VA Vocational Rehabilitation and Employment
Service Contract Management Is Improving, but Challenges Remain Gao ID: GAO-07-568R April 23, 2007The Department of Veterans Affairs' (VA) Vocational Rehabilitation and Employment (VR&E) program provides services such as vocational counseling and job training to assist veterans with service-connected disabilities obtain and maintain suitable employment and achieve maximum independence in daily living. In fiscal year 2006, the VR&E program obligated about $702 million and served about 89,000 veterans. The Veterans Benefits Administration (VBA), which administers the VR&E program, provides some services to veterans through two types of contracts--national contracts and local contracts. In fiscal year 2003, VA adopted the National Acquisition Strategy (NAS) to award contracts at the national level to ensure that veterans have access to the same quality and types of VR&E services across regional offices. These national contracts, once awarded, are implemented by VA's regional offices. Services available under these national contracts include initial evaluations, case management, and employment placement assistance. In fiscal year 2006, VR&E spent about $15 million through national contracts. There are 165 national contracts currently active in fiscal year 2007. Regional offices also can negotiate and implement local contracts for services that are not provided through national contracts such as tutoring and computer skills evaluations. In fiscal year 2006, VR&E spent about $12 million through local contracts. VR&E contracting officers are responsible for negotiating the terms of local contracts. Contracting officer's technical representatives, often VR&E counselors themselves, assist in managing both national and local contracts. Recent studies of the VR&E program have raised concerns about its contracting practices. In March 2004, the VR&E Task Force recommended that VA enhance VR&E contracting practices by taking several actions, including revising the scope of national contracts and developing contracting training and hiring contracting specialists to improve the contracting expertise of VR&E staff. According to the VR&E Task Force, VR&E's capacity to manage its contracts could be further improved by enhancing the usefulness of its case management data system. For example, the VR&E Task Force recommended that VA improve its case management data system so that purchased contract services could be tracked by the counselor who orders the services or by the veteran that receives the services. In February 2005, the VA Inspector General recommended that existing national contracts be renegotiated to better reflect market rates for services because VA was at risk of paying excessive prices for VR&E services purchased through its current national contracts. The report also noted that VA should strengthen regional office oversight and management of contracts. To address Congressional interest in VR&E contract management, we conducted a study to determine how VA has improved VR&E contract management practices and identify challenges VA continues to face. Specifically, Congress asked us to answer the following questions: (1) What progress has VA made in implementing selected recommendations on contracting for VR&E services made by the VR&E Task Force and the VA Inspector General? (2) What are VA's key challenges in improving its management of VR&E service contracting?
VA reports progress in implementing contracting-related recommendations made by the VR&E Task Force and VA Inspector General. However, some key recommendations have not yet been implemented. Specifically, VA regional offices requested and obtained lower prices under existing national contracts. VA has taken steps to increase regional office VR&E staff contracting expertise. VA has taken steps to develop additional regional office internal control policies and procedures for contracting activities. VA's efforts to address issues with contracting data are on hold. VA has not yet awarded new national contracts. Key challenges remain to improving VA's management of VR&E service contracting. Specifically, we found that (1) regional offices are not fully applying VA's contracting guidance; (2) current training does not adequately prepare contracting officers to manage contracts; (3) regional offices report delays in communication with VA headquarters on contracting questions, but VA is taking actions to address these concerns; (4) VA's management of VR&E contracting is limited by inadequate reporting capabilities; and (5) inadequate internal controls over contracting data raise reliability concerns.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-568R, VA Vocational Rehabilitation and Employment: Service Contract Management Is Improving, but Challenges Remain
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April 23, 2007:
The Honorable Stephanie Herseth:
Chairwoman:
The Honorable John Boozman:
Ranking Minority Member:
Subcommittee on Economic Opportunity:
Committee on Veterans' Affairs:
House of Representatives:
Subject: VA Vocational Rehabilitation and Employment: Service Contract
Management Is Improving, but Challenges Remain:
The Department of Veterans Affairs' (VA) Vocational Rehabilitation and
Employment (VR&E) program provides services such as vocational
counseling and job training to assist veterans with service-connected
disabilities obtain and maintain suitable employment and achieve
maximum independence in daily living. In fiscal year 2006, the VR&E
program obligated about $702 million and served about 89,000 veterans.
The Veterans Benefits Administration (VBA), which administers the VR&E
program, provides some services to veterans through two types of
contracts--national contracts and local contracts. In fiscal year 2003,
VA adopted the National Acquisition Strategy (NAS) to award contracts
at the national level to ensure that veterans have access to the same
quality and types of VR&E services across regional offices. These
national contracts, once awarded, are implemented by VA's regional
offices. Services available under these national contracts include
initial evaluations, case management, and employment placement
assistance. In fiscal year 2006, VR&E spent about $15 million through
national contracts. There are 165 national contracts currently active
in fiscal year 2007. Regional offices also can negotiate and implement
local contracts for services that are not provided through national
contracts such as tutoring and computer skills evaluations. In fiscal
year 2006, VR&E spent about $12 million through local contracts. VR&E
contracting officers are responsible for negotiating the terms of local
contracts. Contracting officer's technical representatives, often VR&E
counselors themselves, assist in managing both national and local
contracts.
