VA to investigate claims of billions spent improperly

Veterans Affairs Secretary Robert McDonald has directed the department’s inspector general to investigate a whistle-blower’s claims that the VA spends some $5 billion a year on prosthetics and other supplies without contracts.

The issues were raised in a memo sent March 19 to McDonald by Jan Frye, deputy assistant VA secretary for acquisition and logistics, who testified to a House subcommittee hearing last week on waste, fraud and abuse in the VA purchase-card program. Frye said he did not want to be party to violations in the procurement of drugs and medical devices without contracts that provide legal protection and safety and efficacy mandates.

McDonald said in a written statement that “serious allegations have been made regarding VA’s purchase authorities and we are working diligently to review them.” He added that “the vast majority” of transactions cited in Frye’s memo paid for veterans’ care.

Rep. Mike Coffman (R-Colo.), chairman of the House subcommittee, said during the hearing that the VA may have spent as much as $6.22 billion on “improper and unauthorized procurement expenditures” in fiscal 2014. Without contracts, he said, patient-safety provisions are not required, potentially exposing veterans to harm from faulty products. “Among other things, purchase-card abuse invites cronyism and the directing of business to favored vendors,” Coffman said.

The VA could save as much as 20% on medical and surgical acquisition costs if it leveraged its spending costs using tiered pricing to get lower prices for higher volume, Frye wrote. “It’s a nobrainer,” he said.—