Sole-Source Service Contracting at Regional Procurement Office East Needs Improvement

The VA Office of Inspector General (OIG) conducted reviews of each of the three Veterans Health Administration (VHA) Regional Procurement Offices (RPOs) to assess the use of sole-source procedures when awarding service contracts valued at more than $700,000 in fiscal year (FY) 2017. A sole-source contract is awarded without full and open competition. The Federal Acquisition Regulation states, with a few exceptions, that a contracting officer will not negotiate sole-source contracts without written justification and approvals. The lack of approval violates the Federal Acquisition Regulation and without competition, the government could pay more for services and be more susceptible to fraud. The OIG reviewed 20 sole-source contracts awarded by RPO East totaling $41.4 million. The OIG found RPO East contracting officers did not obtain required approval before awarding 10 contracts worth about $14.2 million. This occurred because officials did not follow the proper approval process, did not receive the correct guidance, and misinterpreted regulations. As a result, the costs of those 10 contracts cannot be fully justified. The OIG also found contracting officers unnecessarily limited competition on four recurring transportation service contracts worth about $8.5 million. This occurred because RPO East contracting officials knew in advance that the existing contracts would expire but did not properly plan a fair and open competition for new ones. The result was an increased risk to the government. The OIG recommended the executive director of VHA procurement ensure awareness of approval procedures for sole-source contracts and make certain all justifications are approved by the appropriate authority. The OIG also recommended the executive director commits adequate time for soliciting and awarding recurring services competitively and reviews the actions of contracting personnel involved in the cited contracts to determine whether administrative actions are warranted.