Up to $920 million in possible 'illegal, improper' spending on VA charge cards, watchdog report shows

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Last year, the Department of Veterans Affairs spent $4.8 billion using charge cards. A VA watchdog agency found that millions of that money could have been spent illegally or improperly, including a surge in year-end spending that indicates potential waste. 

Every year, the VA's Inspector General reviews the VA's charge card programs for any risks. That review includes purchase cards, travel cards, fleet cards and other ways VA spends money. 

The Inspector General's report for 2018 spending, released July 22, showed that up to 20 percent of total transactions could be at risk -- or as much as $920 million in possible "illegal or improper" spending.

The report shows VA's purchase cards "remain at medium risk of illegal, improper or erroneous purchases" and "data mining" of purchase card transactions showed "potential misuse of cards." VA made about 7.1 million transactions using cards in 2018, for about $606 per transaction, on average. 

The Inspector General report also showed that VA's use of the cards "continue to identify patterns" that don't comply with federal regulations. 

VA's level of risk for its cards stayed the same from 2017 to 2018, though the amount of money and number of transactions went up -- potentially putting more cash at risk.

About 13,600 VA employees were cardholders last year, or about 3.7 percent of the total VA workforce, the report said. 

"Controls over the use of purchase cards are critical to ensuring VA uses taxpayer funds effectively and efficiently to serve the nation’s veterans," the report said. 

Risk factors included: potential duplicate payments (overpayments), potential split purchases (to avoid spending caps), too many cardholders per approving officials, inadequate reporting and recording of financial information, surges in year-end card spending, convenience checks used for higher-risk purchases for cash cards, foreign currency, money orders and travelers' checks. 

VA data showed a surge in year-end spending using the cards last year. 

"This could be an indicator of a rush to spend unused appropriations at the end of the fiscal year creating the potential for wasteful or abusive procurement practices, such as purchasing goods or services that do not meet legitimate government needs," the Inspector General report said. 

Last year, the Inspector General found that employees at the St. Louis VA were making improper split purchases of up to $61,000. The IG also found that a lack of control over purchase card use at the Washington, D.C. VA led to an employee buying eight Microsoft Surface Pro computers, eight Apple iPhones and two iPads. A Seattle VA employee created a fake vendor profile to purchase a personal computer for $3,400. A Dallas VA manager used split purchases that led to VA overpaying for supplies by $37,000.

IG said VA decreased the percent of duplicate charges and split transactions in 2018, so the watchdog agency did not increase its risk level, the report said. 

Between 2015-18, IG criminal investigators opened 78 cases of misused purchase cards and "continue to identify patterns of misuse and fraudulent use of purchase cards" at VA. 

Members of Congress were not satisfied with that, though, and penned a letter to VA Secretary Robert Wilkie calling for stronger oversight of the purchase cards. The letter was signed by Rep. Chris Pappas, D-N.H., Jack Bergman, R-Mich., and Kathleen Rice, D-N.Y.

“OIG’s estimate that between 5 and 20 percent of transactions are at risk equates on average to between $230 million and $920 million of potentially erroneous, improper, or illegal spending,” the bipartisan group wrote in the letter. “There was a notable spike in fiscal year-end spending in 2018, which may represent unnecessary or wasteful purchases. OIG also documented continued inadequate data collection, which impedes conclusive determinations as to which transactions are wasteful or illegal, and which are merely inaccurately recorded or reported.”

Members also asked for a briefing of their staff by the end of August. 

"VA always strives to minimize the risks associated with its purchase card program and we appreciate the inspector general’s oversight as part of this yearly review," VA spokesman Randal Noller told Connecting Vets. 

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Reach Abbie Bennett: abbie@connectingvets.com or @AbbieRBennett

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