Testimony 

Before the Subcommittee on Health, Committee on 

Veterans’ Affairs, House of Representatives 

United States General Accounting Office

GAO 

For Release on Delivery 

Expected at 9:30 a.m. 

Wednesday, June 26, 2002 VA AND DEFENSE 

HEALTH CARE 

Potential Exists for 

Savings through Joint 

Purchasing of Medical and 

Surgical Supplies 

Statement of Cynthia A. Bascetta 

Director, Health Care—Veterans’ 

 Health and Benefits Issues 

GAO-02-872T 
Page 1 GAO-02-872T 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss an important component of the 

Department of Veterans Affairs’ (VA) business practices—purchasing 

medical and surgical supplies—and its efforts to jointly procure them with 

the Department of Defense (DOD). In fiscal year 2001, VA spent about 

$500 million and DOD spent about $240 million for these supplies. Since 

the early 1980s, the Congress has urged VA and DOD to achieve greater 

efficiencies through improved acquisition processes and increased sharing 

of medical resources. In June 1999, VA and DOD signed a memorandum of 

agreement to combine their buying power and achieve lower medical 

supply costs and eliminate contracting redundancies for certain items, 

including pharmaceuticals and medical and surgical supplies. 

Last year we reported that VA and DOD saved over $170 million annually 

by jointly procuring pharmaceuticals.1

 VA and DOD achieved these savings 

by agreeing on—or “standardizing”—particular drugs that their facilities 

would purchase and then contracting with the manufacturers of these 

drugs for discounts based on their combined larger volume. As a follow-up 

to that study, you requested that we provide information on VA and DOD’s 

progress in jointly procuring medical and surgical supplies. VA and DOD 

purchase approximately 200,000 different medical and surgical supplies. 

Some commonly used supplies include gloves, masks, surgical tape, 

needles, and syringes. Many medical and surgical supplies are 

disposable—that is, one-time use items. 

My testimony today focuses on (1) the status of VA and DOD’s efforts to 

jointly contract nationally for medical and surgical supplies, including 

actual and potential savings from collaboration, and (2) factors that 

impede their efforts for joint contracting. To examine these issues, we 

conducted site visits at VA and DOD headquarters and at eight of their 

medical facilities. We also reviewed studies, documents, and current 

literature relating to standardization, unique identifiers for medical and 

surgical supplies, and joint contracting. In addition, we compared and 

analyzed data from current VA and DOD contracts for medical and 

surgical supplies and conducted numerous interviews with VA and DOD 

 1

U.S. General Accounting Office, DOD and VA Pharmacy: Progress and Remaining 

Challenges in Jointly Buying and Mailing Out Drugs, GAO-01-588 (Washington, D.C.: 

May 25, 2001). 
Page 2 GAO-02-872T 

officials. Our work was conducted from January 2002 through June 2002 in 

accordance with generally accepted government auditing standards. 

In summary, VA and DOD have not awarded joint national contracts for 

medical and surgical supplies as envisioned in their memorandum of 

agreement, and it is unlikely that the two departments will have joint 

national contracts for supplies anytime soon. However, a few VA and DOD 

facilities have yielded modest savings through local joint contracting 

agreements. VA’s and DOD’s procurement efforts have focused on 

contracting separately—VA on a national basis and DOD on a regional 

basis. VA’s and DOD’s current separate contracts are expected to save 

about $19 million annually. Our analysis of about 100 identical medical and 

surgical items that VA and DOD now contract for separately indicates that 

jointly purchasing these items will yield additional savings, although we 

were unable to quantify the full potential. For example, in fiscal year 2001, 

if VA had collaborated with DOD and obtained a discounted price from 

one of DOD’s regions for needle and syringe disposal containers, VA could 

have saved tens of thousands of dollars on this one item alone. Similarly, 

DOD could have realized additional savings if it had obtained VA’s lower 

national contract price on one type of intravenous tubing. 

