The Coalition was invited to testify before the House Committee on Veterans Affairs’ Subcommittee on Oversight and Investigations this week with leadership from the Department of Veterans Affairs and the Government Accountability Office (GAO). The subject of the hearing was Modernizing the VA’s Medical Supply Chain: Lessons from the Pandemic. The following is the oral statement provided on behalf of members. The written statement submitted for the record is also posted for members on our website. To watch a video of the hearing, click here.
Chairman Pappas, Ranking Member Bergman, and Members of the Committee, thank you for the opportunity to appear before you today to address the challenges the Department of Veterans Affairs faces as it builds a resilient supply chain. I am Roger Waldron, President of the Coalition for a Government Procurement. Our association is pleased that the Committee is focusing on the VA’s supply chain and its role in delivering best value healthcare to our nation’s veterans.
By way of background, the Coalition is a non-profit, non-partisan association of small, medium, and large businesses representing more than $145 billion in annual government commercial contract purchases. Coalition members provide more than $12 billion in medical/surgical products and pharmaceuticals, as well as services, to support the healthcare needs of our nation’s veterans/warfighter.
Today, my remarks summarize my submitted written testimony, and I ask that it be included in the record.
Coalition members strongly support the VA’s implementation of a clinically-led program office to develop sound requirements. These requirements define the scope of the VA’s formulary and the commercial medical and surgical products available through the MSPV program, through national contracts, and through the FSS. A clinically-led program office serves as the bridge between the program offices that generate requirements and the VA procurement professionals and contractors. It identifies, collects, analyzes, and communicates formulary requirements across the department and to industry.
Given this central role, it is vital that the program office be managed and led by clinicians. We believe that this management requires the naming of a Medical Supply Chain Leader responsible for formulary management and engagement with industry. In addition, it should include the investment of implementation resources to support medical requirements development.
Further, this office should serve as the lead industry point of contact to interface with industry. As such, it would provide industry with a clear, direct channel through which it can engage with the department and share the latest developments in the rapidly evolving field of medical and surgical technologies.
Engagement with industry, however, is just one factor in developing a robust formulary. Input from healthcare providers and treatment facilities across the VA is important, as is the availability and analysis of transaction data. Indeed, the lack of meaningful, accurate purchase data undermines the development of a comprehensive, holistic formulary. The point is evidenced by the current, significant reliance on Government Purchase Cards, the use of which, undermines the VA’s formulary because it fails to provide such data. The condition is circular: treatment centers use the purchase card because items are not on formulary, and, as a result of that use, the VA lacks the data necessary to improve the formulary.
The VA should enhance and expand the formulary to reflect clinical needs. The resulting contract purchases would provide the VA with sound spend data that, when combined with clinical input, can be used to improve the formulary incrementally, enabling VA to standardize product categories where appropriate, while providing clinical flexibility and choice in other product categories. A first step in expanding the formulary would be to allow firms to offer their full product lines, rather that picking and choosing subsets of those product lines or individual products.
Coalition members also support the VA’s efforts to modernize its financial and logistics systems, including the DMLSS pilot. These systems are critical to creating, managing, and collecting data to support clinically-led sourcing. With regard to DMLSS, transparency regarding the implementation schedule, milestones, and operations will assist all stakeholders in responding to changes in the federal healthcare market. To this end, we believe VA may wish to consider utilizing an electronic dashboard to assess its progress in modernizing systems. A dashboard would aggregate data in a single tool and facilitate management’s ability to make system improvements. A transparent electronic dashboard would assist all stakeholders, including the VA’s industry partners, in tracking and responding to the evolution of supply chain management and implementation of new e-systems.
Finally, regarding acquisition generally, streamlining procurement processes and regulations would help VA meet its needs. Efficiencies also could be obtained by centralizing procurement operations. This coordinated management could allow the department to focus on all aspects of its supply chain, including small businesses.
Chairman Pappas, Ranking Member Bergman, and Members of the House Committee on Veterans’ Affairs, the job is complicated, but the suggestions made could help the VA improve the supply chain programs that serve our veterans. Thank you again for the opportunity to address the Committee. I look forward to answering questions.
Congress Plans CR Vote Next Week
Bloomberg reported that the House plans to vote on a continuing resolution (CR) next week to fund the Government after the fiscal year ends on September 30. There has not been an agreement on how long the CR will fund the Government, proposals range from the end of December 2020 to March of next year. However, Speaker Pelosi and Treasury Secretary Mnuchin have reached an agreement on a “clean” CR, which means that Federal funding would be separate from negotiations on a COVID-relief package. The Coalition will continue to keep members up to date on the status of a CR in the Flash.
