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Whistleblower Accuses VA of Improperly Spending as Much as $6 Billion a Year

May 19, 2015

Officials from the Department of Veterans Affairs (VA) did not have good answers at a congressional hearing looking into improper use of federal charge cards.

Last week's hearing was called because of a whistleblower's letter that said the VA illegally spent up to $6 billion a year using purchase cards without proper contracts. The letter asserted the practice had been going on for years, KUSA-TV (Denver) reports.

Representatives were reportedly incensed over allegations of widespread use of purchase cards in violation of federal regulations and the members of Congress faulted high-level VA officials for failing to take long-standing complaints seriously, the Washington Post reports.

The allegations of improper charge card spending include exceeding authorized purchase limits, inadequate financial controls to prohibit duplicative or split payments, and inadequate recording or reporting of financial information. "By using the card, the purchasers simply ignore that process [and] are able to liquidate the unauthorized commitment," said whistleblower Jan Frye, VA Deputy Assistant Secretary for Acquisition and Logistics. "No pain, no stain. Nobody ever knows." Frye had sent a 35-page memo to VA Secretary Robert McDonald in March accusing agency leaders of making a "mockery" of federal acquisition laws and spending at least $6 billion a year in violation of contracting rules. Some of the improper spending was done by employees who were not authorized to use the cards, according to the Post.

In a statement to the committee, Linda A. Halliday, Assistant Inspector General, VA Office of Inspector General, said the cards "provide a purchase and payment tool that implements simplified acquisition procedures, which creates a way for agencies to Federal acquisition processes by providing a low-cost, efficient vehicle for obtaining goods and services directly from vendors." According to Halliday, in fiscal year 2014, government-wide purchase card spending totaled $17.1 billion by approximately 265,000 cardholders.

According to Frye, VA employees were using the charge cards, known as purchase cards, to buy pharmaceuticals or medical devices such as prosthetics without written contracts or competitive bidding. Frye said the card usage opened the process up to fraud, waste and abuse, KUSA reports. Edward Murray, the VA's Acting Assistant Secretary for Management, said he was made aware of the allegations hours before the hearing at the House Veterans Affairs Subcommittee on Oversight and Investigations. When asked whether he thought the purchase card practices were wrong, Murray said, "A lot of different parts of the organization have looked at this issue, and there are different views on this issue." Rep. Mike Coffman, subcommittee chairman, said to Murray at the hearing, "You are doing absolutely nothing to make a difference on this issue, and I am very disappointed in your testimony today," KUSA-TV reports.

Hours after the hearing, McDonald issued a written statement acknowledging Frye's letter, which Frye said had previously received no response, according to the Post.

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