The lack of progress VA and DOD have made in jointly contracting for 

medical and surgical supplies has, in part, been the result of their different 

approaches to standardizing medical and surgical supplies. These differing 

approaches—VA’s national approach of selecting specific items for all its 

facilities to purchase and DOD’s regional approach that allows each of 

nine geographic regions2

 to individually standardize specific items—

increase the possibility that VA and DOD regions could select and 

standardize different items for purchase and thereby minimize the 

opportunities for national joint procurements. Other impediments to joint 

purchasing have been incomplete VA and DOD procurement data and the 

lack of a means for identifying similar high-volume, high-dollar purchases. 

Because of these shortcomings, it is difficult for VA and DOD to identify 

items that would produce the greatest benefits from standardization 

within—let alone between—their departments. The Secretary of Veterans 

Affairs recently approved a procurement reform initiative to address these 

impediments. If implemented, this initiative would increase the likelihood 

that VA could procure medical and surgical supplies more economically 

 2

For health care delivery, DOD has 12 regions. However, for standardization, it has 

combined some regions for a total of nine geographic regions. 
Page 3 GAO-02-872T 

and put it in a better position to identify and enter into joint procurements 

with DOD. In addition, VA and DOD are making improvements to their 

automated information systems, which should enhance their ability to 

identify items for standardization. However, neither VA nor DOD could 

confirm that their enhanced systems will contain compatible data that will 

allow the two departments to readily exchange procurement 

information—a key capability for facilitating standardization and joint 

procurement. 

VA operates one of the world’s largest health care systems, spending about 

$21 billion a year to provide approximately 3.8 million veterans health care 

through 163 VA hospitals and over 800 outpatient clinics nationwide. DOD 

spends about $19 billion on health care for over 5.8 million beneficiaries, 

including active duty personnel and military retirees and their dependents. 

Most DOD health care is provided at the more than 500 Army, Navy, and 

Air Force hospitals and other military treatment facilities worldwide. 

VA and DOD have separate systems for procuring and distributing medical 

and surgical supplies. VA purchases supplies through the Federal Supply 

Schedule (FSS), which is maintained by VA’s National Acquisition Center 

in Hines, Illinois, and is available to all federal purchasers. VA validates a 

sample of FSS prices to ensure that they are no more than the prices 

manufacturers charge their most-favored, nonfederal customers.3

 Once 

FSS prices are established, VA manually analyzes its procurement history 

to identify like items, such as gauze bandages, for which it could 

potentially standardize and negotiate blanket purchase agreements (BPA) 

and national contracts directly with vendors (manufacturers or 

distributors) for a larger discount based on volume purchasing. After like 

items are identified, a team of clinicians—including doctors, technicians, 

and nurses—assesses the products for quality and agrees on a specific 

item or items that are acceptable for use by all VA hospitals.4

 Acquisition 

officials then negotiate BPAs with the vendors of the chosen products to 

obtain lower prices. Once BPAs are established, VA facilities are required 

to purchase the items from the selected vendors. If medical and surgical 

 3

In cases where VA’s validation process identifies that the FSS price is more than the price 

paid by most-favored, nonfederal customers, VA recovers the price differences from the 

manufacturers. 

4

Not all medical and surgical supplies are viable candidates for standardization for various 

reasons, such as strong clinician preferences for a specific item. 

Background 
Page 4 GAO-02-872T 

supplies are not available through BPAs, VA medical facilities have the 

option of purchasing supplies from FSS, locally, or on the open market 

directly from manufacturers. Recently, VA began monitoring facility 

compliance with national BPAs. 

DOD purchases medical and surgical supplies through Distribution and 

Pricing Agreements (DAPA), which are negotiated and maintained by the 

Defense Supply Center in Philadelphia, Pennsylvania.5

 DOD also allows its 

regions to individually standardize medical and surgical items and 

negotiate their own regional incentive agreements (RIA) to obtain larger 

discounts on certain high-volume, high-dollar medical and surgical items. 

