Summary of Fiscal Year 2023 Preaward Audits for Healthcare Resource Proposals from Affiliates

VA is authorized by statute to procure healthcare resources from affiliates on a sole-source basis without regard to laws or regulations that require competition. VA policy requires that contracting officers request an Office of Inspector General (OIG) review or audit for any sole-source healthcare proposal with an anticipated annual value of at least $400,000. The OIG provides information that contracting officers may use as they negotiate fair and reasonable prices. In fiscal year 2023, the OIG completed 15 audits of sole-source healthcare proposals. The combined estimated contract value of these 15 preaward audits was about $125.8 million, and the OIG team identified approximately $37.3 million in potential cost savings. Following the OIG audits, the Veterans Health Administration sustained about $9.2 million in cost savings.Thirteen proposals reviewed had full-time-equivalent pricing. For these 13 proposals, the OIG determined the hourly rate pricing offered to the government was higher than the supported amounts, and the OIG recommended contracting officers obtain lower prices than those offered to the government.Two proposals reviewed had both hourly rate pricing and per-procedure pricing. The OIG found the affiliate offered rates higher than current Medicare rates for per-procedure pricing. In these two audits, the OIG recommended reimbursement rates that were 100 percent of the current Medicare rates for the per-procedure portion of the affiliate’s proposals.Finally, for 10 of the 15 contract proposals examined, the OIG found potential conflicts of interest for VA personnel who may be involved in the acquisition process and who also hold a position with the affiliate. In each instance, the OIG recommended the contracting officer request an opinion from VA’s Office of General Counsel as to whether these individuals would have a financial interest in the proposal.