VA Acquisition Management: Steps Needed to Ensure Healthcare Federal Supply Schedules Remain Useful

Through the FSS program, VA manages nine healthcare-related schedules—groups of contracts used to order medical supplies and services—under authority delegated by GSA. VA's FSS program management, including the speed with which it adds new contracts, affects VA medical centers' ability to use it to easily obtain goods and services. Further, recent changes in VA's medical procurement have also raised questions about the future role of the program.

GAO was asked to examine VA's management and use of its FSS program. This report assesses (1) what is known about VA use of its FSS program for fiscal years 2014-2018; (2) program management challenges faced by NAC; (3) the extent to which NAC awarded FSS contracts to vendors in a timely manner from fiscal years 2014-2018; and (4) the extent to which the FSS and MSPV-NG programs provide overlapping or duplicative offerings.

GAO reviewed eight VA schedules, excluding pharmaceutical due to the use of a prime vendor, among other things. GAO also analyzed three of these schedules representing about two-thirds of VA's FSS contracts; analyzed policies, guidance, and processes; and interviewed senior VA procurement, contracting, and supply chain logistics staff at NAC and two medical centers.

Over the past 5 years, Department of Veterans Affairs (VA) medical spending increased, but spending on its eight non-pharmaceutical Federal Supply Schedules (FSS) was flat. GAO found the vendor-submitted sales reports to be sufficiently reliable for describing these trends. However, GAO found that VA's National Acquisition Center (NAC)—the VA-wide contracting organization responsible for FSS—lacks controls to ensure the completeness of vendor sales data, which is used to calculate fees that finance the program.

The FSS program faces numerous challenges. For instance, NAC FSS guidance and training are not comprehensive, posing a risk of inefficiency and uneven application of requirements by contracting staff. Limited collaboration between FSS leadership at both NAC and the General Services Administration (GSA) also resulted in missed opportunities to share tools and practices. A 3-year FSS leadership gap further exacerbated challenges; these positions are now filled.

NAC also failed to meet its 180-day timeliness goal for 75 percent of the non-pharmaceutical FSS contracts it awarded from fiscal years 2014 through 2018 (see figure), though NAC met its goal for contract modifications 80 percent of the time.

By assessing timeliness goals and identifying barriers to achieving them, NAC leadership can take steps to better enable its contracting workforce to provide an efficient and reliable means to obtain needed goods and services through FSS.

Moreover, VA's procurement leaders have not assessed, and communicated to program managers, whether the duplication between FSS and the Medical Surgical Prime Vendor-Next Generation (MSPV-NG) program is a necessary and effective use of resources. These two programs feature many of the same items, and different contracting staff manage different contracts for the provision of the same or similar medical supplies for VA medical centers. Without assessing duplication between these two programs, VA is at risk of inefficient use of its contracting workforce, and may be unable to fully leverage its buying power.

GAO is making 11 recommendations: nine to VA and two to GSA; including that VA provide comprehensive guidance and FSS-specific training, improve NAC and GSA collaboration, evaluate timeliness goals and barriers, and assess FSS and MSPV-NG program duplication. VA and GSA agreed with GAO's recommendations.

In fiscal year 2018, the Department of Veterans Affairs (VA) spent nearly  $27 billion to procure a wide range of goods and services, including  medical supplies and equipment, to meet the needs of veterans. During  the same timeframe, VA purchased $2.3 billion in medical supplies and  services through eight non-pharmaceutical Federal Supply Schedules  (FSS) managed by VA’s National Acquisition Center (NAC). These  schedules, which are groups of contracts, are designed to provide VA and  other government agencies with a simplified procurement method.

Recent changes to VA’s procurement system through its Medical-Surgical  Prime Vendor-Next Generation (MSPV-NG) program have raised  questions about the future role of certain schedules in the FSS program.  Further, FSS users and vendors have also raised questions about the  program’s utility and efficiency. In light of these issues, you requested that  we examine VA’s management and use of its FSS program. This report  assesses: (1) what is known about VA’s use of its FSS program for fiscal  years 2014 through 2018; (2) challenges NAC faces in effectively  managing the FSS program; (3) the extent to which NAC awarded FSS  contracts in a timely manner from fiscal years 2014 through 2018; and (4) the extent to which the FSS and MSPV-NG programs provide overlapping  or duplicative offerings.

To assess what is known about VA organizations’ use of the FSS  program from fiscal years 2014 to 2018, we analyzed vendor sales report  data and compared them to FSS contract obligations data reported in  Federal Procurement Data System-Next Generation (FPDS-NG). We  found these data sufficiently reliable for the purposes of describing trends  in usage, based on our review of documentation and interviews with NAC  staff. (We discuss issues with the internal controls for this data source in  our report.) We reviewed eight schedules in VA’s FSS program, excluding  the pharmaceutical schedule due to its use of a prime vendor, among  other things. We further selected the FSS Medical Equipment and  Supplies, Patient Mobility Devices, and Healthcare Staffing schedules as  the focus of our review. We did this because, when we began our review,  the contracts under these three schedules collectively represented  around two-thirds of active NAC FSS contracts. We also used information  obtained from a prior GAO review of VA’s Veterans First Program when  discussing FSS use and used Standards for Internal Control in the  Federal Government as criteria to assess this use.

To determine challenges NAC faces in effectively managing the FSS  program, we reviewed VA procurement and internal NAC FSS policy,  guidance, and contracting staff training materials. We interviewed VA  FSS leadership, contracting staff, and other personnel during a site visit  to NAC; we also interviewed contracting and logistics staff at two  Veterans Health Administration (VHA) Veterans Integrated Service  Networks about their use of FSS. Further, we reviewed documentation  regarding General Services Administration (GSA) practices for managing  its FSS program, and delegation documents, and interviewed cognizant  GSA officials.

To assess the extent to which NAC awarded FSS contracts in a timely  manner, we analyzed NAC data on how long it took to process contract  offers and modifications for fiscal years 2014 through 2018. From the  three selected NAC schedules, we also reviewed 26 NAC FSS contracts  awarded from fiscal years 2014 to 2019, selected in part from those  contracts that did not meet timeliness goals. We conducted this review of  selected contracts to gain a better understanding of why the timeliness  goals were not being met. Furthermore, we reviewed systems and  processes used to award contracts, and interviewed VA FSS leadership,  contracting staff, and other personnel.

To assess the extent to which the FSS and MSPV-NG programs provide  overlapping or duplicative offerings, we reviewed relevant policies,  guidance, and documents, such as VA’s 2018-2024 Strategic Plan. We  interviewed MSPV program office officials, VHA and Strategic Acquisition  Center procurement officials, and VA and VHA procurement leadership.  We also used information obtained from an ongoing GAO review as well  as published GAO reports on VA’s MSPV-NG program.

We conducted this performance audit from November 2018 to January  2020 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.