Teams of military and contractor personnel in each region identify items 

for standardization. As in VA’s process, clinicians then assess and select 

items to standardize. Finally, the teams negotiate regional price discounts 

with the vendors. DOD facilities are required to buy from certain vendors 

to take advantage of DAPA pricing or, if a better price has been negotiated, 

through RIAs. If items are not available through DAPA or RIAs, facilities 

can purchase items locally or directly from manufacturers. 

Over the past 2 decades, the Congress has urged VA and DOD to maximize 

efficient use of federal dollars by sharing their health care resources. In 

May 1982, the Congress passed the VA and DOD Health Resources Sharing 

and Emergency Operations Act,6

 which encouraged the two departments 

to enter into health resources sharing agreements. After the Congressional 

Commission on Servicemembers and Veterans Transition Assistance 

issued its 1999 report calling for VA and DOD to combine their market 

power, the Congress passed the Veterans Millennium Health Care and 

Benefits Act,7

 which required VA and DOD to report on their joint 

pharmaceutical and medical supplies procurement activities. 

 5

Currently, DAPA is being converted to FSS pricing. 

6

Public Law 97-174. 

7

Public Law 106-117. 
Page 5 GAO-02-872T 

VA and DOD have not awarded national joint procurement contracts for 

medical and surgical supplies, and none appear likely in the near future. 

While a few VA and DOD facilities have obtained modest savings through 

local joint contracting agreements, we identified some additional joint 

procurement opportunities that have the potential to increase VA’s and 

DOD’s savings. Since their 1999 memorandum of agreement, VA’s and 

DOD’s procurement efforts have focused on separately contracting for 

standardized medical and surgical supplies. Their separate national and 

regional contracts are expected to save a total of about $19 million 

annually. 

VA and DOD’s joint procurement efforts for medical and surgical supplies 

have been limited to the local level. In May 2000, we reported that six VA 

and seven DOD facilities had joint purchasing agreements for certain 

medical supplies, realizing modest savings.8

 Under one local contract, 

some VA and DOD facilities in Virginia and North Carolina negotiated 

discounts with a manufacturer for chemistry test slides; these VA and DOD 

facilities reported savings of $358,000 and $301,000, respectively. 

Subsequently, VA and DOD facilities in another region joined the contract 

for additional savings of slightly over $1 million. 

Currently, VA has about 150 national BPAs—most of which were awarded 

in 2000—covering over 1,900 individual medical and surgical items such as 

examination gloves, surgical face masks, and tongue depressors.9

 VA 

estimates that it saves about $13 million annually through these national 

BPAs. DOD has 53 RIAs—most awarded in 2002—for items such as 

surgical tape, needles, and syringes.10 The department expects to save 

about $6 million annually through these agreements. The combined 

savings of about $19 million are about 22 percent less than the $88 million 

the two departments would have spent had the RIAs and national BPAs 

not been negotiated and are indicative of the savings potential that exists. 

 8

U.S. General Accounting Office, VA and Defense Health Care: Evolving Health Care 

Systems Require Rethinking of Resource Sharing Strategies, GAO/HEHS-00-52

(Washington, D.C.: May 17, 2000). 

9

VA has 126 national BPAs, 17 basic ordering agreements with industries operated by the 

disabled, and 6 national contracts covering over 1,900 individual medical and surgical 

items. For simplicity, we refer to these as national BPAs. 

10The total number of medical and surgical items for the 53 RIAs in nine geographic regions 

was not available centrally. 