Recent studies of the VR&E program have raised concerns about its
contracting practices. In March 2004, the VR&E Task Force recommended
that VA enhance VR&E contracting practices by taking several actions,
including revising the scope of national contracts and developing
contracting training and hiring contracting specialists to improve the
contracting expertise of VR&E staff. According to the VR&E Task Force,
VR&E's capacity to manage its contracts could be further improved by
enhancing the usefulness of its case management data system. For
example, the VR&E Task Force recommended that VA improve its case
management data system so that purchased contract services could be
tracked by the counselor who orders the services or by the veteran that
receives the services. In February 2005, the VA Inspector General
recommended that existing national contracts be renegotiated to better
reflect market rates for services because VA was at risk of paying
excessive prices for VR&E services purchased through its current
national contracts. The report also noted that VA should strengthen
regional office oversight and management of contracts.
To address your interest in VR&E contract management, we conducted a
study to determine how VA has improved VR&E contract management
practices and identify challenges VA continues to face. Specifically,
you asked us to answer the following questions: (1) What progress has
VA made in implementing selected recommendations on contracting for
VR&E services made by the VR&E Task Force and the VA Inspector General?
(2) What are VA's key challenges in improving its management of VR&E
service contracting?
On March 29, 2007, we briefed your staff on the results of our study of
VR&E service contract management (see app. I). This report formally
conveys the information provided during that briefing. In summary, we
found that:
* VA reports progress in implementing contracting-related
recommendations made by the VR&E Task Force and VA Inspector General.
However, some key recommendations have not yet been implemented.
Specifically:
- VA regional offices requested and obtained lower prices under
existing national contracts.
- VA has taken steps to increase regional office VR&E staff contracting
expertise.
- VA has taken steps to develop additional regional office internal
control policies and procedures for contracting activities.
- VA's efforts to address issues with contracting data are on hold.
- VA has not yet awarded new national contracts.
* Key challenges remain to improving VA's management of VR&E service
contracting. Specifically, we found that:
- Regional offices are not fully applying VA's contracting guidance.
- Current training does not adequately prepare contracting officers to
manage contracts.
- Regional offices report delays in communication with VA headquarters
on contracting questions, but VA is taking actions to address these
concerns.
- VA's management of VR&E contracting is limited by inadequate
reporting capabilities.
- Inadequate internal controls over contracting data raise reliability
concerns.
To assess VA's progress in implementing contracting-related
recommendations made by the VR&E Task Force and the VA Inspector
General and identify the challenges VA has experienced in improving
management of VR&E service contracting, we (1) conducted site visits of
four diverse regional offices to interview VR&E officials and review
contract files, (2) conducted telephone interviews with officials from
a fifth regional office, (3) interviewed officials at VA headquarters
knowledgeable about contracting practices and policies, (4) analyzed
VR&E contract-related management data, and (5) reviewed contract files
at VA's Office of Acquisition and Materiel Management (OA&MM) to
determine the maximum prices allowed for services available from
national contracts used by the regional offices we visited. We assessed
the reliability of VR&E contracting data captured by VR&E's case
management data system--Corporate WINRS--through several methods,
including comparing these data against local data provided to us by the
four regional offices we visited and by reviewing existing evaluations
of VR&E's case management data system. While we identified accuracy
limitations with the contracting data captured by VR&E's case
management data system--discussed in the slide entitled "Objective 2:
Management Data: Inadequate Internal Controls over Contracting Data
Raise Reliability Concerns" in appendix I (page 30)--we found that
generally VR&E's contracting data are sufficiently reliable for the
purposes of our study. We conducted our work from March 2006 to
February 2007 in accordance with generally accepted government auditing
standards. (See app. II for more details on our objectives, scope, and
methodology.)
Conclusions:
Contracting is a valuable tool for the VR&E program. A well-managed
contracting system can help VA provide VR&E services to veterans in
several ways, such as by gathering the information needed to make
entitlement decisions. Several regional offices felt that prices were
too high for services available through national contracts and
subsequently requested and obtained lower prices. VA has positioned
itself to be at less risk of overpaying this time around, because VA
has conducted market research in preparation for issuing its new
national contracts, something it did not do last time. VA's oversight
and communication with regional offices are a work in progress, but in
the absence of continued improvement, regional offices may be putting
VA at risk for overpaying local contractors. Given their current level
of training, regional VR&E officials may continue to use noncompetitive
contracts even when they are not necessarily appropriate. While
negotiating competitive contracts requires greater contracting
expertise, these contracts may also provide better prices and outcomes.