Federal News Network reported this week on the Defense Department’s leadership perspective on COVID-19 and the impact on the defense industrial base. During a Defense News Conference, Ellen Lord, Undersecretary of Defense for Acquisition and Sustainment, said that the COVID-19 pandemic highlighted vulnerabilities in the defense acquisition system, leading to DoD working with the Administration to address fragility in the supply chain. Lord said that DoD put out nearly $1 billion using Title III of the Defense Production Act.
During the conference, Lord added that more money is needed to help the defense industrial base recover from COVID-19. Of the 22,000 companies that the Defense Management Agency and Defense Logistics Agency track, many have been negatively impacted by the pandemic. While the system has absorbed most of the effects so far, Lord predicts that the negative impacts will start to become more apparent soon.
DoD has called for more funds for the defense industrial base since the summer. Lord urged companies to account for the adverse impacts they experienced from March 15 through September 15, submit proposals showing these impacts, and allow for DoD to assess them at once. This process is estimated to take about six months. All proposals would be examined before spending occurs. Lord expects the total number to fall between $10 and $20 billion. While DoD has the authorization to make the payouts under Section 3610, the agency lacks the appropriations.
This week, Jeff Koses, GSA’s Senior Procurement Executive, announced in a blog that GSA will host listening sessions with industry on the implementation of “unpriced” Schedules. The listening sessions will provide an opportunity for industry to provide their feedback to GSA on the initiative, and are part of an effort for GSA to gather feedback on the “unpriced” Schedules that includes an advanced notice of proposed rulemaking.
As a reminder, Section 876 of the 2019 National Defense Authorization Act (NDAA) authorizes GSA to award multiple award IDIQ contracts, including the Schedules, for services without considering price as an evaluation factor for contract award.
GSA is holding five listening sessions:
- October 20 at 10:00 AM
- October 27 at 11:00 AM
- November 3 at 2:00 PM
- November 9 at 10:00 AM
- November 17 at 2:00 PM
The registration for the listening sessions can be accessed here.
The General Services Administration (GSA) posted a notice this week on GSA Interact about quoting open market items through GSA eBuy. eBuy is a Request for Quote (RFQ)/Request for Information (RFI) system that allows government customers to request information, find sources, and request and receive quotes from GSA contractors who have a Multiple Award Schedule (MAS) contract.
GSA advises against open market quotes because it clogs up the system as it requires sifting through the quotes and verifying that the items are on MAS. Open market quotes are considered non-responsive. The exception to open market quotes is Other Direct Costs (ODCs). There are two ways to properly include open market ODCs:
- OLM procedures: The preferred and simplest method is to use the Order Level Materials (OLMs) procedures, provided the items being offered meet the requirements to become Schedule items (e.g. they are commercial items, Trade Agreements Act (TAA) compliant, etc.). OLM contract line item numbers (CLINs) are limited to 33.33% of the total cost of the order or BPA. See www.gsa.gov/olm for more details.
- Open market procedures: In accordance with FAR Subpart 8.402(f), open market items may be added to a Schedule order for administrative convenience, provided that all open market procedures are followed for those items. These items are generally ODCs but may be other items. The ordering activity must ensure that all open market rules are followed for these items. There is no dollar amount or percentage limitation on open market CLINs; it is at the discretion of the ordering activity.
To read GSA’s Interact notice on open market items, click here.
On Wednesday, Coalition President Roger Waldron testified before the House Committee on Veterans’ Affairs Subcommittee on Oversight and Investigations about the Department of Veterans Affairs (VA) medical supply chain. The subject of the hearing was “Modernizing the VA’s Supply Chain: Lessons from the Pandemic.” Testimony was provided by:
- Ms. Karen Brazell, Principal Executive Director, Office of Acquisition, Logistics, and Construction and Chief Acquisition Officer and Acting Assistant Secretary for Enterprise Integration, U.S. Department of Veterans Affairs
- Mr. Andrew Centineo, Executive Director, Office of Procurement and Logistics, Veterans Health Administration
- Ms. Deborah Kramer, Acting Assistant Under Secretary of Health and Support Services, Veterans Health Administration
- Ms. Shelby Oakley, Director of Contracting and National Security Acquisitions, U.S. Government Accountability Office
- Mr. Roger Waldron, President, Coalition for Government Procurement
During the hearing, witnesses from the VA and GAO discussed the challenges facing the VA supply chain including the transition to the Medical/Surgical Prime Vendor 2.0 program, the use of purchase cards, and the impact of the COVID-19 pandemic.
