The VA office of inspector general found the agency has not repaid funds taken from the Treasury's Judgment Fund during the past six years to pay settlements from contract disputes on 10 major construction projects. The lack of reimbursement goes against federal regulations and VA policy, inspectors said.
"By not reimbursing the Judgment Fund timely, VA has continued to maintain significant liabilities," inspectors wrote. "VA will require significant future funding to satisfy the outstanding claims."
The Treasury paid to settle 23 claims arising from contract disputes on major VA projects in Maryland, Florida, Colorado, Nevada, California and Pennsylvania. Federal laws require agencies to reimburse the Treasury within 45 days or create a repayment plan in that time. Inspectors found the VA had been delinquent for 221 days on average and the agency had no documented plans to repay the money.
Three claims were related to the VA hospital near Denver, which is under construction and experiencing massive cost overruns. Reimbursement for one of those claims is $4.5 million and 411 days past due.
Nine claims came from construction of the new VA hospital in Orlando, Florida. Five of those claims are 340 days delinquent.
As older claims go unpaid, new ones are piling on. One claim, for $1.4 million for the Orlando project, was five days delinquent when inspectors began their review.
The inspector general's office conducted its review from January to September, following a request from Congress to look into the issue.
As of Jan. 31, 2017, the VA had reimbursed the Treasury fund for only $21.4 million of the $247.7 million that it owed, inspectors found, bringing its outstanding balance to $226.3 million. The Treasury does not assess interest on the VA.
The VA hasn't been requesting enough money from Congress to pay back the Treasury, the report also stated. From fiscal 2012 to 2017, the VA asked Congress for only $29 million to go toward the reimbursements.
The inspector general's office is recommending the VA update its policies and ensure it reimburses the Treasury or comes up with a repayment plan within the allotted 45-day window. In a written response to the report, Edward Murray, the VA's acting assistant secretary for management and budget, wrote the VA would establish a repayment plan.
According to the report, Murray told inspectors that reimbursing the Treasury wasn't as urgent as other department needs.
"Replacing Judgment Funds was considered a lower priority than other requirements that support veterans' access and safety," inspectors wrote.