Federal Reports

The Office of Inspector General (OIG) conducted this audit to determine if VA adhered to program requirements in using more than $1 billion appropriated by Congress from fiscal year (FY) 2019 through FY 2021 to repair buildings with identified seismic deficiencies in zones prone to earthquakes. The OIG reviewed 92 projects funded during that period and determined 42 of the buildings (46 percent) were nonessential, as opposed to critical buildings that must remain operational during a seismic event. The cost to address deficiencies in these 42 ancillary buildings was around $616 million.According to data from the Seismic Program Office, seismic evaluations had not been performed on 135 buildings considered critical or essential by February 23, 2023. The program office’s approval of funding to address seismic deficiencies in ancillary buildings without first completing all required seismic evaluations in critical and essential buildings increases the risks to veteran and employee safety and impedes the ability to continue to provide lifesaving care during and after an earthquake.The OIG found that the seismic evaluations were not completed because the program office placed a low priority on them and did not assign a deadline for their completion, despite a 2015 OIG audit recommending this issue be addressed. The program office also lacked an effective process for identifying and tracking buildings needing evaluations. Moreover, seismic data in VA’s Capital Asset Inventory—the authoritative record of VA’s real property—were incomplete, outdated, and not accessible to most VA engineering officials.The OIG recommended VA ensure seismic evaluations are done for all critical and essential buildings, work to correct Capital Asset Inventory inaccuracies, and request that seismic designation information be available to facility officials for review as part of their annual certifications of the Capital Asset Inventory.

VA partners with private sector companies using energy savings performance contracts to implement energy conservation measures without paying direct capital costs up front. The companies finance the capital costs of implementing these energy upgrades and are compensated through the energy cost savings received by VA. The measures help reduce energy or water usage at VA medical facilities—for example, by installing low-energy lighting and low-flow bathroom fixtures.Before awarding the work, VA must validate the contractor’s energy baseline and savings estimates to ensure future payments are based on reasonable energy savings. An energy baseline is the energy use or demand with existing equipment at a site before implementation. The contractor’s savings estimate is the difference between the baseline amount and the cost of utilities, operation, and maintenance for equipment to be installed. If the contractor’s estimates are overstated, VA may be locked into a payment schedule that exceeds its actual energy savings.After validation, a VA contracting officer negotiates a guaranteed cost savings amount with the contractor. By law, payments from the government cannot exceed this amount over the life of the contract. The amount is evaluated annually to determine if the contractor is delivering the promised savings. If not, VA can deduct the savings not realized from annual payments.The OIG found VA did not independently review the contractor’s energy baseline or estimated savings calculations at four of 13 medical facilities using energy savings performance contracts. Moreover, VA did not have effective policies or quality control procedures to ensure the contractor’s baseline and savings estimates were independently reviewed and that payments complied with the law and with Federal Energy Management Program guidance requiring one-time payments to be made in the same contract year as energy-related savings occurred. The OIG made four recommendations to address these weaknesses.

We audited costs claimed by the Connecticut Department of Energy and Environmental Protection under WSFR grants awarded by the FWS.

VA’s Denver Logistics Center (DLC) manages millions of dollars of supplies intended for Veterans Health Administration (VHA) facilities and patients. According to VA policy, VA staff who use, supervise, or control VA-owned goods are accountable for those goods from acquisition to disposition.The VA Office of Inspector General (OIG) audited to determine whether the DLC maintained accurate inventories of VA-owned goods and identified significant deficiencies in inventory management operations and systems. Specifically, the DLC’s inventory records did not align with on-hand supplies or include all goods, and the DLC lacked an effective internal control system. Inaccurate inventories, weak internal controls, and lack of reporting outside of the DLC created the risk of misleading financial reporting and increased costs to VHA. Further, supplies and veteran information kept at DLC warehouses were not physically secured.The audit also revealed the DLC did not have appropriate system controls to protect inventory data. The DLC’s inventory management system software has access and security vulnerabilities and lacked transparency. Like the VA-owned supplies on hand, the DLC system hardware was also vulnerable to physical access and security risks. Overall, the DLC’s inventory ordering system is becoming unsustainable.The DLC has largely operated under minimal oversight of its inventory operations, and the OIG found that oversight to be ineffective at ensuring VA policies were followed and VA-owned goods protected. The independent nature of DLC operations, along with the deficiencies identified in this audit, impedes the DLC from effectively fulfilling its mission and creates a heightened risk of fraud, waste, and abuse.VA concurred with the OIG’s 11 recommendations to improve the inventory management operations and oversight of the DLC and with another eight recommendations that address information system deficiencies.