COVID-19 Response Strains Supply Chain While Modernization Delays Continue (GAO-20-716T)

Summary

GAO testimony, GAO-20-716T, before the Subcommittee on Oversight and Investigations of the House Committee on Veterans' Affairs on September 16, 2020. It is the statement of Shelby S. Oakley, Director, Contracting and National Security Acquisitions, on acquisition management at the Department of Veterans Affairs (VA). It notes that VA spends hundreds of millions of dollars annually to meet the health care needs of about 9 million veterans. GAO's preliminary observations show that VA has used multiple approaches, including a new personal protective equipment tracking tool, additional contracting organizations, emergency flexibilities and federal partnerships, to meet its critical medical supply needs. Its title states that the COVID-19 response strains the supply chain while modernization delays continue.

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United States Government Accountability Office
Testimony
Before the Subcommittee on Oversight
and Investigations, Committee on
Veterans’ Affairs, House of
Representatives
VA ACQUISITION
For Release on Delivery
Expected at 2:00 p.m. ET
Wednesday, September 16, 2020

MANAGEMENT
COVID-19 Response
Strains Supply Chain
While Modernization
Delays Continue
Statement of Shelby S. Oakley, Director,
Contracting and National Security Acquisitions

GAO-20-716T
September 16, 2020

VA ACQUISITION MANAGEMENT
COVID-19 Response Strains Supply Chain While
Modernization Delays Continue
Highlights of GAO-20-716T, a testimony
before the Subcommittee on Oversight and
Investigations, Committee on Veterans’
Affairs, House of Representatives

Why GAO Did This Study What GAO Found
VA spends hundreds of millions of GAO’s preliminary observations show that the Department of Veterans Affairs
dollars annually to meet the health (VA) has leveraged multiple approaches—including a new personal protective
care needs of about 9 million equipment tracking tool, additional contracting organizations, emergency
veterans. As of June 30, 2020, VA flexibilities, and federal partnerships—to meet its critical medical and surgical
received about $19.6 billion in supply needs during the Coronavirus Disease 2019 (COVID-19) pandemic.
supplemental appropriations for These approaches include using regional contracting offices to obtain supplies
COVID-19-related needs. Due to through new contracts and requesting supplies through the Federal Emergency
longstanding issues with VA Management Administration. To aid its response to ongoing and future public
acquisition management, GAO
health emergencies, VA plans to establish central sources of critical supplies
added it to its High Risk List in 2019.
called Regional Readiness Centers.
This statement discusses how VA is
meeting its needs for medical and
As GAO reported in June 2020, VA has several supply chain modernization
surgical supplies during the efforts underway. However, in its draft report on the MSPV program, GAO found
pandemic and the status of ongoing that each effort faces significant delays.
efforts to modernize its supply chain. MSPV modernization. VA’s next iteration of its preferred supply source, the
This statement is based on Medical-Surgical Prime Vendor (MSPV) 2.0 program, aims to address some
information from three reports shortfalls identified in GAO’s past and ongoing reviews, such as supply
issued from 2017-2020, a draft backorders. However, VA delayed implementation of MSPV 2.0 from April 2020
report on the MSPV program
to early 2021 and, based on its plans, it will not fully address all existing issues.
currently with VA for comment, and
preliminary observations from an Inventory management system modernization. VA’s inventory management
ongoing review of VA’s COVID-19 system is antiquated, which has led to supply chain challenges. VA has a
procurements. program underway to implement a more modern system, but its rollout at initial
To perform this work, GAO reviewed locations has been delayed over a year by systems integration challenges.
VA documentation and interviewed Nationwide implementation is not planned until 2027.
VA officials and medical center staff. Defense Logistics Agency MSPV pilot. VA is piloting the use of the Defense
What GAO Recommends Logistics Agency’s MSPV program to provide medical and surgical supplies to
several VA medical centers in lieu of MSPV 2.0. In addition to the pilot facing
GAO has made 40 delays of almost a year, VA lacks a comprehensive methodology to measure
recommendations since 2015 to pilot success.
improve acquisition management at
VA. VA agreed with those Infection Control Gowns in Supply Point at a Veterans Affairs Medical Center
recommendations and has
implemented 22 of them. VA is
currently reviewing
recommendations from GAO’s draft
report on the MSPV program.

