A VA OIG investigation found Veterans Affairs failed to pay back the Judgment Fund over $247 million for contract disputes and has no plan to pay the funds back.
Investigators concluded VA is delinquent because the agency failed to request sufficient funds in its budget to fund reimbursement of contract disputes. VA told VA OIG that repayment of funds was a lower priority than supporting veterans’ access to healthcare and safety. The majority of settlements came from breaches at Orlando VA Medical Center.
Given the headlines over the past 4 years, including VA covering up for bad doctors, it sure looks like other priorities are trumping both settlements and veteran safety.
So what is a top priority at VA these days?
VA is charged with caring for veterans healthcare and benefits needs while it stonewalls and deceives veterans and the American public into believing all such needs are met. When will America wise up to the colossal waste in an agency forever plagued by scandal and fraud.
Below is the main body of the full report:
VA OIG Judgment Fund Investigation Results And Recommendations
VA failed to reimburse the Treasury Judgment Fund for major construction claims as required. From October 1, 2011 through September 30, 2016, Treasury used the Judgment Fund to pay 23 claims related to 10 major construction projects. The payments made on VA’s behalf totaled $247,748,686, but VA reimbursed the Judgment Fund only $21,420,264. The average delinquency for all 23 claims was 221 days. As of January 31, 2017, 11 of the claims remained unpaid with an overdue balance of $226,328,422.
VA was delinquent in reimbursing the Judgment Fund because VA did not request sufficient funding for the reimbursement of CDA claims. Despite having an overdue balance of more than $226 million, VA’s 2017 congressional submission requested funding of only $9 million to reimburse the Judgment Fund for the payment of CDA claims. VA was aware that it needed more funds to satisfy its reimbursement obligation but, according to VA’s Acting Deputy Assistant Secretary for Budget, the replacement of judgment funds was considered a lower priority than other needs. Without such funding, the Deputy Chief Financial Officer could not follow Federal regulations and VA policies, which require claims be reimbursed promptly or a reimbursement plan be established. By not reimbursing the Judgment Fund timely, VA has continued to maintain significant liabilities not covered by its budget. VA will require additional funding to satisfy all reimbursement obligations remaining as of January 31, 2017.
Criteria For VA OIG Review
Federal regulations, 31 CFR §256.40 and §256.41, require VA to reimburse the Judgment Fund for payments made pursuant to the CDA. In addition, the Treasury Financial Manual10 states, “Upon receipt of a reimbursement notice in a Contract Disputes Act case, an agency has 45 business days to repay the Judgment Fund or contact the Judgment Fund Branch to make written arrangements for reimbursement.” VA’s Judgment Fund Reimbursement policy states the Office of the Deputy Chief Financial Officer receives the Treasury request for reimbursement and provides VA’s plan for reimbursement. This policy also states VA will reimburse the Judgment Fund for CDA claim payments and will adhere to the regulatory time frame established for submitting such reimbursements.
VA is to use proper appropriated funds or request supplemental appropriations to reimburse the Judgment Fund, if necessary.
Required Funds And Examples
From October 1, 2011 through September 30, 2016, the Judgment Fund paid $247,748,686 on behalf of VA for major construction claims related to 10 major construction projects, with an average delinquency of 221 days. As of January 31, 2017, VA still owed the Judgment Fund $226,328,422 from Treasury reimbursement requests. VA did not establish repayment plans to reimburse the Judgment Fund, as required. According to VA, Treasury had not made any follow-up collection requests for reimbursement to the Judgment Fund.
Examples of substantial delinquencies in VA repayments to Treasury include:
- The Judgment Fund made a payment related to the new construction of the VA Orlando Medical Center totaling $31,806,708 in July 2015. VA’s reimbursement to Treasury was overdue 340 days, as of January 31, 2017.
- The Judgment Fund made a payment related to the new construction of the VA Denver Medical Center totaling $4,447,028 in March 2015. VA’s reimbursement to Treasury was overdue 411 days, as of January 31, 2017.
Appendix A describes the 23 payments made by the Judgment Fund during the review period to settle VA major construction claims.
VA Fails To Request Sufficient Funds To Pay Judgment Fund
Between 2012 and 2017, VA only included about $28.9 million in its budget requests to reimburse the Judgment Fund. Of that amount, VA used $21,420,264 to reimburse the Judgment Fund for major construction claims and used the remainder for other types of claims. VA’s Acting Deputy Assistant Secretary for Budget reported to us that because of budget constraints, “…emphasis was on Department facility requirements that support veteran access and safety while replacement of judgment funds was a lower priority.”
Although VA is not assessed interest by Treasury on outstanding balances that are overdue to the Judgment Fund, VA has continued to maintain significant liabilities not covered by budgetary resources. VA requires significant funding to satisfy the outstanding claims.
VA OIG Conclusion
VA failed to fully and timely reimburse the Judgment Fund as required. From October 1, 2011 through September 30, 2016, Treasury paid claims from the Judgment Fund totaling $247,748,686 on VA’s behalf. The average delinquency on these claims of 221 days is well beyond the required 45 business days. VA reimbursed the Judgment Fund $21,420,264, leaving a balance due of $226,328,422 as of January 31, 2017. VA failed to pay these claims timely because it failed to request and obtain sufficient funds from Congress. By not reimbursing the Judgment Fund timely, VA has continued to maintain significant liabilities not covered by its budget.
VA OIG Recommendation
We recommended the Acting Assistant Secretary for Management and Acting Chief Financial Officer establish procedures to ensure VA reimburses the Treasury Judgment Fund within 45 business days of receipt of requests for reimbursement or establishes appropriate payment plans for claims paid pursuant to applicable law.
VA Management Comments
The Acting Assistant Secretary for Management, who was also serving as the Acting Chief Financial Officer, concurred with the intent of the recommendation. He reported VA will update policy to establish procedures ensuring that VA reimburses the Treasury Judgment Fund or establishes appropriate repayment plans for claims paid. The policy will be updated to reflect the requirements contained in Treasury Policy, and 31 CFR §256.40 and §256.41. The expected completion date for this policy update is June 2018.
VA OIG Response To VA Management
The Acting Assistant Secretary’s corrective action plan is responsive to the intent of the recommendation. We will monitor implementation of the planned action and will close the recommendation when we receive sufficient evidence demonstrating progress in addressing the recommendation.