Gains from improved contract management will be minimized without an
information system to provide usable and reliable data on contract use.
VA plans to improve the reporting capabilities of Corporate WINRS, but
without improvements to internal controls and data reliability, reports
produced by the system will not be as fully useful as they could be.
Recommendations for Executive Action:
To address the key challenges we identified that VA faces in improving
its management of VR&E contracting, we recommend that the Secretary of
Veterans Affairs direct the Under Secretary for Benefits to take the
following actions:
(1) Conduct a management review to assess how regional offices are
implementing VA's contracting guidance and take necessary actions to
make needed improvements. For example, VA could clarify to VR&E
employees how existing VR&E guidance on contract file maintenance
applies to local contracts.
(2) Require regional offices to report on the efficacy of contracting
training and take necessary actions to make needed improvements. For
example, VA could develop VR&E-specific contracting training.
(3) Improve VA management of VR&E contracting by improving Corporate
WINRS reporting capabilities and its internal controls over contracting
data.
Agency Comments:
We provided a draft of this report to the Department of Veterans
Affairs for review and comment. On March 23, 2007, VA provided written
comments agreeing with our conclusions (See app. III). However, while
VA concurred with our recommendations, we have concerns about the
actions it reported it will take to respond to two of the
recommendations.
In response to our first recommendation, VA said that it will continue
to assess regional office performance through its site visits to 12
regional offices per year. VA also stated that it will reiterate that
its file maintenance guidance applies to both national and local
contracts. While these actions are useful in helping to ensure that
regional offices are following contracting guidance, in our view they
are insufficient. We believe that a systematic, one-time review of all
regional office practices is needed. This review would allow VA to
identify the full extent of compliance with contracting guidance and
determine the needs for additional or clarified guidance.
VA also said that it will continue to provide specific annual VR&E
contract training as well as conduct specialized VR&E contract training
to VR&E regional office staff responsible for managing contracts.
However, our second recommendation was for VA to require regional
offices to report on the efficacy of VA's training and take necessary
actions to make needed improvements. We maintain that contracting
training could benefit from a systematic effort to obtain information
from regional VR&E staff on the efficacy of existing training.
In response to our third recommendation, VA said that it will modify
the VR&E case management system to incorporate additional internal
controls and reporting capabilities. VA stated that this would be done
in an upgrade to Corporate WINRS, scheduled for fiscal year 2008. VA
reported that the upgrade project is currently in VA's internal project
prioritization process.
In addition, VA provided technical comments, which are incorporated as
appropriate. After our briefing of your staff, we made further
technical corrections to the slides based on the comments we received
from VA on a draft of the information (concerning price reductions
requested and obtained by VA regional offices) we sent to you on April
11, 2007. The pricing information was requested by your staff during
the March briefing.
We are sending copies of this report to the Secretary of Veterans
Affairs, relevant congressional committees, and other interested
parities and will make copies available to others upon request. In
addition, this report will be available at no charge on GAO's Web site
at www.gao.gov. If you or your staff have any questions about this
report, please contact me on 202-512-7215 or fantoned@gao.gov. Contact
points for our Offices of Congressional Relations and Public Affairs
may be found on the last page of this report. Brett S. Fallavollita
(Assistant Director), Greg Whitney (Analyst-in-Charge), Irene J.
Barnett (Senior Analyst), Avrum Ashery, Jessica Botsford, Irene Chu,
Jennifer Lutzy McDonald, Walter Vance, and Charles Willson also made
significant contributions to this report.
Sincerely yours,
Signed by:
Denise M. Fantone:
Acting Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Briefing Slides:
VA Vocational Rehabilitation and Employment: Service Contract
Management Is Improving, but Challenges Remain:
Briefing for the Staff of the Subcommittee on Economic Opportunity,
Committee on Veterans' Affairs House of Representatives:
March 29, 2007:
Objectives:
The House Subcommittee on Economic Opportunity, Committee on Veterans'
Affairs, asked that we conduct this study. We answered the following
questions:
1. What progress has the Department of Veterans Affairs (VA) made in
implementing selected recommendations on contracting for Vocational
Rehabilitation and Employment (VR&E) services made by the VR&E Task
Force and the VA Inspector General?
2. What are VA's key challenges in improving its management of VR&E
service contracting?
Key Findings:
VA Reports Progress in Implementing Recommendations on VR&E Service
Contracting, but Some Key Recommendations Are Not Yet Implemented:
Guidance Application, Training, Communication, and Management Data Are
Key Challenges to Improving VA's Management of VR&E Service
Contracting:
Scope and Methodology:
To Address Our Research Objectives, We Took Several Approaches:
Focused on contracting-related recommendations in the VR&E Task Force
report (March 2004) and the VA Inspector General report on VR&E
contracting (February 2005). Specifically, we focused on
recommendations related to:
* national contracts revise scope and award new contracts;
* human capital issues related to contracting increase regional office
contracting expertise,
* regional office internal controls over contracting activities-improve
documentation of contracting actions and controls over payments to
contractors, and:
* contracting data enhance the usability of VR&E's management data
system for internal control and financial management.
