VA Procurement Reform Task Force Report Page 1 

 

Department of Veterans Affairs 

Procurement Reform Task Force Report 

Table of Contents 

 Topic Pages

Executive SummaryÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖ. 2 - 5 

OverviewÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖ. 6 - 8 

Goal 1: Leverage Purchasing Power of VAÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖ. 9 - 20 

Goal 2: Standardize Commodities Within VAÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖ. 21 - 24 

Goal 3: Obtain and Improve Comprehensive VA Procurement InformationÖ 25 - 29 

Goal 4: Improve VA Procurement Organizational EffectivenessÖÖÖÖÖÖÖÖ.. 30 - 42 

Goal 5: Ensure a Sufficient and Talented VA Acquisition WorkforceÖÖÖÖ... 43 - 50 

Summary of RecommendationsÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖ. 51 - 60 

AppendicesÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖÖ 61 - 75 

 Appendix A: Charge Memo 

 Appendix B: Task Force Members 

 Appendix C: Summary of Interview Findings 

Appendix D: Acquisition Workforce - Pertinent Key Report Highlights 

 Appendix E: Glossary 
VA Procurement Reform Task Force Report Page 2 

 

EXECUTIVE SUMMARY

OVERVIEW 

The Department of Veterans Affairsí (VA) acquisition system spends over $5 billion 

annually for pharmaceuticals, medical-surgical supplies, prosthetic devices, information 

technology, construction, and services. Recently, the Office of the Inspector General 

(OIG) and stakeholders expressed concerns about the effectiveness of VAís acquisition 

system. Issues raised include the extent to which VA obtains best available prices, 

consistently complies with Federal and VA acquisition regulations, appropriately uses 

purchase cards, implements adequate systems to track and document purchases, and 

ensures an adequate VA acquisition workforce. 

The Secretary of Veterans Affairs established a Procurement Reform Task Force in 

June 2001, to review VAís acquisition system, develop specific recommendations for its 

optimization, and address concerns raised by various groups. 

The Task Force reviewed documents prepared by OIG and other sources, including over 

100 interviews with VA officials, vendors, private health care organizations and other 

individuals familiar with VAís acquisition programs. The Task Force also heard 

presentations from several key VA program leaders. 

The Task Force focused its efforts on areas that offer substantial near-term savings and 

have high potential for sustainable improvements. In addition, the Task Force addressed 

critical VA-wide issues that affect the overall effectiveness of VAís acquisition system. 

Specifically, the Task Force examined acquisition of medical-surgical supplies, hightechnology medical equipment, and prosthetic devices, as well as overarching issues 

including procurement authority and the acquisition workforce. While pharmaceuticals 

comprise a large percentage of VAís annual acquisition expenditures, the Task Force 

concluded that this area had already benefited from considerable management attention 

and improvements. Information technology and capital asset acquisitions were excluded 

since other groups were addressing these separately. 

The Task Force established five major goals, which will lead to dramatic improvements 

in VAís acquisition system: 

1. Leverage purchasing power of VA 

2. Standardize commodities within VA 

3. Obtain and improve comprehensive VA procurement information 

4. Improve VA procurement organizational effectiveness 

5. Ensure a sufficient and talented VA acquisition workforce 
VA Procurement Reform Task Force Report Page 3 

 

To accomplish these goals, the Task Force developed more than 60 specific 

recommendations and action steps required for implementation. Key recommendations 

are summarized below, and are detailed in subsequent sections of this report. 

GOAL 1: LEVERAGE PURCHASING POWER OF VA 

The VA health care system is one of the nationís largest markets for medical equipment, 

products, and services. VA purchased over $500 million in medical-surgical supplies 

alone in FY 2000. In order to capitalize on its significant purchasing power, VA needs to 

better coordinate planning and procurement of products and services that are needed on 

a recurring basis. Currently, substantial market leverage is lost due to fragmented 

procurement practices that undermine VAís ability to consistently achieve the best 

prices and other terms. 

While the Task Force recognizes the importance of retaining local initiative and 

flexibility, it is clear that actions must be taken to fundamentally change the 

Departmentís contracting priorities to maximize its position in the market and improve 

consistency, compliance, and quality across the system. To accomplish this objective, 

the Task Force recommends a revised contracting hierarchy, which mandates the use of 

Federal Supply Schedules (FSS) and national contracts for medical-surgical supplies and 

equipment. The new priorities encourage the establishment of national Blanket 

Purchase Agreements (BPA) when appropriate. Veterans Integrated Service Networks 

(VISN) will be required to submit requests for BPAs and consolidated high-technology 

medical equipment purchases to the National Acquisition Center (NAC) in order to 

improve systemwide coordination and maximize its negotiating position. 

The Task Force also found that the Departmentís approach to attain socioeconomic goals 

needs to be better aligned with acquisition planning. The Task Force proposes 

recommendations to improve achievement of socioeconomic goals, while also ensuring 

programs and mission goals are not put at risk. 

In addition, the Task Force is concerned about the lack of oversight and discipline in the 

use of purchase cards. Recommendations are offered to better control and monitor the 

use of purchase cards as a buying vehicle, while enhancing their use as a payment 

method. 

Given the strategic relationship between VA and the Department of Defenseís (DoD) 

health care systems, the Task Force also recommends intensified efforts to identify and 

pursue further opportunities for joint purchasing. 

GOAL 2: STANDARDIZE COMMODITIES WITHIN VA

VAís pharmaceutical national contractsí (formulary) program is widely recognized as 

successful in using standardization to lower prices, improve quality, and streamline 

procurement. While efforts to adopt a similar approach to standardize purchasing of 

medical-surgical supplies have been underway for several years, progress has been slower 

than desired. In large part, limited progress can be attributed to the lack of cliniciansí 

ìbuy-inî to the current standardization approach and limited accountability for 
VA Procurement Reform Task Force Report Page 4 

 

compliance. The Task Force recognizes the significant potential for cost saving and 

other procurement efficiencies and believes standardization of medical-surgical supplies 

is critical to achieve these results. The Task Force recommendations offer a robust, userled approach to identify and select specific commodities for standardization. 

GOAL 3: OBTAIN AND IMPROVE COMPREHENSIVE VA PROCUREMENT 

INFORMATION 

Since successful management depends on effective measurement, the Task Force believes 

optimal results cannot be achieved from VAís acquisition system without the ability to 

identify, track and evaluate what is being purchased. To improve the completeness, 

reliability, accuracy, and consistency of VA procurement and materiel management data, 

Task Force recommendations address the need to improve use of existing systems, 

establish a National Item File (NIF), facilitate adoption of Universal Product Numbers 

(UPN), and improve planning for the migration to the core Financial Logistics System 

(coreFLS). 

GOAL 4: IMPROVE VA PROCUREMENT ORGANIZATIONAL EFFECTIVENESS 

To improve accountability, consistency and oversight of VAís acquisition system, the 

Task Force recommends several key organizational and policy changes. While field 

acquisition employees have a clear line of authority within their immediate organizations 

to their customers, other lines of procurement authority require clarification. This is 

especially important given the new contracting hierarchy recommended by the Task 

Force. Recommended changes include establishing direct authority from the VA Senior 

Procurement Executive, through the Procurement Executive, to Heads of Contracting 

Activity. The Task Force also recommends separating and elevating the VHA Logistics 

Office, and establishing a VHA Acquisition Board. The Acquisition Board will be 

responsible for standardization, acquisition planning, education and training, and 

oversight. The Acquisition Board will provide valuable customer feedback to the 

National Acquisition Center to ensure it is responsive to the needs of its clients. In 

addition, the Task Force recommends establishing a Business Oversight Board, as a 

subcommittee of the VA Strategic Management Council (SMC). The Business Oversight 

Board will assess, analyze and monitor critical business functions, including 

procurement activities, across the Department 

Finally, to separate oversight responsibility of the Supply Fund Board from the 

operational functions of the Supply Fund, the Task Force recommends the Supply Fund 

Board be elevated and chaired by the Assistant Secretary for Management. 

GOAL 5: ENSURE A SUFFICIENT AND TALENTED VA ACQUISITION 

WORKFORCE 

Ultimately, the success of VAís acquisition system depends on its workforce. Without a 

sufficient number of talented and knowledgeable professionals, virtually none of the 

goals articulated by the Task Force can be achieved. The acquisition workforce issues 

currently facing VA are shared across Government, and the Task Force encourages VA to 

continue pursuing governmentwide solutions. In addition, the Task Force recommends 

VA take specific steps to ìprofessionalizeî the acquisition workforce, improve 
VA Procurement Reform Task Force Report Page 5 

 

recruitment and retention, and enhance education and training. These actions include 

identifying members of its workforce and the competencies they must attain, assessing 

compensation, and establishing an acquisition intern program. 

CONCLUSION 

In summary, the VA Procurement Reform Task Force proposes a comprehensive set of 

recommendations that address the critical success factors necessary to optimize VAís 

acquisition system. Collectively, these recommendations offer a solid foundation for 

sustainable, systemwide transformation. Successful implementation of these 

recommendations will help VA fulfill its mission of service to veterans by improving 

quality, creating efficiencies, and supporting its dedicated workforce. 
VA Procurement Reform Task Force Report Page 6 

 

OVERVIEW 

VA administers one of the largest Federal acquisition programs. VA annually purchases 

more than $5 billion of pharmaceuticals, information technology (IT), equipment, 

medical-surgical and other supplies, prosthetics, services, and construction (Table A). 

VA manages its acquisition activities with nearly 6,000 employees. 

 Source: VA Procurement History File (FY01) 

 

The Departmentís acquisition program is the responsibility of the Senior Procurement 

Executive (SPE). Currently, the Assistant Secretary for Management serves as the SPE, 

as well as head of the Office of Management (OM). The Procurement Executive (PE), 

who reports to the SPE, also has major responsibilities. The PE serves as the Deputy 

Assistant Secretary for Acquisition and Materiel Management. The majority of VAís 

local acquisitions are executed by contracting officers within the Veterans Health 

Administration (VHA). Currently, the VHA Office of Logistics, located in VHAís Office 

of the Chief Financial Officer, oversees VHAís acquisition program. 

OM awards national contracts, including certain Federal Supply Schedules (FSS) under 

delegated authority from the General Services Administration (GSA). FSS contracts are 

also available for use by other Government agencies (OGA). These agencies purchase 

over $1.5 billion of commodities using FSS and national contracts managed by VA. Major 

activities of the VA national acquisition program include the procurement of information 

technology, pharmaceutical products, extended-care (i.e., nursing home care) services, 

subsistence, and medical-surgical supplies. In addition, OM is responsible for policy 

development, oversight, contracting officer certification, and training for the acquisition 

workforce. 

Each of the Departmentís three Administrations ó VHA, Veterans Benefits 

Administration (VBA), and National Cemetery Administration (NCA) ó execute 

FY01 Acquisition Expenditures ($M)

$2,500

$600

$600

$500

$500

$400

$300

Pharmaceuticals

IT (VHA)

Equipment

Medical-Surgical

Prosthetics

Services (Medical)

Construction

Table A 
VA Procurement Reform Task Force Report Page 7 

 

contracts, orders and agreements under individual delegations. The Administrations not 

only buy from national contracts awarded by OM, but also award contracts to meet local 

and regional needs. These acquisitions include a wide array of commodities, including 

medical services, health care products, vocational rehabilitation services, construction, 

and grave markers. 

SCOPE AND METHODS

The Secretary of Veterans Affairs established the VA Procurement Reform Task Force in 

June 2001 to review VAís acquisition system, develop specific recommendations for its 

optimization and address concerns expressed by various groups. The Secretary 

appointed 13 members to the Task Force and instructed them to present their findings 

and recommendations to him through the Departmentís Strategic Management Council 

(Appendices A and B). 

The Task Force focused its efforts on areas that offer substantial near-term savings and 

have high potential for sustainable improvements. In addition, the Task Force addressed 

critical VA-wide issues that affect the overall effectiveness of VAís acquisition system. 

Specifically, the Task Force examined acquisition of medical-surgical supplies, hightechnology medical equipment, and prosthetic devices. The Task Force also studied 

overarching issues such as procurement authority and the acquisition workforce. 

Although pharmaceuticals comprise a large percentage of VAís annual acquisition 

expenditures, the Task Force concluded that this area had already benefited from 

considerable management attention and improvements. Information technology and 

capital asset acquisitions were excluded since other groups are addressing these issues 

separately. Nonetheless, the framework and approach proposed by the Task Force are 

directly applicable to the procurement of capital assets as well as services. 

