**VA NAC Industry Conference**

**October 3-4, 2005**

**Town Hall Questions and Answers**

**[Miscellaneous:]{.underline}**

1)  *What do you see resulting from raising the credit card from \$2500
    to \$250,000?*

> The small purchase threshold was being considered for an increase to
> \$250,000, but this was not finalized. Credit card limits remain at
> \$2,500.

2)  *Are there plans for a laboratory prime vendor?*

> The VA NAC is still looking into the merits and viability of a
> laboratory prime vendor program. If vendors have any information or
> suggestions, please contact Carole O'Brien, Director -- FSS Service,
> at 708-786-4957 or Steve Thomas, Director -- National Contract
> Service, at 708-786-4920.

3)  *For a better understanding of how funds are allocated through the
    VHA system provide an explanation of the budget process. VA in
    general, VISN level, individual VAMC.*

4)  *How does "fall-out" funding occur at the end of the Government's
    Fiscal Year?*

5)  *Who/What Department is the point of contact for marketing? What are
    the regulations, processes, to market to the VAs?*

6)  *When new technology is developed that could benefit our veterans,
    what is the process to present this technology to the VA?*

> If a vendor already has an FSS contract, they can utilize the
> Modification Clause of their contract to add the product to their
> existing contract vehicle. Vendors are also encouraged to contact the
> customer groups to discuss the potential of their new product or line.

7)  *When, if at all, will VA be using E-Offer and/or E-Mod?*

> Currently the VA NAC does not utilize these electronic tools. The VA
> is working on a national initiative for an electronic contract
> management system.

8)  *Does DoD have separate conferences?*

> DoD and VA run a joint health care conference. The next one is to be
> scheduled sometime in Fiscal Year 2007. DoD also has periodic meetings
> and conferences, as needed on specific issues. DoD also has an annual
> TRICARE Conference in February. Information is available at the
> following website: <http://www.tricare.osd.mil/conferences.cfm>

9)  *Provide information about the Trade Agreements Act and discuss
    substantial transformation, as well as provide the website for the
    Customs Office.*

> Trade Agreements Act (TAA) applies to all Federal Supply Schedule
> (FSS) programs managed by the VA NAC and requires that products
> contracted for under the FSS program are from designated countries as
> outlined by the TAA. A product can be manufactured in a non-designated
> country and transformed into the end product and be acceptable under
> the program. For example, a widget manufactured in China cannot be a
> stand alone item under the FSS, but if the widget is added to a group
> of components to make a product, then the product would be acceptable.

**[Federal Supply Schedules:]{.underline}**

***General:***

1)  *Is the FSS program being phased out?*

> The FSS program is not being phased out. Many of the NAC programs
> utilize the FSS as its foundation. The Prime Vendor programs provide
> distribution services for the products and prices negotiated under the
> FSS program. Many of the standardization efforts utilize the FSS
> program for their source of vendors and potential products. The FSS
> program will continue to be a corner stone of the responsibilities of
> the VA NAC.

2)  *How can the contract modification process be streamlined?*

> In the past several years, the Service has worked to improve the
> process by implementing a formal Request for Modification Form that
> provides guidance on the information needed to affect a specific type
> of change to an existing contract. We have also begun working with
> accepting electronic spreadsheets for large amounts of data. To
> continue to improve upon this process, we are always looking for
> suggestions and encourage our vendors to submit their ideas to their
> Contract Specialist, the Assistant Directors, or the Director.

3)  *What is the advantage of the FSS program, when a national contract
    has been awarded for similar/same items?*

> The FSS program is available for a vendor to sell to all federal
> government agencies. A National Contract program is limited to
> specific customers that are identified in the procurement. If a vendor
> does not participate in the FSS program, they are limiting their
> potential market.

4)  *Why doesn't the NAC require vendors to hold and FSS contract in
    order to bid on a national contract solicitation?*

> A requirements type contract that is utilizing for letting national
> contracts does not require that a vendor participate in the FSS
> program. In utilizing Blanket Purchase Agreement (BPA) procedures, a
> vendor must hold an FSS contract, because the BPA procedures are part
> of their FSS contract.

5)  *Can vendors expect to see increased demand under the FSS program
    due to Hurricanes Katrina and Rita?*

> Vendors have probably already seen increased demand through the
> wholesale purchases. If the items that are on their current FSS
> contracts are to be used in the rebuilding efforts, then the vendors
> will probably continue to see an increase over the short term.

6)  *GSA Advantage -- should all FSS vendors participate? Who sets up
    the program? What is the cost?*

> Currently steps are being taken to mandate the participation of our
> vendors with GSA Advantage, except for Pharmaceutical Public Law
> vendors. The vendor is responsible for working with GSA to establish
> their pricelist, but there are several vendors available that are
> marketing their ability to provide this service. There is no specific
> fee associated with this program, so costs would be limited to any
> fees from hired consultants or for associated efforts within the
> vendor's firm.

