Problems Were Identified on One Regional Procurement Office Central Ambulance Service Contract

The VA Office of Inspector General (OIG) conducted reviews of each of the three Veterans Health Administration (VHA) Regional Procurement Offices (RPOs) to assess the use of sole-source procedures when awarding service contracts valued at more than $700,000 in fiscal year (FY) 2017. A sole-source contract is awarded without full and open competition. The Federal Acquisition Regulation states, with a few exceptions, that a contracting officer will not negotiate sole-source contracts without a written justification and appropriate approvals. The lack of approval violates the Federal Acquisition Regulation, and without competition the government could pay more and be more susceptible to fraud. The OIG reviewed 18 sole-source contracts awarded by RPO Central valued at about $77 million to determine whether proper justification had been filed and approval obtained. The OIG found that a contracting officer did not obtain the required approval for an ambulance service contract worth about $2.2 million because he did not understand the procedures. The same contracting officer also unnecessarily limited competition on the same contract by failing to plan for the procurement in advance. The new sole-source contract was awarded based on compelling urgency, even though RPO Central officials knew for several years that they would need to open a new competition when the existing contract expired. When contracting officers violate federal regulation by failing to obtain the required approval for sole-source contracts, they exceed their authority and this could result in the termination of their warrant, which is their authority to enter into, administer, or terminate contracts. Because the RPO Central contracting officer exceeded his authority on the ambulance service contract, the $2.2 million cost was not fully justified. The OIG recommended VHA ensure awareness of approval procedures for sole-source contracts and ensure adequate time is allotted for soliciting and awarding recurring services competitively.