The Task Force collected and reviewed a considerable amount of information. The Task 

Force reviewed documents prepared by the VA Office of Inspector General (OIG), 

former and current VA groups addressing acquisition issues, and other sources. The 

Task Force paid particular attention to the May 15, 2001, Office of Inspector General 

Report, ìEvaluation of the Department of Veterans Affairs Purchasing Practices.î The 

Task Force conducted more than 100 interviews with VA officials, vendors, private 

health care organizations, and other individuals familiar with VAís acquisition programs 

(Appendix C). The Task Force also heard presentations by several key VA program 

leaders from OIG, Prosthetics Service, and the Denver Distribution Center. 

The Task Force convened numerous face-to-face meetings and videoconferences to 

identify issues, discuss findings, develop recommendations, and prepare its report. The 

Task Force had the privilege of presenting interim progress to the Deputy Secretary and 

the VA Strategic Management Council in November 2001, and to the Secretary in 

September 2001 and December 2001. 
VA Procurement Reform Task Force Report Page 8 

 

FRAMEWORK 

VAís acquisition system is integral to the Departmentís mission of serving our Nationís 

veterans. In pursuing its charter, the Task Force was guided by the principles that in 

order to fulfill its mission, VA must have an acquisition system that: 

• Promotes the timely delivery of high-quality patient care and other services; 

• Optimizes the utilization of resources and deployment of assets; 

• Adapts to changing business and health care environments; and 

• Ensures compliance with acquisition statutes, regulations, and policies. 

In order to create such a system, the Task Force established a framework that is 

predicated on five major goals: 

To accomplish these goals, the Task Force developed more than 60 specific 

recommendations, along with action steps required for implementation. The five major 

goals and key recommendations are presented in the sections that follow. 

Accomplishing these goals will lead to dramatic and sustainable improvements in VAís 

acquisition system. 

Leverage Purchasing Power of VA Leverage Purchasing Power of VA

Standardize Commodities Within VA Standardize Commodities Within VA

Obtain and improve Comprehensive VA Procurement 

Information

Obtain and Improve Comprehensive VA Procurement 

Information

Improve VA Procurement Organizational Effectiveness Improve VA Procurement Organizational Effectiveness

5 Major 

Acquisition

Goals

Ensure a Sufficient and Talented VA Acquisition 

Workforce

Ensure a Sufficient and Talented VA Acquisition 

Workforce
VA Procurement Reform Task Force Report Page 9 

 

GOAL 1: LEVERAGE PURCHASING POWER OF VA 

As the Nationís largest health care delivery enterprise, VA has the ability to realize 

enormous economies and achieve greater management efficiencies by fully leveraging its 

vast purchasing power. The Task Force believes it is essential to eliminate practices that 

fragment purchasing power and undermine the Departmentís ability to consistently 

achieve the best terms and prices. The Task Force addresses these problems with 

recommendations designed to eliminate contracting redundancies and bring consistency 

and focus to the Departmentís purchasing practices. These recommendations include 

the following: imposing a hierarchy which mandates the use of national contracts and 

FSS to procure health care supplies; pursuing tiered pricing and other favorable terms for 

acquisition instruments; consolidating high-technology medical equipment purchases; 

optimizing purchase card use; and, achieving lower medical materiel costs through 

partnering with DoD. 

ASSESSMENT 

The VA health care system is one of the Nationís largest markets for pharmaceuticals, 

medical equipment, products, and services. VA annually contracts for over $2.5 billion in 

pharmaceuticals and over $1.5 billion in medial-surgical supplies, prosthetic devices, 

equipment, and other health care related items. Presently, there is a wide range of 

purchasing practices employed by VA. This fragmentation diminishes VAís ability to 

optimize terms and obtain best prices for products that are needed on a recurring basis. 

 

VA has authority to obtain health care items using a variety of contracting mechanisms. 

These options range from nationally negotiated, committed-volume contracts to an 

individual making a simple open-market transaction using a purchase card. There is 

significant redundancy and inconsistency throughout the system. 

FY01 Acquisition Expenditures ($M)

$2,500

$600

$600

$500

$500

$400

$300

Pharmaceuticals

IT (VHA)

Equipment

Medical-Surgical

Prosthetics

Services (Medical)

Construction

Table 1.1 Source: VA Procurement History File (FY01)
VA Procurement Reform Task Force Report Page 10 

 

Federal Supply Schedule (FSS) and National Contracts 

VA possesses unique opportunities to leverage buying power using FSS. These 

Schedules are multiple award contracts under which many vendors can have a 

contract to sell the same or similar products to the Federal Government, and 

meet all competition requirements. For, example, under the FSS multiple award 

program, all manufacturers of aspirin can have a contract to sell their products to 

the Government. 

The General Services Administration (GSA) has delegated authority to VA to 

award and administer multiple award FSS contracts for Federal Supply Classes 

65 (Medical and Surgical Supplies) and 66 (Laboratory), providing VA and other 

Government agencies access to a centralized acquisition program for health care 

supplies and services. VA FSS contracts are negotiated by the National 

Acquisition Center (NAC), the largest combined contracting activity within VA. 

Vendors submit offers to the NAC for evaluation by NAC contracting officers. 

The evaluation includes an assessment of the vendorís commercial sales practices. 

The NAC negotiates with vendors, seeking to leverage overall Government 

buying power by achieving pricing and terms equal to or better than what the 

vendor offers to its Most Favored Customer (MFC). During negotiations, 

manufacturers are required to disclose the prices and concessions they offer their 

MFC. 

Unlike other Government contracts, the FSS Multiple Award Schedule includes a 

price reduction clause that helps to ensure that, throughout the life of the 

Governmentís contract, prices remain comparable to the prices granted to a 

negotiated commercial ìtracking customer.î FSS contracts include a maximum 

order provision (not to be confused with the recently eliminated maximum order 

limitation). Maximum order provisions provide the Government the opportunity 

to obtain better pricing and terms on volume purchases in excess of established 

thresholds. 

VA-administered FSS schedules include other provisions and clauses to protect 

the interests of the Government including pre- and post-award audit rights, 

access to contractor records, and price adjustment clauses. In addition, FSS 

contracts contain Blanket Purchase Agreement (BPA) provisions that allow the 

Government the opportunity to negotiate better unit pricing based on 

commitments to sales volume or market share, and to provide more timely 

procurement of products and services needed on a recurring basis. FSS 

negotiations can also include tiered pricing arrangements that prescribe lower 

unit prices for larger purchase quantities, and other favorable terms, such as 

extended warranty periods, and reduced pricing on key parts or installation 

services. Because of the global nature of FSS and national contracts, these 

valuable terms can be more readily negotiated by the NAC and made available to 

all VA and OGA customers. 
VA Procurement Reform Task Force Report Page 11 

 

VA uses national contracts to leverage the Departmentís buying power on health 

care commodities identified as high usage where competition is practical. The 

requirements for national contracts are developed with customer input and are 

openly competed. National contracts are generally firm, fixed-price requirementtype contracts, with a base year and four 1-year option periods. Options are only 

exercised after market research reveals that the prices are fair and reasonable and 

the award is in the best interest of the Government. This type of contracting 

encourages vendors to offer better terms and prices based on firmer 

commitments. Since 1997, VA has achieved a cost avoidance of over $800 million 

using national contracts. 

VA FSS Multiple Award Schedule Contracts administered by the National 

Acquisition Center are also beneficial because: 

• Negotiation, award, and administration of national contracts avoid the 

administrative costs and procurement delays that result when VA facilities 

negotiate individual contracts. 

• Oversight and accountability of performance and pricing are improved and 

consistently uniform. 

• Government health care providers have a broad range of contract items 

readily available to facilitate the delivery of high-quality health care. 

• All vendors, including small businesses, have the opportunity to sell to the 

Government. 

• Competition requirements are met. 

Failure to use national contracts and FSS erodes VAís ability to leverage 

aggregate buying power of the Federal Government, diminishes visibility over 

procurement of medical-surgical items, and impedes ability to effectively manage 

VA acquisition program resources. The Task Force recognizes that waiver of 

mandatory use of FSS or national contracts may be appropriate in emergency or 

other situations where patient care may be negatively impacted. The 

circumstances warranting waivers are expected to be infrequent. 

In summary, the Task Force believes that national contracts and FSS provide the 

best opportunity to achieve optimal pricing for VA and OGAs, including 

concessions given to commercial customers. FSS contracts protect the 

Governmentís interest by accommodating changes in market prices and making a 

variety of health care items available to VA clinicians. Negotiation of national 

BPAs allows NAC contracting officers to achieve additional discounts off the best 

FSS price by leveraging the overall buying power of VA and OGAs to meet 

volume commitments. 
VA Procurement Reform Task Force Report Page 12 

 

Product Databases 

The benefits of FSS and national contracts cannot be realized unless procurement 

officials have reliable information available that identifies what items are offered. 

An electronic catalogue of FSS and national contract items should be available 

that enables purchasers to ìshop for productsî and compare prices of like or 

similar items. 

Currently an electronic, partially searchable database showing many of the items 

available from FSS is available as a commercial service. It is available for a fee, 

and contains files in Portable Document Format (PDF). Products are not readily 

searchable unless one of the key words by which the file is indexed is used. As an 

example, a user can search for a specific manufacturerís catheter using the stock 

number for that catheter. A search for catheters in general, however, will not 

display the array of catheters available on contract for the purposes of comparing 

them. While searchable database services are used by some procurement 

professionals, they are not easily used by purchase cardholders. 

GSA operates a website, GSA Advantage!, that has a robust search function. 

However, only 8 percent (i.e., 78,000 items) of FSS Classes 65 and 66 product 

items are currently on the electronic website. GSA Advantage! is further limited 

because descriptions are not always complete, and photographs may be not be 

available. Other improvements are needed to make the website useful for 

purchase cardholders. Until GSA Advantage! is improved and made user-friendly 

for every VA buyer, full benefits of focused VA purchasing from FSS will not be 

fully realized. 

VA Procurement Experience 

The Task Force recognizes that VAís success in improving acquisition of 

pharmaceuticals offers valuable lessons that can be applied to medical-surgical 

supplies and equipment. The number of pharmaceutical items offered to VA 

through the FSS greatly increased when Public Law 102-585 required 

manufacturers to make ìcovered drugsî available on FSS. VA has also been 

successful in negotiating distribution services contracts such as the 

Pharmaceutical Prime Vendor distribution program. Under this program, a 

single prime vendor has an agreement with VA to distribute virtually all 

pharmaceuticals. The distribution agreement features ìnegativeî distribution 

fees. The vendor does not charge VA a fee for distribution services. Negative fees 

result from factors such as favorable volume-leveraged terms offered to the 

distributor by manufacturers with which the NAC has predetermined contract 

prices and cost-of-money benefits that accrue to the distributor. 

VA has not been universally successful in achieving the best prices and terms for 

medical-surgical items or contracts for their distribution. Some VA facilities have 

purchased various items on the open market at prices higher than those available 
VA Procurement Reform Task Force Report Page 13 

 

to commercial customers. The Task Force examined several issues that 

contribute to open-market purchasing: 

• Manufacturers are not required to offer their medical-surgical products on 

FSS. 

• Some products used by VA medical facilities are only offered on the open 

market (e.g., certain types of vascular stents). 

• In an attempt to achieve better prices and terms, VA facilities and VISNs 

have pursued separate contracts with vendors holding national or FSS 

contracts, causing vendors to conduct multiple negotiations for the same 

products or services, and possibly undermining the ability of the NAC to 

negotiate national contracts. 

• Local contracts occasionally have lower initial costs, but may lack the same 

favorable terms and conditions as national contracts and, therefore, have 

higher total (i.e., life-cycle) costs. 

• Some VA facilities and VISNs have entered into local distribution contracts 

that often charge more for items than the price available on FSS, BPA, or 

national contracts. 

• It is difficult for VA medical facilities to determine the availability and 

prices of medical-surgical items on VA contracts. 

• VA is currently limited in its ability to oversee the scope and volume of 

procurement of medical-surgical items, in part due to the proliferation of 

purchase cardholders and the resulting lack of procurement history. 

VA is experiencing a new trend in the FSS program where distributors are 

seeking FSS contracts to supply medical-surgical products. Use of product 

distributors, which are typically small businesses, for non-distribution services 

enhances attainment of VAís socioeconomic goals. However, the Task Force 

believes this practice is not without cost to VA. Accountability is lost and the 

potential to reduce costs is decreased because of VAís inability to validate cost. 

