Logistics Managers Improperly Allowed Employees to Auction Off Government Property

In March 2023, while conducting an audit of the Denver Logistics Center (DLC), the OIG found an employee recreation group was auctioning items that VA purchasers had requested through free offers associated with supply orders that met a minimum-dollar threshold. DLC staff auction winners took the items for personal use, and the proceeds were used to fund staff social events. The OIG initiated this administrative investigation to examine possible misconduct by VA senior leaders responsible for maintaining ethical procurement practices.DLC purchasing agents claimed free items for 32 purchases from February 2021 through May 2023. The employee recreation group then sold the items to staff through silent auctions. Under federal law, the items were government property because they were part of a purchase made by VA. Federal ethics regulations state, “employee[s] ha[ve] a duty to protect and conserve Government property and shall not use such property, or allow its use, for other than authorized purposes.” DLC leaders and staff had taken related VA ethics and purchase card training, which explained management of government property, ethical restraints on receiving free incentives, and purchase card prohibitions; however, no one at the DLC appeared to have questioned the propriety of the auctions.The OIG found the purchases associated with the free items constituted waste. Contrary to VA policy, which requires every effort be made to use government-wide or agency contracts, the DLC purchased these items without considering a preestablished government contract. The DLC director halted the auctions and the acceptance of free merchandise in June 2023. VA concurred with the OIG’s six recommendations that include a full accounting of losses and recoveries, enhanced guidance and training, and taking any other needed administrative actions. VA was also alerted to 168 other facilities that appeared to be receiving free incentives for further examination.