### §8125. Procurement of health-care items

(a) Except as provided in subsections (b) and (c) of this section, the Secretary may not procure health-care items under local contracts.

(b)(1) A health-care item for use by the Department may be procured under a local contract if—

(A) the procurement is within the limits prescribed in paragraph (3) of this subsection; and

(B)(i) the item is not otherwise available to the Department medical center concerned,

(ii) procurement of the item by a local contract is necessary for the effective furnishing of health-care services or the conduct of a research or education program at a Department medical center, as determined by the director of the center in accordance with regulations which the Under Secretary for Health shall prescribe, or

(iii) procurement under a local contract is demonstrably more cost-effective for the item.

(2) In the case of the need for an emergency procurement of a health-care item, such item may be procured under a local contract, but no greater quantity of such item may be procured by a local contract than is reasonably necessary to meet the emergency need and the reasonably foreseeable need for the item at the medical center concerned until resupply can be achieved through procurement actions other than emergency procurement.

(3)(A) Except as provided in subparagraphs (C) and (D) of this paragraph, not more than 20 percent of the total of all health-care items procured by the Department in any fiscal year (measured as a percent of the total cost of all such health-care items procured by the Department in that fiscal year) may be procured under local contracts.

(B) Local contracts for the procurement of health-care items shall, to the maximum extent feasible, be awarded to regular dealers or manufacturers engaged in the wholesale supply of such items.

(C) The Secretary may increase for a fiscal year the percentage specified in subparagraph (A) of this section to a percentage not greater than 30 percent if the Secretary, based on the experience of the Department during the two fiscal years preceding such fiscal year, determines that the increase and the amount of the increase are necessary in the interest of the effective furnishing of health-care services by the Department. The authority to increase such percentage may not be delegated.

(D) Items procured through an emergency procurement shall not be counted for the purpose of this paragraph.

(c) A provision of law that is inconsistent with subsection (a) or (b) of this section shall not apply, to the extent of the inconsistency, to the procurement of a health-care item for use by the Department.

(d) For the purposes of this section:

(1) The term "health-care item" includes any item listed in, or (as determined by the Secretary) of the same nature as an item listed in, Federal Supply Classification (FSC) Group 65 or 66. Effective December 1, 1992, such term also includes any item listed in, or (as determined by the Secretary) of the same nature as an item listed in, Federal Supply Classification (FSC) Group 73. Such term does not include perishable items.

(2) The term "local contract" means a contract entered into by a Department medical center for procurement of an item for use by that medical center.

(3) The term "emergency procurement" means a procurement necessary to meet an emergency need, affecting the health or safety of a person being furnished health-care services by the Department, for an item.

(Added Pub. L. 100–322, title IV, §403(a)(1), May 20, 1988, 102 Stat. 543, §5025; amended Pub. L. 100–687, div. B, title XV, §1507(b), (c), Nov. 18, 1988, 102 Stat. 4136, 4137; renumbered §8125, Pub. L. 102–40, title IV, §402(b)(1), May 7, 1991, 105 Stat. 238; Pub. L. 102–83, §4(a)(3), (4), (b)(1), (2)(E), Aug. 6, 1991, 105 Stat. 404, 405; Pub. L. 102–405, title III, §302(c)(1), Oct. 9, 1992, 106 Stat. 1984; Pub. L. 107–14, §8(a)(15), June 5, 2001, 115 Stat. 35; Pub. L. 113–188, title XVII, §1701, Nov. 26, 2014, 128 Stat. 2026.)

#### **Editorial Notes**

#### Amendments

2014—Subsecs. (d), (e). Pub. L. 113–188 redesignated subsec. (e) as (d) and struck out former subsec. (d) which required annual reports from the directors of Department medical centers and from the Secretary.

2001—Subsec. (d)(1). Pub. L. 107–14, §8(a)(15)(A), struck out "(beginning in 1992)" after "each year".

Subsec. (d)(2). Pub. L. 107–14, §8(a)(15)(B), struck out "(beginning in 1993)" after "each year".

Subsec. (d)(3). Pub. L. 107–14, §8(a)(15)(C), struck out par. (3) which read as follows: "Not later than February 1 of each year from 1989 through 1992, the Secretary shall submit to the Committees on Veterans' Affairs of the Senate and the House of Representatives a report on the experience in carrying out this section during the preceding fiscal year. The first such report shall contain information showing the percentage (measured by cost) of the total of all health-care items procured by the Department during fiscal year 1988 that were procured through local contracts. The other reports under this paragraph shall contain information showing the percentage (measured by cost) of the total of all health-care items procured by the Department, and by each Department medical center, during the fiscal year covered by the report that were purchased through local contracts and, in the case of each medical center at which the percentage was greater than 20 percent, an explanation of the reasons why that occurred."