Socioeconomic Goals 

VAís small business goal of total acquisition dollars is 40 percent, which is higher 

than the Governmentwide average of 23 percent. VA has consistently attained a 

higher percentage accomplishment than the Governmentwide average in every 

socioeconomic procurement category. VA has established goals for itself that are 

higher than the statutory goals and generally higher than all other Federal 

agencies. VA intends to continue its commitment to small business and other 

preferential business entities while still achieving the goals of the Task Force. 
VA Procurement Reform Task Force Report Page 14 

 

The Task Force believes that the Departmentís approach to attain socioeconomic 

goals needs to be better aligned with acquisition planning. Achievement of 

program and mission goals should not conflict with socioeconomic goals. 

Moreover, socioeconomic goals, currently perceived as primarily an acquisition 

responsibility, should be recognized by and also be the responsibility of program 

managers. Finally, data on purchases from small businesses made by purchase 

cards is not being fully captured (Recommendation 3.1). 

RECOMMENDATIONS

The Task Force proposes an extensive set of recommendations that are designed to 

improve the ability of VA to achieve the best prices and other favorable terms. The Task 

Force believes that these recommendations will eliminate contracting redundancies and 

bring consistency and focus to the Departmentís acquisition practices. The ultimate 

result of these changes will be increased efficiency and significant cost avoidance. 

Goal 1: Leverage Purchasing Power of VA 

1.2 Pursue legislation and policy changes to enable VA to count first-tier 

subcontracts toward achievement of socioeconomic goals

1.3 Pursue tiered pricing and other favorable terms in all procurement 

instruments

1.4 Consolidate high-technology equipment purchases not covered by FSS 

schedules

1.5 Opitmize and monitor the use of purchase cards

1.6 Partner with DoD to further leverage purchasing power of VA

Establish a contract hierarchy which mandates VA use of national contracts 

and VA Federal Supply Schedule Groups 65 and 66 and for procurement of 

health care supplies

1.1

Leverage Purchasing Power Recommendations
VA Procurement Reform Task Force Report Page 15 

 

Recommendation 1.1: Establish a contract hierarchy, which mandates VA use of 

national contracts and VA Federal Supply Schedule Groups 65 and 66 for 

procurement of health care supplies 

The Task Force believes that FSS and national contracts provide the best 

opportunity to achieve optimal pricing and other terms for VA and other 

Government agencies. Therefore, the Task Force recommends VA establish the 

following priority: 

This contracting hierarchy does not apply to the procurement of items from 

statutorily mandated sources. 

VA will prepare an amendment or a deviation to the VA Acquisition Regulation 

(VAAR) that will change the contract hierarchy and mandate use of VA FSS 

ï National committed use contracts

ï VA Federal Supply Schedule (FSS) Groups 65 and 66 for 

health care supplies in the following order of priority

! Nationally awarded Blanket Purchase Agreements issued 

against FSS contracts (by the NAC)

! Multi-VISN, VISN, or locally awarded BPAs issued against FSS 

contracts

! FSS purchases

ï VISN or regionally awarded contracts for items without 

national or FSS contracts

ï Locally awarded contracts for items without national or FSS

contracts 

ï Open-market purchases

Tier Two Tier Three Tier One
VA Procurement Reform Task Force Report Page 16 

 

Groups 65 and 66 for VA procurement of health care supplies and equipment. 

The Task Force further recommends VA encourage other Government agencies to 

take similar measures particularly with respect to mandated use of VA FSS 

Groups 65 and 66. The Task Force proposes that all standardization 

requirements for local, VISN, or regional contracts or BPAs initially be referred to 

the NAC. The NAC will then determine if a negotiation at a corporate level offers 

greater potential than local negotiations. If so, the NAC will negotiate the 

contract within an established timeframe. Otherwise, the NAC will allow the 

requesting group to proceed with its negotiations. If the NAC does not decide 

within the specified timeframe, then the requesting group may proceed with its 

actions. The VHA Acquisition Board should establish performance metrics and 

monitor network and facility compliance and NAC timeliness. The Task Force 

recommends limiting arrangements with distributors for medical-surgical 

products and equipment to distribution services only. Exceptions will be 

granted if the distributor has a commercial customer base from which 

negotiations and award can proceed, or the distributor can provide the 

manufacturers' commercial-customer pricing information to determine a 

negotiation position which will result in a valid award. 

The Task Force also recommends delegating the authority to execute waivers of 

the mandatory FSS requirement under compelling clinical circumstances to the 

VA Procurement Executive. The Procurement Executive may delegate waiver 

authority. Waivers should be closely monitored by the Procurement Executive 

and the VHA Acquisition Board (Recommendation 4.1). 

The Task Force believes VAís acquisition system cannot achieve optimal results 

without the ability to identify medical supply items available on national and FSS 

contracts. The Office of Acquisition and Materiel Management (OA&MM) must 

develop a readily accessible, web-based, searchable listing of current FSS and 

national contracts. The listing must facilitate identification of specific items, 

contract vendors and their socioeconomic status, and related prices. The webbased searching tool will be coordinated with GSA Advantage! in a manner that 

should result in a virtual ìVA Storeî section within GSA Advantage!. The ìVA 

Storeî should include all commodities commonly purchased by VA and other 

Government agencies from VA contracts. The ìVA Storeî should also provide 

efficient and documented records of purchases from VAís FSS contracts. 

OA&MM should establish a ìHelp Deskî to respond to questions regarding 

availability, use, and benefits of national and FSS contracts. 

VA needs to provide education and training tailored to improve VA Central 

Office and field staff knowledge of use and benefits derived from FSS contracts, 

BPAs, and GSA Advantage! OM and VHA will conduct industry outreach meetings 

and develop other communication mechanisms to inform manufacturers and 

suppliers of the new contracting priorities and will actively encourage industry 

participation in FSS and national contracts. 
VA Procurement Reform Task Force Report Page 17 

 

OM and VHA will collectively develop measures designed to monitor 

performance and audit compliance with revised contracting priorities and 

regulations, including socioeconomic goals. Results of these reviews will be 

reported to the VHA Acquisition Board. The success of this recommendation is 

partially but not entirely dependent upon other recommendations such as 

Recommendations 3.1 and 3.3. 

Recommendation 1.2: Pursue legislative and policy changes to enable VA to count 

first-tier subcontracts toward achievement of socioeconomic goals 

The Task Force recognizes the importance of socioeconomic programs. As VA 

attempts to leverage its buying power through increased use of standardization 

and other large procurements, opportunities for small businesses to be prime 

contractors may be diminished. For example, a small business may not have 

sufficient manufacturing, sales, distribution, or support capacity for a specific 

item needed systemwide. While the aggregation of requirements may limit 

opportunities for small businesses to participate as prime contractors, the Task 

Force expects their participation as first-tier subcontractors to increase. 

Subcontracting goals are currently required of large business contractors 

awarded large contracts. However, since subcontracting awards are not 

currently counted toward socioeconomic goal achievements, these 

subcontracting goals have limited utility. They are given little attention from 

either the contracting officer or the contractor. Consequently, for this 

realignment of emphasis to subcontracting to be successful, adequate incentives 

must be given to achieve these goals. The Task Force recommends VA champion 

this initiative with the Small Business Administration. 

The Task Force believes that VA must find mechanisms to maintain and enhance 

small business participation in VAís acquisition process. The Task Force 

recommends VA pursue legislative and policy changes allowing first-tier 

subcontracts to contribute toward attainment of socioeconomic goals. It is also 

critical to ensure small business participation contributes to mission, program, 

and budget objectives. The VHA Acquisition Board should explore innovative 

approaches to increase small business participation, such as establishment of an 

incentive pool. 

Recommendation 1.3: Pursue tiered pricing and other favorable terms in all 

procurement instruments 

The Task Force believes tiered pricing and other favorable terms included in 

initial FSS awards can improve procurement efficiencies and reduce costs. 

Consequently, the Task Force recommends pursuing tiered pricing and other 

favorable terms for all acquisition instruments. The NAC will aggressively 

pursue BPAs, tiered pricing, and other favorable pricing terms in FSS contracts to 

the maximum extent appropriate. When national standardization efforts 

identify products for national BPAs, the NAC will aggressively pursue the most 

favorable terms for VA. 
VA Procurement Reform Task Force Report Page 18 

 

As noted above in Recommendation 1.1, multi-VISN, VISN, or local groups that 

identify potential benefits of establishing a BPA will forward a request to the 

NAC for a decision on negotiation strategy. If the NAC elects not to pursue a 

BPA, then the requesting group may still choose to do so. These groups should 

also pursue tiered pricing and other favorable terms in all of their contracts. In 

addition, all VISN and local BPAs should contain language that permits 

cancellation of the regional or local BPA if a national BPA for the same product 

becomes available, even if the national BPA is awarded to a different vendor. 

Recommendation 1.4: Consolidate high-technology equipment purchases not 

covered by FSS schedules 

In order to achieve the maximum pricing leverage for high-technology equipment, 

VA should consolidate and aggregate its needs at the VISN level whenever 

feasible. VISN Equipment Committees should be created and charged to 

aggregate and consolidate equipment procurement plans of desired purchases of 

high-technology equipment. Each VISN Committeeís selections will be subject 

to approval by Network Directors. 

VISN Directors will submit approved and funded plans to the NAC for 

procurement on a recurring basis. The plans shall provide the necessary 

information to negotiate improved prices that would include acceptable vendors, 

rationale, and price. Once received, the NAC will aggregate requests from 

multiple sources (e.g., VISNs, other Government agencies) and leverage those 

quantities to achieve price efficiencies and other concessions (e.g., additional 

features, equipment support, and/or training). 

To provide further incentive for cost efficiencies, the OM will waive the usual fee 

charged if the NAC is unable to negotiate more favorable terms than the 

submitting office. This arrangement will align the financial incentives of the 

NAC with those of the VISNs. 

Recommendation 1.5: Optimize and monitor the use of purchase cards 

VA has greatly increased the use of purchase cards as a procurement method for 

micropurchases (i.e., transactions at or below $2,500). Currently, 97-98 percent 

of all micropurchases are made by purchase card. There are approximately 

34,000 purchase cards issued by VA. VA receives a rebate of 1.06 percent from 

the purchase card company for each VA purchase. In FY 2001, VA received a 

rebate of $15 million from the use of purchase cards. 

However, there are problems associated with the use of purchase cards. These 

concerns include misuse, proliferation of cards, lack of training, use of cards to 

bypass mandatory sources and standardization, lack of compliance with 

acquisition regulations and laws (e.g., requirement for competition), and the 

inability to monitor and track purchases for purposes of both procurement 

history and socioeconomic data. 
VA Procurement Reform Task Force Report Page 19 

 

The Task Force has concluded VA lacks the performance measures and other 

management tools necessary to assist users and managers with the recording, 

approval, and reconciliation of related transactions. VA can improve the 

management of its purchase card program by developing and applying national 

criteria for their use, including identification of appropriate purchase cardholders 

and approving officials. 

To enhance the effectiveness of the purchase card program, VA will provide 

initial and ongoing training to all purchase cardholders. The Task Force 

recommends VAís Employee Education Service (EES), with assistance from OM, 

develop VA-specific training modules to be made available to all purchase 

cardholders. These training modules should provide extensive guidance on 

compliance with VA contract hierarchy, acquisition regulations and laws, 

including the requirement for competition and use of socioeconomic preferences. 

To the maximum extent possible, training should be accomplished via distance 

learning and other technologies, such as computer-based training or closedcircuit television programs. 

In order to decrease transaction costs (e.g., invoice processing and late payment 

penalties) and maximize rebates VA receives from the purchase card company, 

the Task Force recommends that VA optimize the use of the purchase card as a 

payment mechanism. VA should assign îpayment onlyî authority to individuals 

who are not warranted contracting officers to pay for acquisitions above $2,500. 

The Task Force believes that VHA can improve its procurement information by 

requiring that all services use ìdetailedî rather than ìsimplifiedî transactions for 

recording in Integrated Funds Distribution, Control Point Activity, Accounting 

and Procurement (IFCAP) when conducting recurring purchase card 

transactions. The Task Force recognizes that use of detailed transactions in 

IFCAP is not appropriate for all types of purchase card transactions; therefore, 

VA will revise and implement new criteria regarding the use of ìdetailedî versus 

ìsimplifiedî transaction documentation. These criteria will be based on such 

factors as the frequency of transactions, amount of purchase, and organizational 

unit. 

Finally, the Task Force believes that optimal purchase card efficiencies cannot be 

achieved without monitoring purchase card transactions. VA should implement 

a nationally developed audit tool at the local level to monitor purchase card 

transactions to ensure security, appropriate purchases, proper costing, timeliness 

of certification, and oversight. 