7)  *Confirm record retention requirements, i.e. sales transaction date,
    disclosures, offer documents, etc. How long? And from what date or
    action?*

> All records must be maintained through 3 years after final payment.
> The contract clause incorporated into the FSS program (AS13
> Examination of Records by VA) has the Contractor agree that the
> Secretary of the Department of Veterans Affairs or any duly authorized
> representative shall have access to, and the right to examine, any
> books, documents, papers, computer tapes, and any other directly
> pertinent records of the Contractor related to this contract for
> overbillings, billing errors, compliance with the Price Reduction
> clause and compliance with the Industrial Funding Fee clause of this
> contract.  The time period must include data at least 60 days prior to
> award. Moreover, the Master Agreement under Public Law 102-585,
> Veterans Health Care Act of 1992, indicates that the manufacturer will
> retain all records relevant to the generation of the required reports
> and the calculations of annual Federal price ceilings for not less
> than 5 years from the date of their creation.

8)  *Can contractors pass on costs to the VA when their schedule
    products have been improved, enhanced, expanded through R&D?*

> FSS vendors can utilize the Economic Price Adjustment (EPA) Clause to
> request consideration for price increases under their contracts. These
> increases will be reviewed against the vendor's commercial pricelist
> changes and tracking customer price changes. If a vendor has not
> passed along higher costs to their commercial customers, the clause
> will not allow consideration of a price increase solely to the
> Government.
>
> ***Pharmaceutical:***

1)  *Are manufacturers responsible for notifying eligible entities of
    new prices? Send a hard copy of the pricelist?*

> FSS vendors are required to prepare a comprehensive pricelist that
> provides all current terms and conditions, as well as
> products/services and negotiated prices. This pricelist must be made
> available to any FSS customer that requests it. There is no longer a
> specific requirement that vendors must continually mail copies of the
> pricelists to all eligible FSS users.

2)  *Define Membership for Big 4 and Dual FSS.*

> Big 4 customer group consists or members of the Department of Veterans
> Affairs (DVA), Department of Defense (DoD), Public Health Service
> (PHS) (which includes Indian Health Service), and Coast Guard. Dual
> FSS customers are all remaining eligible FSS users to include, but not
> limited to, Bureau of Prisons, State Veteran Homes with Sharing
> Agreements, etc.

3)  *Is one comprehensive customer list available?*

> General Service Administration (GSA) is the policy holder for agency
> eligibility under the FSS program. Unfortunately, there is not an
> all-inclusive list of eligible users, but there is a policy statement
> that defines what an eligible use is. This policy statement can be
> found at www.fss.gsa.gov.

4)  *Please provide a definition of "wholesaler" as it pertains to the
    Non-FAMP calculation.*

> Please see the definition in Sect. I, par. O., of the Master
>
> Agreement which states: "Wholesaler" means merchant
>
> middleman, including a prime vendor or similar distribution system,
>
> who sells chiefly to retailers, other merchants, or industrial,
>
> institutional, and commercial users mainly for resale or business
>
> use. For drugs only sold directly to the retailer, other merchants,
>
> industrial, institutional, or commercial users, the buyer will be
>
> considered to be the wholesaler. Further elaboration was added to
>
> the same definition in Sect. I of the draft Amended Master
>
> Agreement of Sept. 2000 (which reflects VA policy but has not been
>
> presented to manufacturers for signature).

5)  *What is the difference between rebates and incentives paid to a
    wholesaler and paid through a wholesale?.*

> For purposes of non-FAMP computations, there is no
>
> difference.

6)  *Review how TriCare effects quarterly and yearly Non-FAMP
    calculations. PS - I pay my rebates.*

> Please see the attachment to the Oct. 14, 2004 Dear

Manufacturer Letter signed by Steve Thomas. There is

also non-FAMP calculation information in Addendum C

of the "Processes and Procedures Guide for

Manufacturer Refunds, 2.2" on the website of the

TRICARE Management Activity. After reviewing these

sources, please call Marci Anderson(202) 565-5444 with specific

questions.

7)  *What efforts are being made to address the causes of "penny"
    pricing for a brand (covered) drug on the FSS?*

> The causes of penny Federal ceiling prices, derived from negative FCP
> numbers which are caused by the additional discount exceeding the
> annual non-FAMP times 76 percent,, are solely within the control of
> individual covered drug manufacturers because penny prices are the
> result of increases in commercial prices during the previous 12
> months.