To view the full hearing, click here. Coalition President, Roger Waldron’s testimony is provided as this week’s FAR & Beyond blog (above).
VA Data Breach Exposes Veterans
Fedscoop reported that the Department of Veteran Affairs (VA) has had a data breach where 46,000 veterans’ personal information was exposed. The VA will not reenable the breached system until a complete security review is done by the VA Office of Information Technology. The breach in the system occurred from unauthorized users accessing an application within the Financial Service Center (FSC) to steal payments from community health care providers. The VA inspector general is also investigating the breach.
New Login for eBuy Beginning Oct 10
The General Services Administration (GSA) announced that starting on Saturday, October 10, eBuy will move to a new login process, which includes multi-factor authentication (MFA). The new login will utilize the GSA FAS ID, a centralized identity management system to access GSA applications with one email and password. The GSA FAS ID is currently used for the Sales Reporting Portal, GSA Advantage Purchase Order Portal, GSA Vendor Poral, and the Mass Mod Portal. GSA also plans to expand the GSA FAS ID to eOffer and eMod in the Spring of 2021.
GSA notes that users who already has a GSA FAS ID and access to eBuy should not see any changes to the way they login. Users without an established GSA FAS ID will need to register in the system starting on October 10. GSA has provided a list of frequently asked questions for vendors.
GSA Increasing Supply Chain Security Requirements in Contracts
FedScoop reported that the General Services Administration (GSA) is adding supply chain risk management (SCRM) and cybersecurity language to its contracts. Keith Nakasone, GSA’s Deputy Assistant Commissioner for the IT Category, noted that vendors will need to self-certify and GSA will monitor compliance with a SCRM plan. GSA plans to include the requirements in their GWAC programs including the upcoming 8(a) STARS III contract.
The Coalition has reached out to the U.S. Department of Veterans Affairs for information about how our pharmaceutical members can support veterans who have lost their employer-based healthcare and may not know how to continue their prescription medications.
Pharmaceutical member companies report that they have received an influx of calls from patients in recent months who have lost their employer-sponsored healthcare and are not sure about how they can continue their prescription medications.
Many of these individuals may qualify for the Health insurance exchanges through the Affordable Care Act, and/or Medicaid if they meet the FPLs in their state. There is also a segment of the newly uninsured who may qualify for VA healthcare benefits. We are concerned, however, that many do not know they are eligible and/or how to begin the application process.
We also understand that member patient assistance lines are often able to share basic information about the ACA and/or Medicaid with these patients.
We want to make sure that the same opportunity is available for veterans.
The Coalition has a meeting scheduled with the VA Health Eligibility Center on September 29 to discuss this issue and is looking for a small group of companies to participate. The purpose of the meeting is to see what VA healthcare benefits information member companies can be share with veterans. For example, how interested veterans might apply for VA healthcare benefits and/or connect with the VBA.
If you are interested in participating, please contact Aubrey Woolley at email@example.com.
Legal Corner: Defense Production Act—Using Authority To Address Emergent Needs
*Rebublished with permission from Thompson Reuters.
The Legal Corner provides the legal community with an opportunity to share insights and comments on legal issues of the day. The comments herein do not necessarily reflect the views of The Coalition for Government Procurement.
Since late March 2020, the Defense Production Act of 1950 (DPA)1 has been used in a variety of ways to respond to the COVID-19 pandemic. The Government’s recent activities under the statute illustrate its flexibility, provide guidance regarding how it may be used in the future, and, in some instances, highlight its complexity and its limitations to address threats such as a global pandemic. The statutory authorities are both extensive and complex, as the statute has been amended repeatedly since 1950 in ways that require clarification. Although there is a breadth of authorities under the statute, some provisions are specific to problems that arose during past events and may not be sufficiently flexible to address the emergency circumstances faced today, such as the COVID-19 pandemic.
In the light of the current national emergency caused by COVID-19, this BRIEFING PAPER updates and expands upon BRIEFING PAPERS No. 01-12, Defense Priorities & Allocations System (published in November 2001 shortly after the September 11 terrorist attack) regarding the use of the DPA and related regulations.2 Specifically, after providing background on the DPA and the implementing regulations and reviewing practical considerations and historical use of the Act, this PAPER discusses COVID-19 related actions using the DPA priorities and allocations and related authorities.
Click here to read more.