View GAO-20-716T. For more information,
contact Shelby S. Oakley at (202) 512-4841 or
OakleyS@gao.gov.

United States Government Accountability Office
Letter

Chairman Pappas, Ranking Member Bergman, and Members of the
Subcommittee:

Thank you for having me here today to discuss our ongoing work and
observations on the Department of Veterans Affairs (VA) medical supply
chain. VA spends hundreds of millions of dollars annually on medical
supplies to meet the healthcare needs of about 9 million veterans and has
one of the most significant acquisition management functions in the
federal government. VA received about $19.6 billion in supplemental
appropriations to spend on Coronavirus Disease 2019 (COVID-19)-
related needs, as of July 29, 2020. Like most medical institutions
worldwide, VA has faced difficulties obtaining sufficient supplies,
especially personal protective equipment (PPE), for staff at its 170 VA
medical centers during the COVID-19 pandemic. Existing shortcomings in
VA’s medical supply chain and inventory systems posed additional
challenges. VA had several supply chain modernization initiatives
underway to address these challenges prior to the pandemic. These
include the development of a new iteration of its Medical-Surgical Prime
Vendor (MSPV) program—VA’s preferred supply source. Under this
program, contractors—called prime vendors—deliver a wide range of
supplies to VA medical centers on near-daily basis, and it is intended to
be the medical centers’ primary source for medical supplies.

Due to long-standing issues with VA acquisition management, we
designated it a high-risk area in 2019. In our priority recommendation
letter that we sent to the Secretary of VA earlier this year, we noted that
three priority recommendations related to VA acquisition management
have yet to be fully implemented. For example, with regard to the MSPV
program, we reported that VA had yet to assess potential duplication
between MSPV and its Federal Supply Schedule program.

My remarks today will summarize a few key findings on VA’s response to
COVID-19 and its progress toward modernizing its supply chain based on
three issued reports; a draft report on VA’s MSPV program, which is

Page 1 GAO-20-716T
currently with VA for comment; and preliminary observations from our
ongoing review of VA’s COVID-19-related procurements. 1

As part of our work for our issued and draft reports, we reviewed VA
policies, communications, briefings, prior GAO reports on leading
practices for organizational transformation, relevant legislation, and other
documents. 2 We conducted interviews with VA officials responsible for
Veterans Health Administration (VHA) and VA-wide procurement and
logistics, program office managers, and supply chain managers, as well
as other VA officials. For our draft report on VA’s MSPV program, we also
conducted site visits to 12 VA medical centers in 2019, selected based on
highest total spending on medical and surgical supplies, among other
things. As part of our ongoing work on VA’s COVID-19-related
procurements, we reviewed the Federal Procurement Data System-Next
Generation (FPDS-NG) procurement data through August 31, 2020. We
identified contract obligations related to COVID-19 using only the National
Interest Action code. We also reviewed VA memorandums, briefings, and
we met with key VA personnel responsible for the agency’s response to
COVID-19. We expect to issue a report on this ongoing review by early
2021. Finally, we met with senior VA officials on September 9, 2020, to
obtain agency views on the new observations discussed in this statement.

We conducted the work on which this statement is based in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on
our audit objectives.

1See GAO, High-Risk Series: Substantial Efforts Needed to Achieve Greater Progress on
High-Risk Areas, GAO-19-157SP (Washington, D.C.: Mar. 6, 2019); Veterans Affairs
Contracting: Improvements in Buying Medical and Surgical Supplies Could Yield Cost
Savings and Efficiency, GAO-18-34 (Washington, D.C.: Nov. 9, 2017); and VA Acquisition
Management: Supply Chain Management and COVID-19 Response, GAO-20-638T
(Washington, D.C.: June 9, 2020).
2See GAO-18-34, GAO-19-157SP, and GAO-20-638T. More detailed information on the
scope and methodology is contained within these reports.