The FSS program is directed and managed by GSA and provides federal  agencies with a simplified process for obtaining commercial supplies and  services at prices associated with volume buying. Schedules are catalogs  of related products and services, from pre-approved vendors, with  established pricing that can be used by federal agencies to obtain goods  and services, ranging from office furniture to medical equipment and  supplies. Since 1960, GSA has delegated authority to VA to manage  health care related schedules, currently totaling nine schedules.  (Throughout this report, we use the term “FSS” to refer to VA’s FSS  program, unless otherwise noted.) These nine VA schedules, as shown in  figure 1, are designed to provide FSS users at VA and other agencies  with a menu of items—including medical equipment, supplies, and  services—they can order from in a streamlined manner.

Sales to VA on the pharmaceutical schedule were $33.5 billion from fiscal  years 2014 through 2018. We omitted the pharmaceutical schedule from  our review because it differs substantially from the other eight schedules,  particularly in its use of a prime vendor.

VA’s FSS program is managed by the National Acquisition Center (NAC),  a VA-wide contracting organization which is also responsible for procuring  items like high-tech medical equipment for medical centers. NAC is part  of VA’s Office of Procurement, Acquisition and Logistics, which is  overseen by VA’s Office of Acquisition, Logistics, and Construction.  Within NAC, the FSS Service, which is comprised of about 80 staff, is  divided into teams of contracting staff who are responsible for individual  schedules. Another team, NAC’s Program Management and Resource  Support, manages functions such as issuing guidance and providing  training. In 2016, NAC issued a Procedural Guideline that generally sets a  goal for its contracting staff to complete their review of and award  decision for vendor-submitted FSS offers within 180 calendar days.

Like GSA’s FSS program, users of the VA FSS program are charged a  fee on the price of their FSS purchases, called the Industrial Funding Fee  (IFF). VA’s FSS fee is 1 percent for services and 0.5 percent for goods.  Fees generated by VA FSS fund its operations and other VA procurement  operations. NAC facilitates collection of the IFF from vendors that sell  products or services under VA FSS contracts, and vendors remit the IFF  to VA’s Supply Fund, a self-supporting revolving fund. The Supply Fund,  in turn, is used to provide funding to NAC for the operation of the FSS  Service, the office that manages VA’s FSS program.

VA’s schedules are used by organizations across the federal government,  including the Department of Defense, Department of Health and Human  Services, and the Department of Homeland Security. In this review, we  focus on how the Veterans Health Administration (VHA) uses VA’s  schedules. VHA, the only VA administration that uses the VA schedules,  provides medical care to about 9 million veterans at 170 medical centers.  These medical centers are organized into 18 Veterans Integrated Service  Networks (VISN), organizations that manage medical centers and  associated clinics across a given geographic area. Each VISN is served  by a corresponding Network Contracting Office (NCO), which is  responsible for awarding contracts for medical goods and services that  the medical centers need.

Two primary groups of VHA staff place FSS orders:  1.  VHA contracting officers, who are authorized to enter into contracts  on behalf of the government, may place orders against the schedules.  They handle purchases over the micro-purchase threshold, which is  generally $10,000.  2.  Certain VHA medical center logistics staff are authorized to make  smaller purchases at or below the micro-purchase threshold, including  placing FSS orders. Many of these staff are in the medical centers’  logistics offices, which are responsible for managing the supply chain  for VHA’s medical centers.

Figure 2 provides an overview of VA’s procurement structure and FSS  users.

VA’s Medical-Surgical Prime Vendor Program

In addition to purchasing goods and services through FSS, VHA logistics  staff at VA’s medical centers can also buy them through the MSPV-NG  program. In this program, VA medical centers use contractors called  medical-surgical prime vendors to obtain many of the supplies they use  on a daily basis, such as bandages and scalpels. These prime vendors  operate local warehouses and deliver supplies ordered by medical  centers. The prices for these medical supplies are established by  separate contracts or agreements that are awarded by contracting  officers within VA’s Strategic Acquisition Center (SAC). The MSPV-NG  program is managed by SAC and VHA. As we reported in 2018, for over  a decade, each medical center used VHA’s legacy MSPV program to  order medical supplies. Many of those items were purchased using VA’s  FSS, which provided medical centers with a great deal of flexibility to  order from a catalog containing hundreds of thousands of items.  However, this flexibility prevented VHA from standardizing the items used  across its medical centers and also affected its ability to leverage its  buying power to achieve greater cost avoidance. In December 2016,  VHA transitioned to a new iteration of this program called MSPV-NG,  which has a narrower catalog of medical supplies than the legacy  program, which offered hundreds of thousands of items. As of September  2019, the catalog offers about 22,000 supply items to medical centers.

Veterans First Contracting Program Requirements

In June 2016, a Supreme Court decision clarified that VA must apply the  Veterans First Contracting Program preference before contracting with a  non-veteran-owned business, including purchases made through FSS.  This program, referred to in this report as Veterans First, provides  preference within VA for contracting with veteran-owned small  businesses. Specifically, VA contracting officers must apply the “VA Rule  of Two,” meaning they must conduct market research to determine  whether there is a reasonable expectation that two or more veteran- owned small businesses will submit offers for a particular good or service  at a fair and reasonable price that offers best value to the government. If  two or more such businesses are found, contracting officers must set  aside the procurement for the veteran-owned small businesses.

Use of VA’s FSS Was Flat While Overall VHA Spending Rose, but NAC Lacks Controls to Verify Sales Data and Visibility into Small Business Participation and User Experience

VHA used NAC’s FSS to purchase billions of dollars in medical supplies  and services over the past 5 years. Sales for the eight non- pharmaceutical schedules, however, have been largely flat, as compared  to the rise in VHA’s total health care spending. Though we found vendor- submitted sales reports to be sufficiently reliable for describing overall  trends, we found that NAC does not have controls in place to ensure that  vendors are providing complete data—used to calculate fees that finance  the program. In an attempt to assess data completeness, NAC recently  began comparing vendor data to Federal Procurement Data System-Next  Generation (FPDS-NG) data for verification. However, because agencies  do not report micro-purchases made via purchase card in FPDS-NG, this  approach alone is not effective. We also found that NAC does not  analyze existing data on the number of veteran-owned small businesses  that hold FSS contracts, the types of goods and services they offer, or  which schedules have the most or least participation by these  businesses. This information is important because VHA contracting  officers must apply the Veterans First preference to contracts. The  existence or lack of veteran-owned small businesses on FSS affects  whether these staff can use FSS to fulfill their needs. Finally, we found  that NAC has limited visibility into the FSS user experience. Those  insights could help NAC identify potential areas for improvement.

Billions of Dollars in Medical Supplies and Services Are Purchased through VA FSS, but Sales Are Flat amid a Rise in Overall VHA Medical Spending

VHA obligated $291 billion from fiscal years 2014 to 2018 for health care  services provided at its medical facilities—$12 billion of which was for  medical supplies and services obligated using the eight non- pharmaceutical VA schedules. In contrast to VHA obligations for health  care at its medical centers, which increased nearly 20 percent during this  5-year period, VA FSS purchases on these schedules were flat. See  figure 3.