Healthcare Spotlight: President Releases Anticipated Executive Order on “Most Favored Nations” Drug Pricing
On September 13, 2020, President Trump signed an Executive Order (EO) on “Lowering Drug Prices by Putting America First.” The EO applies “most favored nations” pricing to both Part B and Part D prescription drugs and biologics under the Medicare program. “Most-favored-nation-pricing” in the EO is defined as the lowest price, after adjusting for volume and differences in national gross domestic product (GDP), for a pharmaceutical product that the manufacturer sells in an OECD member country that has a comparable per-capita GDP. It is expansive in that it covers not only Medicare Part B drugs and biologics that are administered in a clinical setting, but also Medicare Part D drugs and biologics from outpatient sources, including pharmacies.
The publication of the EO rescinds a previous EO by the same name that the Administration announced on July 24, 2020, which was expected to cover only Medicare Part B drugs. The EO was never officially published based on the White House’s offer to accept an alternative proposal from the pharmaceutical industry by August 24, 2020. However, an agreement is reported to not have materialized resulting in the White House publishing the EO on September 13, 2020, which expands the most favored nations pricing approach considerably to not only Part B drugs under Medicare, but also Part D drugs and biologics.
The EO requires the Health and Human Services Secretary to implement a rulemaking that would test a payment model whereby Medicare would pay, for certain Medicare Part B and Part D drugs and biologics, no more than the most-favored-nation price. The government would then assess whether paying no more than the most-favored-nation price had mitigated poor clinical outcomes and “increased expenditures associated with high drug costs” for patients requiring pharmaceutical treatment.
The EO does not provide specific timelines or due dates concerning the implementation of the EO or the associated rulemakings by the Department of Health and Human Services.
On September 14, the Federal Acquisition Regulation (FAR) Council published a proposed rule to implement Executive Order (EO) 13881, Maximizing Use of American-Made Goods, Products, and Materials, which strengthens Buy American preferences for contracting. This EO changes FAR clauses implementing the Buy American statute by increasing the domestic content requirements and price preference for domestic products.
The domestic content requirement for iron and steel end products increases to 95 percent under the order. For everything else, the domestic content requirement increases from 50 percent to “exceeds 55 percent of the cost of all components.” The EO encourages the use of domestic end products and construction materials through a price preference. Under the EO, the price preference for large businesses increases from 6 percent to 20 percent. The price preference for small businesses increases from 12 percent to 30 percent. The deadline for written comments in response to the proposed rule is November 13, 2020. Members who have feedback that they would like included in the Coalition’s comments, please contact Sean Nulty at firstname.lastname@example.org.
The General Services Administration’s (GSA) Inspector General (IG) released a report on September 14 about the Federal Acquisition Service’s (FAS) small business procurement reporting. The IG completed this audit to determine if the FAS correctly identifies and reports small business procurements according to the Federal Acquisition Regulation (FAR). FAS identified and reported $89 million in procurement to small businesses, which were incorrectly reported due to inaccurate North American Industry Classification System (NAICS) code reporting. While NAICS codes are important for the business size determination, codes are automatically populated based on the task order and they cannot be modified by contracting officers even if they are incorrect. The IG found that work that was completed partially by small business subcontractors was inaccurately reported as complete contract awards to small businesses.
The IG recommends that the FAS Commissioner address the Federal Procurement Data System-Next Generation (FPDS-NG) limitations to ensure that contracting officers can identify and change the data to accurately reflect small business procurements. There was also a recommendation that FAS have conversations with the Small Business Administration to discuss changing the reporting requirements of subcontracting and reseller work for small business procurement. FAS Commissioner Julie Dunne agreed with the second recommendation and partially agreed with the first.
The Government Accountability Office (GAO) released a report on opportunities to better integrate industry research and development (R&D) into the Department of Defense’s (DoD) planning. The report found that the majority of the $4-5 billion that DoD allocates to industry for research is not used in ways that line up with the agency’s goals. According to GAO’s report, DoD does not know how contractors’ R&D projects fit into its technology goals, which puts the agency at risk of duplicating work or missing opportunities in its science and technology investments.
In 2018, 62 percent of industry R&D projects did not align with the ten modernization priorities that DoD identified, including artificial intelligence and cyber. About 80 percent of contractors’ R&D spending went towards short-term investments intended to maintain near-term profitability, while only 20 percent went towards long-range research investments. While DoD has a database of independent R&D projects, it does not obtain information on whether they align with the agency’s modernization priorities, the project’s complete cost, or the project’s level of innovation. GAO recommended that DoD determine whether to require this additional information in the project database, and that the agency review projects annually as part of its strategic planning process.