Page 2 GAO-20-716T
According to senior VA procurement and logistics officials we interviewed
VA Leveraged during our ongoing review of VA’s procurement of COVID-19-related
Multiple Approaches critical medical and surgical supplies, VA experienced difficulty obtaining
several types of supplies, such as respirator masks and isolation gowns,
to Obtain Supplies needed to protect its frontline workforce during the COVID-19 response.
during COVID-19 VA uses a “just in time” inventory supply model—a standard practice
employed by many hospital networks where only limited stock is
maintained on-site. However, for this model to succeed, VA needs
consistent deliveries from VA’s suppliers. During COVID-19, when there
were global supply chain shortages, VA relied on a new PPE tracking
tool, additional VA contracting organizations, emergency flexibilities, and
federal partnerships to obtain needed supplies for VA medical centers.
VA also has begun planning for future public health emergencies by
working to stand up Regional Readiness Centers.

Developed new PPE tracking tool. VA supply chain leaders did not
have an automated way of tracking the stock of critical supplies at VA
medical centers during the COVID-19 pandemic due to VA’s antiquated
inventory management system, and as a result have relied on manual
tracking. According to senior VA acquisition and logistics officials we
interviewed during our ongoing review of COVID-19 related
procurements, beginning in late February to early March 2020, VA
requested that medical centers provide daily updates via spreadsheets in
an attempt to obtain near real-time information on the levels of PPE on
hand, usage, and supply gaps. These spreadsheets, which VA medical
centers updated manually on a daily basis, provided the primary means
by which VHA leadership obtained detailed information on the stock of
critical supplies at its VA medical centers. VHA leadership did not have
insight into supplies in an ongoing or systematic way prior to the
pandemic.

In April 2020, VA developed a PPE tracking tool to manage this reporting
process, and VA medical center staff interviewed during our ongoing
COVID-19 review said that the tool is generally effective for tracking
inventory levels and usage rates of PPE. However, information must still
be gathered and manually reported by each of the 170 VA medical
centers on a daily basis because the connection between VA’s local
inventory system and this tool is not automated. As such, VA medical

Page 3 GAO-20-716T
center staff must validate the PPE inventory data and perform actions
such as manual counting to correct issues. 3

Leveraged additional VA contracting organizations. According to VA
officials, VA leveraged the breadth of its acquisition workforce to respond
to COVID-19. Our preliminary observations indicate that during the
COVID-19 pandemic, VA is using contracting organizations within VA that
normally would not contract for medical supplies to try to meet its PPE
needs and find additional supply sources. Our preliminary analysis of
contracting reporting in FPDS-NG indicates that VHA’s Network
Contracting Offices—which provide contracting support to the various
regions of VA’s hospital network—increased their supply purchases by
entering into new contracts. 4 In addition, department-wide contracting
organizations that would normally not make individual supply
purchases—such as VHA’s Program Contracting Activity Central and
VA’s Strategic Acquisition Center—also played substantial roles in
helping VA obtain necessary supplies. 5

Between March 13, 2020, and August 31, 2020, about 45 percent ($978
million) of the $2.1 billion VA obligated on products and services for the
COVID-19 response were through purchases made outside of already
existing VA contracting mechanisms. Figure 1 shows the COVID-19-
related contract obligations from March 13, 2020, through August 31,
2020, made by the various VA contracting offices. These obligations
include both supplies, such as PPE, and services, such as information
technology systems to support telemedicine.

3VHA issued an April 17, 2020 memorandum to VA medical centers “to reduce the
variation in methods used to report and calculate PPE levels on hand within the VHA.”
According to VA’s Acting Assistant Under Secretary for Health for Support Services, VA
developed a Power Business Intelligence Tool in April 2020 in response to the pandemic,
which allows VA senior procurement, health, and logistics officials to view PPE supply
status at a national and VA medical center level.
4FPDS-NG is the central repository for U.S. government procurement data. For contract
actions over the micro-purchase threshold, agencies must submit detailed contract
information to FPDS-NG. The database includes the product or service, agency and
vendor information, contract start and estimated completion dates, and location of
performance, among other elements.
5Program Contracting Activity Central typically provides procurement support for VHA-
wide programs, such as energy efficiency contracts.