8)  *Are any efforts being made to revise the pricing calculations for
    FCP so that manufacturers are not penalized for price increases
    throughout the life of a contract?*

> VA offers relief from "penny pricing" in the year following the
> effectiveness of a penny price by allowing the dual calculation to be
> omitted in the annual report for a following year that is the second
> or subsequent year of a multi-year contract. The Dear Manufacturer
> letter dated February 11, 1997 explains the relief policy and also
> Sect. II, par. B.5, of the draft Amended Master Agreement.)
>
> Furthermore, in the case of single-pricing manufacturers experiencing
> low (but not penny) FCPs, they may mitigate the anchor effect of these
> prices in subsequent years by electing dual pricing well before Sept.
> 30. This election will permit them, in a second or subsequent year of
> a multi-year contract, to begin the dual calculations for their annual
> filing with negotiated OGA FSS prices rather than beginning with last
> year's FCPs (as single pricers do).
>
> In light of P.L.102-585, Sect. 603(c), the additional discount
> provision, there is nothing more that VA can do to eliminate or
> mitigate the penalty for manufacturers raising their commercial prices
> more than the 12-month percentage increase in CPI-U.

9)  *For pharmaceutical manufacturers waiting for litigation concerning
    TRICARE to conclude, if it is determined that back payments of
    rebates are owed, how would the VA see these rebates rolled into
    Non-FAMP calculations? Would you see a recalculation of annual
    Non-FAMP and FCP?*

> VA will wait to see the outcome of the litigation brought by the
> Coalition before addressing this question.

10) *If there are problems with an annual calculation, can the
    Pharmaceutical Pricing Agreement (PPA) Addendum be amended later?*

> A true calculation error may always be corrected by describing it and
> filing a corrected annual report with PBM. Once a corrected report is
> accepted by VA, a corrected PPA Addendum may also be filed with a
> revised FCP.
>
> If a vendor is appealing an accurately calculated, below-cost FCP to
> the P. L. 102-585 Nominal Increase Board, they will still be
> responsible for honoring the current FCP on their contract while the
> appeal is processed. If an FCP increase is approved, then the vendor
> will be able to revise the PPA Addendum and FSS contract appropriately
> at that time.

11) *Is it possible to update prices in the pharmaceutical database more
    than twice per month?*

> The current Modification Clause utilized in the Pharmaceutical FSS
> program allows for approval of modifications with an effective date of
> the 1^st^ or the 15^th^ of a month. This was enacted to provide
> cut-off times to ensure submission of data through the Prime Vendor
> system. There has been not talk currently of revising these dates.
> Once the system is able to incorporate technology to eliminate any
> manual processes, reconsideration will be given to this matter.
>
> ***Services:***

1)  *How do vendors combat their competitors undercutting their price on
    a contract renewal and then hiring the temporary workers from the
    previously awarded contract?*

> Federal Acquisition Regulations limits service contracts from
> exceeding 5 years in length. Generally speaking, it has historically
> been the position of the Government to protect the employees working
> under federal contracts in the transition from one federal service
> contract to the next. Therefore, when a contract expires and a firm is
> bidding on the follow-on contract it is important for them to be
> competitive in price.

2)  *If 621I is not subject to the Service Contract Act, why are we
    seeing COs attaching wage determinations to RFQs?*

> We are aware that there is some confusion in regards to the
> application of the Service Contract Act (SCA) to this schedule. We are
> in the process of clarifying these contractual issues and intend to
> refresh the solicitation and modify current contracts once the issues
> are resolved.

3)  *Have state agencies been given the authority to use FSS 621I?*

> Authorized users of FSS 621 I includes approved State Veterans Homes
> with sharing agreements. The list of authorized users primarily
> contains federal agencies and can be found under the title
> "Eligibility to use GSA sources" at:
> [www.gsa.gov/schedules](http://www.gsa.gov/schedules)

4)  *How far in advance should a vendor begin the renewal process? What
    is the renewal process?*

> A firm can initiate a re-negotiation of their current FSS contract at
> their discretion. You will be notified by your contracting officer
> approximately 8 months before your contract is due to expire if you do
> not take it upon yourself to complete the latest solicitation.