We found that the VHA sales trends varied among our three selected  schedules during this period, as shown in figure 4. Specifically, VHA sales  on the FSS for Medical Equipment and Supplies, the largest of the three,  were generally flat. VHA sales on the FSS for Patient Mobility Devices,  which includes items such as wheelchairs, increased nearly 50 percent,  while sales on the Healthcare Staffing schedule fell by more than 30  percent.

VA Lacks Controls to Ensure That Vendors Provide Complete Data

NAC does not have controls in place to ensure that vendors provide  complete data in their sales reports. These sales reports—required per an  FSS contract clause—are NAC’s only means of tracking FSS sales and  related fees that finance the FSS program. In fiscal year 2018, vendors  on VA’s nine schedules remitted $82 million in IFF from customers to  VA’s Supply Fund. Figure 5 provides an overview of key steps in VA’s  FSS vendor sales report and IFF collection process.

Like NAC, GSA also depends on vendor-reported data to track its FSS  sales. However, we found that GSA takes additional steps for its FSS  program to ensure the completeness of vendor-reported data. GSA has  internal controls to ensure data completeness, including a staff of 43  Industrial Operations Analysts who implement GSA procedures to ensure  that, among other things, vendors have sound sales data reporting  processes. We did not evaluate GSA’s use of these analysts, but,  according to GSA FSS officials, these analysts review vendor sales data,  educate vendors about GSA’s requirements, and conduct checks on  vendor internal controls and compliance with GSA policies.

Having internal controls in place is essential to ensure completeness of  vendor-reported sales data. In February 2019, NAC officials told us they  had tried to use obligation data reported in FPDS-NG to verify the  completeness of vendor sales data. However, they found that FPDS-NG  did not contain a substantial portion of vendor sales. These officials  stated that the difference between the vendor sales data and the  obligations in FPDS-NG was likely due in large part to purchases under  the micro-purchase threshold (currently $10,000) that agencies do not  report to FPDS-NG. Because agencies do not report micro-purchases  made via purchase cards to FPDS-NG, per the Federal Acquisition  Regulation, this approach alone is not effective to ensure data  completeness.

To estimate what portion of vendor-reported sales were below the micro- purchase threshold, we compared sales data that vendors reported to VA  to the obligations included in FPDS-NG data for fiscal year 2018 for the  eight schedules we reviewed. We found that 54 percent of VA FSS sales  as reported in vendor data were not included in FPDS-NG. VA  procurement officials we interviewed told us that the 54 percent were  likely micro-purchases made by medical center logistics staff using their  government purchase cards. For a more detailed view, we also reviewed  the percentage of fiscal year 2018 sales included in FPDS-NG for our  three selected VA schedules, and found that 65 percent and 71 percent of  FSS sales for the Medical Equipment and Supplies and the Patient  Mobility Devices schedules, respectively, were not included in FPDS-NG,  as shown in figure 6.

Finally, we compared FPDS-NG data to FSS sales reports for non-VA  agencies. We found instances where obligations in FPDS-NG reported by  these agencies exceeded those reported by vendors in FSS sales  reports—sometimes significantly. Specifically, from fiscal years 2014 to  2018, FPDS-NG reflected a cumulative $533 million more than the sales  that vendors reported to NAC for non-VA agencies for the Healthcare  Staffing schedule. This difference between reported sales and obligations  indicates a risk that vendors are under-reporting VA FSS sales to other  agencies.

Standards for Internal Control in the Federal Government require that  management have adequate controls for ensuring the quality of data.  NAC FSS officials told us that they would like to do more to mitigate the  risk that vendors may not be reporting complete VA FSS sales data,  given the differences we found and that NAC also found between  reported sales and obligations. Additional internal controls, similar to the  process used by GSA, would help NAC to ensure vendor-reported sales  are complete, and that the appropriate IFF sales fees that finance the  FSS program are collected.

NAC Lacks Visibility into the Extent of Veteran- Owned Small Business Participation in the VA FSS Program

We found that NAC does not assess data on the participation of, and  items and services offered by, veteran-owned small businesses in NAC’s  FSS program. This information is important because VHA contracting  staff must apply the “VA Rule of Two” preference before contracting with  a non-veteran-owned business. This preference for veteran-owned small  businesses under the Veterans First program—which VA implemented  more expansively after the 2016 Supreme Court decision—has had a  major impact on VA procurement, as we reported in 2018. Thus, the  availability of information about goods and services offered by veteran- owned small businesses on FSS affects whether contracting officers can  use FSS as a simplified means of making purchases. However, NAC  officials do not track the types of goods and services offered by veteran- owned small businesses holding FSS contracts, or which schedules have  the most or least participation by these businesses. In interviews for this  review and from our prior work, 10 contracting officers told us they use  FSS less often than in the past. They cited the Veterans First requirement  and instances where their market research showed a lack of veteran- owned small businesses holding FSS contracts. Instead, these  contracting officers said, they found the goods and services they needed  from veteran-owned small businesses on the open market. In addition,  officials with VA’s Office of Small and Disadvantaged Business Utilization  told us that that they do not analyze existing data on veteran-owned small  businesses to assess these businesses’ participation in the FSS program.  To conduct our own analysis, we looked at March 2019 data for the three  selected VA schedules and found that goods and services provided by  veteran-owned small businesses ranged from 11 to 23 percent of all the  line items offered on these schedules, as shown in figure 7.

According to the Standards for Internal Control in the Federal  Government, program officials need quality information on how well their  programs are serving end users—in this case, VHA contracting officers.  Without analyzing veteran-owned small business participation in its FSS  program, NAC cannot assess whether its program is meeting the needs  of its users in light of the Veterans First preference, which requires  contracting officers to apply the VA Rule of Two before purchasing  through a non-veteran-owned business. Because the number of veteran- owned small businesses available on FSS directly affects how often  contracting officers are able to use FSS, taking steps to better understand  these data would enable NAC to, if necessary, make adjustments to its  program to ensure contracting officers can use FSS as a regular, reliable,  and simplified source for obtaining goods and services.

NAC Has Limited Visibility into User Experience with the FSS Program

NAC is not consistently obtaining and analyzing feedback from FSS users  on their experience with the FSS program, despite having some tools in  place to gather such information. To provide support to users, NAC’s  website provides links to the FSS Help Desk and to a customer survey,  among other contact information. However, while these tools could be  used to gather feedback on whether the products and services offered on  VA’s schedules meet user needs, NAC has received minimal user  feedback via these tools. FSS leadership acknowledged the importance  of user feedback, and stated they would like to develop a more  comprehensive feedback mechanism, such as email surveys sent to  users on a periodic basis with questions specific to their FSS program  experience. Without such a feedback mechanism, NAC officials lack  information on users’ experience with the program that could provide  insights on areas for improvement. These insights, including whether  program improvements are needed, are especially important given that  FSS sales did not keep pace with the increased VHA spending over the  past 5 years. Standards for Internal Control in the Federal Government  state that, in order to formulate a strategy and achieve program  objectives, management needs quality information to make informed  decisions and evaluate performance.