Page 4 GAO-20-716T
Figure 1: Total Coronavirus Disease 2019-Related Obligations for Selected
Department of Veterans Affairs Contracting Offices from March 13, 2020 through
August 31, 2020

Implemented emergency flexibilities. VA’s existing supply contracts
and agreements—such as those under the MSPV-NG program—also
have not fully met VA medical center needs, leading VA to use
emergency flexibilities to obtain critical medical supplies. VA had existing
clauses in its MSPV-NG contracts—VA’s preferred supply source—that
established terms for the suppliers to maintain support to VA in the event
of a catastrophe. However, according to senior VA acquisition officials,
because those suppliers faced the same shortages in the broader market,
they were not able to provide enough supplies to meet VA’s surging
demand. For example, VA’s Office of Acquisition and Logistics issued a
memorandum on March 15, 2020, to implement emergency flexibilities
available under the Federal Acquisition Regulation, such as increasing
the micro-purchase threshold from generally $10,000 to $20,000. 6
According to medical center officials we spoke with as part of our ongoing
work on VA’s COVID-19 related procurements, this flexibility has been
helpful in enabling them to meet their medical supply needs. This ongoing
work will describe the acquisition flexibilities available to VA to obtain

6A micro-purchase is an acquisition of supplies or services using simplified acquisition
procedures, the aggregate amount of which does not exceed the micro-purchase
threshold. VA’s March 15 memorandum delegated authority to specified VA contracting
officials to invoke emergency acquisition flexibilities available under Federal Acquisition
Regulation part 18. See VA Executive Director, Office of Acquisition and Logistics and
Senior Procurement Executive mem. re: Emergency Acquisition Flexibilities—Emergency
Assistance Activities in Support of Global Pandemic for Coronavirus Disease 2019
(COVID-19) (Mar. 15, 2020).

Page 5 GAO-20-716T
essential medical supplies and equipment during the COVID-19
pandemic.

Collaborated with the Federal Emergency Management Agency
(FEMA). VA collaborated with FEMA and participated in the Strategic
National Stockpile program to obtain supplies. 7 According to VHA senior
procurement and logistics officials, although VA’s Emergency
Management Center had an existing relationship with FEMA, VA support
services officials—who had primary responsibility for requesting medical
items through FEMA—did not have a process in place prior to the
COVID-19 pandemic for placing medical supply requests through FEMA.
Officials said that this led to a brief, initial delay in processing VA’s first
request. On April 17, 2020, VA placed its first FEMA supply requests,
according to VA senior acquisition and logistics officials. VA’s Office of
Procurement and Logistics made this request, and the head of this office
was on a detail to FEMA from March 20, 2020, to June 12, 2020, to assist
in the agency’s COVID-19 response efforts. As of September 11, 2020,
according to information provided by the VA, it received shipments of
several different types of supplies through FEMA, as shown in Table 1.
We plan to issue a report on our review of VA’s response to COVID-19 by
early 2021, which will include information on VA’s ability to meet medical
center COVID-19 needs.

Table 1: Coronavirus Disease 2019-Related Items Requested by the Department of Veterans Affairs and Received from the
Federal Emergency Management Administration, as of September 11, 2020
Item Total requested Total received
Respirators 5,000,000 8,233,920
Eye protection (face shield or goggles/glasses) 427,000 427,000
Generic masks 7,500,000 2,479,000
Gloves (single) 22,200,000 5,655,400
Gowns 3,400,000 0
Powered air purifying respirators 6,258 6,258
Swabs 10,000 933,220
Test kits - 420
Collection and stabilization tubes 10,000 787,248
Viral transport medium - 94,200
Source: Department of Veterans Affairs. | GAO-20-716T

7The Strategic National Stockpile’s role is to supplement state and local supplies during
public health emergencies. The supplies, medicines, and devices for life-saving care
contained in the stockpile can be used as a short-term stopgap buffer when the immediate
supply of adequate amounts of these materials may not be immediately available.

Page 6 GAO-20-716T
Establishing Regional Readiness Centers. VHA is also taking steps to
better respond to future health emergencies through standing up
Regional Readiness Centers to act as a central source for the
management and resupply of VA medical center PPE and critical items.
According to a July 2020 VHA plan, VHA’s intent in establishing these
centers is to build resiliency into the supply chain by minimizing
disruptions due to the increased global demand for PPE and critical items
in COVID-19. Under this plan, each Regional Readiness Center will
manage and maintain 120 days of supply, including what each VA
medical center within the region was ordering before COVID-19 and the
materials required to sustain COVID-19 response efforts. VHA also
intends for the centers to perform tasks such as decontaminating
respirator masks and providing extra storage to VA medical centers that
are unable to store more than 30 days of supply at their facilities.