VA and DOD Have 

Not Awarded Joint 

National Contracts; 

Potential Savings 

Exist 
Page 6 GAO-02-872T 

However, additional savings can be achieved through VA and DOD 

collaboration. By comparing DOD’s RIA data from one geographic region 

to VA’s national BPA data, we identified about 100 identical medical and 

surgical items that are procured by both VA and DOD. For most of these 

items, the price difference was less than 4 percent. However, for 19 of the 

items, the cost differentials range from 4 to 43 percent, with DOD 

generally paying more than VA. For 14 of these items, VA negotiated lower 

prices with the manufacturer than DOD (see table 1); for 5 others, DOD 

negotiated lower prices (see table 2). For example, for a large bore 

intravenous extension set used for quickly delivering fluids or blood, 

DOD’s negotiated unit price per case is $179—43 percent more than VA’s 

negotiated unit price of $102. For borderless dressings, which are used to 

treat serious wounds, DOD’s negotiated case price of $90 is 36 percent 

lower than VA’s negotiated case price of $141. Purchasing the items from 

the vendors offering the lowest price will yield additional savings for both 

departments. For example, in fiscal year 2001, VA could have saved over 

$52,000 on one item alone—8-gallon sharps containers for disposing of 

used syringes—if it had collaborated with DOD and obtained its regional 

price. In that same year, DOD could have saved about $200,000 on 

intravenous pumps and tubing accessories if it had collaborated with VA 

and obtained VA’s lower national BPA prices. While the item-by-item 

savings may be relatively small, the cumulative effect of joint purchasing 

thousands of items can be significant. 
Page 7 GAO-02-872T 

Table 1: Unit Price Comparison for Select Identical Medical and Surgical Items; VA More Economical Than DOD 

 Unit price (dollars) Difference 

Item description VA DODa Dollars Percent

Advanced woundcare – Manufacturer A 

Polyurethane sterile foam dressing, 3" x 3" $37.39 $51.16 $13.77 27

Polyurethane sterile foam dressing, 12" x 10" 385.47 401.38 15.91 4

Polyurethane sterile foam dressing, 27-5/8" x 15-3/4" 438.57 456.67 18.10 4

Polyurethane sterile foam dressing adhesive, 2" x 2" 44.95 69.81 24.86 36

Polyurethane sterile foam dressing, 4" x 4" 27.25 42.38 15.13 36

Wound dressing alginate, 2 grams 9.93 16.21 6.28 39

Wound dressing alginate, 3" x 4-3/4" 14.91 25.75 10.84 42

Intravenous pumps and tubing accessories 

Luer-Lock Smart-Site needleless valve port 87.00 105.00 18.00 17

Extension set with two injection sites 174.00 273.00 99.00 36

Extension set with 0.2 micron filter 197.00 214.00 17.00 8

Large bore extension set 102.00 179.00 77.00 43

Extension set with 1.2 micron filter 144.00 191.00 47.00 25

Vial adapter/access device 145.00 172.00 27.00 16

Vial dispensing/access device 147.00 209.00 62.00 30

a

The DOD unit price is from one DOD geographic region. 

Source: GAO analysis of May 2002 VA and DOD prices. 
Page 8 GAO-02-872T 

Table 2: Unit Price Comparison for Select Identical Medical and Surgical Items, DOD More Economical Than VA 

 Unit price (dollars) Difference 

Item description DODa

 VA Dollars Percent 

Advanced woundcare – Manufacturer B 

Borderless dressing, 8" x 8" $90.00 $140.63 $50.63 36 

Island dressing, 1-3/4" x 2-1/2" 111.00 135.00 24.00 18 

Island dressing, 4-1/2" x 9-1/2" 66.00 74.25 8.25 11 

Sharps containers 

8-gallon sharps container, red with clear hinged lid 52.08 63.50 11.42 18 

2-gallon sharps container, yellow 65.97 77.00 11.03 14 

a

The DOD unit price is from one DOD geographic region. 

Source: GAO analysis of May 2002 VA and DOD prices. 