Recommendation 1.6: Partner with DoD to further leverage purchasing power of 

VA 

VA should intensify ongoing initiatives designed to identify and create 

opportunities for joint VA-DoD purchasing to achieve lower medical materiel 

costs by combining the purchasing power of the two Departments and 

eliminating contracting redundancies. While all sharing initiatives must yield 
VA Procurement Reform Task Force Report Page 20 

 

cost or other benefits to VA, there are ample opportunities to utilize combined 

volume-leveraged contracts that will yield significant benefits for both 

Departments. 

The Task Force recommends that VA identify new opportunities for sharing by 

pursuing contacts at the Department, Service, Military Regional, and individual 

military installation levels. In addition, VA should consider proposing an 

Acquisition Initiatives/Opportunities Subcommittee under the VA/DoD Health 

Care Resources Sharing Board. 

The Task Force proposes VA request Office of Management and Budget (OMB) 

and DoD support for the proposed legislative amendment that would allow DoD 

to use more of the Supply Fund program services. 

CONCLUSION 

In summary, the Task Force recommends a comprehensive, integrated system approach 

to fully leverage the Departmentís vast purchasing power and achieve greater 

management efficiency. The Task Force believes that by using VAís unique acquisition 

authorities and imposing a priority framework for ordering health care items, VA will be 

able to better capitalize on its significant purchasing power. As a result, better 

communications, enhanced clinical involvement, real-time access to contract source 

information, and stronger purchasing oversight will be realized. When combined with 

enhanced standardization activities (Goal 2), VA will fully harness its enormous 

potential purchasing power. These actions will significantly benefit and support the 

Department in its mission to provide quality health care and other services to the 

Nationís veterans.
VA Procurement Reform Task Force Report Page 21 

 

GOAL 2: STANDARDIZE COMMODITIES WITHIN VA 

The Task Force recognizes the significant potential for cost savings and other 

procurement efficiencies and believes standardization of medical-surgical supplies is 

critical to achieve these results. VAís pharmaceutical national contractsí (formulary) 

program is widely recognized as successful in using standardization to lower prices, 

improve quality, and streamline procurement. The Task Force believes the same basic 

principles can be applied to the procurement of medical-surgical supplies. While efforts 

to adopt a similar approach to standardize purchasing of medical-surgical supplies have 

been underway for several years, progress has been slower than desired. The Task Force 

recommends several improvements, including a robust, user-led approach to identify and 

select specific commodities for standardization. 

ASSESSMENT 

VA buys large quantities of commodities, such as pharmaceuticals, medical-surgical 

supplies, and prosthetic devices. VHA has been standardizing some of these products for 

several years. The goal of these efforts is to standardize the types of products purchased, 

consistent with delivery of the highest quality of care and needs of practitioners. Despite 

efforts to standardize products, considerable fragmentation still occurs. As examples, 

procurement history records show VHA has purchased gloves from 191 different vendors 

and stents from 38 vendors. 

Pharmaceutical standardization has been accomplished through the creation of a 

national formulary administered by VHAís Pharmacy Benefits Management (PBM) 

Program. The PBM Program has been extraordinarily successful in selecting the most 

efficacious medications and, by working closely with the NAC, obtaining the lowest 

prices in the industry. 

ï 38 vendors have contracts with VA to provide 

stents

ï Lack of product standardization adversely impacts 

VA because it reduces VAís ability to leverage its 

purchasing power

ï Reduction in the number of vendors will provide 

economies of scale and will enable VA to receive 

discounts; therefore, significant cost savings will 

be achieved

Stent Purchases in VHA 

(in Fiscal Year 2001)

6% 5%

7%

22%

14%

10%

9%

9%

9%

9% Boston Scientific

Medi-Tech

Medtronic

ACS

Cordis

J&J

Guidant

Sci-Med

AVE

29 vendors

Table 2.1 Source: VA Procurement History Files (FY01)
VA Procurement Reform Task Force Report Page 22 

 

VHA has started to standardize selected prosthetic devices while continuing to respect 

concerns expressed by veteransí advocacy groups. The Prosthetics Strategic Health Care 

Group is building a procurement database, the National Prosthetics Patient Database 

(NPPD) that collects information and classifies prosthetic devices into categories. The 

recently formed Prosthetics Clinical Management program is using the NPPD to identify 

ìcommon useî items that may be appropriately contracted for on a national basis. 

The VHA Logistics Office manages standardization of medical-surgical and other 

supplies. The VHA Logistics Office has formed six user groups charged with reviewing 

products for possible standardization. The six user groups are: 

• Medical-surgical; 

• Environmental management; 

• Pathology and laboratory; 

• Imaging and nuclear medicine; 

• Dental; and 

• Food and nutrition. 

The six user groups evaluate quality, acquisition costs, and implementation costs of 

products. In addition, they also consider safety and small business concerns. The VHA 

Logistics Office and OA&MM are working with DoD to identify opportunities to jointly 

standardize and procure medical-surgical supplies and medical equipment. 

Unfortunately, the pace of efforts to standardize medical-surgical supplies has lagged 

behind expectations. Participation and ìbuy inî by clinicians, especially at the local level, 

have been limited. The user groups have also been frustrated by inaccurate and 

incomplete procurement information (Goal 3). Although user groups consider quality as 

their first criterion, some clinicians perceive that current standardization efforts 

emphasize unit price, with insufficient attention to quality and long-term costs. Finally, 

compliance with standardization decisions has been variable and difficult to monitor. 

RECOMMENDATIONS 

The Task Force is convinced that there are significant opportunities to improve and 

expand the benefits of VHAís standardization efforts. The Task Force believes that an 

approach similar to the one used for pharmaceuticals can be applied to the procurement 

of medical-surgical supplies and prosthetic devices with even greater savings. 

Goal 2: Standardize Commodities Within VA 

2.1 Expand, enhance, and enforce commodity standardization

Standardization Recommendation
VA Procurement Reform Task Force Report Page 23 

 

Recommendation 2.1: Expand, enhance, and enforce commodity standardization 

The Task Force believes the VHA Acquisition Board should select product 

categories for national standardization (Recommendation 4.1). As discussed 

below, user-based groups should conduct evaluations of specific products, with 

the NAC managing associated acquisition activities. The Acquisition Board 

should consider several product attributes in its deliberations, including the 

volume of product purchased (i.e., quantity and/or total costs), number of 

vendors selling the product, socioeconomic status of vendors, variation between 

manufacturers, availability of substitute products, and the stability of the 

product in terms of technological improvements. 

As a starting point, the Task Force recommends the Acquisition Board first 

consider the ìTop 20î non-standardized medical-surgical items purchased by 

VHA, based on total costs. The estimated ìTop 20î list for VHA in FY 2001 is 

listed in Table 2.2 below: 

The Task Force recommends establishing additional user-based groups focused 

on product standardization. The Task Force believes a larger number of more 

narrowly focused groups will successfully standardize more products in a shorter 

period of time than the current six user groups. It is essential to continue to have 

clinicians and other users of the products lead and drive the process. Clinical 

participation will ensure optimal decision making and improve compliance. 

VHA ìTOP 20î L IST (FY01)

ï VHA should focus on the top 20 non -

standardized medical -surgical items to 

obtain maximum benefit 

Table 2.2

Source: VA Procurement History Files (FY01) 

Item Estimated Annual 

Expenditures ($000)

Stents (multiple types) $20,253

Intravenous (IV) Injections Sets $18,637

Gloves (surgical and exam) $15,955

Surgical Procedure Packs $9,190

Sutures $8,286

Electrodes (ECG) $7,471

Laboratory Supplies $7,320

Sheath Introducers $6,129

Wheelchairs $5,863

Contrast Media (radiology) $5,374

Surgical Staplers $4,879

Cardiac Pacemakers $4,808

Guidewires $4,214

Collection Tubes (phlebotomy) $3,555

Balloon Catheters $2,299

Cardiac Catheters $2,259

Forceps $2,250

Defibrillators $2,238

Scooters $1,998

Continuous Positive Airway Pressure Systems $1,986

 Total $134,964
VA Procurement Reform Task Force Report Page 24 

 

The VHA Acquisition Board should establish a consistent approach to 

standardizing commodities that will be followed by all user groups. Processes 

should be based on commercial best practices, and the user groups will consider 

quality, total life-cycle costs, and socioeconomic business goals. The goal of 

standardization is to reduce the numbers of vendors and products purchased in 

order to leverage purchasing power and develop economies of scale. 

Standardization does not mean that only a single vendor will be selected. In 

many cases, having at least two possible sources for a particular product is 

desirable and can lead to step-wise reductions in price through ongoing 

competitive pressures. Additionally, having more than one vendor will also allow 

small businesses to continue to participate in these procurements. Currently, 

small businesses have been awarded 35 percent of standardized contracts. 

Once particular products have been selected through the standardization 

process, they will be considered mandatory for use by all VHA facilities. VHA 

will grant waivers to standardized products, but only when compelling clinical 

circumstances can be demonstrated. The process to request waivers and the 

criteria used to evaluate requests should be developed and clearly communicated 

to VA employees. The authority to grant waivers should rest with the VHA Chief 

Logistics Officer (CLO) (Recommendation 4.2). This authority may be delegated 

to others. 

VA needs to monitor and enforce compliance with its standardization decisions 

in order to achieve maximum results from its standardization efforts. This 

requires complete and accurate procurement data and active involvement of 

senior leadership (Recommendation 3.1). The VHA CLO should select, 

distribute, and review information necessary to evaluate compliance. 

CONCLUSION 

Standardization, in concert with a new contracting hierarchy, will be a powerful 

approach for VA to ensure it achieves best value in its purchases. VA has clearly 

demonstrated through its Pharmacy Benefits Management (PBM) Program that a userdriven, evidence-based approach can both improve quality and reduce costs. The Task 

Force believes similar results can be achieved with the procurement of prosthetic devices 

and medical-surgical supplies. The Task Force recommends several actions that will 

expand, enhance, and enforce product standardization. 
VA Procurement Reform Task Force Report Page 25 

 

GOAL 3: OBTAIN AND IMPROVE COMPREHENSIVE VA PROCUREMENT 

INFORMATION 

Since successful management depends on effective measurement, the Task Force believes 

VAís acquisition system cannot achieve optimal results without the ability to identify, 

track, and evaluate what is being purchased. In addition, thorough documentation is 

essential to ensure compliance with procurement policies. Currently, VA systems make 

it difficult to consistently record complete, reliable, and accurate acquisition and 

materiel management data. The Task Force addressed these issues and makes 

recommendations to improve the use of existing systems, establish a National Item File, 

facilitate adoption of Universal Product Numbers, and improve planning for the 

migration to coreFLS. 

ASSESSMENT

VA collects extensive procurement information in several separate databases. One of 

VHAís principal procurement databases is the Integrated Funds Distribution, Control 

Point Activity, Accounting and Procurement (IFCAP) system. Each VHA facility 

develops its own item file in IFCAP. Although naming conventions were available to 

users when each facility established its item file, a search of the national IFCAP database 

reveals wide variations in naming. As an example, Table 3.1 displays a partial listing of 

the variety of names used to describe surgical gloves. These differences preclude a 

complete and accurate ìroll-upî of national VA procurement information. 

The variations in item files also may be related to the use of distributors by some VHA 

facilities. In some cases, facilities use stock numbers from distributors to identify 

purchased products, instead of stock numbers from manufacturers. As a result, the 

identical product from a single manufacturer may be listed under several different item 

numbers. 

Source: VA Procurement History Files (FY01)

Table 3.1

ï Surgical gloves are listed by several 

different names

ï This variability limits VAís ability to 

aggregate data

Surgical Glove Descriptions

Gloves

Sterile procedure gloves

Gloves surgical

Surgical gloves

Gloves -surgeons

Glove-surgeon-sterile

Surgeons gloves

Gloves, orthopedic surgical

Surgical gloves for orthopedics

Orthopedic, surgical gloves

Orthopedic, surgical sterile

Ortho gloves
VA Procurement Reform Task Force Report Page 26 

 

The widespread use of purchase cards also contributes to the lack of procurement data. 

While the purchase card records provided by the issuing financial institution contain 

some transaction information, they do not provide sufficient identification and details of 

the type of items being purchased. Moreover, purchase card users have the option of 

recording transactions in IFCAP using a ìsimplifiedî method, rather than the more 

complete (and time-consuming) ìdetailedî method. The ìsimplifiedî method does not 

always include enough specificity (e.g., item file number) to thoroughly evaluate 

purchases or to capture important socioeconomic data. Inappropriate use of the 

ìsimplifiedî method fragments and limits complete procurement information 

(Recommendation 1.5). 

