Federal Reports

This report presents the results of our verification inspection of a June 2014 Office of Inspector General (OIG) audit of SBA’s 7(a) loan guaranty approval process, performance audit report 14-13. The review determined significant opportunities existed to improve the management of the 7(a) loan guaranty approval process to mitigate its risk of loss and protect the integrity of the program. Specifically, the audit found that processing center management emphasized quantity over quality for 7(a) loan reviews, and processing center loan specialists were not provided adequate guidance and training to conduct their 7(a) loan review activities.A verification inspection is a short review that focuses on closed recommendations from prior OIG reports. This inspection focuses on recommendation 1, which recommended that SBA revise management reports to measure quality against established targets, ensure production credit is given for all loan review actions, and promote compliance with SBA requirements.We found SBA effectively implemented recommendation 1 by revising its management reports to include key factors for measuring the quality and complexity of loan reviews to promote compliance with SBA requirements.

The Veterans Benefits Administration (VBA) provides disability compensation benefits to eligible veterans and may require medical examinations to determine the severity of their conditions. Some conditions may change or improve over time, which may require veterans to be reexamined. In a July 2018 report, the VA Office of Inspector General (OIG) found claims processors did not consistently follow VBA policy that requires reexaminations of veterans be requested only when necessary. VBA has taken steps to reduce the number of unwarranted reexaminations with the creation of “batch jobs” intended to automatically cancel reexaminations meeting certain parameters. However, the OIG found that VBA carried out two batch cancellation jobs that mistakenly included reexaminations that should not have been canceled because they were required by law. This resulted in required future reexaminations being canceled, potentially causing veterans to receive monthly compensation benefits that are not consistent with their current levels of disability—higher or lower. After the OIG raised concerns, VBA suspended a scheduled batch cancellation job and reestablished workload controls to determine if reexaminations were necessary.The OIG recognizes VBA’s efforts to be responsive to prior OIG recommendations and to use automation, when possible, to minimize unnecessary medical reexamination requests. Since VBA took responsive action, the OIG did not further review the batch cancellation jobs. The OIG provided this memorandum to formally convey the information necessary for VBA leaders to further research the matter, assess the magnitude of the issue, and determine if additional actions are warranted. The OIG requested that VBA inform the OIG what action is taken to address the issues identified in this memorandum regarding batch cancellations involving medical reexaminations and appreciates VA’s response as to planned improvements.

The Pandemic Response Accountability Committee (PRAC) is issuing this Risk Advisory to notify Small Business Administration (SBA) management of potential identity or other fraud in its COVID-19 Economic Injury Disaster Loan (EIDL) program, EIDL Advance program, and Paycheck Protection Program. The PRAC identified possible identity or other fraud in one or more of these SBA programs involving 945 minors (under 18 years old) and 231 elderly individuals (80 years and older) who are also listed as household members in the Department of Housing and Urban Development’s Low Rent and/or Housing Choice Voucher program. We urge SBA to further examine the potential identity fraud we have detected using SBA’s own verification methods to determine which instances are fraud and take appropriate action to prevent further harm if it is determined that a minor’s or elderly’s identity was fraudulently used. We are providing management with a separate non-public version of this Risk Advisory to share the details regarding these additional safeguards.

The Federal Emergency Management Agency (FEMA) provided approximately $49.3 million of coronavirus disease 2019 (COVID-19) pandemic relief funds to Springfield, MA; Coeur D’Alene, ID; Sheridan County, NE; Marion County, GA; White Earth Nation in Minnesota; and Jicarilla Apache Nation in New Mexico.

Objective: To determine whether the Social Security Administration’s (SSA) corrective actions in response to our prior audit effectively improved its processing of Internal Revenue Service (IRS) non-wage-related alerts.

Objective: Our objectives were to summarize the results of prior audits and provide the Social Security Administration (SSA) recommendations to improve its financial management oversight of states’ disability determination services (DDS).

The VA Office of Inspector General (OIG) completed 32 preaward reviews of sole-source healthcare proposals in fiscal year 2021 and provided information that VA contracting officers could use to help negotiate fair and reasonable prices. The proposals typically come from VA affiliated institutions such as colleges and schools of medicine. The combined estimated contract value of the 32 proposals reviewed was $305 million. The OIG identified a total of $102.5 million in potential cost savings for 29 of those proposals. As of March 2022, VA contracting officers had awarded 30 proposals and had sustained at least $44 million in cost savings.OIG reviews of the individual contract proposals were not previously published because they contain clinical staff’s sensitive personal data. This report, however, summarizes the OIG’s prior findings and recommendations in three areas: costs underlying proposed hourly rates, offered per-procedure prices, and potential conflicts of interest. For 27 of the 29 proposals reviewed that contained hourly rates, the prices offered to the government were higher than the supported amounts and contracting officers were urged to obtain lower prices. Frequently occurring issues included unsupported provider salaries, administrative expenses, fringe benefits amounts, and malpractice insurance premiums. The four proposals with per-procedure pricing all offered prices higher than the properly calculated Medicare rates and so the OIG recommended contracting officers also obtain lower prices. For 22 of the 32 proposals, there were potential conflicts of interest for VA personnel. These personnel held faculty appointments at the affiliated institutions and potentially would also have responsibilities related to the affiliate’s services. In each instance, the OIG recommended the contracting officer request an opinion from VA’s Office of General Counsel on whether these individuals would have a financial interest in the proposal.