Lawmakers in both parties were incensed Thursday over allegations of widespread use of purchase cards at the Department of Veterans Affairs in violation of federal regulations and faulted high-level agency officials for failing to take long-standing complaints seriously.
In a tense hearing before the House Veterans’ Affairs Committee, Democrats and Republicans demanded to know why VA officials did little to stop their health system from buying more than $1 billion in prosthetics and other medical supplies without competitive bidding and proper contracts. Some of the improper spending was done by employees who were not authorized to use the cards.
“To let this continue and not be furious about it defies anybody’s rational thinking,” Chairman Jeff Miller (R-Fla.) said at the two-hour hearing held by the committee’s investigations panel.
It was the first of three hearings scheduled for this spring to address concerns flagged by Jan R. Frye, VA’s deputy assistant secretary for acquisition and logistics, about contracting practices. The Washington Post reported Thursday 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.
Hours after the hearing, McDonald issued a written statement acknowledging the letter, which Frye said had previously received no response.
“It is clear that serious allegations have been made regarding VA’s purchase authorities and we are working diligently to review them,” McDonald wrote.
“VA appreciates the issues Mr. Frye has brought to light, and as he has made clear, there are many acquisition paths within VHA,” McDonald wrote, referring to the Veterans Health Administration. He said the “vast majority of the funding identified in the memo went to provide Veterans needed care in the community.”
McDonald said he has asked the inspector general’s office to review the letter. “Any findings of wrongdoing or evidence of harm to Veterans” will be referred to the Justice Department, he wrote.
At the hearing, top agency officials said that in response to concerns from the VA’s inspector general’s office, which flagged improper purchase-card practices last fall, oversight has improved, card spending limits have declined and purchases by unauthorized employees have stopped.
“As with many large programs, we have experienced challenges,” said Edward Murray, VA’s acting assistant secretary for management and interim chief financial officer. “I can tell you we have stringent controls over our card program.”
But his defense provoked more anger from lawmakers, who said he had not convinced them the improper practices have stopped.
“Didn’t you have a gut check when these allegations came up?” a seething Rep. Jackie Walorski (R-Ind.) asked Murray. “That we have to stop this, this is wrong. It’s illegal activity. Did that never dawn on you, Mr. Murray?”
Walorksi pressed him repeatedly. Finally, Murray said, “There are different views” within VA on Frye’s allegations. “There’s ambiguity” about the law, he said. “There are differences of opinion.”
Rep. Tim Walz (D-Minn.) reflected the sense among lawmakers that VA, even under new leadership after a scandal over waiting times for medical appointments, has a long way to go to earn public trust.
“What kills me is the veterans’ lack of trust,” Walz told Murray and Norbert Doyle, VHA’s chief procurement and logistics officer. “It breaks their heart to see these stories in the news.”
Walz said he is skeptical that McDonald is changing what the White House called a “corrosive culture” inside VA. “I don’t for a second believe there’s an attempt to make that change.”
Frye testified about some of what he described to McDonald: a series of practices that he says run afoul of federal rules, including the widespread use of purchase cards — usually meant as a convenience for minor purchases of up to $3,000 — to buy billions of dollars worth of medical supplies without contracts. In one example, he said, up to $1.2 billion in prosthetics were bought using purchase cards without contracts during an 18-month period that ended last year.
“There simply is not the leadership, the leadership’s will to get them fixed,” Frye told lawmakers. “We aren’t prosecuting a war in Southwest Asia. We’re buying. It’s an easy procurement mission. But somehow we’ve decided it’s just too hard to put contracts in place in accord with the law.”
Rep. Mike Coffman (R-Colo.), chairman of the oversight panel, said VA had tried to keep Frye from testifying.
“VA decided it would be better to send an individual who has been at the helm of the contracting office for just a month to discuss matters that have gone on for years,” he said.
The agency has 25,500 purchase cards that were used about 6 million times last year to make $3.7 billion in purchases, mostly for the sprawling veterans health system, Murray said. The cards allow VA to buy drugs and medical supplies quickly, he said.
In response to concerns from Congress and the inspector general’s office, the number of cards has declined from 37,000 in fiscal 2011, he said. About 23,000 employees have them.
But card purchases shot up during that time, from $1.8 billion three years ago, said Linda Halliday, assistant inspector general for audits and evaluations. The watchdog has reported for years that weak contracting systems put VA at risk of waste and abuse and that the purchase-card system needs better oversight.
Rep. Kathleen Rice (D-N.Y.) called those totals “just enormous” and said they were an invitation to abuse. Rice said she and her siblings “never would have attended college” if her parents had given each child a credit card.