NAC Faces Numerous Challenges Managing Its FSS Program

The NAC FSS program office faces numerous challenges—some of  which are VA-wide issues we have identified in prior reports—including  inadequate training and leadership instability. For example, NAC FSS  guidance and training for contracting staff is not comprehensive, which  poses a risk of inefficient use of contracting staff. Further, limited  collaboration between FSS leadership at both NAC and GSA has resulted  in missed opportunities to share tools and practices. These and other  challenges faced by NAC were further exacerbated by a 3-year  leadership gap in the FSS program; these positions have since been  filled.

NAC FSS Program Guidance and Training for Contracting Staff Is Not Comprehensive

The Federal Acquisition Regulation, along with GSA and VA’s FSS  regulations and policies, form the basis for NAC’s management of the VA  FSS program. NAC issues additional guidance to operationalize these  higher-level policies into NAC’s FSS work processes. This internal  guidance takes several forms, including Procedural Guidelines, FSS  Bulletins, and Standard Operating Procedures. We found that NAC’s  internal guidance does not provide contracting staff with a comprehensive  overview of key aspects of their jobs, creating confusion for the staff that  implements the guidance. For example, NAC contracting staff members  we interviewed stated that, for offers from resellers and distributors  without significant commercial sales, assessing price reasonableness  was a challenge. They said NAC’s standard processes assume that  commercial sales data would be available to form the foundation of price  analysis, but no NAC guidance outlines how to approach this analysis for  distributors and resellers that lack significant commercial sales.

Additionally, several contracting staff we interviewed told us that FSS  team chiefs and supervisors provide them guidance informally, which can  create confusion and variation in applying requirements across the VA  FSS teams. For example, one member of the contracting staff told us that  some teams require vendors to submit new commercial sales data when  exercising an option to extend an FSS contract. But he told us this is not  the case across all of VA’s FSS teams.

Standards for Internal Control in the Federal Government state that  management should periodically review policies, procedures, and related  control activities for continued relevance and effectiveness in achieving  objectives or addressing related risks. Reviewing NAC FSS policies and  procedures, including those given informally, will allow NAC FSS  leadership to provide more comprehensive guidance to all FSS  contracting staff on these basic, but critical, steps to help ensure an even  application of the FSS offer review process.

We found that training for NAC FSS contracting staff is not  comprehensive, posing another challenge to NAC’s management of its  FSS program; we also cited inadequate training when adding VA  Acquisition Management to GAO’s High Risk list. NAC contracting staff  attend training at VA’s Acquisition Academy, and several staff members  we interviewed said they found it helpful. However, according to NAC  officials, and based on our review of course materials and VA-wide  training, the Academy does not provide FSS-specific training. There are  differences between awarding and managing FSS contracts and other  types of federal contracts. For instance, before awarding an FSS contract,  NAC FSS contracting staff must take steps that in some cases are  specific to the evaluation of FSS contract offers, such as seeking to  obtain discounts from a vendor’s commercial pricelist that are equal to or  greater than the discounts offered to the vendor’s most favored customer.  In addition, while NAC has provided some FSS-specific training to its  contracting staff, such training is not offered on a regular basis, and no  overall FSS training program or curriculum exists to guide NAC training  for contracting staff.

According to the NAC FSS official responsible for training, the last  comprehensive office-wide FSS training provided to staff was about 3  years ago (since then, 16 new contracting staff have joined NAC FSS).  We interviewed 16 other NAC contracting staff, and six of them  expressed the need for more extensive training on FSS-specific  contracting. In mid-2018, the NAC FSS Director created Team Lead  positions to help train and mentor FSS contracting staff. This effort is still  in development. The NAC official responsible for training, among other  things, stated that other training and mentoring efforts are underway since  he joined NAC in November 2018, specifically among individual NAC  schedule teams, which sometimes provide informal training to their  contracting staff. However, some of these informal training efforts are not  offered on a consistent basis. For example, a senior member from the  contracting staff on the Medical Equipment and Supplies schedule team  provided a series of training sessions to his team on evaluating offers  from distributors and resellers without significant commercial sales to the  general public. However, this training was not provided to all NAC FSS  contracting staff, even though contracting staff working on most of the  eight schedules must review offers from distributors and resellers.

NAC officials are in the early stages of exploring ways to improve training  for their contracting staff. In the summer of 2019, NAC officials told us  they plan to post materials from all prior training on NAC’s intranet. They  also developed new orientation training for the nine new contracting staff  who joined NAC in July 2019, covering topics such as FSS policies and  where to find them, as well as an introduction to contract systems. The  NAC FSS official responsible for training emphasized that these topics  were covered at a basic level and said he would like to develop more  comprehensive training that would be offered on a consistent basis.

Standards for Internal Controls in the Federal Government state that well- trained staff, among other things, are essential to effective program  execution. In addition, GAO’s guide for assessing federal government  training states that in order to ensure training is effective, training  programs should be guided by an overall strategy, informed by assessing  priorities and evaluating results. While NAC has taken some steps to  improve training for FSS contracting staff, NAC has yet to implement a  comprehensive and consistently offered FSS training curriculum. Doing  so could enable NAC to provide its staff with the tools and clarity needed  to perform their roles and increase efficiency.

Collaboration between NAC and GSA Is Limited, and GSA Does Not Have Current Documentation of Its Delegation of Authority to VA

We found that NAC faces challenges effectively collaborating with GSA,  the agency that oversees all FSS for the federal government. GSA has  longstanding processes and established tools—such as its use of  analysts to review vendors’ internal controls, as well as its automated  offer-intake system—stemming from its decades of experience running an  FSS program that is larger than VA’s program. However, collaboration  and knowledge-sharing between NAC and GSA is limited. For example,  in the past, NAC and GSA held meetings quarterly, but since 2015, these  meetings have been held on an ad hoc basis. Neither organization took  action until recently to ensure that meetings continued at regular intervals.  GSA officials told us that during 2016 through 2018, they met with NAC a  number of times in response to questions from NAC FSS officials.  However, these meetings covered general policy questions, and  according to NAC, did not focus on discussing cross-agency roles and  responsibilities or on sharing practices for managing the FSS program.  Separately, VA Office of the Inspector General’s Office of Contract  Review officials told us of a 2010 working group formed to collaboratively  discuss revisions to GSA’s regulations, which included representatives  from GSA, NAC, the VA Office of the Inspector General, and others.  According to these VA Inspector General officials, this group was  disbanded about a year after it began due to disagreements among the  participants.

Upon NAC’s FSS Director’s request, in February 2019, NAC and GSA  resumed quarterly meetings. However, NAC officials noted instances  where collaboration is still limited. For example, GSA did not provide NAC  officials with advance notice about the publication of a final rule  establishing changes to GSA’s FSS regulations that were relevant to  NAC’s administration of its FSS program. NAC discovered the final rule  had gone into effect after it was published, independent of any  communication from GSA. NAC officials stated they would like to have  additional opportunities for input on GSA regulations that affect the VA  FSS program.

Our prior work has found that clearly defining roles and responsibilities is  a key practice for cross-agency collaboration. Without a clear and  shared understanding of their respective responsibilities, and processes  to ensure they share tools and practices, NAC will not have the  opportunity to learn from GSA’s experience or have timely input on GSA  actions that affect the VA FSS program.