The lack of progress VA and DOD have made in jointly contracting for 

medical and surgical supplies has, in part, been the result of their different 

standardization approaches—national versus regional. Other impediments 

to joint purchasing have been incomplete procurement data and the lack 

of a means for each department to identify similar high-volume, high-dollar 

purchases. Because of these shortcomings, it is not only difficult for VA 

and DOD to identify items that should be standardized within their 

departments but between their departments as well. VA is considering 

improvements to its acquisition policies and is designing an enhanced 

automated information system. These improvements are intended to 

minimize local purchases, accelerate identification of items for 

standardization, and create greater purchasing power, placing it in a better 

position to jointly purchase with DOD. For its part, DOD is implementing a 

new automated information system, which is intended to enhance its 

ability to identify items for standardization. However, according to 

officials from both departments, it is uncertain whether data from the new 

systems will be compatible. Such capability would assist both departments 

in identifying joint procurement opportunities. 

Impediments to Joint 

Procurement 
Page 9 GAO-02-872T 

While VA and DOD have both begun to independently standardize medical 

and surgical supplies for their facilities, VA has standardized nationally 

and DOD has standardized regionally. According to a DOD official, DOD 

has made several attempts at national standardization but has been unable 

to do so. The official said that the primary reason was because DOD was 

unable to gain widespread clinician acceptance across all its medical 

facilities. DOD officials consider the regional approach more feasible for 

standardizing medical and surgical supplies because it would be easier to 

gain acceptance among smaller groups of clinicians. However, this 

approach limits the prospects for jointly procuring with VA because it 

increases the possibility that different medical and surgical items will be 

standardized within DOD regions. For example, while eight of the nine 

DOD geographic regions individually standardized and contracted for 

needles and syringes from the same vendor, six of the nine geographic 

regions standardized on surgical gloves from five different vendors. 

VA and DOD acknowledge that standardizing medical and surgical 

supplies is a critical step toward achieving joint procurement. However, 

identifying and standardizing like items has been a cumbersome and timeconsuming process for VA and DOD because they lack complete data on 

their medical and surgical supply procurements. In addition, they lack 

unique item identifiers that would make recognizing similar items easier. 

Complete data on all medical and surgical supplies purchased by their 

facilities would enable VA and DOD to more readily identify prospective 

items for standardization and joint purchasing opportunities. While VA has 

multiple information systems and databases that provide procurement 

information, the systems do not have the capability to provide a 

systemwide list of its top high-volume, high-dollar medical and surgical 

items purchased by all VA facilities. Instead, VA only has quantity and 

price information on items purchased from its national BPAs. DOD also 

does not have information on the top medical and surgical items 

purchased by its facilities because its systems do not capture information 

on purchases that individual facilities make locally or directly from 

manufacturers. 

In addition to lacking complete data, VA and DOD face a difficult task in 

identifying like items because not all medical and surgical supplies have 

universal product numbers (UPN) or similar coding. Industry estimates 

Different Approaches to 

Standardization Limit 

Potential for Joint National 

Contracts 

Incomplete Procurement 

Data and Lack of a Means 

for Identifying Similar 

Items Complicate 

Standardization 
Page 10 GAO-02-872T 

show that from 40 to 80 percent of medical and surgical supplies have 

UPNs depending on the unit of packaging—individual items, cases, or 

pallets.11 A product’s UPN and associated bar code identify characteristics 

such as the manufacturer, product type, size, and unit of packaging (for 

example, 10 per carton). As such, UPNs not only facilitate standardization 

but also enable purchasers of medical and surgical supplies to develop 

standard product groups, track prices, and employ prudent purchasing 

methods—paying for medical and surgical supplies that meet quality 

standards at competitive prices. 

Without UPNs or another identification system, VA and DOD must pull 

information from various sources—including ad hoc acquisition reports 

and multiple databases—to identify like items. For example, to identify the 

types of surgical gloves used at VA facilities, staff working on the 

procurement reform initiative had to manually look at item descriptions in 

various databases. For this one item, VA identified more than 12 different 

product names, including sterile gloves, surgeon’s gloves, and orthopedic 

gloves. Stock number identifiers were also inconsistent because each 

facility has the option of using the manufacturers’ stock numbers or 

various distributors’ stock numbers. With a dozen product names and a 

proliferation of stock numbers, this one item—surgical gloves—could 

appear in VA’s acquisition system as numerous separate items. 