General Services Administration (GSA) Global Supply announced that they are preparing the Supply Catalog 2021 and that it will be available in electronic and print versions in late October. The catalog has approximately 200 new healthcare furniture items ranging from storage units for use in patient rooms to waiting room seating in many different colors and patterns. This catalog contains over 7,500 of GSA’s most popular items across many product categories, such as office supplies, tools, furniture, cleaning products, and more. It also has approximately 200 new healthcare furniture items ranging from storage units for use in patient rooms to waiting room seating in many different colors and patterns.
GSA is preparing to start four contracts to locally store and ship high-volume GSA Global Supply products to support customers in Guam, Hawaii, Japan, and Korea. These sites will store and deliver hundreds of high-demand products in less than a week.
Off the Shelf: An Inside Look at Federal Acquisition
This week on Off the Shelf, Robin Bourne, subject matter expert at the Gormley Group, shares the insights and wisdom gained from a 30 year career as an acquisition professional at the General Services Administration (GSA).
Bourne shares his observations regarding key aspects of the evolution of the Federal Supply Schedules (FSS) and the Federal Acquisition Service (FAS).
He also shares insights regarding the rollout of the “schedules consolidation” and what it means for customer agencies, industry, and GSA.
Finally, Bourne highlights some of the ongoing challenges and opportunities in front of FAS, focusing on the acquisition workforce, and gives his take on contract duplication, category management, and best in class contracts.
Click here to listen to the full show.
DPC Issues Section 889 Purchase Card Use Guidance
On September 9, Defense Pricing and Contracting (DPC) issued governmentwide commercial purchase card (GPC) use guidance related to Section 889 Part B of the National Defense Authorization Act, which prohibits contracting with entities using certain banned telecommunications services and equipment. The memo provides directions for direct cardholders, including how to properly document 889 determinations, and outlines which information to enter into their purchase logs.
GSA Issuing Section 889 Contract Modifications
Federal Computer Week reported that General Services Administration (GSA) is working to have federal contractors comply with National Defense Authorization Act (NDAA) Fiscal Year 2019 (FY19) Section 889(a)(1)(B) through contract modifications. GSA is using contracts modifications as a key part in ensuring contractor compliance with Section 889. Thousands of compliance modifications have been sent out and about 81 percent of the modifications have been accepted.
Department of Labor Increases Contractor Minimum Wage
The Wage and Hour Division of the U.S. Department of Labor (DOL) announced that the applicable minimum wage rate for workers performing work on or in connection with federal contracts covered by Executive Order 13658, Establishing Minimum Wage for Contractors, has been raised to $10.95 per hour. The required minimum cash wage that must be paid to tipped employees performing work on or in connection with covered contracts will increase to $7.65 per hour. These new rates will go into effect on January 1, 2021.
The Coalition invites our Friday Flash readers to join the following upcoming Lunch and Learn series webinars next week.
September 22 from 12:00 – 1:00pm EST: Update on OTAs (Miller & Chevalier Chartered)
Miller & Chevalier will be discussing everything OTAs, including a brief overview of the history of OTAs and important highlights and red flags to be aware of when contracting with the government using OTAs. Topics will include eligibility, considerations when negotiating proprietary rights under OTAs, and planning for the potential for a sole source follow-on production contract.
September 24 from 12:00 – 1:00pm EST: Small Business Subcontracting Plans and Flow Down Clauses Demystified (Holland & Knight). More information coming soon!
The Coalition is pleased to host David S. Black and Eric S. Crusius from Holland & Knight LLP to discuss Small Business Subcontracting Plans and Flow Down Clauses Demystified. Small Business Subcontracting Plans are an underappreciated compliance risk for prime contractors and opportunity for small business subcontractors. Likewise, understanding which clauses should be flowed down from a prime contract to a subcontractor can have important impacts in shifting and sharing performance risk and cost.
POSTPONED – Webinar: Trillions in Taxpayer Funds: The Next Phase – Fraud, Investigations, and False Claims
Over the past months, statutes representing massive efforts to support the economy and business have been enacted. Agencies have been provided new authorities, existing authorities have been relaxed, and government has distributed vast sums to companies through various methods, including procurements, loans, loan guarantees, and grants. This webinar will explore the risks associated with these actions and the inevitable investigations and claims of fraud that are likely to arise from participation in these programs.
We hope that you will join us for our Lunch and Learn series webinars throughout the month of September. If you have any questions about registration, please contact Michael Hanafin at email@example.com.