VA also collects redundant procurement information by using duplicative procurement 

software (e.g., IFCAP and the Prosthetics Procurement Package) and duplicative 

inventory software packages (e.g., IFCAP and the Prosthetics Inventory Package). This 

practice reduces efficiencies by requiring staff to record entries into multiple systems. In 

addition, some of the identifiers in these databases (e.g., Healthcare Common Procedure 

Codes [HCPC] used in the National Prosthetic Patient Database [NPPD]) lack 

specificity and lead to different products having identical codes.

RECOMMENDATIONS

The Task Force proposes short-term and long-term actions that will improve the 

accuracy, reliability, and utility of VAís procurement information. The Task Force 

believes these recommendations will increase and enhance the collection and analysis of 

procurement information by employing consistent practices, reducing fragmentation, 

and capturing relevant data. 

Goal 3: Obtain and Improve Comprehensive VA Procurement Information 

Obtain and Improve Comprehensive VA Procurement Information

3.1 Improve the accuracy and completeness of procurement and materiel 

management data

3.2 Facilitate industrywide development and adoption of Universal Product 

Numbers (UPN)

3.3 Establish a National Item File (NIF) with a standard naming convention

3.4 Develop a migration strategy for the transition to coreFLS
VA Procurement Reform Task Force Report Page 27 

 

Recommendation 3.1: Improve the accuracy and completeness of procurement and 

materiel management data 

VHA can improve its procurement information by enforcing the requirement for 

all services with recurring inventories to use the Generic Inventory Package 

(GIP). Implementation of the GIP management system will capture procurement 

transaction data in IFCAP and provide VA with the information necessary to 

optimize its procurement system. 

VHA Directive 1761.2, dated October 2000, requires an appropriate level of 

inventory management and use of GIP. Some VHA facilities cite a lack of 

expertise regarding GIP as a barrier to full implementation. Consequently, VHA 

needs to provide additional education, training, and assistance to facilities for 

implementation of GIP. 

In conjunction with GIP, VHA facilities and VISNs should implement costeffective inventory management and distribution systems. Several VISNs utilize 

medical-surgical prime vendors (MSPV) that provide distribution, inventory 

management, and procurement transaction services. For a variety of local 

conditions (e.g., geography, availability of MSPVs), the fees charged by MSPVs 

may or may not exceed the benefits of the services provided. The Task Force 

recommends each VISN critically assess the cost-effectiveness of MSPV programs 

based on nationally developed criteria and implement as appropriate. 

The Task Force recommends that IFCAP and GIP systems be the standards and 

that the VHA Acquisition Board carefully review potentially redundant 

procurement systems in VHA (Recommendation 4.1). The Board should actively 

solicit perspectives from VA Central Office (VACO) program officials as well as 

field staff who use the databases. The Board should decide if systems and 

databases, such as the NPPD, should be modified, discontinued, or remain 

unchanged. 

Recommendation 3.2: Facilitate industrywide development and adoption of 

Universal Product Numbers (UPN) 

Some health care products have unique, industrywide identifiers, such as the 

National Drug Code (NDC) number, for pharmaceuticals. The availability and 

use of NDCs facilitate product cost-comparisons, reductions in medical errors, 

implementation of electronic medical records with computerized order-entry, 

and cost savings. Unfortunately, such universal identifiers do not commonly 

exist for medical-surgical supplies. Some manufacturers and distributors may be 

resisting creating these identifiers since they would permit easy costcomparisons of similar products. 

Many Government, business, health care, and consumer organizations have 

advocated adoption of unique, industrywide identifiers for all health care 

products as a way to improve quality, increase safety, and enhance costefficiencies. The proposed identifiers, known as Universal Product Numbers 
VA Procurement Reform Task Force Report Page 28 

 

(UPN), have the potential to extend the benefits of NDCs to the procurement 

and utilization of all medical-surgical supplies. 

The Task Force recommends that VA take a leadership position in the advocacy 

of UPNs. Specifically, the Task Force suggests that VA should expedite efforts to 

prepare a UPN cost-benefit analysis and a formal regulatory package. 

Subsequently, VA should submit this data to the Office of Management and 

Budget (OMB). Members of the Task Force believe other Federal agencies will 

support VAís lead in this endeavor. VA should also continue to actively 

participate in the Health Care Electronic Data Interchange Coalition to promote 

the use of UPNs in the health care industry.

Recommendation 3.3: Establish a National Item File (NIF) with a standard naming 

convention

In order to create an accurate, comprehensive, and useful procurement database, 

VA should consistently assign a unique identifier to each product purchased. 

This database, which would include purchases of pharmaceuticals, prosthetic 

devices, and medical-surgical supplies, would serve as a VA National Item File 

(NIF). The VHA Acquisition Board should determine if Healthcare Common 

Procedure Codes (HCPC) are the appropriate identifier for prosthetic devices. 

(Although HCPCs are the industry standard and are used by Medicare, HCPCs 

lack specificity as noted above.) The NIF would provide the necessary 

information to improve data quality, facilitate data exchange, evaluate 

comparative data, increase efficiencies, and monitor compliance. 

VA can immediately begin the formation of a NIF that will be used in IFCAP at 

all VHA facilities. The NIF developed for IFCAP will also serve as the NIF for 

coreFLS (Recommendation 3.4). The Task Force recommends the item files from 

the VHA and VBA facilities serving as coreFLS enterprise builds (i.e., test sites) 

should be used to begin development of the NIF. The enterprise builds are 

located in Little Rock, AR; Albany, NY; Fayetteville, NC; Austin, TX; Hines, IL; 

and Huntington, WV. VA should merge the item files from these enterprise 

builds, eliminate duplication, and standardize the numbering system. Once 

available, VA should download the NIF and develop a programming patch to 

IFCAP for mandatory use at each facility. 

Recommendation 3.4: Develop a migration strategy for the transition to coreFLS 

Successful implementation of coreFLS will require uniform, systemwide product 

numbering. As noted above, such a numbering system does not currently exist. 

It is essential that a product identifier and cataloging scheme be developed to 

ensure that coreFLS can accumulate all supply consumption data. VHA and OM 

should work cooperatively to establish a uniform conversion process at the 

coreFLS enterprise builds. The lessons learned from the enterprise builds will 

facilitate an expeditious conversion of all facility GIP, prosthetic (i.e., NPPD), and 

pharmacy data into coreFLS. 
VA Procurement Reform Task Force Report Page 29 

 

If UPNs are created and adopted industrywide, they could serve as the product 

numbering system for medical-surgical items. UPNs could supplement the 

coreFLS item number and would be useful to compare product pricing and 

consumption industrywide. Additionally, if products are labeled with bar-coded 

UPN numbers on the package, VA could significantly increase materiel handling 

efficiencies. 

CONCLUSION 

With a consistent, standardized, and accurate national procurement database, VA will 

be able to fully leverage its purchasing power and ensure compliance with regulations 

and corporate goals. VA will also be able to effectively manage its inventory and avoid 

emergency or open-market purchases. 
VA Procurement Reform Task Force Report Page 30 

 

GOAL 4: IMPROVE VA PROCUREMENT ORGANIZATIONAL EFFECTIVENESS 

The Task Force believes it is critical to have in place appropriate organizational 

structures, acquisition policies, and relevant authorities to ensure accountability, 

consistency, and effective oversight across the system. The Task Force recommends 

several key organizational and policy changes that will achieve these objectives, while 

enabling integration and elevation of acquisition strategy and planning to a national 

level. 

ASSESSMENT 

VA currently has a limited ability to enable key employee groups to coordinate, integrate, 

and ensure consistency among acquisitions. Further, VA lacks global acquisition 

planning and strategy development. Within VHA, various entities plan and develop 

strategies independently to meet their individual needs. As a result, there is significant 

redundancy and inconsistency across the system, with little leverage to meet shared 

requirements. In addition, VHA does not fully benefit from lessons learned, and 

solutions are often not scaled to meet broader needs. 

VHA must develop an approach to procurement that is sustainable and consistent, and 

achieves desired results. The Task Force believes a cross-functional, multi-disciplinary 

approach is necessary, given that acquisition of medical-surgical supplies and equipment 

has a critical impact on the ability of VA to deliver high-quality health care. The 

participation of all employee groups is important, including contracting, logistics, 

finance, legal, and small business. Clinical involvement and feedback are particularly 

critical. Under the existing organizational structures, there is no central coordinating 

mechanism. Currently, clinicians are not sufficiently involved in the process and are 

often unaware of the benefits of dedicating their time and effort to the procurement 

process. 

The Task Force concluded that VHA needs a single point of authority and responsibility 

for guiding standardization, procurement planning, and other related functions. The 

present Chief Logistics Officer (CLO) function is obscured within VHA by the relative 

lack of visibility of the Logistics Office among senior leaders. Appropriate coordination 

and customer feedback are also needed between VHA and the Office of Management 

(OM), including the National Acquisition Center (NAC). 

The Task Force also found a need to clarify and codify procurement authority. While 

field acquisition staffs have a clear line of authority within their immediate organizations 

to their customers, other lines of procurement authority are blurred. When VHA 

organizational structures were decentralized, many acquisition responsibilities were 

exported to the Heads of Contracting Activity (HCA) and Chief Logistics Officers 

(CLO) in the field. There are approximately 220 HCAs across VA, most of whom are 

within VHA. Some CLOs in the field are not also HCAs, despite the significant synergy 

in those responsibilities. This creates further fragmentation and redundancy within the 

acquisition system, and needs to be resolved. 
VA Procurement Reform Task Force Report Page 31 

 

HCAs have dual roles, with operational responsibilities to local VISN and facility 

management, and technical responsibilities for compliance with applicable acquisition 

rules and regulations. Oversight of these technical responsibilities requires clarification, 

since VAís current delegation of procurement authority does not actually empower the 

Procurement Executive to oversee execution of these duties. It is widely assumed that 

procurement authority is formally delegated to the field from the VA Procurement 

Executive. In fact, contracting authority currently flows from the Secretary to the Senior 

Procurement Executive, from the Secretary to the Procurement Executive, and from the 

Secretary to the HCAs. As a result, HCAs are accountable only to the Secretary and to 

their supervisors at the VISN level. The Task Force recognizes the importance of having 

clear, direct accountability from the field through the Procurement Executive to the 

Senior Procurement Executive to ensure that acquisition activities are being carried out 

in a manner consistent with laws and regulations. 

Current Acquisition Authority 

The VA Supply Fund plays an important role in the Department. Many acquisition 

functions within VA are funded through the Supply Fund, including acquisition training 

and the Office of Small and Disadvantaged Business Utilization (OSDBU). Currently, 

the oversight and operation of the Supply Fund are linked. The oversight provided by 

the Supply Fund Board should be separated from the operational function of OA&MM 

to avoid any real or perceived conflicts of interest. 

Secretary

Procurement

Executive

Senior and Intermediate 

Contracting Officers

Heads of Contracting 

Activities

Senior Procurement

Executive

Basic Contracting Officers

Purchase Cardholders

Table 4.1
VA Procurement Reform Task Force Report Page 32 

 

The Task Force also questioned and reviewed the cost-effectiveness of the Denver 

Distribution Center (DDC). The DDC provides many valuable audiological services, 

including procurement and distribution of hearing aid batteries. DDC also provides 

hearing-aid repair services directly for veterans and VA medical facilities. With 61 

authorized full time employee equivalents (FTEE) and an operating budget of $5.7 

million, the DDC represents a significant investment. DDC has been widely recognized 

for the quality of its work; however, some have suggested that there may be more costeffective alternatives that could maintain work quality and volume at a much lower cost. 

RECOMMENDATIONS 

The Task Force proposes a set of organizational changes and revisions to VAís 

procurement authority that will lead to meaningful, sustainable improvements in 

acquisition planning, execution, oversight, and coordination across the system. The 

Task Force believes these changes are necessary to ensure accountability and 

achievement of consistent, measurable results. The recommendations below are 

intended to be applicable to all VA-funded acquisitions. 

Goal 4: Improve VA Procurement Organizational Effectiveness 

 Organizational Effectiveness Recommendations

4.1 Establish a VHA Acquisition Board

4.2 Establish a separate Office of Chief Logistics Officer within VHA

4.3 Codify the authority of VA's Senior Procurement Executive and Procurement 

Executive over the Heads of Contracting Activity (HCA)

4.4 Enhance the role of the VISN Chief Logistics Officers

4.5 Clarify the role of contracting at each level of the organization

4.6 Elevate accountability of the Supply Fund Board

4.7 Establish a VA Business Oversight Board

4.8 Independently assess the cost-effectiveness of the Denver Distribution Center to 

determine whether the program is necessary

4.9 Ensure VA acquisition programs achieve desired results
VA Procurement Reform Task Force Report Page 33 

 

Recommendation 4.1: Establish a VHA Acquisition Board 

VHA will establish an Acquisition Board to oversee and coordinate 

standardization activities, acquisition planning, education, and training for 

acquisition staff, CLO council activities, and socioeconomic goal attainment. As 

depicted in Table 4.2, the Task Force proposes the Acquisition Board be on par 

with VHAís Policy and Capital Asset Boards. Subcommittees will be established 

as needed. 