GSA and VA are also missing a document—namely, GSA’s updated  delegation of authority to VA—that could guide their collaboration efforts.  This delegation should state what authority is granted to VA, and cite the  limitations on that authority. We found a January 2008 Federal Register  notice mentioned a 2004 update to the delegation, but the GSA Director  of Policy for the Federal Acquisition Service was unable to locate or  provide this update. VA was also unable to locate a copy of the 2004  update. Instead, GSA and VA gave us a number of documents, including  memorandums and other communications that spanned from the 1960s  to the 1990s. The documents were fragmented and outdated. Further,  many of these older documents referred to outdated laws, regulations, or  organizations, raising questions about their current applicability.

Standards for Internal Control in the Federal Government state that the  roles of those responsible for carrying out programs should be clearly  outlined in policy, and GAO has also reported that written guidance and  agreements on collaboration are key features of successful cross-agency  collaboration. The lack of current documentation related to GSA’s  delegation to VA, alongside the limitations in NAC and GSA  communication, undermine a firm foundation on which to build  collaboration. Without a clear delineation of roles and responsibilities—and effective overall coordination—NAC and GSA risk misunderstandings  and missed opportunities to share information and tools that could  improve NAC’s management of the VA FSS program.

Key FSS Leadership Vacancies Spanned 3 Years

From 2015 until 2018, senior VA FSS leadership positions were vacant,  which affected VA’s FSS program management and directly contributed  to many of the challenges we identified above. Namely, the FSS program  director position was vacant for over 2 years and the role of FSS Program  Management and Resource Support team chief was vacant for about 19  months.

During that time, chiefs of individual VA schedules held the Director or  Chief positions on an acting and rotational basis. During these rotations,  these chiefs were dual-hatted as they maintained responsibility for their  primary job role. The Associate Executive Director of the NAC stated that  he was reluctant to make long-term, strategic policy decisions while the  FSS Director position was vacant.

In late 2017 and late 2018, respectively, NAC permanently filled these  two FSS program positions. However, by then, broader changes had  taken place within VA contracting that affected the VA FSS program:  namely, the Supreme Court ruled in 2016 that before VA may contract  with a non-veteran-owned business, VA must apply the “VA Rule of Two,”  including instances when VA makes purchases through FSS. Also in late  2016, VA launched the MSPV-NG program, which offers items similar to  those items offered on two VA schedules. Figure 8 provides a timeline of  these FSS leadership vacancies and events.

Although both of these leadership positions have since been filled, the  effect of the gaps is still evident in some cases. According to NAC FSS  officials, hiring to fill open FSS contracting staff positions was slowed by  the leadership gaps, which added to workload pressures; more contract  offers were received than completed in fiscal years 2015 and 2016,  creating a backlog. Contracting staff workload is a VA-wide issue we  previously identified, and is one of the areas of concern we cited in  adding VA Acquisition Management to GAO’s High Risk List in 2019. In  late 2018, the FSS Director sought approval for 10 additional contracting  staff; 9 of these positions were filled in July 2019. NAC leadership stated  that these positions should help address some of the backlog faced by  FSS contracting staff.

NAC Rarely Meets Its Timeliness Goals for FSS Contract Awards

NAC has experienced major delays in awarding vendor contracts and  missed its timeliness goal for contract award 75 percent of the time from  fiscal years 2014 through 2018. NAC’s inefficient offer intake system and  fragmented vendor guidance likely contributed to these delays. NAC FSS  leadership has acknowledged these challenges and is working to address  some of them. Assessing the appropriateness of these timeliness goals  and taking steps to comprehensively identify and address barriers to  achieving them will better position NAC’s contracting workforce to  improve contract award timeliness.

NAC Has Not Awarded FSS Contracts in a Timely Manner

Our analysis shows that from fiscal years 2014 through 2018, NAC did  not meet its timeliness goals for 75 percent of its FSS contract awards.  To do this analysis, we compared NAC FSS contract award data for the  eight non-pharmaceutical schedules against the timeliness goal of 180  calendar days for contracting staff reviews and decisions on vendor  contract awards, as set forth in a NAC Procedural Guideline.  Specifically, we found that 319 of the 803 FSS contract awards took at  least double the 180-day goal. In addition, 12 of them exceeded the goal  by more than 1,080 days—six times the goal. During fiscal years 2015  and 2016, the program accumulated a backlog of FSS offers, which  coincided with a vacancy in the FSS Director position starting in October  2015. While NAC staff made some progress on mitigating this backlog,  timeliness remains an issue. For example, during fiscal year 2018, NAC  missed its timeliness goal 73 percent of the time. Figure 9 portrays NAC’s  timeliness of FSS contract awards over this 5-year period.

We also analyzed the timeliness of awards for the three selected VA  schedules from fiscal years 2014 through 2018, as shown in figure 10.  This analysis shows that NAC consistently missed its timeliness goals  across the three different schedules.

However, for contract modifications—typically changes to contract items  or prices—NAC met its timeliness goal—set at 60 calendar days—80  percent of the time over this 5-year period. We reviewed data on about  14,000 modifications executed by NAC for the eight non-pharmaceutical  schedules from fiscal years 2014 to 2018. About 2,300 of these  modifications were executed to add new items to existing contracts. For  these, NAC met the timeliness goal only 54 percent of the time. The  ability to quickly add new items to FSS contracts is important to ensure  that agency users have access to up-to-date medical supplies and  services through the VA FSS program.

These timeliness goals apply across all of NAC’s eight non- pharmaceutical schedules, regardless of how complex a contract award  or modification might be. Various factors can affect contracting staff’s  ability to meet these goals, including the complexity of the award, staff’s  workload, and whether or not vendor documentation is complete.

NAC FSS leadership has acknowledged these challenges and is working  to address some of them. However, NAC has not assessed if the current  timeliness goals are appropriate, or performed a comprehensive  assessment of the barriers that prevent FSS contracting staff from  achieving timeliness goals. Standards for Internal Control in the Federal  Government state the importance of management making well-informed  decisions and conducting meaningful evaluations of their organization’s  performance. Assessing the appropriateness of current timeliness goals  and taking steps to comprehensively identify and address barriers to  achieving them will better position NAC contracting staff to meet these  goals. Moreover, timelier contract awards enable medical centers to  obtain needed goods and services and, as a result, help FSS to remain  useful to medical centers.

Inefficient Offer-Intake Process and Fragmented Vendor Guidance Likely Contributed to Delays

When seeking a VA schedule contract award, NAC processes require  vendors to submit an offer and required documents. Because NAC’s offer  intake system is not automated, NAC officials must manually check a  general FSS email inbox for vendor submissions and manually review the  vendor’s offer and required documents to determine if all information is  included.