The manufacturing and distribution industry has been reluctant to adopt 

more UPNs for medical and surgical supplies. The industry contends it is 

too costly and there is a lack of demand from purchasers. To address the 

cost concerns, VA is in the process of performing an economic analysis to 

determine the cost and benefits of requiring vendors to include UPNs and 

associated bar codes for all medical and surgical supplies on FSS. 

Concerning demand, however, purchasers have presented a different 

perspective from that held by the manufacturing and distribution industry. 

For example, the Healthcare EDI Coalition—which represents 20 major 

health care buying groups, including VA and DOD—endorsed the use of 

UPNs for medical and surgical items in February 1998. At that time, this 

group represented over 90 percent of all health care group contract 

purchases in the nation. In June 2000, a group of four health care 

purchasing groups, with annual purchases of over $38 billion and whose 

 11Industry standards organizations have created two UPN formats for medical equipment 

and supplies: (1) an alphanumeric standard that provides detailed product information and 

(2) an all-numeric standard that is more consistent with international coding standards. 
Page 11 GAO-02-872T 

membership includes more than 5,800 health care facilities, teamed with 

three e-commerce companies to endorse UPNs for medical supplies. 

According to a VA official, one of the largest group purchasing 

organizations (GPO)12 for health care products, which represents over 

1,800 nonprofit hospitals and health systems and about $14 billion in 

annual purchases, recently began an effort to require UPNs for all medical 

and surgical items purchased through its organization—an initiative we 

believe is consistent with best business practices. In 1998, we 

recommended that the Administrator of the Health Care Financing 

Administration, now the Centers for Medicare and Medicaid Services, 

require suppliers to identify the specific medical equipment, supplies, and 

devices they bill to Medicare by including UPNs on their Medicare claims.13

VA is considering how to implement improvements to its acquisition 

policies. These improvements are intended to minimize local purchases, 

accelerate standardization, and create greater purchasing power. If 

implemented, the improvements will place the department in a better 

position to jointly purchase with DOD. VA and DOD are also making 

improvements to their automated information systems. However, it is 

uncertain whether data from the new systems will be compatible. Such 

capability would assist both departments in identifying joint procurement 

opportunities. 

In May 2002, VA’s Procurement Reform Task Force issued its report on 

improving the efficiency and effectiveness of VA’s acquisition system, 

which included 65 recommendations. Recognizing that standardizing 

medical and surgical supplies is critical to achieving cost savings, the task 

force recommended that VA establish a contract purchasing hierarchy that 

would require its facilities to purchase supplies first from national BPAs; 

then multiregional, regional, or local BPAs; and then from FSS. Only when 

items are not available from these sources can facilities enter into local 

agreements or purchase them directly from the manufacturers. This 

recommendation is timely because VA recently estimated that from 30 to 

35 percent of facilities’ purchases are not from BPA contracts. To further 

enhance VA national standardization, the task force also recommended 

 12GPOs use volume purchasing of their member facilities to negotiate lower prices from 

vendors. 

13U.S. General Accounting Office, Medicare: Need to Overhaul Costly Payment System for 

Medical Equipment and Supplies, GAO/HEHS-98-102 (Washington, D.C.: May 12, 1998). 

Some Impediments 

Beginning to Be 

Addressed, but Impact on 

Joint Procurement Unclear 
Page 12 GAO-02-872T 

that VA continue standardizing medical and surgical products to obtain 

maximum benefits by focusing on high-volume, high-dollar medical and 

surgical items. 