1992—Subsec. (b)(1)(B)(ii). Pub. L. 102–405 substituted "Under Secretary for Health" for "Chief Medical Director".

1991—Pub. L. 102–40 renumbered section 5025 of this title as this section.

Subsec. (a). Pub. L. 102–83, §4(b)(1), (2)(E), substituted "Secretary" for "Administrator".

Subsec. (b). Pub. L. 102–83, §4(b)(1), (2)(E), substituted "Secretary" for "Administrator" in two places in par. (3)(C).

Pub. L. 102–83, §4(a)(3), (4), substituted "Department" for "Veterans' Administration" wherever appearing.

Subsec. (c). Pub. L. 102–83, §4(a)(3), (4), substituted "Department" for "Veterans' Administration".

Subsecs. (d), (e). Pub. L. 102–83, §4(b)(1), (2)(E), substituted "Secretary" for "Administrator" wherever appearing.

Pub. L. 102–83, §4(a)(3), (4), substituted "Department" for "Veterans' Administration" wherever appearing.

1988—Subsec. (d)(1). Pub. L. 100–687, §1507(b)(1), inserted "(beginning in 1992)" after "of each year".

Subsec. (d)(2). Pub. L. 100–687, §1507(b)(2), inserted "(beginning in 1993)" after "of each year".

Subsec. (d)(3). Pub. L. 100–687, §1507(b)(3), added par. (3).

Subsec. (e)(1). Pub. L. 100–687, §1507(c), substituted "65 or 66" for "65, 66, or 73" and inserted after first sentence "Effective December 1, 1992, such term also includes any item listed in, or (as determined by the Administrator) of the same nature as an item listed in, Federal Supply Classification (FSC) Group 73."

#### **Statutory Notes and Related Subsidiaries**

#### Effective Date

Pub. L. 100–322, title IV, §403(b), May 20, 1988, 102 Stat. 545, as amended by Pub. L. 100–687, div. B, title XV, §1507(a), Nov. 18, 1988, 102 Stat. 4136, provided that:

"(1) Subsections (a), (b)(1), and (b)(2) of section 5025 [now 8125] of title 38, United States Code (as added by subsection (a)), shall take effect one year after the date of the enactment of this Act [May 20, 1988].

"(2) Subsection (b)(3) of such section shall apply to health-care items procured for use by the Veterans' Administration [now Department of Veterans Affairs] after September 30, 1990."

#### Medical Surgical Prime Vendor Program

Pub. L. 115–407, title VII, §703, Dec. 31, 2018, 132 Stat. 5381, provided that:

"(a) Vendors.—In procuring certain medical, surgical, and dental supplies or laboratory supplies for medical centers of the Department of Veterans Affairs, the Secretary of Veterans Affairs shall carry out the Medical Surgical Prime Vendor program, or successor program, in a manner that—

"(1) requires the Secretary to award contracts to multiple regional prime vendors instead of a single nationwide prime vendor; and

"(2) prohibits a prime vendor from solely designing the formulary of such supplies.

"(b) Clinically Driven Sourcing.—

"(1) Expertise.—In carrying out the formulary of supplies under the Medical Surgical Prime Vendor program, or successor program, the Secretary shall ensure that each employee of the Department of Veterans Affairs who conducts formulary analyses or makes decisions with respect to including items on the formulary has medical expertise relevant to the items for which the employee conducts such analyses or makes such decisions.

"(2) Lists.—Not later than 30 days after the date of the enactment of this Act [Dec. 31, 2018], and every six months thereafter with respect to any updates, the Secretary shall submit to the Committees on Veterans' Affairs of the House of Representatives and the Senate a list of each employee described in paragraph (1) and the relevant medical expertise of the employee, listed by the categories of items in the formulary described in such paragraph."

#### Standardization of Medical and Pharmaceutical Items

Pub. L. 100–322, title IV, §402, May 20, 1988, 102 Stat. 543, as amended by Pub. L. 100–687, div. B, title XV, §1508, Nov. 18, 1988, 102 Stat. 4137, directed Administrator, not later than Oct. 1, 1989, to develop and fully implement an agency-wide plan for cost-effective standardization of health-care items procured by Veterans' Administration.