Earlier this month, Bureaucracy Times reported that nearly seven in ten pharmaceutical proposals examined by the Department of Veterans Affairs inspector general contained problems in the commercial pricing disclosures VA uses to negotiate federal drug prices.
Apparently, the pharmaceuticals weren’t special.
In a new report released Sept. 22, the VA Office of Inspector General examined 12 nonpharmaceutical Federal Supply Schedule proposals covering medical supplies and services. Eleven of the 12 proposals, or 91.7 percent, contained commercial-sales disclosures that auditors determined were not accurate, complete, or current.
The proposals represented approximately $814 million in estimated contract value and included 12,246 offered items.
Only one proposal passed through the review without OIG identifying disclosure deficiencies.
That matters because VA uses commercial-sales information to determine whether prices offered to the federal government are fair and reasonable. Vendors are generally required to disclose information about their commercial pricing practices, including discounts and concessions offered to other customers.
In other words, the government is negotiating with information supplied by the companies sitting across the negotiating table.
And, once again, OIG found problems with that information.
A Familiar Problem
The findings closely resemble those in the pharmaceutical pricing review Bureaucracy Times covered on Sept. 8.
In that report, OIG examined 16 pharmaceutical proposals and found that 11 contained deficient commercial-sales disclosures.
Taken together, the two FY2025 reviews examined 28 pharmaceutical and nonpharmaceutical proposals.
Twenty-two of them had disclosure problems.
That works out to approximately 79 percent.
The scale of the purchasing system involved is considerably larger than the sample. VA’s National Acquisition Center administers nine healthcare Federal Supply Schedules. Federal agencies purchased approximately $25.7 billion in products and services through those schedules during fiscal 2025, according to OIG.
The pharmaceutical proposals reviewed by OIG represented roughly $21 billion in estimated contract value. The latest nonpharmaceutical review adds another $814 million.
These are not negotiations over boxes of tongue depressors in the supply closet.
$29 Million Identified, $11.7 Million Sustained
OIG’s review also produced measurable results.
Auditors recommended lower prices for eight of the 12 proposals and calculated approximately $29.1 million in potential savings.
VA ultimately sustained approximately $11.7 million of those savings.
That is about 40 percent of what OIG identified.
But the aggregate figure conceals substantial differences among individual negotiations.
For one proposal, identified in the report only as Report 4, OIG calculated $10.85 million in potential savings.
VA sustained none of it.
Another proposal, Report 10, carried approximately $4.59 million in potential savings. Again, none was sustained.
Report 11 produced another $987,400 in potential savings and zero sustained savings.
The opposite happened with Report 6. OIG identified approximately $11.75 million in potential savings, and VA ultimately sustained approximately $11.55 million, or more than 98 percent.
Why one negotiation captured nearly everything OIG identified while others captured nothing is one of the more interesting questions left by the report.
Unfortunately, figuring out who was sitting on the other side of those negotiations is not particularly easy.
The Vendors Without Names
The OIG summary does not identify the companies associated with the 12 proposals.
There is a reason for that. According to OIG, the individual preaward reports are not publicly released because they contain proprietary commercial information.
Bureaucracy Times attempted to reconstruct several of the unnamed vendors using information that is public.
We compared the report dates, contract award dates and other information contained in OIG’s appendix against VA’s publicly accessible Federal Supply Schedule contracting records.
The exercise produced several plausible matches, but not enough evidence to responsibly attach an OIG finding to a specific company.
That distinction matters.
For example, multiple VA medical-supply contracts were awarded on some of the dates appearing in the OIG report. A matching award date can identify candidates, but it cannot establish that a particular vendor was the subject of a particular OIG review.
So we aren’t going to guess.
The result is an odd transparency gap.
VA publicly identifies its Federal Supply Schedule contractors. OIG publicly identifies millions of dollars in potential savings associated with individual proposal reviews. But the public information does not reliably connect the two.
The government knows which companies submitted the problematic disclosures.
The public gets Report 4.
And Then There Is Report 11
One entry in OIG’s appendix raises another question.
Report 11 was issued Sept. 2, 2025.
The table lists the corresponding contract award date as July 30, 2025.
That would put the award 34 days before OIG issued its preaward report.
There may be an entirely routine explanation. The date could reflect an existing contract, a modification, an effective date or some other element of the acquisition chronology.
Our reconstruction uncovered another reason for caution. In at least one portion of the public contracting record, dates that appear to represent contract effectiveness do not necessarily correspond neatly with the literal date on which an award was made.
That makes the chronology difficult to reconstruct from the summary alone.
But it also illustrates the larger problem.
OIG is performing these reviews precisely because commercial pricing disclosures affect the government’s ability to negotiate favorable prices. Across the pharmaceutical and nonpharmaceutical reviews examined by Bureaucracy Times this month, 22 of 28 proposals contained problems with those disclosures.
The latest audit alone identified $29.1 million in potential savings.
VA captured $11.7 million.
And the public still cannot readily determine which companies were responsible for the disclosures behind the remaining millions.
For a federal purchasing system that moved $25.7 billion in healthcare products and services last year, “Report 4” leaves quite a bit to the imagination.
