The Villages Daily Sun

THE VILLAGES — A Pittsburgh VA hospital obligates $141,000 to purchase livers for transplant patients.

Officials claim there was a national contract for the deal and that they received the livers at a standardized price of $21,800; however, they were later unable to provide a copy of that contract.

In fact, inconsistencies surrounding the deal led a Government Accountability Office report to conclude, “We cannot confirm that the procurement was properly authorized.”

This is just one of dozens of revelations detailed in the July report.

The report’s findings are relevant to officials at the North Florida / South Georgia VA station, which services the local tri-county area, because in 2007 it ranked second nationally in a type of spending that the authors consider ripe for abuse.

At issue is a perfectly legal, often used, system that allows the VA to purchase goods or services now, and pay for them later. Called “miscellaneous obligations,” their use has become a staple in VA hospitals across the country.

In 2007, 129 VA stations made slightly more

than 127,000 miscellaneous obligations purchases representing $6.9 billion.

Ranking second, was North Florida / South Georgia with more than 4,000 miscellaneous obligations purchases totaling $14.5 million.

“That is not at all surprising because we are the largest VA in the country,” said Mary-Kay Hollingsworth, a spokeswoman with North Florida / South Georgia.

North Florida / South Georgia serves nearly 125,000 veterans, Hollingsworth said.

The investigation into miscellaneous obligations was spurred by a joint letter sent by Rep. Ginny Brown-Waite, R-Brooksville and Rep. Harry Mitchell, D-Arizona, both members of the Veterans Affairs Committee.

“Yes the congresswoman is very concerned. She is going to use her position on the Oversight and Investigations Committee, where she is the ranking member, to follow up and to make sure that internal controls are followed through with and put in place,” spokesman Charlie Keller said.

The congresswoman wants to, “make sure that there is no more possibility of fraud, waste and abuse and not having instances where employees are signing off themselves on $100,000-plus contracts without competition and without going through traditional contracting rules,” he added.

The authors of the report, the GAO’s Kay Daly and Glenn Slocum, wrote that money used for miscellaneous obligations is liable to, “… fraud and abuse, including government employees converting government assets into their own use without detection.”

Though they admit no evidence of fraud was found in the 42 miscellaneous obligations they reviewed for the report, questions persist.

Why could officials not produce a contract for the liver deal? Where is the nearly $120,000 that remains and is unaccounted for? Are there instances of abuse at North Florida/South Georgia? Because the VA currently has no way of tracking money it routinely distributes for miscellaneous obligations, those questions may never be answered.

And the $141,000 liver deal is just one of the 127,070 miscellaneous obligations used in 2007.

The VA did offer new guidelines to oversee miscellaneous obligations in May. While the changes made improvements, the report said they “did not fully address … design flaws we identified.”

“I would characterize this as putting the organization at risk,” Daly said in an interview.

Miscellaneous obligations are used mostly for two purposes: providing a way to pay for contracted goods and services — such as drugs or medicines — when the quantity or delivery date are undetermined; and to simplify the payment process when veterans receive medical care from a private physician outside the VA system.

For example, it would be cumbersome for the VA to negotiate separate agreements with the thousands of private physicians who treat veterans, so miscellaneous obligations are used as a blanket authorization for medical services provided by non-VA physicians.

Hollingsworth said in the case of North Florida/South Georgia, it is just a matter of volume.

“We have more obligations because of our largest service area and the number of veterans we serve.”

The Veterans Administration does require a review process for all miscellaneous obligations, but that process is marred by gaping holes, according to the report.

“Contracting officers were at times familiar with specific miscellaneous obligations at their facilities, but they had no documented approvals available for review,” the report concluded.

“This is one of the problems we had when we looked at the 42 miscellaneous obligations. We would ask if they had documentation; they never had that,” Daly said.

According to the report, another flaw in VA procedure allows for a single person to perform each of the four functions necessary to obtain a miscellaneous obligation. Overall, Daly and Slocum found that more than 70 percent of the obligations they studied were handled by too few people.

In front of Congress, Daly stressed this point.

“According to … officials, they obtained documents showing that a miscellaneous obligation for $200,000 was requested, approved, and obligated by the same fiscal official, calling into question the adequacy of the segregation of duty controls over miscellaneous obligations,” Daly said in testimony before the House Committee on Veterans Affairs.

Matt Dixon is a reporter with the Daily Sun. He can be reached at 753-1119, ext. 9089, or Matthew.Dixon@thevillagesmedia.com.