Hearing of the House Committee on Veterans Affairs, Subcommittee on Oversight and Investigations - Acquisition Deficiencies at the U.S. Department of Veterans Affairs

Statement

Statement of The Honorable Cliff Stearns
a Representative in Congress from the State of Florida

Thank you, Mr. Chairman.

I appreciate the opportunity to be here this morning, and I thank the Chairman for holding this important hearing.

Unfortunately, the Department of Veterans Affairs procurement system is broken. And the fact that the procurement process is broken is hardly a secret. Problems stemming from VA's fragmented and decentralized procurement system have been documented for over 10 years, and the VA has openly acknowledged that there are serious deficiencies. These deficiencies have led to hundreds of millions of taxpayer dollars being wasted.

In recognizing that VA needs to improve its procurement structure, a VA Procurement Reform Task Force was created, and in 2002 it issued a report that included 65 recommendations on how the VA could improve the efficiency and effectiveness of its procurement acquisition system. Despite the Task Force recommendations, very few issues with VA's procurement structure have actually been addressed.

Several GAO reports have revealed significant weaknesses with the VA procurement process, and poor financial management oversight has been reported as a major material weakness since fiscal year 2005.

The Inspector General of the VA has estimated that in 2004 alone, VA could have saved $1.4 billion over five years if the VA had improved procurement practices at its medical centers. Unfortunately though, the VA does not have its 152 hospitals and over a thousand outpatient clinics utilize a procurement system that ensures the VA is getting the best available price. This has resulted in $41 million over a period of five years being wasted. Overall, the VA IG has identified millions of dollars that could be put to better use if the VA were to reform its procurement process. This is a blatant abuse of taxpayer dollars and is particularly troubling given the current state of our economy and our rising national debt.

Even more troubling is the fraud and abuse that is occurring as a result of VA's lack of oversight over companies claiming Service Disabled Veteran Owned Small Business (SDVOB) status. Due to VA's lack of oversight -- a direct result of its fragmented acquisition structure -- ineligible firms that have falsely claimed SDVOB status have been able to receive approximately $100 million of sole-source or set-aside SDVOB contracts. These companies are wrongfully taking job opportunities away from our nation's service disabled veteran owned businesses and are getting away with it due to the fact there is no requirement to terminate these contracts even after they are found to be ineligible and the firms are allowed to self-certify themselves.

Clearly Mr. Chairman, we are facing a major problem at the VA. Billions of dollars are at stake -- these are taxpayer dollars - and the VA Office of Acquisition, Logistics, and Construction is doing a poor job of overseeing acquisition contracts. Additionally, small veteran owned businesses are being cheated out of millions in federal contracts.

I look forward to hearing from the VA today on how they plan to reform their procurement process once and for all, and I hope the VA will also provide our Committee with an accurate dollar amount as to how much the VA spends on procurement annually.

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