Interviewed VA officials on the implementation status of the VR&E Task
Force and VA Inspector General contracting-related recommendations.
Analyzed data on contracted services from VR&E's Corporate WINRS data
system to identify the types of services and the amounts spent on
contracts.
Conducted case study reviews of the Boston, Denver, Houston, and St.
Petersburg regional offices, which were selected to provide diversity
in geography, veteran workload, and types of contracts and
expenditures. At each office, we interviewed VR&E officials, obtained
contracting data, and reviewed national and local contract files. We
also interviewed Waco regional office VR&E officials because, like
Houston, Waco was a pilot for national contracts.
Reviewed contract files maintained by VA's Office of Acquisition and
Material Management for the national contracts available to our case
study sites, to calculate the ranges of prices allowed.
Case Study Sites (Fiscal Year 2006 Data):
[See PDF for image]
Source: GAO analysis.
[End of figure]
Data Reliability:
We interviewed officials about the completeness and accuracy of
contracting data and reviewed existing documentation and VA's internal
evaluation of its data system.
We compared the Corporate WINRS contracting data we obtained from VA
headquarters to data we obtained from the four regional offices.
We found the data to be sufficiently reliable for our purposes, with
some exceptions as discussed under Finding 2.
Our work was conducted from March 2006 to February 2007 in accordance
with generally accepted government auditing standards.
Background:
VR&E Provides Services to Veterans with Disabilities:
To assist veterans with service-connected disabilities obtain suitable
employment and achieve maximum independence in daily living, services
such as vocational counseling and job training services are generally
provided by VR&E counselors at VA's 57 regional offices.
Contracts are used when:
* The demand for VR&E services exceeds a regional office's capacity to
provide the services in-house.
* Specific services cannot be provided by VR&E staff.
* Veterans living far from regional office locations cannot be
reasonably served by regional office VR&E counselors.
VA Awarded National Service Contracts under a National Acquisition
Strategy (NAS):
For fiscal year 2003, VA awarded 241 contracts for VR&E services under
a National Acquisition Strategy. The objective of this strategy was to
standardize the provision of services and procurement strategies across
VR&E offices. The contracts awarded under the National Acquisition
Strategy were fixed price, indefinite delivery, indefinite quantity
contracts.
* Each contract was awarded for a base year (fiscal year 2003) and four
1-year options, with fiscal year 2007 being the last option year.
* A total of 165 national contracts remain available to provide
services in fiscal year 2007.
Although negotiated and awarded nationally, each contract only applies
to the particular regional offices for which contractor proposals were
accepted and awarded.
Contracting Officers in the Regional Offices Can Negotiate Local
Service Contracts:
Regional office Contracting Officers can negotiate local contracts when
services are not available through a national contract.
* Regional office VR&E Contracting Officers are responsible for
negotiating the terms of local contracts, including services and
prices.
* Contracting Officers hold warrants allowing them to negotiate
contracts for specific amounts (to a maximum of $100,000).
* Contract Officer's Technical Representatives, often VR&E counselors
themselves, assist in managing contracts.
Different Types of Services Are Available through National and Local
VR&E Contracts:
[See PDF for image]
Source: GAO analysis.
[End of figure]
The Contracting Process:
[See PDF for image]
Source: GAO analysis.
[End of figure]
Overview of Finding 1:
VA Reports Progress in Implementing Recommendations on VR&E Service
Contracting, but Some Key Recommendations Are Not Yet Implemented:
Progress has been reported:
* VA regional offices negotiated lower prices under existing national
contracts.
* VA has taken steps to increase regional office VR&E staff contracting
expertise.
* VA has taken steps to develop additional regional office internal
control policies and procedures for contracting activities.
Action remains to be taken:
* VA's efforts to address issues with contracting data are on hold.
* VA has not yet awarded new national contracts.
Objective 1: Status of Recommendations:
VR&E Task Force and VA Inspector General Recommendations:
[See PDF for image]
Source: GAO analysis.
[End of figure]
Objective 1: National Contracts Recommendation Status:
VA Regional Offices Negotiated Lower Prices under Existing National
Contracts:
VA's Inspector General noted that VA did not conduct market research
before awarding national contracts in 2002, and was at risk of paying
excessive prices.
* Officials at the three regional offices we visited that use national
contracts said that some contractors' original prices were too high,
based on previous experience contracting for comparable services.
