The Department of Veterans Affairs has improperly spent at least $5 billion a year on medical equipment and supplies, according to a March 19 memo from the VA’sDeputy Assistant Secretary Jan Frye to Secretary Robert McDonald.
The VA has violated federal contracting rules, according to Frye, the VA’s assistant secretary for acquisition and logistics.
A House investigations panel held a hearing Thursday in the first of three hearings looking into the matter, according to a published report.
Frye said McDonald had not responded to his memo. On Thursday, McDonald produced a written response acknowledging the memo, saying he has asked the inspector general’s office to review Frye’s letter, according to the report. Any findings of wrongdoing would be referred to the Justice Department, he wrote.
In the memo, Frye said the VA’s annual Federal Procurement Data System spend may be understated by as much as $6 to $10 billion.
In Fiscal Year 2015 alone, he certified the Department Federal Procurement Data System (FPDS) spend to the President’s Office of Management and Budget at $19 billion.
“As VA’s Senior Procurement Executive, it is my professional opinion the VA has understated its annual acquisition spend at a minimum in the range of $5B each of the past five years, due to our inexcusable failure to acquire a substantial quantity of goods and services in accordance with Federal laws and regulations,” Frye wrote.
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For instance, Frye estimated that in one year, $1.2 billion in prosthetics were purchased without a contract in violation of federal law.
The VA could save as much as 20 percent on medical and surgical supplies if it used its high volume of purchases to get lower pricing, according to Frye.
Also, he said, “… We have effectively ‘hidden’ our illegal transactions from public scrutiny.”
“It doesn’t take genius nor an auditor to recognize VA internal records are not in equilibrium,” Frye wrote. “For instance, if we report $19B in annual spend via FPDS, and VA financial records reflect dollars obligated for products, services and construction don’t closely approximate this amount, then something is seriously awry. This very basic but significant discrepancy should have been examined and explained by the Office of Management. It has been observed for a number of years but simply ignored, almost as if billions of dollars represent a rounding error.”
Twitter: @SusanMorseHFN