Further, there are no automated checks for completeness of vendor  documentation. We analyzed a non-generalizable sample of 26 selected  FSS contracts awarded beginning in fiscal year 2014 through January  2019 on three schedules—Medical Equipment and Supplies, Patient  Mobility, and Healthcare Staffing—and found that in 14 instances, VA  contracting staff identified incomplete documentation and had to follow up  with the vendors to receive revisions. NAC officials told us that tracking  vendor offers and associated documents from email is cumbersome and  time consuming because they have to sort through several separate  vendor email messages to splice together vendor offer submissions, due  to file size limitations.

The inefficient offer intake process also led to delays in assigning offers to  contracting staff. NAC did not always assign offers to contracting staff  immediately after vendor submission, delaying the start of work. Our  review of 26 selected VA FSS contract files identified 10 instances where  NAC took more than 20 days after receipt to assign the offer to  contracting staff. NAC officials told us that these delays were caused by  both the non-automated offer-intake process as well as the team chiefs’  lack of time to assign these offers to contracting staff for their review.  According to the FSS Director, in mid-2018 he created a team lead for  each NAC schedule team to assign offers to contracting staff and monitor  these offers to better ensure timeliness. Figure 11 summarizes key steps  in NAC’s FSS manual offer intake and award process, as described by  FSS contracting officials.

In contrast to VA’s manual system, since 2004, GSA has used an online  system called eOffer to manage its FSS offer intake process. This system  includes automated system checks to ensure documentation is complete  before it is submitted by vendors. Once offers are submitted, supervisors  in GSA FSS offices review offers in the system and assign them to  contracting staff for review. We have not evaluated whether the eOffer  system increases efficiency or reduces errors in submitted offers, but,  according to GSA officials, eOffer achieves efficiency and accuracy due  to the automated checks that will not let vendors submit an incomplete  offer package.

NAC contracting staff told us that they could benefit from a more efficient  system to accept offers from vendors. In late 2018, NAC and GSA  discussed the possibility of adopting GSA’s eOffer online system, as well  as its companion eMod, which is used to process modifications. In  November 2018, GSA’s estimate to add VA to the system was about $9  million for the first year, and nearly $8 million annually thereafter, which,  according to NAC’s FSS Director, is cost-prohibitive. GSA officials told us  that to determine this cost, they compared the number of NAC FSS  contracts to the number of GSA FSS contracts, and apportioned 10  percent of the overall system development and operation cost to VA.  Despite the cost of GSA’s systems, if VA does not address limitations in  its own manual offer-intake process, such as implementing a system that  can provide automated checks for completeness, delays in assigning  offers to contracting staff will continue. Further, FSS contracting staff will  continue to spend additional resources and time to gather and complete  offer documentation before they can determine whether to award the  contract.

We also reviewed NAC’s website and found that guidance for vendors  was fragmented. Pieces of guidance were spread out among a number of  documents as opposed to being located in one document or section of  the website for vendors to easily locate. This also contributes to vendors  submitting incomplete offer documentation, which, in turn, contributes to  delays in contract awards. Incomplete documentation for pricing and  sales data is particularly common—namely, information that enables  contracting staff to compare the prices vendors offer the government and  commercial customers for the same goods. As stated in Standards for  Internal Control in the Federal Government, clear communication with  outside parties, like vendors, is essential to ensuring that NAC is able to  help achieve its program objectives. Clearer guidance would provide  vendors with a reminder of program requirements that could reduce VA  FSS contracting staff review time and improve their efficiency in reviewing  contract offers.

VA Has Not Assessed Whether FSS and MSPV-NG Program Duplication Is Necessary or Efficient

Over the past few years, the FSS and MSPV programs have transitioned  from functioning together to existing as separate programs serving similar  VA medical center needs. However, VA leaders have not assessed if the  overlapping offerings are a necessary and effective use of resources, or  allow VA to fully leverage its buying power—a stated goal of both the  MSPV-NG and FSS programs. As we reported in November 2017, for  over a decade, VA’s medical centers used VHA’s legacy MSPV program  to order medical supplies—many of which were purchased using NAC’s  FSS program. When VHA transitioned to its MSPV-NG program in late  2016, it significantly narrowed the catalog to 6,000 items, and VHA  contracting officials told us that they modified the contracting approach in  March 2018 to have the prime vendor supply the items directly, separate  from FSS. At the outset, VHA set goals for the MSPV-NG program,  including standardization of requirements for supply items and cost  avoidance by leveraging VA’s substantial buying power. However, the  MSPV-NG program recently revised its goals from focusing on  standardization to increasing the number of catalog items available for  medical centers’ use—the catalog contains more than 20,000 items as of  September 2019.

We compared the MSPV-NG catalog to the VA Medical Equipment and  Supplies schedule to determine whether they offered similar products,  and found overlap. For example, we found that as of June 2019, about  two-thirds (139 of 206) of the MSPV-NG catalog suppliers also offered  items on the Medical Equipment and Supplies schedule. Also, in March  2019, NAC FSS leadership provided analysis to the MSPV-NG program  office showing that 41 percent of items that the MSPV-NG program  planned to include in an update of the MSPV catalog were already  available under VA FSS contracts. This duplication could result in  inefficiencies whereby different sets of contracting staff within the FSS  and MSPV-NG programs award, modify, and manage contracts for the  same or similar medical supplies for VA medical center use.

The MSPV-NG program office is currently developing the next iteration of  the program, called MSPV 2.0, which it plans to roll out in February 2021.  In April of 2019, a senior VHA procurement official announced at a vendor  forum that the VA FSS program would be used as a source for its MSPV  2.0 supply catalog. However, in June of 2019, MSPV-NG program  officials and VHA procurement leadership told us they decided against  using FSS for this purpose and provided several reasons for this decision.  First, these officials stated that FSS was not comprehensive enough to  fulfill the MSPV 2.0 catalog; as noted above, FSS could provide about 40  percent of needed items. These officials also stated that the effort needed  to create new FSS contracts or add new items to existing VA FSS  contracts to fulfill the remaining 60 percent of the required MSPV 2.0  catalog would be too time consuming. Further, these officials also stated  that there were not enough veteran-owned small businesses that offer  items on VA FSS to support the MSPV 2.0 requirements. They stated this  could result in extra time and resources to solicit both within FSS and the  open market to ensure that they meet the VA Rule of Two. NAC FSS  leaders told us that they communicated their willingness to support the  MSPV 2.0 program by offering to work with vendors to quickly add the  needed items; however, the MSPV-NG program office did not involve  them in their final decision not to use FSS as a source for the MSPV 2.0  program.

VA procurement leaders have informally discussed the future of the FSS  program, according to a senior VHA procurement official. According to  this official, VA has not determined whether it will change the strategy for  FSS, or if the duplication between the FSS and MSPV-NG programs is a  necessary and efficient use of resources.