* These offices negotiated price reductions for individual services
provided by 8 of their 20 national contracts. Reductions under these
contracts ranged from less than 5 percent to 81 percent of the original
individual service price. For example, one regional office negotiated a
reduction from $395 to $76 (81 percent) for an individual case
management service.
Objective 1: Human Capital Recommendation Status:
VA Has Taken Steps to Increase Regional Office VR&E Staff Contracting
Expertise:
In an effort to increase contracting expertise, VA's goal is to have at
least two Contracting Officers and two Contracting Officer Technical
Representatives (COTR) at each regional office by the end of fiscal
year 2007.
At the end of fiscal year 2006, VA reported having at least one
Contracting Officer and one COTR at each regional office.
As of February 2007, VA reported that it has hired VR&E contracting
specialists for 11 of its 57 regional offices and warranted them as
Contracting Officers.
VA's proposed fiscal year 2008 budget includes a request for increased
funding to hire more contract specialists.
VA has established contracting training requirements for regional VR&E
staff.
* VA reports tracking the completion of training requirements by
regional office staff in fiscal year 2007.
Objective 1: Internal Controls Recommendation Status:
VA Has Taken Steps to Develop Additional Regional Office Internal
Control Policies and Procedures for Contracting Activities:
In September 2005, VA issued guidance on documentation that must be
maintained in contract files. For example, when a regional office uses
a higher-priced contractor over others providing the same service, it
must document its reasons, which may include better contractor
performance or greater capacity to provide services in a timely manner.
VA officials told us that, as part of VA's periodic quality assurance
reviews, they now track how contract files are maintained by reviewing
all contract files during regional office site visits to ensure that
the files are being maintained in accordance with VA policy and Federal
Acquisition Regulations.
VA assembled a Business Process Reengineering team to study how to best
improve controls over VR&E payments, including payments to contractors.
As part of this effort, VA is considering consolidating payment
processing from all regional offices into fewer regional offices.
Objective 1: Contracting Data Recommendation Status:
VA Efforts to Address Issues with Contracting Data Are On Hold:
The VR&E Task Force recommended that VA improve the capability of
Corporate WINRS to provide data for program management.
In response to the Task Force's recommendations, VA plans to develop a
new version of Corporate WINRS with improved reporting capabilities,
including reporting of contracting data. At the time of our review,
this effort was on hold, as VA has not requested funding to upgrade the
system in its fiscal year 2007 or 2008 budgets.
Objective 1: Awarding New National Contracts Recommendation Status:
VA Has Not Yet Awarded New National Contracts:
VA did not meet its own deadline to award new contracts by October 1,
2006, so it exercised the fourth and final option year for the current
national contracts, through fiscal year 2007. VA expects to award new
contracts by August 31, 2007 for fiscal year 2008 (10/1/07). If VA
cannot award new contracts by then, it has the option to extend the
current national contracts through March 2008.
VA completed market research for the new national contracts.
VA organized its regional offices into 26 sub-areas for the purpose of
awarding new national contracts. In order to be competitive,
contractors must demonstrate the capacity to provide services to all
regional offices in a given sub-area.
Overview of Finding 2:
Guidance Application, Training, Communication, and Management Data Are
Key Challenges to Improving VA's Management of VR&E Service
Contracting:
Regional offices are not fully applying VA's contracting guidance.
Current training does not adequately prepare contracting officers to
manage contracts.
Regional offices report delays in communication, but VA headquarters is
taking actions to address these concerns.
In addition to having inadequate reporting capabilities, inadequate
internal controls over contracting data raise reliability concerns.
Objective 2: Contracting Guidance:
Regional Offices Are Not Fully Applying VA's Contracting Guidance:
VA quality assurance reviews of 10 regional offices in fiscal year 2006
found that some regional offices were not fully implementing VA's
contracting guidance. For example, some regional offices were not
maintaining their contract files in accordance with VA's contract file
maintenance guidance or requiring staff with contractor oversight
responsibilities to complete contracting training.
During our site visits to four regional offices, we found that no
offices had implemented all aspects of the contract file maintenance
guidance.
Some regional offices said they were not sure under which circumstances
the guidance applies to local contracts.
Objective 2: Training:
Current Training Does Not Adequately Prepare Contracting Officers to
Manage Contracts:
Required contracting training does not provide local officials with an
adequate level of contracting expertise to manage contracts.
* Contracting Officers at three of the five sites we contacted said
that VA's training has not prepared them to adequately manage
contracts.
* A few Contracting Officers do not feel adequately prepared to handle
larger, more complex contracts that must be competed among several
vendors. Consequently, they are purchasing services through smaller,
noncompetitive contracts.
Objective 2: Communication:
Regional Offices Report Delays in Communication, But VA Headquarters Is
Taking Actions to Address These Concerns:
Regional office officials told us that VR&E headquarters is not always
timely in responding to questions or requests to clarify contracting-
related guidance, resulting in service delays to veterans and misuse of
inactive contracts, among other problems.
