VA ADVANCE program ROI overestimated, says OIG

VA also paid too much in interagency contracting fees to OPM, auditors say By David Perera Officials running human capital training and recruitment programs at the Veterans Affairs Department paid too much in interagency contracting fees to the Office of Personnel Management and used questionable assumptions to calculate return on investment, the VA office of inspector general says.

In a report (.pdf) dated Aug. 2, the VA OIG says the department has spent $864 million from fiscal 2010 through the current year on human capital programs known as ADVANCE (which doesn’t appear to stand for anything but which the VA apparently capitalizes out of a desire to be emphatic).

Included in those programs are VA’s Learning University and CSEMO (which does stand for something: Corporate Senior Executive Management Office) efforts for which VA obtained goods and services support contracts from the Office of Personnel Management.

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Sign up for our FREE newsletter for more news like this sent to your inbox!OPM, like any interagency contracting assisted services provider, charges a fee for its services, which varied from 3.2 to 4.5 percent per year. The fiscal 2011 fee of 4.5 percent, auditors say, “was not advantageous” and ended up costing the VA $2.46 million in additional fees it could have avoided had it paid OPM the average service fee OPM charged in fiscal 2010.

In the current fiscal year, VA pays OPM a service fee of 3.75 percent, the audit says.

Interagency contracting comes with more-than-usual paperwork requirements, including a finding from a contracting officer that the interagency route is the best procurement method. The department was unable to provide auditors with documentation that the VA considered the reasonableness of service fees as part of that finding.

VA officials said they thought OPM’s service fees were reasonable, but “they could not provide us with sufficient documentation to demonstrate that a cost assessment was conducted as part of the best procurement approach determination.”

VA estimates of its return on investment also suffer from a lack of documentation, according to auditors. The VA said in December 2011 that ADVANCE (emphatic capitalization) achieved an ROI of $604 million–greater than the $576 million it spent on the program in fiscals 2010 and 2011.

But in making that estimate, VA relied on external studies of the value of training and decided to just assume a rate of return of 38 percent. That figure, auditors say, comes from studies that look at the ROI of training provided to newly hired employees in largely low-wage manufacturing industries.

The range of ROI cited in the studies VA officials had examined posited ROIs ranging from 7 to 38 percent, auditors say, and they recommend taking the median rather than the upper bound as the “more reliable way of measuring VA’s training ROI.”

For more: – download the report, 11-02433-220 (.pdf)

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