VHA’s plan states that it has completed or is in the process of completing
several milestones in its implementation effort. For example, VHA has
established interagency agreements with the Department of Health and
Human Services and Defense Logistics Agency to acquire warehousing
and distribution capabilities and plans to onboard staff to work in the
centers by November 2020. VHA anticipates full implementation of the
centers will occur by July 2021. In the long term, according to its plan,
VHA aims for the Regional Readiness Centers to support VHA
preparedness for regional and national public health emergencies,
including those secondary to natural disasters. We plan to issue a report
on our review of VA’s response to COVID-19 by early 2021, which will
include information on the status of VHA’s Regional Readiness Centers.

Our prior work has identified longstanding issues with VA’s approach to
Planned Supply purchasing medical supplies. The global supply chain disruption caused
Chain by COVID-19 created additional challenges for VA’s medical supply
chain. VA acquisition leadership has recognized the shortcomings in its
Transformations Are medical supply chain management and has identified supply chain
Delayed and May Not modernization as a priority. VA has several supply chain transformation
initiatives underway, but they are delayed, will take time to implement,
Fully Address Existing and will not fully address existing issues.
Issues
MSPV modernization. In November 2017, we reported weaknesses in
VA’s implementation of its current version of its MSPV program—MSPV-
NG. 8 These included the lack of an effective medical supply procurement

8See GAO-18-34.

Page 7 GAO-20-716T
strategy, clinician involvement, and reliable data systems. We found that
several of VA’s medical supply management practices were not in line
with those employed by private sector leading hospital networks. We also
found that VA’s initial formulary consisted of around 6,000 items at
launch, and, according to senior VA contracting officials, many items on
the formulary were not those needed by medical centers. 9 These factors
resulted in an initial formulary that did not meet the needs of VA medical
centers. The MSPV-NG program office subsequently took steps to
expand the formulary, growing it to over 25,000 items as of August 2020.
We made nine recommendations related to MSPV-NG in our 2017 report.
VA has not yet fully implemented four of these recommendations as of
August 31, 2020.

VA is developing the next iteration of the program, called MSPV 2.0,
which is intended to address some of the shortfalls we previously
identified in MSPV-NG, including significantly expanding the number of
items on the formulary to a planned 125,000. Based on observations from
our ongoing work, some of the current MSPV-NG challenges persist and
may not be remedied by MSPV 2.0. 10 For example, all 12 of the VA
medical centers we visited during 2019 experienced challenges with
backorders of needed supplies in MSPV-NG (see figure 2). When a prime
vendor lacked the available inventory to fulfill an order, some VA medical
centers told us they chose to wait for the resolution of the backorder,
resulting in delivery delays of several days, weeks, or even months. Other
VA medical center staff told us that they pursued alternative sources,
using government purchase cards, to meet the facilities’ needs. These
challenges obtaining routine supplies through MSPV-NG differ from the
nationwide challenges VA and other hospital networks faced obtaining
PPE amid the COVID-19 pandemic, but they illustrate how VA faced
existing supply chain challenges it was working to address before the
pandemic. The terms of the September 2019 MSPV 2.0 solicitation would
provide more explicit directions to prime vendors to keep a 30-day supply
of stock for regularly ordered supplies. VA also plans to establish new
performance metrics for less-frequently-ordered supplies. These changes
are intended to reduce problems with supplies being on backorder.

9The formulary is a list of specific medical and surgical supplies available to VA medical
centers to purchase through VA’s MSPV program.
10The period of performance for VA’s original MSPV-NG contracts has ended. However,
VA has put bridge contracts in place with the MSPV-NG prime vendors until it is able to
implement MSPV 2.0.

Page 8 GAO-20-716T
Figure 2: Examples of Supply Items for Which Veterans Affairs Medical Center Staff Reported Backorders During 2019

Note: These examples of supplies on backorder were reported by clinical and logistics staff at 12 VA
medical centers we visited during 2019.

