Sole-Source Service Contracting at Regional Procurement Office West Need 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 a written justification and appropriate approvals. The lack of approval violates the Federal Acquisition Regulation, and without competition the government could pay more for goods and services and be more susceptible to fraud. The OIG reviewed 15 sole-source contracts awarded by RPO West with a total value of about $19 million to determine whether they were properly justified and approved, and found that this was not done for five contracts worth about $6 million. This occurred because RPO West contracting officers did not follow the required approval process and misunderstood who the proper approval authority was. When contracting officers violate federal regulation by failing to obtain the required approval for sole-source contracts, they exceed their contracting authority and this could result in the termination of their warrant, which is their authority to enter into, administer, or terminate contracts. RPO West contracting officers exceeded their authority on five contracts resulting in approximately $6 million in costs that were not completely justified. The OIG recommended the executive director of VHA procurement ensure personnel’s awareness of approval procedures and the required written justification for sole-source contracts, establish procedures to help make certain the appropriate authority approves all sole-source contracts, and review the actions of contracting personnel involved in the cited contracts to determine whether administrative actions are warranted.