Audit of VISN 22 Supply Chain Management

Report Information

Issue Date
Report Number
25-02834-142
VISN
22
State
Arizona
California
New Mexico
District
VA Office
Veterans Health Administration (VHA)
Report Author
Office of Audits and Evaluations
Report Type
Audit
Report Topic
Supplies and Equipment
Major Management Challenges
Healthcare Services
Recommendations
7
Questioned Costs
$0
Better Use of Funds
$369,000
Congressionally Mandated
No

Summary

Summary

The VA OIG audited supply chain management at medical facilities in West Los Angeles and San Diego, California, and Phoenix, Arizona—all in Veterans Integrated Service Network (VISN) 22. The OIG team focused on expendable supplies, nonexpendable equipment, supply chain leadership, and storage practices—areas with recurring weaknesses in past audits. The audit covered expendable supply operations in the third quarter of FY 2025 and equipment purchased from October 2019 through May 2025.

The OIG found that all three facilities struggled to meet VHA requirements for managing expendable and nonexpendable inventory. Two facilities stored supplies insecurely, increasing risk of theft, loss, and misuse. Overall, inadequate inventory controls put VHA at risk for higher costs and potential fraud, waste, and abuse.

The team estimated that at least 15 percent of items in the expendable inventory, valued at about $1.4 million, reflected fewer actual on-hand quantities than reported across the three VISN 22 facilities. At least 10 percent of items, valued at about $369,000, had more on-hand quantities than reported in the system. About half of expendable supplies were above VHA’s required normal stock levels, and 4 percent were below reorder points. Inventory issues were partly attributed to supply chiefs not consistently enforcing monitoring and reconciliation procedures.

For nonexpendable equipment, about 41 percent of items were in different places than recorded, and at least 5 percent—with a value of at least $8.7 million—were missing. Facilities often did not update equipment locations or complete required reports of survey, weakening accountability.

Finally, VISN quality control reviews for FYs 2024 and 2025 showed repeat findings because corrective actions were not implemented or sustained. Despite VISN engagement, recurring deficiencies indicate the need for stronger internal processes and oversight.

VHA concurred with the OIG’s seven recommendations to improve VISN 22 supply chain management.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Require medical facility directors in Veterans Integrated Service Network 22 to develop and implement procedures to maintain stock within the required thresholds as outlined in Veterans Health Administration Directive 1761.

No. 2
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Require medical facility directors in Veterans Integrated Service Network 22 to ensure supply chain staff review and update ABC classification labels on expendable supplies in accordance with Veterans Health Administration guidance and establish a process to routinely verify that labeling aligns with the official ABC classification report.

No. 3
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Ensure medical facility directors in Veterans Integrated Service Network 22 develop a process to ensure facility staff safeguard expendable supplies in accordance with Veterans Administration Handbook 0730.

No. 4
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Ensure medical facility directors in Veterans Integrated Service Network 22 develop and implement local procedures that require clinical service areas to notify supply chain staff when equipment is relocated, establish protocols to validate and update the equipment location, and ensure equipment items are properly tagged.

No. 5
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Require medical facility directors in Veterans Integrated Service Network 22 to ensure facilities conduct annual inventory of nonexpendable equipment.

No. 6
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Require medical facility directors in Veterans Integrated Service Network 22 to enforce timely completion of reports of survey in accordance with Veterans Health Administration policy and implement oversight mechanisms to monitor the timely initiation, approval, and closure of reports.

No. 7
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Ensure facilities implement corrective actions to effectively address deficiencies identified during the Veterans Integrated System Network’s quality control reviews.