VR&E headquarters officials said that they are aware of these concerns,
and VA is taking actions to address them.
* VR&E headquarters hired an additional contracting specialist who will
act as the primary liaison to regional offices.
* VA established an electronic mailbox for all regional office
contracting questions.
* VA will continue allocating time during regular VR&E Officer call-in
sessions for contract-related questions.
Objective 2: Management Data:
VA's Management of VR&E Contracting Is Limited by Inadequate Reporting
Capabilities:
Corporate WINRS was originally designed to capture case management
information on veterans. As the Task Force noted, the system is now
used to collect program management data as well. Currently, Corporate
WINRS can:
* provide data for a range of automated reports to track certain
activities such as regional offices' caseloads, the case status of
veterans by counselor, and contractor timeliness.
However, automated reports that would facilitate contract management
have not yet been fully developed. Currently, Corporate WINRS cannot:
* readily track contracting activities such as contractor costs by
regional office and:
* readily and reliably separate spending on national versus local
contracts.
Inadequate Internal Controls over Contracting Data Raise Reliability
Concerns:
VR&E officials at all five regional offices we contacted told us that
Corporate WINRS lacks adequate internal controls, a condition that
could lead to errors, including:
* obligating funds to expired contracts and:
* obligating funds from an incorrect funding source.
VA officials recognize that current restrictions in Corporate WINRS
affect the integrity of any process used to measure the exact payments
or pending obligations on any contract.
When we compared contracting data provided by regional offices we
visited to data provided by VA, we found some discrepancies-potentially
affecting data reliability-in the:
* number of contracts used,
* type of contract used (national versus local), and:
* amount paid to contractors.
Conclusions:
Contracting is a valuable tool for the VR&E program. A well managed
contracting system can help VR&E provide services to veterans by:
* gathering the information needed to make entitlement decisions and
evaluate veterans' employability,
* supplementing services provided by VA staff, and;
* obtaining services at the best value to the government.
Because several regional offices felt that prices were too high under
the current national contracts, they negotiated lower prices. Because
VA has conducted market research in preparation for issuing its new
national contracts, which it did not do last time, VA has positioned
itself to be at less risk of overpaying this time around.
VA's oversight and communication with regional offices is a work in
progress, but in the absence of continued improvement, regional offices
may be putting VA at risk for overpaying local contractors.
Given their current level of training, regional VR&E officials may
continue to use noncompetitive contracts even when they are not
necessarily appropriate. Negotiating competitive contracts requires
greater contracting expertise, but may also provide better prices and
outcomes.
Gains from improved contract management will be minimized without an
information system to provide usable, reliable data on contract use. VA
plans to improve the reporting capabilities of Corporate WINRS, but
without improvements to internal controls and data reliability, reports
produced by the system will not be as useful as they could be as
management tools.
Recommendations for Executive Action:
To help improve VA's management of VR&E service contracting, both at
the headquarters and regional office levels, we recommend that the
Secretary of Veterans Affairs direct the Under Secretary for Benefits
to:
Conduct a management review to assess how regional offices are
implementing contracting guidance and take necessary actions to make
needed improvements. For example, VA could clarify to VR&E employees
how existing VR&E guidance on contract file maintenance applies to
local contracts.
Require regional offices to report on the efficacy of contracting
training and take necessary actions to make needed improvements. For
example, VA could develop VR&E-specific contracting training.
Improve VA management of VR&E contracting by improving Corporate WINRS
reporting capabilities and its internal controls over contracting data.
[End of section]
Appendix II: Objectives, Scope, and Methodology:
We examined (1) the progress VA has made in implementing selected
recommendations on contracting for VR&E services made by the VR&E Task
Force and VA Inspector General reports, and (2) the key challenges in
improving its management of VR&E service contracting. To address these
issues, we identified contracting-related recommendations from the 2004
VR&E Task Force and 2005 VA Inspector General reports, interviewed
officials from VA headquarters, conducted case studies of four VA
regional offices, analyzed VR&E contract-related management data, and
reviewed contract files at VA's Office of Acquisition and Materiel
Management (OA&MM). We conducted our work from March 2006 to February
2007 in accordance with generally accepted government auditing
standards.
To identify contract-related recommendations from the 2004 VR&E Task
Force and 2005 VA Inspector General reports, we examined all
recommendations from both reports, selecting recommendations related to
(1) national contracting, (2) human capital issues related to
contracting activities, (3) internal controls over contracting
activities at the regional office level, and (4) data on contracting.
Overall, we identified 10 recommendations to include in our review
(table 1). To obtain information on the status of contract-related
recommendations and to determine the changes VA has made to its VR&E
contracting policies and procedures in response to these
recommendations, we interviewed VA officials, including officials from
the VR&E Service. Additionally, we obtained updated status reports on
VR&E Task Force and VA Inspector General recommendations from VA
headquarters.