Proposed VHA Acquisition Board 

The Task Force recommends that the Deputy Under Secretary for Health 

(DUSH) chair the Acquisition Board. Further, the DUSH, reporting through the 

Under Secretary of Health, will serve as the liaison to the Departmentís Strategic 

Management Council (SMC). 

Deputy Secretary

Strategic Management

Council 

Under Secretary

for Health

Deputy Under Secretary

for Health

Policy Board Acquisition Board Capital Asset Board

Table 4.2
VA Procurement Reform Task Force Report Page 34 

 

The Acquisition Board will establish a NAC Advisory Council to provide clinical 

and customer feedback and guidance to the NAC, as shown in Table 4.3. The 

NAC Advisory Council will monitor the effectiveness of the NAC. In conjunction 

with the Supply Fund Board, which will monitor the efficiency of the NAC, the 

NAC Advisory Council will ensure the NAC is a customer-responsive 

organization. 

 Proposed NAC Oversight

 The Task Force recommends members of the Acquisition Board should include 

senior leaders from VACO, Networks, and facilities: 

VHA Acquisition Board

NAC Advisory Board

National Acquisition Center

(NAC)

Supply Fund Board

Assistant Secretary

for Management

Effectiveness Efficiency

Table 4.3

Deputy Under Secretary for Health (Chair) VISN Chief Medical Officer

VHA Logistics Officer (Executive Director) VISN Chief Logistics Officer

VHA Chief Consultant, Pharmacy Benefits Management Facility Medical Center Director

VHA Chief Consultant, Prosthetics Facility Chief of Staff

VHA Chief Consultant, Patient Care Services Facility Chief, OA&MM

VHA Chief Financial Officer Executive Director, National Acquisition Center

VISN Director VA Procurement Executive

Proposed Acquisition Board Senior Leadership Membership 
VA Procurement Reform Task Force Report Page 35 

 

Recommendation 4.2: Establish a separate Office of Chief Logistics Officer within 

VHA

The Task Force recommends separating and elevating the current VHA Logistics 

Office from the Office of the VHA Chief Financial Officer, and establishing a VHA 

Office of Chief Logistics Officer (CLO). The VHA CLO should report directly to 

the Deputy Under Secretary for Health (Table 4.5). The Office of Chief Logistics 

Officer will support the activities of the VHA Acquisition Board and will provide 

program direction and coordination for all VHA logistics and acquisition 

functions. The Task Force suggests that preference should be given to qualified 

Title 38 candidates for the VHA CLO position. The Task Force believes a CLO 

who is a clinician will facilitate and encourage clinical participation in logistics 

and acquisition initiatives, especially standardization activities. 

 VHA Chief Logistics Officer 

Recommendation 4.3: Codify the authority of VAís Senior Procurement Executive 

and Procurement Executive over the Heads of Contracting Activity (HCA)

The Task Force recommends delegating the authority to appoint HCAs from the 

Secretary through the Senior Procurement Executive (SPE) to the Procurement 

Executive (PE), as shown below in Table 4.6. This proposed delegation of 

authority is consistent with current delegation of authority to the PE for senior 

and intermediate contracting officers. This change in authority also will clarify 

and formalize accountability of VAís contracting staff, including HCAs, to OM 

for compliance with Federal and VA acquisition rules and regulations. The Task 

Force further suggests that OM, working in conjunction with customer 

Under Secretary

for Health

Deputy Under Secretary

for Health

VHA Chief Financial

Officer

VHA Logistics

Officer

Table 4.5

Under Secretary

for Health

Deputy Under Secretary

for Health

VHA Chief Financial

Officer

VHA Chief Logistics

Officer

Current Organizational Structure Proposed Organizational Structure
VA Procurement Reform Task Force Report Page 36 

 

organizations within VHA and VBA, evaluate and determine the appropriate 

number of HCAs needed to accomplish the Departmentís procurement objectives. 

Although the number of HCAs needed may vary by organization (e.g., VISNs), 

the Task Force believes there will be an overall reduction in the number of 

designated HCAs. 

Proposed Procurement Authority

Recommendation 4.4: Enhance the role of the VISN Chief Logistics Officers 

VISN Chief Logistics Officers (CLO) should be part of VISN management teams 

and have clearly defined responsibilities. VA should require that all VISN CLOs 

also be Heads of Contracting Activity (HCA) to facilitate their effectiveness. 

This will better integrate and align acquisition, inventory management, and 

logistics functions within VHA. In addition, the responsibilities of the VISN 

CLOs need to be clarified to ensure consistency and accountability across the 

system, in terms of both customer responsiveness and compliance with 

acquisition rules and regulations. 

Secretary

Senior Procurement 

Executive

Procurement 

Executive

Senior 

Contracting Officer

Intermediate 

Contracting Officer

Table 4.6

Head of Contracting 

Activity

Basic Contracting Officer

Purchase Cardholder
VA Procurement Reform Task Force Report Page 37 

 

Recommendation 4.5: Clarify the role of contracting at each level of the 

organization 

The roles, responsibilities and relationships of the various acquisition 

organizations within VA should be defined to ensure decision making is 

consistent with relevant policy objectives, as well as compliant with applicable 

rules and regulations. The following charts summarize the delineation of 

acquisition responsibilities recommended by the Task Force. 

Proposed Acquisition Responsibilities 

VA Office of Management 

Develop, award, and administer FSS and national contracts

Develop, award, and administer VA Central Office contracts

Delegate authority to contracting officers

Manage acquisition training program

Administer VA Supply Fund

Develop and promulgate national acquisition and logistics policies and performance metrix

Audit and monitor compliance with use of mandatory national contracts, FSS contracts, and 

BPAs.

Represent VA in discussions with other agencies regarding Federal acquisition policies and 

practices

Advise the Secretary on proposed legislation affecting VA procurement and logistics 

programs

Coordinate VACO, VHA, VBA, NCA, Logistics Office, EES, and HR development and 

implementation of innovative recruitment, training and education strategies

Work with the Office of Small and Disadvantaged Business Utilization (OSDBU) to establish 

and achieve socioeconomic goals
VA Procurement Reform Task Force Report Page 38 

 

Proposed Acquisition Responsibilities (contíd) 

VHA Acquisition Board 

Set VHA acquisition priorities consistent with Department goals and objectives

Develop VHA Advance Procurement Plan

Review, approve, and coordinate implementation of VHA acquisition activities

Identify items for standardization and oversee process

Develop and implement effective acquisition strategies for pharmaceuticals, prosthetic 

devices (including surgically implanted devices), medical-surgical supplies, non-medical 

supplies (e.g., office supplies), services (both clinical and non-clinical), and information 

technology

Monitor compliance with standardization decisions, performance measures, purchase cards, 

educational requirements, and training

Develop data systems and automated tools that facilitate compliance monitoring

Recommend allocation of acquisition resources (e.g., funding for prosthetic devices) to 

Under Secretary for Health

Assess effectiveness and customer responsiveness of the National Acquisition Center (NAC) 

and consolidated field contracting activities (e.g., Cleveland Business Center, Austin 

Automation Center)

Offer clinical expertise and consultative services to the NAC

Provide input to the Supply Fund Board regarding rate changes

Work with OSDBU to establish and achieve socioeconomic goals
VA Procurement Reform Task Force Report Page 39 

 

Proposed Acquisition Responsibilities (contíd) 

Office of Chief Logistics Officer

Audit compliance with national contracts, FSS contracts, and national Blanket Purchasing 

Agreements with assistance from OA&MM

Coordinate efforts to standardize pharmaceuticals, prosthetic devices, and medical-surgical 

supplies

Encourage participation in standardization initiatives, including pharmaceuticals, prosthetic 

devices, and medical-surgical supplies

Establish criteria for selection of purchase cardholders

Participate in development of VHA statements of work, especially for services

Define appropriate metrics to assess effectiveness of the VHA acquisition system

Minimize need for and use of multiple and duplicative information systems

Provide staff support to the VHA Acquisition Board

Provide leadership and mentorship to VISN Chief Logistics Officers

Participate with VA OA&MM in development and implementation of innovative recruitment, 

training, and education strategies

Work with OSDBU to establish and achieve socioeconomic goals

VISN and Local Contracting Offices

Utilize existing national and FSS contracts

Develop and award VISN and local BPAs against FSS contracts, subject to prior review by 

NAC

Develop and award contracts for goods and services when national and FSS contracts do 

not exist

Assist in development of statements of work for goods and services not available from 

national and FSS contracts

Administer locally awarded contracts

Work with OSDBU to establish and achieve socioeconomic goals
VA Procurement Reform Task Force Report Page 40 

 

Recommendation 4.6: Elevate accountability of the Supply Fund Board

To separate the oversight responsibility provided by the Supply Fund Board from 

the operational functions provided by OA&MM, the Task Force recommends 

elevating accountability to the Assistant Secretary for Management, as shown 

below in Table 4.7. With the Assistant Secretary for Management (currently also 

the SPE) as the Chair of the Supply Fund Board, any real or perceived conflicts of 

interest will be eliminated. The Task Force also suggests Board membership be 

revised to include several members of the VHA Acquisition Board.

VA Supply Fund Board 

Recommendation 4.7: Establish a VA Business Oversight Board 

The Task Force recommends establishing a Business Oversight Board (BOB) as a 

subcommittee of the VA Strategic Management Council (SMC). The BOB will 

assess, analyze, and monitor critical business functions, including procurement 

activities, across the Department. Central review and oversight are critically 

important in ensuring that Departmental goals and objectives are met 

Currently, the SMC, chaired by the Deputy Secretary, is the appropriate 

organization to provide these central functions. The BOB will provide regular 

reports to the SMC, and provide recommendations when appropriate. The Task 

Force recommends members of the BOB include subject matter experts from the 

Administrations and staff offices. 

Deputy Secretary

Assistant Secretary

for Management

Deputy Assistant Secretary

for Acquisition and 

Materiel Management

Supply Fund Board National

Acquisition Center

Table 4.7

Deputy Secretary

Assistant Secretary

for Management

Deputy Assistant Secretary

for Acquisition and 

Materiel Management

National

Acquisition Center

Supply Fund Board

Current Organizational Structure Proposed Organizational Structure
VA Procurement Reform Task Force Report Page 41 

 

Among its charges, the Task Force recommends the BOB specifically monitor the 

reconstituted Supply Fund Board (Recommendation 4.6) and newly formed VHA 

Acquisition Board (Recommendation 4.1). The BOB will ensure that the 

activities of these two groups are coordinated and aligned with Departmental 

goals, especially with respect to the important activities carried out by the 

National Acquisition Center (see Table 4.8). 

Although the BOB will initially focus on procurement activities, at the direction 

of the SMC, the BOB may subsequently provide value-added services with 

respect to other business functions including finance, information technology, 

human resources, and capital assets. 

Recommendation 4.8: Independently assess the cost-effectiveness of the Denver 

Distribution Center (DDC) to determine whether the program is necessary 

As previously discussed, the Denver Distribution Center (DDC) provides many 

logistical and audiological services and is widely known for the quality of its 

work. However, questions about the cost-effectiveness of the DDC exist. The 

Task Force reviewed the program, but was unable to reach a definitive 

conclusion. The Task Force, therefore, recommends an independent group 

conduct a thorough cost-benefit analysis. The reviewer should consider and 

recommend other alternatives for accomplishing the DDCís mission or possibly 

exporting the ìDDC modelî to other procurement and logistics activities. The 

Assistant Secretary for Management should contract for and review the results of 

the analysis.

Secretary

Deputy Secretary

Strategic Management

Council

Business Oversight

Board

Table 4.8

Business Oversight Board

VHA Acquisition

Board Supply Fund Board

National Acquisition

Center
VA Procurement Reform Task Force Report Page 42 

 

Recommendation 4.9: Ensure VA acquisition programs achieve desired results

Acquisition performance metrics should be established for all major procurement 

activities, and should include measures for quality, timeliness, responsiveness to 

customers, compliance with VA and Federal rules and regulations, and 

implementation of procurement reforms. The metrics should also monitor 

achievement of socioeconomic goals. The VHA Office of Chief Logistics Officer 

and the Office of Management should develop the metrics jointly. The Task 

Force believes it is critical to measure results, and expects use of these metrics 

will facilitate continuous improvements across VAís acquisition system.

