Review of Five Contracts Awarded by the Veterans Administration at the End of Fiscal Year 1979 for ADP Services and/or Software

GAO reviewed five of seven automatic data processing procurement contracts which the Office of Management and Budget (OMB) had recommended that the Veterans Administration (VA) terminate. GAO assessed OMB charges concerning procurement irregularities and VA responses to these charges. GAO also identified the VA officials responsible for any confirmed irregularities, citing the contracting officer as the responsible official, as well as other officials who were directly involved. As the Administrator of Veterans Affairs had approved several of the projects leading to these yearend contracts, the only options available to the contracting officers were to refuse to process the contracts or take shortcuts. They took various shortcuts. For one or more of the contracts, GAO found VA did not conduct cost or price analysis; did not conduct preaward price negotiations even when there was only one responsive bidder; substituted a postaward audit clause for the conduct of negotiations, a practice precluded by Federal procurement regulations; and awarded a contract without proper authority from the General Services Administration. Other questionable practices involved: a lack of a determination of why only one contractor submitted a proposal for a pharmacy application; an unclear clause in two requests for proposals; and the Small Business Administration not being involved early enough in preaward discussions on one contract. GAO confirmed about half of the OMB charges, and agreed with the VA responses to OMB for the remainder. The VA Office of Inspector General is continuing to investigate OMB observations of favoritism. VA has proposed several corrective actions which should improve and strengthen its procurement practices.