Sacramento Veterans Affairs Medical Center in Rancho Cordova, Calif. (Rich Pedoncelli/AP)

Top officials at the Department of Veterans Affairs acknowledged to House lawmakers Monday that they have been spending billions of dollars a year on private medical care for veterans without contracts, and said it would be too costly and cumbersome to put them in place.

“VA acknowledges that our long-standing procurement processes for care in the community need improvement,” Edward Murray, VA’s acting secretary for management and interim chief financial officer, testified, referring to what’s called non-VA care. Murray said that “serious legal questions” have arisen over medical care veterans get outside VA hospitals and clinics, a growing cost that’s expected to reach more than $10 billion this fiscal year.

The hearing before the House Committee on Veterans’ Affairs’s investigations panel was the second of three scheduled for the spring to address allegations of billions of dollars in misspending flagged by Jan R. Frye, VA’s deputy assistant secretary for acquisition and logistics, about contracting practices. The Washington Post reported in May that Frye had sent a 35-page memo to VA Secretary Robert McDonald in March accusing agency leaders of making a “mockery” of federal acquisition laws and spending at least $6 billion a year in violation of contracting rules.

[Veterans Affairs improperly spent $6 billion annually, senior official says]

Frye described a culture of “lawlessness and chaos” at the Veterans Health Administration, the massive health-care system for 8.7 million veterans, and said his efforts to reform a wasteful, disorganized contracting process that put veterans health and taxpayers money at risk have been met with resistance from agency leaders for years.

[9 takeaways from Frye’s memo]

Frye, testifying Monday, repeated his concerns that VA has failed to engage in competitive bidding or sign contracts with outside hospital and health-care providers that offer medical care for veterans that the agency cannot provide, such as specialized tests and surgeries, obstetrics care and other procedures. VA has paid billions of dollars in such fees, in violation of federal acquisition rules that the agency’s own general counsel has said since 2009 must be followed, Murray and other officials acknowledged at the hearing.

Frustrated lawmakers from both parties said the lack of contracts represented another case of bureaucratic incompetence they said has become the order of the day at VA.

“If the atom bomb can be built and wars conducted under the acquisition regulations, surely VA can deliver patient care under them as well,” Rep. Mike Coffman (R-Colo.), chairman of the oversight panel, said, and later called the contracting issues an example of “bureaucratic lawlessness.”

But VA officials said they would need to hire at least 600 employees to write and oversee contracts for private care, an expense they cannot afford. They also said that in rural areas in particular, many physicians are nervous about doing business with the government and are wary of the paperwork involved in a contract with VA.

Phillipa Anderson, VA’s assistant general counsel for government contracting, said that if a doctor or other clinician is paid, properly billed and provides a service to a veteran, that effectively constitutes a contract. But Frye and several lawmakers said that practice puts taxpayers and veterans at risk.

“When federal contracts are required and you don’t use them, there are terms and conditions that are missing from the contract,” Frye said. “There are termination issues. Disputes over fair and reasonable prices. A whole host of issues. Safety and efficacy. Without them, the contractor is there to do what he or she wants.”

VA operates one of the largest health-care systems in the country, spanning 150 hospitals and more than 800 outpatient clinics. The agency has been struggling to serve not only the veterans returning from Iraq and Afghanistan, but also a surge in veterans who served in the 1960s and 1970s.

VA has been rocked since last year by revelations about long wait times for veterans seeking treatment for health issues including cancer and post-traumatic stress disorder. McDonald’s predecessor, Eric K. Shinseki, resigned as VA secretary last year after a coverup of months-long hospital wait times became public, and Congress has given the system $10 billion in new funding to ramp up private medical care.

The agency is urging Congress to pass legislation that would allow an expedited form of purchasing care for veterans who need to go outside the VA system, allowing the use of agreements other than those required by federal acquisition regulations.