Page 9 GAO-20-716T
Further, under MSPV-NG, the MSPV program office manages the
formulary manually by releasing spreadsheets each month with
information on supplies available to VA medical centers. Since the
formulary is updated only once a month, representatives of two prime
vendors told us that price adjustments are sometimes incorporated into
their inventory database before the VA medical center updates its
information, and any orders where the price does not match are rejected.
According to VA medical center logistics officials, this led to cases where
prime vendors rejected an order three or four times before all mismatched
information was identified. These officials said that the additional
administrative burden caused by reworking orders often resulted in delays
of needed supply items at VA medical centers. In our draft report on the
MSPV program, we made several recommendations for how VA can
improve its supply chain. VA is currently reviewing the draft report and is
scheduled to provide any comments later this month.

VA intended to begin MSPV 2.0 in April 2020 to ensure uninterrupted
service to VA medical centers when the MSPV-NG contracts ended, but it
has been delayed. VA’s MSPV 2.0 prime vendor procurement has been
subject to multiple bid protests and VA officials told us during our ongoing
MSPV review that they delayed implementation until at least January
2021 as a result. Because the MSPV-NG contracts ended in March 2020,
VA is continuing to provide medical and surgical supply services to VA
medical centers through bridge contracts that VA awarded to the four
prime vendors without full and open competition. 11 The delay in MSPV 2.0
means VA medical centers will continue to face the issues of the MSPV-
NG program for longer than anticipated. Further, on July 29, 2020, VA
notified one of the prime vendors of VA’s intent to terminate that vendor’s
contract because of performance problems. According to senior VA
officials, medical centers previously served by this prime vendor are now
meeting supply needs via the three other existing prime vendors.

Inventory management system modernization. VA also relies on an
antiquated inventory management system, which has led to supply chain
challenges. In May 2019, the VA Inspector General found that proper
inventory monitoring and management was lacking at many VA medical

11While there is no government-wide definition for bridge contracts, GAO has defined it as
an extension to an existing contract beyond the period of performance (including base and
option years) or a new, short-term contract awarded on a sole-source basis to an
incumbent contractor to avoid a lapse in service caused by a delay in awarding a follow-on
contract.

Page 10 GAO-20-716T
centers, noting that inventory management practices ranged from
inaccurate to nonexistent. 12 In 2013, we also reported on weaknesses in
VA’s inventory management systems and made recommendations to VA
to evaluate its efforts to improve in this area. 13 VA plans to transition to a
Department of Defense inventory management system, called Defense
Medical Logistics Standard Support (DMLSS). DMLSS serves as the
primary ordering system for the Defense Logistics Agency’s (DLA) MSPV
program—which is separate from VA’s MSPV program—and supports
DLA’s inventory management, among other things. According to VA,
DMLSS is a much-improved inventory management system that provides
more powerful analysis and reporting than VA currently has. VA’s
implementation schedule shows that it will take 7 years to roll out DMLSS
and its successor—LogiCole—at all VA medical centers. 14 In the near-
term, VA had planned to implement DMLSS at three VA medical centers
in mid-to-late 2019. However, due to technology integration issues
between VA’s financial system and the DMLSS system that VA did not
plan for, VA delayed DMLSS implementation by over a year at the initial
locations.

DLA MSPV Pilot. VA is also piloting the use of DLA’s MSPV program to
provide medical and surgical supplies to select VA medical centers in lieu
of its own MSPV program, but this effort is also delayed. To implement
the pilot, VA must use DLA’s inventory management software when
placing orders—such as DMLSS or a portal within DLA’s Electronic
Catalog (ECAT). 15 VA’s original plan was to implement the first phase of

12Department of Veterans Affairs, Office of Inspector General, Veterans Health
Administration: Expendable Inventory Management System: Oversight of Migration from
Catamaran to the Generic Inventory Package (May 1, 2019).
13GAO, Veterans Health Care: VHA Has Taken Steps to Address Deficiencies in Its
Logistics Program, but Significant Concerns Remain, GAO-13-336 (Washington, D.C: Apr.
17, 2013).
14In the future, VA will be moving to using LogiCole, a system that provides similar
functions to DMLSS, but on a more modern technology platform with some additional
features. VA plans to begin implementing LogiCole starting in 2023, with implementation
wrapping up across all Veterans Integrated Service Networks in 2027.
15According to DLA officials, ECAT provides less capability than DMLSS in areas such as
providing real-time data to analyze order history and identifying recommendations for
future purchases. ECAT is typically used (by both Department of Defense and VA
customers) to access ECAT’s own catalog of medical equipment and supplies. This is
separate from the DLA MSPV catalog; for the pilot, DLA is providing select VA medical
centers access to the DLA MSPV catalog through a separate function within the ECAT
platform called Prime Vendor Web Ordering.