VA’s Strategic Plan for Fiscal Years 2018-2024 calls for related efforts to  be coordinated with each other to achieve cross-organizational unity of  purpose. When adding VA Acquisition Management to our High Risk  List in March of 2019, we reported that VA lacks an effective medical  supplies procurement strategy. While this finding stemmed from our  review of VA’s MSPV-NG program and was related to the  recommendation that VA develop an overarching strategy for this  program, the same applies for VA’s FSS program in that VA does not  have a strategic approach for its procurement of medical supplies through  these two programs. Further, we reviewed VHA’s Modernization  Campaign Plan, dated March 2019, and VHA’s Modernization Plan  briefing slides, dated October 2019, which describe several  modernization initiatives. One of these initiatives is to transform the  supply chain through modernization. This modernization plan includes the  planned MSPV 2.0 program and VA’s planned changes to its supply  chain management system; however, it does not include FSS.

As VA is undertaking these efforts, it is unclear how and whether FSS fits  into VA’s vision of a modernized supply chain. Taking steps to assess VA  FSS and MSPV program duplication will allow VA to determine if it is  efficiently using its contracting staff. Moreover, communicating its  decision to managers of these two programs will allow these managers to  focus and coordinate their resources accordingly. This assessment will  also help VA determine if it is leveraging its buying power to improve the  effectiveness and efficiency of services for veterans and their families.

The continued utility of parts of VA’s FSS program is in question amid flat  sales in recent years and competing programs available to medical center  staff for supplies, such as MSPV-NG. VA has the opportunity to improve  its FSS program by ensuring that it has complete vendor sales data and  better information on participation by veteran-owned small business and  user experiences. Obtaining such information would enable NAC to  ensure it is collecting all fees it is owed which support program  operations, and ensure that FSS can remain a regular, reliable and  simplified source for contracting officers to obtain goods and services on  behalf of the medical centers. Other steps are necessary, however, to  address challenges VA faces with its FSS program. Specifically, the FSS  program needs to provide comprehensive guidance and training to its  contracting officers, and assess timeliness goals and barriers to achieving  these goals to ensure the program remains useful to customers—namely  medical centers that rely on the goods and services provided by FSS. In  working to improve its FSS program, NAC has the opportunity to gain  insights and experience from GSA on how it manages its much larger  schedules program. However, lack of collaboration between GSA and  NAC has resulted in missing opportunities for such information sharing.  Finally, both VA’s FSS and MSPV-NG programs support VA’s overall  medical supply chain, yet VA has not assessed whether duplication  between them is a necessary and effective use of resources. Without this  assessment, VA could be missing opportunities to leverage buying power  and improve efficiency in procuring goods and supplies for its medical  centers.

We are making a total of 11 recommendations, including nine to VA and  two to GSA:  The Secretary of Veterans Affairs should ensure that the Associate  Executive Director of VA’s NAC puts controls in place to better ensure the  completeness of vendor FSS sales reporting. (Recommendation 1)

The Secretary of Veterans Affairs should ensure that the Associate  Executive Director of VA’s NAC assesses data on the participation of and  items and services offered by veteran-owned small businesses in NAC’s  FSS program, in order to determine whether their program is meeting the  needs of VHA contracting officers who use it given the Veterans First  requirements they must meet. (Recommendation 2)

The Secretary of Veterans Affairs should ensure that the Associate  Executive Director of VA’s NAC directs the FSS Director to develop a  mechanism to consistently obtain and analyze VHA user feedback on the  FSS program. (Recommendation 3)

The Secretary of Veterans Affairs should ensure that the Associate  Executive Director of VA’s NAC provides FSS contracting staff with  comprehensive FSS guidance. (Recommendation 4)

The Secretary of Veterans Affairs should ensure that the Associate  Executive Director of VA’s NAC develops an FSS-specific training  program to include essential skills and processes to meet ongoing  training needs for new and existing contracting staff. (Recommendation 5)

The Administrator of GSA should work with the Secretary of VA to  develop a memorandum of understanding outlining the roles and  responsibilities of GSA and NAC for collaborating under GSA’s delegation  of authority to VA for the healthcare-related Federal Supply Schedules,  including the processes through which the two organizations will  coordinate and share useful tools and practices. (Recommendation 6)

The Secretary of Veterans Affairs should work with the Administrator of  GSA to develop a memorandum of understanding outlining the roles and  responsibilities of GSA and NAC in collaborating under GSA’s delegation  of authority to VA for the healthcare-related Federal Supply Schedules,  including the processes through which the two organizations will  coordinate and share useful tools and practices. (Recommendation 7)

The Administrator of GSA should take steps to document its delegation of  authority for the healthcare-related Federal Supply Schedules to VA.  (Recommendation 8)

The Secretary of Veterans Affairs should ensure that the Associate  Executive Director of VA’s NAC assesses the appropriateness of NAC’s  current timeliness goals for FSS contract awards and takes steps to  comprehensively identify and address barriers to achieving them.  (Recommendation 9)

The Secretary of Veterans Affairs should ensure that the Associate  Executive Director of VA’s National Acquisition Center takes measures to  ensure greater efficiency in the offer-intake process, such as providing  additional guidance for vendors or by adopting a system that includes  checks for completeness of required vendor documentation.  (Recommendation 10)

The Secretary of Veterans Affairs should take steps to assess duplication  between VA’s FSS and MSPV programs, to determine if this duplication is  necessary or if efficiencies can be gained. (Recommendation 11)

We provided a draft of this report to the Department of Veterans Affairs  and to the General Services Administration for review and comment. In  VA’s comments, reproduced in appendix II, it concurred with all of our  nine recommendations. In GSA’s comments, reproduced in appendix III, it  concurred with our two recommendations.

We are sending copies of this report to the appropriate congressional  committees. As agreed with your offices, unless you publicly announce  the contents of this report earlier, we plan no further distribution until 30  days from the report date. At that time, we will send copies to the  Secretary of the Department of Veterans Affairs and the Administrator of  the General Services Administration. In addition, the report will be  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions concerning this report, please  contact me at (202) 512-4841 or by email at oakleys@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this report. GAO staff who made key  contributions to this report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

This report assesses: (1) what is known about the Department of  Veterans Affairs’ (VA) use of its Federal Supply Schedule (FSS) program  for fiscal years 2014 through 2018; (2) challenges the National Acquisition  Center (NAC) faces in effectively managing the FSS program, (3) the  extent to which NAC awarded FSS contracts in a timely manner from  fiscal years 2014 through 2018, and (4) the extent to which FSS and the  Medical-Surgical Prime Vendor-Next Generation (MSPV-NG) programs  provide overlapping or duplicative offerings.

To assess what is known about VA’s use of its FSS program from fiscal  years 2014 through 2018, we analyzed quarterly vendor sales report data  provided by NAC. To assess the reliability of these data, we reviewed  documentation and other information on the internal controls of the data  systems used by NAC to collect and verify VA FSS sales reports. We  found these data to be sufficiently reliable for analyzing overall trends in  sales on VA’s FSS for this time period. We also obtained contracting data  from the Federal Procurement Data System-Next Generation (FPDS-NG)  for fiscal years 2014 through 2018, as well as a listing of VA FSS  contracts active during that period from NAC. We used these data to  analyze contract obligations on VA FSS contracts over this time period.  Further, we compared total obligations based on FPDS-NG data to  vendor-reported sales data provided by NAC by schedule and fiscal year.  We found the FPDS-NG data sufficiently reliable for our purpose of  comparing reported obligations to vendor sales data. We also used  information obtained from a prior GAO review of VA’s Veterans First  Program when discussing FSS use and used Standards for Internal  Control in the Federal Government as criteria to assess this use.

