Audit of Consolidated Mail Outpatient Pharmacy Contract Management

The audit determined that VA needs to improve Consolidated Mail Outpatient Pharmacy (CMOP) contract management. CMOP managers did not always ensure that contracts were effective, economical, and adequately protected VA's contractual interests. The audit identified two issues pertaining to contract development and monitoring. For one of six contracts reviewed for contract development, the National CMOP Office did not comply with Federal acquisition requirements. As a result, we estimated a monetary savings of at least $724,476 over the 3-year period on one of the contracts reviewed. In addition, for three of 13 contracts reviewed for contract monitoring, we identified a significant risk that CMOPs could overpay for contract services valued at $40.7 million due to poor monitoring controls. The audit report made four recommendations addressed to the Acting Under Secretary for Health and Executive Director for Acquisition, Logistics, and Construction: 1. We recommended that the Acting Under Secretary for Health require the National CMOP Office to establish management review processes for determining CMOP contract needs and evaluating the cost-effectiveness of procurement alternatives. 2. We recommended that the Acting Under Secretary for Health require the National CMOP Office to assess the continued need for the current backup data storage contract. 3. We recommended that the Executive Director for VA Acquisition, Logistics, and Construction require the NAC to establish oversight procedures to ensure that CMOP contracting officers comply with FAR and VAAR. 4. We recommended that the Executive Director for VA Acquisition, Logistics, and Construction require CMOP contracting officers to specify monitoring procedures for their assigned contracts when appointing COTRs, to evaluate the effectiveness of contract monitoring at least annually, and to take corrective action when warranted. The Acting Under Secretary and Executive Director agreed with the audit findings, recommendations, and monetary benefits and provided acceptable corrective action plans.