Federal Reports

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.

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We found that a former BIA employee defrauded the Government through misuse of Government credit cards and other misconduct.

What We Looked AtSince 2014, the Federal Aviation Administration’s (FAA) Airport Improvement Program has obligated more than $3.18 billion to eligible airports each fiscal year for airport development and planning. At the direction of Congress, FAA published its Policy and Procedures Concerning the Use of Airport Revenue (Revenue Use Policy) to define airport revenue and identify permitted and prohibited uses of that revenue. FAA amended this policy in 2014 to address revenue use for aviation fuel taxes. Given the importance of promoting effective stewardship of taxpayer dollars used to support the Nation’s airports, we initiated this audit. Our objective was to assess whether FAA’s oversight policies and procedures are sufficient to prevent or detect airport revenue diversion. For this audit, we focused on FAA’s efforts to ensure compliance with FAA’s rules for collecting and using aviation fuel taxes. What We FoundSince amending its Revenue Use Policy, FAA has made progress confirming whether State and local Government laws comply with the amendments. However, the Agency has not yet tested or validated if the compliant jurisdictions use the proceeds from aviation fuel taxes according to the jurisdictions’ approved action plan. Without testing the jurisdictions’ approved action plan for using aviation fuel taxes, FAA cannot ensure that revenue is used for aviation‑related purposes as required by Federal regulations. In addition, the Agency has not taken enforcement actions against the five jurisdictions that are not yet in compliance with the amendments. According to Agency officials, the lack of testing, validation, and enforcement action is due to congressional guidance that encouraged the Agency to postpone enforcement. By potentially diverting aviation fuel tax revenue from airports for non‑aviation-related purposes, these jurisdictions increase the risk of hindering the airports’ ability to remain self‑sufficient and improve their infrastructure. Our RecommendationsWe made three recommendations to improve FAA’s oversight policies and procedures for preventing and detecting airport revenue diversion. FAA concurred with our recommendations and provided appropriate actions and completion dates. We consider all recommendations resolved but open pending completion of the planned actions.

What We Looked AtExtreme weather events, including those potentially caused by effects of climate change, are a source of major disruptions to the National Airspace System (NAS). In November 2021, Congress passed the Infrastructure Investment and Jobs Act (IIJA) authorizing $25 billion to the Federal Aviation Administration (FAA) to fund programs to address aging aviation infrastructure. Specifically, it funded the Airport Infrastructure Grant program, Airport Terminal Program, and the Facilities and Equipment program. Also, in November 2021, President Biden issued Executive Order (EO) 14052, which directed agencies tasked with implementing IIJA to take steps, such as prioritizing as appropriate and to the extent consistent with law, building resilient infrastructure projects that help combat climate change. As part of our IIJA funding oversight and given the policy emphasis on climate change and resiliency, we initiated this audit. Our objective was to assess FAA’s plans for prioritizing resiliency into IIJA aviation programs. What We FoundFAA has taken steps to address resiliency in discretionary IIJA aviation programs. For example, FAA incorporates resiliency and climate change in its project selection criteria for these programs. However, FAA has not established a mechanism for collecting and reporting data on the extent to which IIJA-funded projects address FAA’s and the Department of Transportation’s (DOT) strategic goals on climate and sustainability. Also, FAA does not have a framework to prioritize projects that address climate change in its standards. As a result, FAA and airports are not required to consider climate change impacts when proposing infrastructure projects. However, in September 2021, FAA entered into an interagency agreement with DOT’s John A. Volpe National Transportation Systems Center (Volpe) for a 5-year study to identify the climate change risk to airport systems. Yet, the results of this study, which is currently scheduled to conclude in 2026, will not be available for many projects that receive funding before the study’s end. Our RecommendationsWe made two recommendations to improve FAA’s prioritization of resiliency and climate change in IIJA aviation programs.