Page 11 GAO-20-716T
the DLA pilot at the Captain James A. Lovell Federal Health Care Center
using ECAT in March 2019—with a transition to DMLSS scheduled to
occur in October 2019—but VHA Procurement and Logistics officials
confirmed this VA medical center’s switch to DMLSS did not occur until
August 2020. VA officials also stated that they planned to enter the pilot’s
second phase at two VA medical centers in Veterans Integrated Service
Network 20—Spokane and Puget Sound—in October 2019 using
DMLSS. 16 This phase of the pilot did not start until July and August 2020
(respectively) using ECAT, with a move to DMLSS not scheduled to occur
until fiscal year 2021.

VA plans to use the results of the DLA MSPV pilot to determine if it
should implement the program at all VA medical centers, but we found
that it lacks the comprehensive methodology to effectively do so. VA’s
February 2019 MSPV 2.0 Program Acquisition Strategy states that VA
sees the potential for increased efficiencies through the use of DLA’s
expansive formulary and that VHA will decide by 2025 whether DLA’s
MSPV program will replace MSPV 2.0. Senior VHA Procurement and
Logistics Office officials told us in June 2020, as part of our ongoing
MSPV work, that VA is strongly considering a full transition to DLA’s
MSPV program in the future.

In March 2020, the MSPV program office identified preliminary metrics to
evaluate pilot success, such as cost avoidance, micro-purchase spending
using government purchase cards, and VA customer satisfaction.
However, we found VA has not established or determined how to
measure or interpret the pilot’s success metrics. For instance, VHA
Procurement and Logistics Office officials told us that they collect data on
cost avoidance from the Captain James A. Lovell Federal Health Care
Center, but VA has not established a level of cost avoidance justifying a
transition away from its own planned MSPV 2.0 program. In addition,
VA’s current evaluation of the pilot does not include several MSPV-NG
program challenges that we identified, such as limited formulary
coverage, out-of-stock items, and drop shipment delays. To determine if
DLA’s program is more effective than VA’s MSPV 2.0 program, it is
important that VA consider all facets of the medical and surgical supply
purchasing process. In our draft report on the MSPV program, we made
recommendations for how VA can improve its pilot effort. VA is currently

16Veterans Integrated Service Networks are VHA organizations that manage VA medical
centers and associated clinics across a given geographic area. VHA currently has 18
Veterans Integrated Service Networks across the nation.

Page 12 GAO-20-716T
reviewing the draft report and is scheduled to provide any comments later
this month.

In summary, VA faces several longstanding medical supply chain
challenges. These issues have been further exacerbated by the demands
of the COVID-19 pandemic, causing VA to rely on other supply sources
and agencies to get needed PPE to its VA medical centers. While VA’s
supply chain modernization efforts should address some of the issues
that have led us to identify VA acquisition management as high risk, these
efforts are significantly delayed and will take many years for VA to
implement.

Chairman Pappas, Ranking Member Bergman, and Members of the
Subcommittee, this completes my prepared statement. I would be
pleased to respond to any questions that you may have at this time.

If you or your staff have any questions about this testimony, please
GAO Contact and contact Shelby S. Oakley at 202-512-4841 or OakleyS@gao.gov. Contact
Staff points for our Offices of Congressional Relations and Public Affairs may
be found on the last page of this statement. GAO staff who made key
Acknowledgments contributions to this testimony are Teague Lyons, Assistant Director; Lisa
Gardner, Assistant Director; Kelsey M. Carpenter; Matthew T. Crosby;
Lorraine Ettaro; Suellen Foth; Rose Brister; Susan Ditto; and Roxanna
Sun.

(104495)
Page 13 GAO-20-716T
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