CONCLUSION 

By implementing these changes in organization, authority, and accountability, 

VA will be able to achieve consistent, measurable results throughout its 

acquisition system. VA will also have a single, national focal point within VHA 

to coordinate, integrate, and leverage key acquisition activities. The Task Force 

believes the VHA Acquisition Board is critically needed and will provide a 

particularly effective forum for discussing and addressing acquisition issues. 
VA Procurement Reform Task Force Report Page 43 

 

GOAL 5: ENSURE A SUFFICIENT AND TALENTED VA ACQUISITION 

WORKFORCE 

Ultimately, the success of VAís acquisition system depends on its workforce. Without a 

sufficient number of talented and knowledgeable professionals, virtually none of the 

goals articulated by the Task Force can be achieved. The acquisition workforce issues 

currently facing VA are shared across Government, and the Task Force encourages VA to 

continue pursuing Governmentwide solutions. In addition, the Task Force recommends 

VA take specific steps to ìprofessionalizeî the acquisition work force, improve 

recruitment and retention, and enhance education and training. These actions include 

identifying members of its workforce and the competencies they must attain, assessing 

compensation, and establishing an acquisition intern program. 

ASSESSMENT

VAís acquisition workforce is in a vulnerable position. The nature of its work is rapidly 

changing, requiring broader competencies and more complex skill sets. There is 

increased need for employees with higher educational levels, general management 

proficiency, and the ability to leverage information technology. Moreover, a critically 

high number of VAís acquisition employees are eligible for retirement. This places the 

Departmentís acquisition leadership succession at risk and may lead to substantial voids 

in both knowledge and service. According to a study completed for VA in January 2001, 

some internal customers are already perceiving service shortfalls and seeking alternate 

contracting arrangements. 

The Task Force reviewed several additional reports that also present findings that 

highlight the vulnerability of VAís acquisition workforce (Appendix D). Key indicators 

are highlighted in Table 5.1. 

ï Overall, 26 percent of VA contract specialist (series 1102) 

will be eligible to retire by 2004; 53 percent will be 

eligible by 2009

ï VHA procurement specialists, on average, are 53 years 

old with over 20 years of service

ï By 2005, 81 percent of VHA master and senior 

procurement specialists (grade 12-15) are projected to be 

retirement eligible

ï Supply Manager is an occupation at high risk for 

turnover with 65 percent eligible to retire ñ the second 

highest percentage among 21 occupations studied by 

VHA National Succession Planning Task Force

Supply Managers - Retirement Eligible

35% 65%

Retirement

Eligible

Not Eligible

Source: VHA National Succession Planning Task Force (2001)

Table 5.1
VA Procurement Reform Task Force Report Page 44 

 

VA must implement effective acquisition recruitment, retention, and training programs 

to address these issues and develop its workforce. Current challenges to successful 

implementation include: 

Recruitment 

• Lack of a comprehensive needs-based human resources plan for the future VHA 

acquisition workforce; 

• Cumbersome hiring process; 

• Historically low pay grades relative to 23 other Federal agencies (third lowest for 

contract specialists, as shown in Table 5.2 below; and, 

• Competition from the private sector and other agencies (e.g., Department of 

Defense already has a wide-ranging, longitudinal, multimillion dollar 

replenishment strategy for its acquisition workforce).

Acquisition Workforce

(Focus Areas)

VA Acquisition Workforce 

Future Challenges 

Recruitment

Retention Training
VA Procurement Reform Task Force Report Page 45 

 

Retention

• Current acquisition career paths are not based on competency and skill 

achievements, but rather on time in position and hours of training; 

• Lack of assessment tool or process to track employee achievement of required 

competency levels; and 

• Limited standardized performance metrics to enable benchmarking and drive 

improvement. 

Training

• Composition of the acquisition workforce is not clearly identified; 

• Core competencies required for various acquisition positions are undefined; 

• Inconsistent enforcement of Clinger-Cohen Act; and 

• Lack of intern or acquisition training programs. 

Table 5.2 Source: Report on the Federal Acquisition Workforce ñ 1100 Series (April 30, 2001)

US Government Contract Specialist

(Agency Grade FY99)

12.38 12.36 12.35

12.13

10.95

9.5

10

10.5

11

11.5

12

12.5

13

HSS Labor NASA GSA VA

Agency

Avg Grade

HSS

Labor

NASA

GSA

VA

ï Of the agencies 

reviewed, VAís contract 

specialist pay grades are 

significantly lower, on 

average, than other US 

Government agencies 
VA Procurement Reform Task Force Report Page 46 

 

In order to be successful, strategies to address these challenges must be focused to meet 

the needs of specific cohorts of employees. Key groups of employees to target are:

New hires 

New hires are significant because they rejuvenate the workforce. They are also 

critically important because of the cost of replacement (i.e., recruitment) and the 

resources necessary to climb the steep initial learning curve. New hires must have a 

thorough orientation program, easy access to resources such as policy and procedure 

guides, a seasoned mentor, an individual development plan, and incentives aligned 

with results. 

Mid-career high performers

Mid-career, high performers should be retained because of their corporate 

knowledge, expertise, and customer relationships. To insulate them from 

recruitment by competitors, VA must ensure well-defined career paths including a 

non-managerial track, responsiveness to employee input, opportunities for special 

projects and job rotations, and retention bonuses. 

Soon-to-be-retirees 

Outstanding employees who are contemplating retirement should be provided 

opportunities to remain active in the organization. Their knowledge and 

institutional memory are invaluable. The recently completed ìformer employee 

surveyî by VHA indicates that career development opportunities and fairness of 

work assignments particularly influenced early retirees. 

Retirees

Retirees can be a valuable resource for short-term filling of critical vacancies or for 

mentoring. VA must be in a position to rehire these former employees without 

creating a financial disincentive for them.

New Hires New Hires

Mid-Career High Performers Mid-Career High Performers

Soon-to-be-Retirees Soon-to-be-Retirees

Retirees Retirees

Key

Employee 

Groups
VA Procurement Reform Task Force Report Page 47 

 

RECOMMENDATIONS 

Numerous strategies and legislative proposals to enhance Federal employee recruitment, 

retention, and training were identified in the reports reviewed by the Task Force. These 

reports strongly suggest that VA will only be successful in revitalizing its workforce if 

VA implements a comprehensive and integrated workforce development strategy. The 

Task Force, therefore, proposes an extensive set of recommendations to achieve the goal 

of ensuring a sufficient and talented VA acquisition workforce. While aimed specifically 

at the areas of recruitment, retention, and training, the recommendations are designed to 

complement each other and provide a pragmatic approach to issues facing the 

acquisition workforce. 

Goal 5: Ensure a Sufficient and Talented VA Acquisition Workforce 

Recommendation 5.1: Determine the appropriate size and mix of VAís acquisition 

workforce 

VA needs to clearly define and identify the occupational series and positions in 

those series that constitute the acquisition workforce. The types and numbers of 

employees targeted by the plan should include: 

• 1100 series employees, 

• 2000 series employees, 

• Heads of Contracting Activity, 

• Contracting Officerís Technical Representatives, 

• Office of Small and Disadvantaged Business Utilization staff, and 

• Auditors. 

VA should then determine the amount and locations of acquisition activities 

needed, followed by the number and mix of acquisition staff. These conclusions 

should be based on a comprehensive acquisition plan. Existing staff should be 

realigned as necessary. VA should also intensify training efforts and establish 

training programs to fill persistent gaps. 

5.1 Determine appropriate size and mix of VA's acquisition workforce

5.2 "Professionalize" VA's acquisition workforce

5.3 Improve recruitment and retention of the acquisition workforce

5.4 Enhance education and training of the acquisition workforce

Work Force Recommendations
VA Procurement Reform Task Force Report Page 48 

 

Recommendation 5.2: ìProfessionalizeî VAís acquisition workforce 

VA must develop a comprehensive needs-based human resource plan for its 

future acquisition workforce. The plan should address core competencies, 

performance evaluation, and an enhanced process for employees to obtain and 

maintain contracting warrants. 

Employee career paths that build upon an identified set of workforce core 

competencies are required. The competencies should be linked to specific skill 

sets and individually applied to the requirements of particular positions. This 

approach will permit continuous assessment of ìskill gaps,î and create individual 

development plans (IDP) based on closing the gaps. Both managerial and nonmanagerial career paths are necessary. 

VA-wide acquisition performance measures, consistent with Department 

strategic goals that relate to each acquisition organization are needed. 

Performance measures must be simple, meaningful, and limited in number. 

Comparing organizational units against each other and benchmarking against 

private sector enterprises should be encouraged. 

Finally, VA needs to enhance its Center for Acquisition and Materiel 

Management Education Online (CAMEO) program. The current program is in 

its initial stage of implementation. Online education program offerings must be 

expanded, and the documentation of employee training records should be 

enhanced to provide the following capabilities: 

• Tracking enrollment in education classes for series 1102, 1105, and 2000 

employees; 

• Providing technical training for acquisition professionals in important 

aspects of contracting, such as performance-based contracting, 

development of statements of work, socioeconomic program 

requirements, and contract administration; 

• Providing non-technical training in competencies, such as 

communications, customer service, creative thinking, and systems 

thinking; 

• Providing training for purchase cardholders in basic acquisition sources 

and requisite qualifications sufficient to grant authority for procurements 

up to $2,500; and 

• Maintaining the continuing education training records for all contract 

specialists and warranted contracting officers.

VA should continue its participation with the Office of Federal Procurement 

Policy (OFPP) to resolve intergovernmental acquisition workforce issues and 

influence Governmentwide acquisition policy. 
VA Procurement Reform Task Force Report Page 49 

 

Recommendation 5.3: Improve the recruitment and retention of the acquisition 

workforce 

VA has experienced considerable turnover of talented acquisition staff who have 

retired or chosen employment with other Government agencies. VA workforce 

strategy and succession planning task forces have recently examined the issues 

contributing to poor recruitment and retention results. The approved 

recommendations (e.g., retention bonus, staggered retirement, ìemeritus status,î 

mentoring opportunities, and flexible work schedules) have already been 

validated and are not reiterated in this report. The Task Force recommends that 

they should be expeditiously implemented. 

No issue is more seminal to the success of recruitment and retention than 

compensation. It is widely believed that VA loses out in the recruiting process 

and in its ability to retain talented acquisition personnel due to low 

compensation levels. The Task Force recommends a comprehensive salary review 

that is benchmarked with other appropriate Government agencies. VA needs to 

review pay levels for acquisition staff and consider options such as pay banding 

and performance-based pay. In addition, grade classifications should be 

reviewed, and additional options should be available (e.g., non-supervisory GS13s and GS-14s). According to the Office of Federal Procurement Policy (OFPP) 

Acquisition Workforce Analysis, VA has far fewer of its journeyman contracting 

officers at the GS-12, GS-13, and GS-14 levels than do other agencies. Existing 

options such as relocation and retention pay should also be fully utilized. 

VA recently surveyed its employees, but the results are pending at the time of this 

report. Findings relevant to the acquisition workforce need to be analyzed and 

an action plan developed and implemented to improve the environment for the 

acquisition workforce. 

Recommendation 5.4: Enhance education and training of the acquisition workforce

Clinger-Cohen legislation sets educational requirements for entry into the GS 

1102 contracting series and for promotion beyond the GS-12 level. The legislation 

also provides the Departmentís Senior Procurement Executive with the authority 

to waive those requirements if it is determined to be in the best interest of the 

Department. VA needs to clarify and disseminate its interpretation of relevant 

aspects of Clinger-Cohen in a consistently enforced directive. 

VA needs to develop updated training and certification programs for the 

acquisition workforce. Training should focus on traditional procurement skills, 

as well as on development of a more comprehensive set of general business 

proficiencies. Courses should include procurement reforms, core competencies, 

customer service, business management, and communication skills to reflect the 

evolving roles of acquisition professionals. The Task Force believes that training 

for Contracting Officerís Technical Representatives (COTR), especially for those 

individuals who do not perform this function on a regular basis, is critically 

needed. It is not unusual for COTRs to be well-trained technically, but lacking in 

an adequate understanding of essential elements of the acquisition process. 
VA Procurement Reform Task Force Report Page 50 

 

VA needs to reestablish an acquisition intern program. Internship programs are 

widely regarded as a successful vehicle to recruit talented professionals. The 

previous VA acquisition intern program should be reviewed and updated to 

include identification of a central source of funding to initiate and sustain a 

robust program. Preceptors for interns should include Heads of Contracting 

Activity (HCA), with selection based on the strength of their existing 

contracting staff. Preceptors should receive specific training in coaching and 

mentoring to assist them in being effective instructors. Special direct-hire 

authority should be sought from Congress to enable VA to recruit top candidates 

for the training program. Additionally, the acquisition career track needs to be 

clearly defined so that newly recruited interns and potential candidates can 

understand the promotional opportunities in the career field. 

