VA Whistleblower Accuses Agency of Improper Spending on Federal Charge Cards

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Members of a congressional subcommittee were not happy with testimony last week from senior officials from the Department of Veterans Affairs (VA) at a hearing looking into improper use of federal charge cards.

The hearing was called because of a whistleblower’s 35-page letter that claimed the VA illegally spent up to $6 billion a year through improper use of purchase cards. According to the letter writer, Jan Frye, VA Deputy Assistant Secretary for Acquisition and Logistics, the practice had been going on for years, KUSA-TV (Denver) reports.

House members of the committee were angry over allegations of widespread use of purchase cards in violation of federal regulations. Committee members 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 Frye. “No pain, no stain. Nobody ever knows.” Frye sent his memo to VA Secretary Robert McDonald in March. The letter accuses agency leaders of making a “mockery” of federal acquisition laws and spending at least $6 billion a year in violation of contracting rules. According to the Post, some of the spending was done by employees who were not authorized to use the cards at all.

In a statement to the committee, Linda A. Halliday, Assistant Inspector General, VA Office of Inspector General, said the cards were given to VA staff to “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 the purchase card practices described by Frye 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, expressed disappointment with Murray’s testimony, KUSA reports. Coffman said to Murray, “You are doing absolutely nothing to make a difference on this issue, and I am very disappointed in your testimony today.”

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