The Department of Veterans Affairs often fails to engage in competitive bidding practices, a violation of federal contracting rules which results in the agency spending at least $6 billion per year on overpriced medical care and supplies, according to a VA memo obtained by The Washington Post.
In the 35-page memo addressed to VA Secretary Robert McDonald, Jan Frue, the VA's deputy assistant secretary for acquisition and logistics, accuses other agency officials of "gross mismanagement" and making a "mockery" of federal acquisition laws, which require competitive bidding and proper contracts, according to the Post.
"Doors are swung wide open for fraud, waste and abuse," Frye wrote, describing a culture of "lawlessness and chaos." He adds, "I can state without reservation that VA has and continues to waste millions of dollars by paying excessive prices for goods and services due to breaches of Federal laws."
Frye describes the VA's widespread use of purchase cards to pay for billions of dollars worth of medical supplies without contracts.
One example cited by Frye was the purchase of $1.2 billion worth of prosthetics, bought with the cards over an 18-month period. Such cards are supposed to be used as a convenient way to make purchases of up to $3,000. Anything over that limit must be linked to a properly awarded contract.
For services over $3,000 that the VA is unable to provide itself, the agency is required to identify providers through a competitive bidding process and then establish a contract to make sure the government gets the best value and quality. Contracts also help provide legal protection to veterans who receive poor care or are subjected to medical malpractice, Frye said.
But according to Frye, the VA often fails to engage in competitive bidding and fails to sign contacts. He said the agency has paid at least $5 billion on outside medical care in both 2013 and 2014, noting that it's a violation of federal rules that the VA's general counsel has said since 2009 need to be followed.
Frye says he repeatedly brought his concerns to senior VA officials, but was ignored. He also claims department officials deceived Congress when asked about the agency's questionable practices.
On Thursday, Frye is scheduled to testify before the House Veterans' Affairs Committee about the waste and fraud in the purchase card program.
