$1B in stimulus money at VA poorly tracked, IG says

Veterans Health Administration did not manage contractor performance determinations properly

The Veterans Health Administration is falling short on oversight of $1 billion in economic stimulus funding for modernization, maintenance and energy projects at veterans hospitals, according to a new report from the Office of Inspector General.

Belinda Finn, assistant inspector general for audits and investigations at the Veterans Affairs Department, found that while the VHA consistently met most competition and contacting requirements for price and bid evaluations, its oversight was inadequate in two areas.

First, the VHA did not ensure that all its contracting officers properly evaluated the prospective contractors’ ability to perform required work before they awarded contracts and orders. In reviewing 65 contract awards and task orders, the IG found that there were 60 awards totaling $83 million that had inadequate determinations in that regard. That represented 92 percent of the awards reviewed.

For example, for 43 contracts and orders totaling $56 million, contracting officers did not adequately assess contractors’ financial resources to determine whether the contractor is at high risk of seeking legal relief from creditors or ceasing operations without paying creditors.

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“We determined that the six contractors rated as high financial risks are still actively working on $9 million in awarded VHA Non-Recurring Maintenance Recovery Act awards and that two contractors with insufficient financial information received $5.2 million in awards,” Finn wrote.

In other cases, the VHA contracting officers did not adequately review contractors’ performance and delivery schedules. Those oversight problems occurred because the VA’s guidance did not address all elements of the required responsibility determinations, “and some contracting officers relied heavily on their prior experiences with prospective contractors to make responsibility determinations,” Finn wrote.

Second, the IG found that the VHA did not include clauses required under the stimulus law in 13 contract awards.

The IG recommended that the VA’s undersecretary for health improve the contractor responsibility determinations and stimulus law clauses, and the Office of Acquisition, Logistics and Construction develop policies and procedures for evaluating contractors' past performance.

VA management agreed with the findings and recommendations, according to the report.


About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

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Reader comments

Tue, Sep 21, 2010 Bill

In fairness though, this is only theoretical risk since apparently none of them have defaulted including the contractors labelled "high risk" who represent less than 1% of the contract On the flip side, I wonder how much it costs the taxpayers to do all the extra contract risk management the OIG seems to think is worth making a to do about? I'm betting tens of millions and considerable delays. Is the extra "due diligence" really worth it?

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