Federal Reports

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.

VHA relies heavily on community providers for dialysis services for veterans, having spent about $1.2 billion on these services from October 2020 through September 2022. The Office of Integrated Veteran Care (IVC) is responsible for managing the delivery of community dialysis services through community care network (CCN) contracts and nationwide dialysis services contracts (NDSCs). CCN providers receive up to the Medicare rate plus some administrative fees, while NDSC providers received more than the Medicare rate.According to the MISSION Act, community provider reimbursement cannot exceed Medicare rates except in highly rural areas, in states with an all payer model, or when VA makes an exception. Although the MISSION Act was not in effect when the current NDSCs were awarded, VA must consider these requirements in future acquisitions. In fiscal year 2021, VHA announced its intent to transition dialysis services from NDSCs to the CCN. The OIG conducted this audit to determine if VHA effectively provides veterans access to dialysis services by evaluating whether it followed its prescribed referral process that prioritizes the use of available CCN over NDSC providers.VHA experienced several barriers to ensuring compliance with its community dialysis referral requirements and increasing use of CCN providers over NDSC providers. Specifically, IVC did not effectively oversee dialysis care in the community, clearly assign oversight responsibilities for community dialysis services, ensure medical facility dialysis coordinators followed required referral steps, or use available data to inform decisions. The team also found some inaccurate or incomplete data in the information system used by dialysis coordinators to identify available providers.The OIG recommended VHA clarify guidance, establish roles and responsibilities, improve data accuracy, and ensure future dialysis service contracts meet MISSION Act payment rate requirements.