5)  *We have been told by teaming partners that we can use their SINs to
    deliver services under payroll. Could this be true?*

> There are two legitimate ways for firms to "team" under an FSS
> contract. The first is a prime / sub-contractor relationship where two
> or more firms work together under a single FSS contract. All firms who
> work under the contract are subject to material terms of the contract
> including the requirement for insurance. The second is where two or
> more FSS contractors work together, to offer a total solution to meet
> a customer's requirement. This enables FSS schedule holders to compete
> for orders of which they may not independently qualify. Detailed
> information regarding the second type of CTA can be found at
> [www.gsa.gov/schedules](http://www.gsa.gov/schedules)

6)  *With the 621I refreshment, our CO indicated that we would be
    required to do a small business subcontracting plan with our
    follow-on contract. Is this accurate?*

> Small business subcontracting plans are required when the estimated
> value of the contract exceeds \$500,000 total contract period and the
> company is other than a small business. If your contract and firm meet
> these criteria, there is a potential that a small business
> subcontracting plan may be requested. If you are a firm that doe not
> subcontract any direct costs, it is important to disclose this and it
> will be taken into consideration. Federal Acquisition Regulation (FAR)
> 19.705-2 for additional information regarding this issue.

7)  *For healthcare staffing, do we still have to sell to the Government
    at a **lower** price than a commercial customer? This is not
    feasible in some states like California.*

> General speaking it the objective of the Government in FSS contract
> negotiations to achieve the best price, discounts, concessions, terms
> and conditions for the services offered regardless of selling terms
> and conditions. It is within the discretion of the contracting office
> to verify and evaluate information that may warrant differentials
> between the best commercial price and those offered to the Government.

8)  *If I am holding an FSS 621I contract, what do I do when a staffing
    RFP has a need for pharmacy technicians and janitors on the same
    RFP? Is this fair bundling? We could not bid, because we do not have
    a schedule for janitors.*

> A firm could enter into an FSS Contractor Teaming Arrangement with
> another FSS contractor who has the janitors under the appropriate
> schedule to propose a combined solution. Information about FSS CTAs
> can be found at [www.gsa.gov/schedules](http://www.gsa.gov/schedules)
> . The bundling determination would need to be refereed to the US Small
> Business Administration for their determination.

9)  *How many years can I have a 621I contract?*

> The contract period is a base period of 5 years with option periods
> that can not exceed 10 years total.

10) *Are there any efforts to provide services nationwide for Orthopedic
    Surgery Physicians?*

> Orthopedic Physicians, both General and Surgery are currently accepted
> under special item number 621-013.

**[National Contract Service]{.underline}**

***Standardization:***

1)  *What steps are the VANAC taking to ensure compliance for end users
    with newly awarded standardized BPAs?*

> Compliance on BPAs is the responsibility of VHA's Clinical Logistics
> Office. VA NAC staff will continue to work with that office to
> maximize compliance.

2)  *What is the level/structure of accountability?*

> Compliance is the responsibility of VHA's Clinical Logistics Office.

3)  *When a national contract is in place, why do VISNs issue separate
    BPAs with companies that are not on the contract? Should this be
    happening?*

> VISNs should not be issuing separate BPAs if a National Contract is in
> place.

4)  *Most contracts set-aside for SDVOBs require US manufacturing.
    Please clarify what this means. Are there any exceptions?*

> Federal Acquisition Regulations require that the offerors provide
> product of a small domestic manufacturer for SDVOSB set-asides.

5)  *Suggestion was provided during the open forum discussion that the
    VA consider using a web based tracking tool for standardization
    items.*

> Thank you for the suggestion. It is under consideration.
>
> ***Prime Vendor:***

1)  *What is the Prime Vendor?*

> The prime vendor is a wholesaler or distributor of goods that provides
> complete breadth and depth of product lines with next day delivery
> direct to the ordering medical center. NAC currently has
> responsibility for two different categories of prime vendors with
> associated contracts, pharmaceutical and medical/surgical. In
> addition, VA has a subsistence prime vendor which is under the
> responsibility of VA Headquarters.

2)  *Can the current system of End Users having to request certain
    products from the Prime Vendor be inverted to require Prime Vendors
    to sell excellent quality and economically priced products?*

> Prime vendors distribute our National Contracted and Federal Supply
> Schedule items. Marketing for FSS products is the responsibility of
> the manufacturer. NAC does a limited amount of "marketing" for its
> National Contract holders. Standardization contracts by their
> definition provide high quality and economically priced products.
> Outside of standardized items, medical centers decide which FSS
> products they would like to use based on quality, functionality and
> price.

3)  *We have established by admission of both VA and PV that loading of
    all new products is mandatory. According to McKesson, new items are
    places on a no load list. How soon does the PV have to load these
    items once placed on the no load list?*

> We give McKesson a minimum of 30 days to load new products into their
> system. Medical centers add items in their responsible distribution
> center by providing McKesson with estimated utilization.

4)  *In loading new items, is usage data required prior to loading to
    the PV database? Must the PV receive intent by the VA to purchase an
    item prior to loading and making products visible to VA customers?*

> The items are automatically loaded for customer visibility by McKesson
> when they are added to the PBM website. Medical centers add items in
> the responsible distribution center by providing McKesson with
> estimated utilization.