Table 1. VR&E Task Force and VA Inspector General Contracting-Related
Recommendations:
Area of focus: National contracts;
VR&E Task Force recommendations: Revise the scope of current national
contracts;
VA OIG recommendations: Revise the scope of and compete new contracts.
Area of focus: Human capital issues;
VR&E Task Force recommendations: (1) Create and staff a new position
for contract specialists at regional offices and implement a training
program for these staff;
(2) Develop a contract training program for all VR&E staff with direct
responsibility for contract oversight;
VA OIG recommendations: Provide contracting staff with appropriate
training and contract warrant authority.
Area of focus: Regional office internal controls over contracting
activities;
VR&E Task Force recommendations: Enhance VA's capacity to manage
contracts;
VA OIG recommendations: (1) Require that regional offices maintain
documentation related to the following: contracts used by the office,
instances when one contractor is used instead of another despite the
fact that a higher price is being paid for services, and instances when
actions are taken to address identified quality assurance review
deficiencies;
(2) Implement adequate contract payment internal controls.
Area of focus: Contracting data;
VR&E Task Force recommendations: (1) Enhance the usability of Corporate
WINRS for internal control and financial management purposes and to
manage and monitor all contractor services;
(2) Elevate funding priority of Corporate WINRS and accelerate the
development and adoption of financial and process enhancements;
VA OIG recommendations: [Empty].
Source: GAO analysis.
[End of table]
To evaluate VA's progress in implementing the recommendations made by
the VR&E Task Force and the VA Inspector General and to identify key
challenges in doing so, we visited four regional offices representing
each of VBA's geographic areas. Our case study sites were Boston,
Denver, St. Petersburg, and Houston. In addition to geographic
diversity, sites were selected that used different types of contracts
(national and/or local) and that represented a range of regional office
size and contracting expenditures among VA's 57 regional offices (table
2). We also contacted VBA's Waco regional office. Waco, like Houston,
piloted VA's strategy for purchasing VR&E services through national
contracts, although neither regional office had any national contracts
available to it for use during the time of our review.
Table 2. Case Study Site Selection Criteria, Fiscal Year 2006:
Case study site: Boston;
VBA area: Eastern;
Number of veterans served: 1,011;
Payments for national contracts: $148,349;
Number of national contracts: 3;
Payments for local contracts: $17,198;
Number of local contracts: 18.
Case study site: Denver;
VBA area: Western;
Number of veterans served: 2,825;
Payments for national contracts: $592,253;
Number of national contracts: 8;
Payments for local contracts: $504,115;
Number of local contracts: 21.
Case study site: St. Petersburg;
VBA area: Southern;
Number of veterans served: 4,977;
Payments for national contracts: $1,394,212;
Number of national contracts: 7;
Payments for local contracts: $128,290;
Number of local contracts: 114.
Case study site: Houston;
VBA area: Central;
Number of veterans served: 4,921;
Payments for national contracts: [A];
Number of national contracts: [A];
Payments for local contracts: $626,731;
Number of local contracts: 64.
Source: Corporate WINRS and data provided by regional offices.
[A] No national contracts were available to the Houston VA regional
office.
[End of table]
At each of the case study sites, we interviewed VR&E officials involved
in the management and oversight of contracted services, discussing the
use of national and local contracts, implementation of VA's contracting
policies and procedures, and challenges they experienced. We also
obtained regional office data on the number of contracts used and
payments made for contracted services during fiscal year 2006. We
assessed the implementation of VA's guidance on contracting by
reviewing national and local contract files for contracts that were
still being used after January 2006, in order to allow regional offices
adequate time to implement VA's policy guidance that went into effect
in September 2005. To determine the number of available national
contracts at each case study site using national contracts in fiscal
year 2006, we reviewed data from VA's OA&MM and interviewed OA&MM
officials. To determine the maximum allowable price for services, we
reviewed contract files for national contracts available to the Boston,
Denver, and St. Petersburg regional offices at VA's OA&MM.
Review of VA's Management Data on Contracting:
To determine the types of services purchased through VR&E contracts and
the amount spent on contracted services nationwide, we analyzed fiscal
year 2006 data on contracted services from VA's Corporate WINRS case
management data system. The information we reviewed included data on
national and local contract usage, services provided through contracts,
and payments for contracted services.
