DEPARTMENT OF VETERANS AFFAIRS Under Secretary for Health

Washington DC 20420

Ms. Catherine McMullen Chief, Disclosure Unit U.S. Office of Special Counsel 1730 M Street, NW, Suite 300 Washington, DC 20036

RE: OSC File No. Dl-14-4320

Dear Ms. McMullen:

June 2, 2017

I am responding to your request for supplemental information on the Orlando Department of Veterans Affairs (VA) Medical Center, Orlando, Florida. The enclosed supplemental report provides information that was obtained from interviews conducted during a site visit on April 12, 2017, and phone interviews conducted on April 26, 2017.

During the supplemental'investigation, the VA team did not substantiate from interviewing six additional staff that Medical Center management was directing employees to violate the Federal Acquisition Regulations and VA policy through the misuse of VA-issued government purchase cards. The whistleblower did not provide any examples of purchase card orders where he or other employees were verbally instructed to "price split." VA Financial Policy, Volume XVI, Chapter 01, Government Micro-Purchase Card, dated December 2014, defines a "splitting" as "[a] prohibited tactic used to avoid a single purchase threshold for micro-purchase cards." In addition, the witnesses interviewed did not provide any written documentation to substantiate the allegations. The witnesses stated during their interviews that they were not verbally ordered to "price split" by Medical Center Logistics management or to circumvent micro­purchase thresholds.

Therefore, the Agency has no further findings or recommendations regarding this case. Please let me know if I can be of further assistance.

Enclosure

Sincerely,

(\ ,~1 (, ! VJ,-~---r ._Q.... .....,._ __

Poonam Alaigh, M.D. Acting

Background

Department of Veterans Affairs (VA) · Supplemental Report

to the Office of Special Counsel

OSC File Number 01-14-4320

Orlando Veterans Affairs Medical Center Orlando, Florida

Report Date: May 17, 2017

At the direction of the Secretary of VA, the Under Secretary for Health appointed an Investigating Officer to identify and coordinate a team to investigate complaints lodged with the Office of Special Counsel (OSC) by , an Inventory Management Specialist (hereafter, the whistleblower} for the Orlando VA Medical Center (hereafter, the Medical 9enter). The whistleblower alleged that Medical Center management is directing employees to violate the Federal Acquisition Regulations (FAR) and VA policy through the misuse of VA-issued government purchase cards, and those employees engaged in conduct that may constitute a violation of law, rule or regulation; and gross mismanagement. The VA team conducted the initial si'te visit to the Medical Center on May 10-11, 2016 and filed its final report on October 11, 2016.

On March 31, 2017, OSC provided the names of six additional Medical Center staff, which could provide further details concerning the whistleblower's allegations. OSC requested that VA provide a supplemental report of our findings from these interviews. The team conducted a follow-up site visit to investigate the same allegation, that "the Medical Center management is directing employees of the Generic Inventory Package (GIP) System to misuse government purchase cards by engaging in "price splitting" to circumvent the formal procurement process, in violation of the FAR and VA directives." (VA Financial Policy, Vol. XVI, Chp. 01, Government Micro-Purchase Card, dated December 2014, defines a "splitting" as "[a] prohibited tactic used to avoid a single purchase threshold for micro~purchase cards.").

On April 12, 2017, the same VA team, comprised of employees of the Procurement & Logistics Office (P&LO), conducted a follow-up site visit to the Medical Center. Team members are: ·, Veterans Health Administration (VHA) Deputy Chief Logistics Officer, . , Director, VHA Service Center, Human Resources (HR), , VHA National Purchase Card Manager,

, VHA Data Systems Program Manager, and , Clinical Program Manager, OMI (Technical Consultant). We interviewed the whistleblower and five of the six named Medical Center staff:·

. Supply Technician , Supply Technician'

, Supply Technician , Inventory Management Specialist

, Supply Technician , Supply Technician

Follow-up telephone interviews were conducted on April 26, 2017, with:

, Supply Technician . , Supply Technician , Chief Logistics Officer

This supplemental report provides an update of the status of the Medical Center, Veterans Integrated Service Network (VISN), VHA and VA recommendations made from the May 10-11, 2016, site visit. It includes interviews conducted of Medical Center staff during the April 12, 2017, site visit and folfow-up telephone interviews conducted on April 26, 2017.

