Billions of Dollars 'Making Mockery' of Federal Law and Taxpayers at VA

WASHINGTON – A federal whistleblower has revealed that the Veterans Health Administration may have improperly spent up to $5 billion in improper and unauthorized procurement expenditures over each of the last five years and lawmakers are demanding an explanation.

An internal Department of Veterans Affairs memo determined that the agency violated federal contracting rules to pay for medical care and supplies. The communique, addressed to VA Secretary Robert McDonald and written by Deputy Assistant Secretary Jan Frye, asserts that the VA “has and continues to waste millions of dollars by paying excessive prices for goods and services due to breaches in federal law.”

The memo maintained, for instance, that VA officials failed to stop the Veterans Health Administration from using purchase cards – generally utilized to make minor purchases of less than $3,000 -- on the acquisition of more than $1 billion in prosthetics and other medical supplies outside the competitive bidding process. At least some of the buys, Frye said, were made by unauthorized personnel.

Frye claimed the agency is responsible for “gross mismanagement.”

During a hearing before the Subcommittee on Oversight and Investigations of the Committee on Veterans Affairs, Rep. Mike Coffman (R-Colo.), the panel chairman, said the agency “has had a history of weak internal controls resulting in serious violations of procurement laws,” adding that inadequate oversight resulted in “improper and unauthorized procurement expenditures.”

“This is a truly staggering amount,” Coffman said. “Given the high number of transactions - $6.2 million in fiscal year 2014 - and the aggregate billions at risk, it is crucial that VA implement effective oversight controls to ensure it uses taxpayer resources efficiently for veterans.”

Testifying before the subcommittee, Frye alleged that some senior VA acquisition and finance officials “have willfully violated the public trust while federal procurement and financial laws were debased.”

“Their overt actions and dereliction of duties combined have resulted in billions of taxpayer dollars being spent without regard to federal laws and regulations, making a mockery of federal statutes,” he said.

Frye told lawmakers he is “not aware of a single senior acquisition leader being held accountable for wrongdoing or dereliction in the nearly 10 years I’ve been in my present VA position.”

“These unlawful acts may potentially result in serious harm or death to America’s veterans,” he asserted. “When VA procures pharmaceuticals or medical devices without terms and conditions afforded via written contracts, the government forfeits all legal protections afforded by contract law. Efficacy and safety mandates are nonexistent.”

Frye said senior leaders within the VA “are not telling the whole story,” adding that, “I will no longer be a party to these VA games.”

Representatives of the Veterans Health Administration appeared at the hearing but their testimony was pushed to the rear when Veterans Affairs Secretary Robert McDonald issued a statement acknowledging that he had received Frye’s letter and referred the missive to the Inspector General’s office for further review. Any evidence of wrongdoing will then be referred to the Justice Department.

“It is clear that serious allegations have been made regarding VA’s purchase authorities and we are working diligently to review them,” McDonald said.

The secretary went on to say that while he appreciates Frye stepping forward with the information, he noted “there are many acquisition paths within VHA” and that most of the sited purchases went to provide needed care for veterans.

A handful of VA officials, led by Edward Murray, the acting assistant secretary for management and the interim financial officer, appeared at the hearing to assuage concerns of lawmakers on both sides of the aisle – with little success.

Much of the controversy centers on the distribution of purchase cards, used by VA officials to obtain items necessary to carry out the agency’s duties. Some of those holding the cards, Frye alleged, were unqualified.