Mr. Chairman,

Thank you for calling this hearing.  Our fiduciary oversight responsibility over the VA is important, particularly when we view the budget each year and see billions of dollars spent by the VA categorized as “miscellaneous obligations.”  When questioned about this line item in the budget, VA does not appear to have any clear knowledge of exactly how this money is being spent.  This is something that gravely concerns me, as well as several of my colleagues on both sides of the aisle, and I believe it is important to get to the root of this problem.

On October 5, 2007, following a staff briefing by the Veterans Health Administration, you and Ranking Member Brown-Waite sent a letter over to the Government Accountability Office requesting an audit of VHA procurement spending under miscellaneous obligations to determine whether (1) procurement obligations and disbursements were properly reported, (2) adequate budgetary and procurement controls are in place for the underlying transactions, and (3) there are indications of fraud or abuse in the underlying transactions.  During the staff briefing, it was noted by VHA officials that $4.8 billion (over 55 percent) of the reported $8.6 billion in procurements through the third quarter of fiscal year 2007 were based on miscellaneous obligating documents.  I appreciate both of your leadership on this issue.

Mr. Chairman, miscellaneous obligations represents an enormous percentage of VHA procurements.  I am concerned that VHA may not know the full scope of what this money is purchasing.  I question how VA can plan the coming FY 2009 budget, not knowing where the needs are, and how to best meet these needs if so much funding is being placed under miscellaneous obligations.  I understand that GAO has issued their report based on our request this week, and I look forward to hearing about their review and the results of the audit.  I also would like to hear from VA about what type of controls are currently in place, whether VA believes these controls are working, what are they doing to tighten the use of the miscellaneous obligations documents for purchasing at VHA.

This is not the first time our Subcommittee has reviewed VHA procurement issues.  During the 108th Congress, we held a series of three hearings both at the Subcommittee and the full Committee on eliminating waste, fraud, and abuse and mismanagement in veterans’ programs at VA.  Included in these hearings were discussions on VA’s purchase cards, as well as third party billing.  I believe it is our job, as the oversight committee to help VA in getting a handle on this issue, and finding solutions to the problems that exist.

While I do not want to say procurement at the Department of Veterans Affairs is broken, it appears seriously dysfunctional and decentralized to such a point that appropriate procurement oversight does not adequately exist throughout the procurement chain.  When you don’t know where the money is spent, how do you know where your greatest needs arise?

Thank you again, Mr. Chairman and I yield back my time.