Recommendations to Medical Center

Recommendation: Develop a local standard operating procedure (SOP) that conforms to national policy.

Resolution: The Chief Logistic~ Officer (CLO}·worked with Logistics supervisors to develop a SOP that conforms to national policy. The CLO implemented the new SOP and reviewed it with staff on May 11, 201'7. Action Closed.

Recommendation: Evaluate previ:ous Medical Center expenditures and identify any future requirements for recurring goods and services (open market) not already on a national, regional, or local contract, and then submit detailed requisitions when the aggregated amount for the funding period will exceed either the micro-purchase threshold or the simplified acquisition threshold to the Veterans Integrated Service Network (VISN) 8, Network Con,tracting Office (NCO}.

Resoiution: Per Medical Center SOP #9, dated January 3, 2017, the Inventory Management Specialist is responsible for notifying their direct supervisor in writing of any high cosUhigh turnover items that might exceed the micro-purchase threshold or the simplified acquisition threshold to maintain normal stock levels.

The Supervisory Inventory Management (IM) Specialist will evaluate items submitted for review and identify any additional future requirements for recurring items not available on the MSPV formulary or not already on contract, and then ensure appropriate items are submitted on a detailed 2237 requisition to NCO.

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The Supervisory IM Specialist will perform a quarterly review of all Medical Center Logistics purchase card orders to ensure open market purchases for the same item(s) are not being purchased repetitively, and will also perform a review of pending acquisition plans submitted to Contracting, and follow-up as necessary. Action Closed.

Recommendation to VISN

Recommendation: Work with the Medical Center to identify the proper contract type to meet its requirement for identified repetitive orders that will exceed either the micro­purchase threshold or the simplified acquisition threshold, i.e., Indefinite Delivery Contract, Blanket Purchase Agreement against Federal Supply Schedule contract, etc.

Resolution: The facility CLO will coordinate with NCO for additional guidance should the contract type (i.e., IDIQ, BPA, etc.) come into question. . .

Action Closed.

Recommendation to the Veterans Health Administration (VHA)

Recommendation: Update VHA Handbook 1730.01, Use and Management of the Government Purchase Card Program.

Resolution: VHA leadership reviewed Handbook 1730 and determined that there is no guidance in the Handbook necessary to transfer to the VHA Procurement Manual.

VHA Directive and Handbook 1730.01, Use and Management of the Government Purchase Card Program were officially rescinded by the Acting Under Secretary for Health on April 04, 2017. VHA Notice 2017-25. Action Closed.

Recommendations to VA

Recommendation: Update VA Financial Policy Volume XVI Chapter 01, Government Purchase Card Program.

Resolution: VA Financial Policy Volume XVI Chapter 01 was revised and published in January 2017. Action Closed.

Findings, Conclusions, Recommendations from Follow-up site visit

Findings:

The team interviewed additional witnesses face to face during the site visit on April 12, 2017, and conducted telephone interviews on April 26, 2017. The whistleblower submitted documents during the interview on April 12, 2017, to include

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copies of: purchase card orders, clinical product review requests and quotations for new items, a purchase order, item inventory lists, an Excel spreadsheet and a copy of an email. The documents provided by the whistleblower to the VA team in April 2017, from 2013, 2014 and 2015 contain information that is the same as the previously submitted documents. These documents and the witness statements provide the basis for our conclusions below.

Conclusions:

The VA Team concludes, based on interviewing the six-additional staff, that Medical Center management rs not directing employees to violate the FAR and VA policy through the misuse of VA-issued government purchase cards. The team reviewed all additional documents submitted by the whistleblower and other staff, and found that the content of this document~tion did not reveal any new information to substantiate the allegations of fraud, waste and abuse or price splitting. The whistleblower did not provide any examples of purchase card orders where he or other employees were verbally instructed to "price split."

In addition, the witnesses interviewed did not provide any written documentation to substantiate the allegations and' stated during their interviews that they were not verbally ordered to "price split" by Medical Center Logistics management or to circumvent micro-purchase thresholds.

Recommendations:

None

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