We selected the Medical Equipment and Supply (65IIA), Patient Mobility  (65IIF), and Healthcare Staffing (621I) schedules as the focus of our  review, based on total number of active contracts; they collectively  represented about two-thirds of the approximately 1,700 active VA FSS  contracts at the time we began our review. We excluded the  pharmaceutical schedule from our review because, unlike the other  schedules, orders are placed almost exclusively through the  pharmaceutical prime vendor, and participation is a statutory requirement.  We also reviewed and compared VA, Veterans Health Administration  (VHA), and General Services Administration (GSA) policies, guidance,  and memorandums related to the program and interviewed VHA- and VA- wide procurement officials regarding factors that affect use of the VA  schedules, including the Veterans First program. We also analyzed data  on items offered by vendors on the three selected schedules to determine  the percent of items offered by veteran-owned small businesses.

We interviewed VHA contracting staff and supply chain logistics staff at  VA medical centers—users of the program—on factors that affect their  use of FSS. We conducted site visits at a non-generalizable selection of  two Veterans Integrated Service Networks (VISNs), visiting one medical  center within each. Additionally, we interviewed Network Contracting  Office (NCO) officials within each selected VISN, either in person or via  telephone:

VISN 12: VA Great Lakes Health Care System

Clement J. Zablocki VA Medical Center (Milwaukee, Wisc.)

Great Lakes Acquisition Center, NCO 12 (Milwaukee, Wisc.)

We selected VISNs and medical centers primarily based on geographical  proximity to NAC and GAO offices, as well for higher total obligations in  fiscal year 2018. At each selected medical center, we interviewed the  Facility Chief Supply Chain Officer and other members of the logistics  staff. At each selected NCO, we interviewed leadership, branch chiefs,  and contracting officers on teams that cover goods and services included  on the three VA schedules we selected. Separately, we also spoke with  representatives of the Coalition for Government Procurement, a group  representing a number of FSS vendors, and attended a conference for  vendors organized by NAC.

To assess challenges NAC faces in effectively managing the FSS  program, we reviewed GSA and VA procurement regulations, policies,  and guidance as well as NAC FSS guidance. We analyzed the content of  training offered by the Veterans Affairs Acquisition Academy and by NAC  FSS. We also reviewed systems and processes used by NAC FSS staff  to accept and review FSS offers and award contracts. We also  interviewed NAC FSS leadership, contracting staff, and other staff  regarding management of the FSS program during a site visit to NAC. We  obtained and analyzed information on NAC FSS staffing, including  leadership vacancies. We obtained documentation on analogous GSA  practices for managing its FSS program, as well as documents delegating  management of healthcare-related schedules to VA. We also interviewed  officials in GSA’s Federal Acquisition Service who are responsible for  overseeing its FSS program.

To determine the extent to which NAC met its timeliness goal for  processing FSS offers and modifications, we analyzed timeliness data  collected by NAC for fiscal years 2014 through 2018, for the eight non- pharmaceutical schedules; we also performed limited analysis of  timeliness for the pharmaceutical schedule, and additional analysis for  our three selected schedules. We focused our analysis of timeliness on  offers resulting in a contract award, because these are the cases that are  relevant to users of the FSS program. To provide context for overall  workload, we also analyzed timeliness for offers that were withdrawn, or  where contracting staff decided not to make an award. We excluded  offers that were reviewed by the VA Inspector General, Office of Contract  Review, from our overall timeliness analysis because NAC policy does  not count the time required for these reviews against its timeliness goal.  To assess the reliability of timeliness data, we collected information on  the system and processes used to maintain the data, performed  electronic testing, and compared reported dates to source documents for  selected contracts. We found these data sufficiently reliable for the  purpose of assessing overall performance and trends in NAC FSS  timeliness.

From the three selected schedules, we selected a non-generalizable  sample of 26 NAC FSS contracts awarded in fiscal years 2014 through  January 2019. Eight of the contracts were randomly selected from all  active contracts on the three schedules as of January 2019, while the  remaining 18 contracts were selected by stratified random sample of  contracts awarded in fiscal year 2018, focusing on those which exceeded  the 180-day timeliness goal and omitting those with few or no sales.  Thirteen of the contracts were under the Medical Equipment and Supplies  schedule, seven of the contracts were under the Healthcare Staffing  schedule, and the remaining six were under the Patient Mobility schedule.  For each selected contract, we reviewed documents in the contract file;  we also interviewed cognizant members of the contracting staff for 16 of  the contracts. We selected this non-generalizable sample to provide  illustrative examples of process steps and factors affecting timeliness; it  was not the sole source of our findings on factors contributing to  timeliness, which also included analysis of policies, guidance, and data,  and interviews with NAC officials.

To assess the extent to which the FSS and MSPV-NG programs provide  overlapping or duplicative offerings, we reviewed policy and guidance  related to both programs and interviewed VHA- and VA-wide procurement  leaders. To assess the extent of overlap between the MSPV-NG and VA  FSS catalogs, we also analyzed data on the items available through  MSPV-NG and VA FSS, as well as the vendors participating in each, to  assess extent of duplication. We interviewed VA officials from NAC, the  Office of Acquisition and Logistics, the Strategic Acquisition Center, and  VHA regarding the relationship between MSPV-NG and the FSS  program. We analyzed policies related to these programs that affect  management and use of VA FSS, and interviewed VA officials about their  impact. We also reviewed documents and interviews with MSPV program  office staff from an ongoing GAO review of the MSPV program. We used  information obtained from an ongoing GAO review as well as published  GAO reports on VA’s MSPV-NG program. Finally, we reviewed  documents, including VA’s 2018-2024 Strategic Plan and VHA supply  chain modernization plans.

Appendix II: Comments from the Department of Veterans Affairs

Appendix III: Comments from the General Services Administration

Appendix IV: GAO Contact and Staff Acknowledgments

Shelby S. Oakley, 202-512-4841 or oakleys@gao.gov.

In addition to the individual named above, Lisa Gardner, Assistant  Director; Teague Lyons, Analyst-in-Charge; Erin Stockdale; Sarah Amer;  Maurice Robinson; Emily Bond; Rashmi Agarwal; Andrew Burton; Virginia  Chanley; Matthew T. Crosby; Susan Ditto; Lori Fields; Gina Flacco;  Suellen Foth; and Alyssa Weir made key contributions to this report.

To meet veterans’ needs, VA spends billions each year through the Federal Supply Schedules program—a simplified way to buy goods and services at volume pricing. The General Services Administration delegates management of part of this program to VA, the largest federal purchaser of medical supplies and services.

However, VA is not managing the program efficiently, with delays in awarding contracts, a lack of training for contracting staff, and limited visibility into users’ needs. Further, VA has not assessed how overlap with another procurement program affects the program’s goals.

We made 11 recommendations to address these issues and others.