Regarding UPNs, the task force recommended that VA take a leadership 

position in advocating their use as a way to improve quality, increase 

safety, and enhance cost-effectiveness of medical and surgical supply 

purchases. Currently, VA is in the process of preparing a cost-benefit 

analysis for the Office of Management and Budget (OMB) to support a 

regulation that would require vendors to include UPNs and associated bar 

codes on all items sold on FSS.14 DOD officials stated that DOD has been a 

long-time supporter of the requirement that vendors include UPNs and 

plans to participate with VA in discussing the rulemaking initiative with 

OMB. Until UPNs are established, the task force recommended that VA 

assign a unique identifier to each medical and surgical product purchased. 

Finally, the task force recommended that VA intensify its ongoing 

initiatives to identify and create opportunities for joint VA and DOD 

purchasing to achieve lower medical material costs by combining the 

purchasing power of the two departments and eliminating contracting 

redundancies. The task force report did not specify how to achieve this, 

given VA’s and DOD’s different approaches to standardization. However, 

joint purchasing could partially be achieved by the task force’s 

recommendation that VA include in its national BPAs a clause allowing 

DOD facilities or regions to purchase medical and surgical supplies from 

VA’s BPAs and create tiered pricing to provide additional discounts as 

more items are purchased. A DOD official stated that the department 

would not require but would support any initiative by its nine geographic 

regions to take advantage of lower medical and surgical supply item 

pricing that may be available through VA’s national BPAs. 

In addition to considering implementation of the task force’s 

recommendations, VA is in the process of designing an enhanced 

automated information system—the CORE Financial Logistics System. 

Similarly, DOD is implementing its enhanced automated information 

system—the Defense Medical Logistics Supply System. VA and DOD 

officials stated that their improved systems will provide information on all 

 14Under Executive Order 12866, dated September 30, 1993, departments are required to 

submit assessments of the potential costs and benefits of significant regulatory actions to 

OMB, along with the draft regulatory actions. 
Page 13 GAO-02-872T 

medical and surgical items purchased, including local and high-dollar, 

high-volume purchases. However, because each department is developing 

its system independently, neither could assure us that the enhanced 

systems will contain compatible information that could be compared 

between the two departments. Without such a capability, it will be more 

difficult for VA and DOD to routinely exchange information on medical 

and surgical standardization efforts and identify additional opportunities 

for joint procurement. 

While it is difficult to quantify the potential savings joint contracting could 

yield, these savings could be meaningful given that VA’s and DOD’s 

separate approaches to procuring surgical and medical supplies have 

yielded an estimated $19 million annually in savings. However, much 

needs to be done to take advantage of additional savings opportunities. At 

this point, neither department has accurate, reliable, and comprehensive 

procurement information—a basic requirement for identifying potential 

medical and surgical items to standardize. Furthermore, because DOD has 

opted to follow a regional rather than a national approach to 

standardization, opportunities for national joint procurement will be more 

difficult to achieve. Within VA, its Procurement Reform Task Force 

highlighted many department procurement shortcomings and potential 

solutions. Continued management attention and commitment to 

implementing the task force’s recommendations is a positive step to 

improving the efficiency and effectiveness of VA’s acquisition system. 

DOD is currently implementing a new procurement system and has been a 

long time supporter of efforts to establish UPNs for medical and surgical 

supplies. However, the future of joint VA and DOD procurement initiatives 

depends on the progress and success each department has in improving its 

acquisition system and, ultimately, each department’s commitment to joint 

procurement. 

Mr. Chairman, this concludes my prepared statement. I will be happy to 

answer any questions you or other members of the subcommittee may 

have. 

Concluding 

Observations 
Page 14 GAO-02-872T 

For further information, please contact Cynthia A. Bascetta at 

(202) 512-7101. Individuals making key contributions to this testimony 

include Michael T. Blair, Jr.; Cherie’ M. Starck; John Y. Oh; Allan C. 

Richardson; and Karen M. Sloan. 

Contact and 

Acknowledgments 

(290127)