Financial Controls and Payments Related to VA-Affiliated Nonprofit Corporations: Middle Tennessee Research Institute

The OIG evaluated the merits of a May 2018 complaint alleging that the Middle Tennessee Research Institute (MTRI), a nonprofit corporation affiliated with VA, overbilled the VA medical center in Nashville, Tennessee by at least $342,000 over several years. In addition, the OIG assessed whether MTRI had adequate controls over and provided sufficient oversight of its expenditures. The OIG also evaluated whether the Nashville VAMC had adequate controls in place and provided sufficient oversight of payments to the MTRI. Payments the OIG reviewed were related to Intergovernmental Personnel Act (IPA) agreement reimbursements from January 2014 through April 2018, which allow VA and affiliated nonprofit corporations to collaborate on mutually beneficial research, education, and training activities. Under such agreements, VA may fund all or part of the salary and fringe benefits of employees working on VA approved projects. While the OIG did not substantiate the allegation of overbilling, the audit team found that the Nashville VAMC made about $720,000 in improper payments to MTRI due to a lack of proper supporting documentation. In addition, MTRI made about $337,000 in payments that lacked proper supporting documentation. The OIG made three recommendations to the director of the VA Tennessee Valley Healthcare System. These include ensuring that MTRI’s board of directors establishes procedures to verify that supporting documentation is adequate before expenditures are approved. Recommendations to the VA Tennessee Valley Healthcare System director included establishing procedures to ensure that (1) Research and Development Budget Office staff at the Nashville VAMC review VA affiliated nonprofit corporation invoices to confirm services were performed or goods received in accordance with IPA agreements before approving invoices for payment and (2) the Research and Development Budget Office supervisor conducts periodic reviews of VA affiliated nonprofit corporation invoices that staff authorized for payment.