To assess the reliability of Corporate WINRS contracting data, we
interviewed knowledgeable VA officials and compared contract-related
data contained in Corporate WINRS to local data we collected from the
four case study sites. We also reviewed existing documentation for the
data system, including (1) the Corporate WINRS Users Manual, (2) the
VR&E Task Force and VA Inspector General reports, and (3) an internal
evaluation of the data system conducted by VA's Office of Business
Oversight, Systems Quality Assurance Service. While we identified
accuracy limitations with Corporate WINRS contracting data--discussed
in the slide entitled "Objective 2: Management Data - Inadequate
Internal Controls Over Contracting Data Raise Reliability Concerns" in
appendix I (page 30)--we found that generally VA's Corporate WINRS data
on contracting were sufficiently reliable for the purposes of our
study. We determined during our reliability assessment of the data that
the data were reliable enough to use to report on national trends.
[End of section]
Appendix III: Comments from the Department of Veterans Affairs:
The Deputy Secretary Of Veterans Affairs:
Washington:
March 23, 2007:
Ms. Denise M. Fantone:
Director:
Education, Workforce, and Income Security Team:
U. S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Fantone:
The Department of Veterans Affairs (VA) has reviewed your draft report,
VA Vocational Rehabilitation and Employment. Service Contract
Management Is Improving but Challenges Remain (GAO-07-568R) and agrees
with your conclusions and concurs with your recommendations.
To strengthen its management of Vocational, Rehabilitation, and
Employment (VR&E) contracting, VA will:
* Emphasize contract maintenance guidance and continue to assess
regional office performance through oversight visits;
* Continue to provide specific annual VR&E contract training as well as
conduct specialized VR&E contract training to VR&E regional office
staff responsible for managing contracts; and:
* Modify the VR&E case management system to incorporate additional
internal controls and reporting capabilities.
The enclosure addresses your recommendations in more detail and
provides suggested rewording for technical clarity. VA appreciates the
opportunity to comment on your draft report.
Sincerely yours,
Signed by:
Gordon H. Mansfield:
Enclosure:
Department of Veterans Affairs (VA) Comments to Government
Accountability Office (GAO) Draft report VA Vocational Rehabilitation
and Employment: Service Contract Management Is Improving but Challenges
Remain (GAO-07-568R):
To help improve VA's management of VR&E service contracting, both at
the headquarters and regional office levels, we recommend that the
Secretary of Veterans Affairs direct the Under Secretary for Benefits
to:
* Conduct a management review to assess how regional offices are
implementing contracting guidance and take necessary actions to make
needed improvements. For example, VA could clarify to VR&E employees
how existing VR&E guidance on contract file maintenance applies to
local contracts.
Concur - The Veterans Benefits Administration (VBA) will reiterate to
Vocational Rehabilitation and Employment (VR&E) field employees that
the guidance in VR&E Letter 28-05-16, "VR&E Contract File Maintenance,"
and the modified VR&E Site Visit Protocol (which is outlined in VR&E's
manual) is applicable to both National Acquisition Strategy and local
contracts. As a management review tool, VR&E Service uses periodic site
visits of the VBA Regional Office VR&E Divisions to assess regional
offices program management to include oversight of contracting. VR&E
Service will continue to conduct approximately 12 of these visits each
year. Both the VR&E Letter and the Site Visit Protocol are available
for review by VARO staff on the VR&E Intranet website. At the beginning
of fiscal year (FY) 2007, VA also published on the VR&E Intranet Web
site a list of all the action items and commendable items found during
the FY 2006 Site Visits to include contracting issues.
* Require regional offices to report on the efficacy of contracting
training and take necessary actions to make needed improvements. For
example, VA could develop VR&E specific contracting training.
Concur - VA will continue to provide VR&E specific contracting training
annually at the VR&E Management Training Conference as well as conduct
specialized VR&E Contract Training to VR&E regional office staff
responsible for managing contracts.
* Improve VA management of VR&E contracting by improving Corporate
WINRS reporting capabilities and its internal controls over contracting
data.
Concur - VA will make modifications to VR&E's case management system
"Corporate WINRS" that will incorporate additional internal controls
and reporting capabilities on contract management. These additional
internal controls and reporting capabilities will be installed during
the CWINRS Upgrade, scheduled for FY 2008. This upgrade is currently
undergoing the internal VA project prioritization process.
[End of section]
Related GAO Products:
Contract Management: Further Action Needed to Improve Veterans Affairs
Acquisition Function. GAO-06-144. Washington, D.C.: October 19, 2005.
Framework for Assessing the Acquisition Function at Federal Agencies.
GAO-05-218G. Washington, D.C.: September 2005.
Vocational Rehabilitation: VA Has Opportunities to Improve Services,
but Faces Significant Challenges. GAO-05-572T. Washington, D.C.: April
20, 2005.
Vocational Rehabilitation: More VA and DOD Collaboration Needed to
Expedite Services for Seriously Injured Servicemembers. GAO-05-167.
Washington, D.C.: January 14, 2005.
VA Vocational Rehabilitation and Employment Program: GAO Comments on
Key Task Force Findings and Recommendations. GAO-04-853. Washington,
D.C.: June 15, 2004.
(130562):
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