In order to compete successfully with other organizations, VA needs to publicize 

and promote its career opportunities to potential recruits. VA should emphasize 

the value of public sector careers, patriotism, and service to veterans. The Task 

Force believes VA must recognize current and future changes in the labor market 

and adapt to be competitive for the ìbest and the brightest.î VA should continue 

to offer longitudinal career opportunities, but also pursue talented individuals 

who may be only interested in short-term prospects. 

CONCLUSION 

In summary, the Task Force proposes a comprehensive, integrated approach to 

ensuring a sufficient and talented acquisition workforce. The Task Force 

recommends initiatives targeted at the areas of recruitment, retention, and 

training. Improved compensation will help to recruit new talent and reduce 

turnover. A first-rate training program will enhance the effectiveness of current 

employees and have tremendous appeal to new college graduates. Finally, 

implementation of a strategic plan for the acquisition workforce will bind these 

initiatives together and ensure that the workforce is managed as a single entity, 

rather than a loose collection of related occupations. 
VA Procurement Reform Task Group Page 51 

Establish a contract 

hierarchy which 

mandates VA use of VA 

Federal Supply 

Schedules (FSS) Groups 

65 and 66 for 

procurement of health 

care supplies.

1.1.1 VA will mandate the use of contracts 

in the following descending order of 

priority: Tier One - National 

committed use contracts; VA Federal 

Supply Schedules (FSS) Groups 65 

and 66, in the following order of 

priority: (1) Nationally awarded 

Blanket Purchase Agreements 

(BPAs), issued against FSS contracts 

(by the NAC); (2) Multi-VISN, VISN, or 

locally awarded BPAs, issued against 

FSS contracts; and (3) FSS 

purchases (without BPAs); Tier Two - 

VISN or regionally awarded contracts 

for items without national or FSS 

contracts; locally awarded contracts 

for items without national or FSS 

contracts; Tier Three - open-market 

purchases.

These priorities for contracts differ 

from those currently listed in the VA 

Acquisition Regulation (VAAR). 

VISNs and facilities will procure items 

from national contracts, FSS, and 

national BPAs, if available. Requests 

by VISNs or facilities for new BPAs 

will be sent to the NAC for 

consideration. The NAC will have a 

fixed time period to either pursue a 

national BPA or allow the requesting 

group to proceed with its negotiations. 

Prepare a deviation to 

the current VAAR 

provision or rewrite 

the VAAR provision to 

reflect new hierarchy.

1.1.2 VA will grant waivers to mandated use 

of FSS contracts, but only when 

compelling clinical circumstances can 

be demonstrated.

The authority to grant waivers will rest 

with the VA Procurement Executive; 

however, this authority may be 

delegated to others.

Establish a process 

for requesting waivers 

and criteria to be used 

for approving waivers.

1.1.3 In establishing contracts with 

distributors for VA FSS Groups 65 

and 66 commodities, VA will limit 

contracts to distribution services only.

The NAC will establish product pricing 

to be used in conjunction with 

distribution contracts through direct 

negotiations with the product 

manufacturers. Negotiations with 

distributors will be for distribution 

services only. An exception may be 

granted when the distributor has a 

commercial customer base from which 

negotiations and award can proceed, 

or the distributor can provide the 

manufacturers' commercial-customer 

pricing information to determine a 

negotiation position which will result in 

a valid award. 

Establish policy to 

limit negotiation of 

distribution contracts 

to the distribution fee 

unless the distributor 

clearly establishes 

that they are 

responsible for 

negotiating product 

prices for a 

manufacturer's 

commercial 

customers. Prior to 

implentation, review 

by General Counsel 

will be needed.

1.1.4 VA will provide a readily accessible 

and searchable listing of current 

national and FSS contracts to 

facilitate its use.

A web-based, user-friendly searchable 

database of all items and services 

available on VA FSS Groups 65 and 

66 will make it easier to determine 

availability of specific items.

Develop a web-based, 

user-friendly 

searchable database 

that will include 

catalog information 

from vendors holding 

national and FSS 

contracts.

1.1.5 VA will establish with GSA a webbased, virtual "VA Store" within GSA 

Advantage. 

The "VA Store" will include 

commodities commonly purchased by 

VA staff and enable efficient and 

documented purchasing from FSS 

contracts.

Collaborate with GSA 

to expedite 

establishment and 

maintenance of "VA 

Store."

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

Recommendations

GOAL 1: LEVERAGE PURCHASING POWER OF VA

Major Recommendations Comments Action Steps

1.1
VA Procurement Reform Task Group Page 52 

Establish a contract 

hierarchy which 

mandates VA use of VA 

Federal Supply 

Schedules (FSS) Groups 

65 and 66 for 

procurement of health 

care supplies.

1.1.6 VA will provide education and training 

to its staff regarding the use and 

benefits of FSS contracts, BPAs, and 

GSA Advantage.

Education and training will be provided 

to both procurement staff and users.

Develop a core 

curriculum regarding 

the use of FSS 

contracts and 

development of BPAs. 

1.1.7 VA will establish a "Help Desk" to 

answer questions regarding the 

availability, use, and benefits of 

national and FSS contracts.

"Help Desk" will be available to all VA 

employees and will improve customer 

service.

Establish a "Help 

Desk" to answer 

questions regarding 

the existence and/or 

use of national and 

FSS contracts.

1.1.8 VA will inform vendors of the new 

contracting priorities and actively 

encourage them to obtain and 

promote their FSS and national 

contracts.

VA staff will also encourage all 

vendors wishing to sell products to VA 

to apply for a FSS contract award.

Develop and 

implement a 

communication plan 

to publicize the new 

contracting priorities 

and encourage FSS 

as a preferred 

contract mechanism.

1.1.9 VA will monitor and audit compliance 

with revised contracting priorities and 

regulations.

Optimal compliance will require 

complete procurement history (see 

Recommendations 3.1 and 3.3) and 

readily accessible listing of current 

national and FSS contracts (see 

Recommendation 1.1.4). 

Performance expectations for various 

organizational units will be 

established. 

Develop an audit tool 

and reporting process.

1.2 Pursue legislation and 

policy changes to enable 

VA to count first tier 

subcontracts toward 

achievement of 

socioeconomic goals.

1.2.1 VA will pursue legislative and policy 

changes allowing first tier 

subcontracts to contribute toward 

attainment of socioeconomic goals. 

VA must find mechanisms to maintain 

and enhance small business 

participation while ensuring 

achievement of mission, program and 

budget objectives. 

Initiate required 

legislative and policy 

changes.

Pursue tiered pricing and 

other favorable terms in 

all procurement 

instruments.

1.3.1 VA will seek tiered pricing and other 

favorable terms in all procurement 

instruments.

Tiered pricing and other favorable 

terms included in initial FSS awards 

can improve procurement efficiencies 

and reduce costs.

Seek tiered pricing 

and other favorable 

terms in all 

negotiations with 

vendors.

1.3.2 VA purchasers will use Blanket 

Purchase Agreements (BPAs), 

whenever feasible, to reduce costs 

and streamline procurements.

This will be the cornerstone of VA 

procurement activities.

Award BPAs from 

FSS contracts in 

accordance with the 

revised contracting 

hierarchy for recurring

requirements.

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

Comments

1.3

Major Recommendations Supporting Recommendations Action Steps

GOAL 1: LEVERAGE PURCHASING POWER OF VA (CONTINUED)
VA Procurement Reform Task Group Page 53 

1.4.1 Purchases of high-technology health 

care equipment in VHA will be 

consolidated and aggregated at the 

VISN level, whenever feasible.

VISN Equipment Committees should 

determine, subject to approval by VISN 

Directors, desired purchases of hightechnology equipment.

Establish VISN 

Equipment 

Committees and 

charge them to 

aggregate and 

consolidate 

equipment 

selections 

whenever feasible.

1.4.2 VISNs will submit approved and 

funded high-technology equipment 

plans to the NAC for procurement on 

a recurring basis.

VISN plans will provide the necessary 

information to negotiate improved 

prices. High-technology equipment 

purchasing will be consolidated at the 

NAC on a recurring basis.

VISNs to develop 

and submit 

approved and 

funded plans for 

high-technology 

equipment 

purchases to NAC.

1.4.3 NAC will attempt to obtain better 

prices and/or additional features and 

support (e.g., education and training).

NAC will aggregate requests from 

multiple sources (e.g., VISNs, other 

government agencies) and leverage 

purchasing power. 

Aggregate hightechnology 

equipment 

requests and 

negotiate for lowest 

price and/or 

additional features 

and support.

1.4.4 OM will waive fees to VHA entities 

submitting requests if NAC is unable 

to negotiate more favorable terms 

than the VISN submitting the request.

This arrangement aligns the financial 

incentives of the NAC with VISNs 

submitting the requests.

Revise NAC fee 

schedule.

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

Action Steps

GOAL 1: LEVERAGE PURCHASING POWER OF VA (CONTINUED)

Consolidate high-technology

equipment purchases not 

covered by FSS schedules.

1.4

Major Recommendations Supporting Recommendations Comments
VA Procurement Reform Task Group Page 54 

1.5.1 VA will develop and apply national 

criteria to determine who should 

possess purchase cards.

The number of purchase cards and 

purchase cardholders will decrease.

Develop and apply 

national criteria to 

determine who should 

possess purchase 

cards.

1.5.2 VA will maximize the use of purchase 

cards as a payment mechanism.

This will increase the amount of 

rebates VA receives from the credit 

card company (i.e., 1.06% of 

purchases) and reduce costs 

associated with processing an invoice 

or check payment.

Encourage the use of 

purchase cards as 

payment for goods 

and services.

1.5.3 VA will assign "payment only" 

authority to individuals who are not 

warranted contracting officers to pay 

for acquisitions above $2,500.

The relative costs, benefits (e.g., 

increased rebates, lower transaction 

costs), and risks need to be identified 

and considered.

Assign "payment only" 

authority for 

purchases above 

$2,500.

1.5.4 VA will revise and implement new 

criteria regarding the use of "detailed" 

versus "simplified" transaction 

documentation (i.e. menus).

The criteria will be based on several 

factors, including frequency of 

transactions, amount of purchase, and 

organizational unit.

Revise and implement 

new criteria regarding 

the use of "detailed" 

versus "simplified" 

transaction 

documentation.

1.5.5 VA will provide initial and ongoing 

training to all purchase cardholders.

VA-specific training modules should 

be developed and made available to 

all purchase cardholders via distance 

learning and other technologies (e.g., 

Internet sites and/or CD-ROMs).

Develop and require 

VA-specific initial and 

ongoing training to all 

purchase cardholders.

1.5.6 VA will monitor use of purchase cards 

to ensure proper use.

A sampling of purchase card 

transactions should be audited to 

ensure security, appropriate 

purchases, proper costing, timeliness 

of certification, and oversight.

Audit purchase card 

use using a nationally 

developed audit tool.

1.6 Partner with DoD to 

further leverage 

purchasing power of VA.

1.6.1 Existing VA-DoD work group should 

intensify its efforts in identifying 

existing and creating new 

opportunities for joint VA-DoD 

purchases.

All partnering activities should yield 

mutual benefits. Optimal results will 

require commitment from both 

Departments at all levels.

Identify new 

opportunities for joint 

VA-DoD purchasing.

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

Optimize and monitor 

the use of purchase 

cards.

1.5

Major Recommendations Supporting Recommendations Action Steps Comments

GOAL 1: LEVERAGE PURCHASING POWER OF VA (CONTINUED)
VA Procurement Reform Task Group Page 55 

2.1.1 VA will identify products to be 

considered for standardization on an 

ongoing basis.

Potential products will be selected 

based on criteria such as the number 

of purchases (e.g., "Top Twenty" list), 

maturity of product development, 

brand differentiation, and substitute 

products. Suitable products may be 

identified at national and local levels.

Identify products to be 

considered for 

standardization. Start 

with the "Top Twenty" 

list identified by the 

Task Force.

2.1.2 VA will establish additional userbased, narrowly focused groups that 

are charged with standardizing a 

specific commodity.

Criteria will be established that 

emphasize product quality and enduser benefits, not merely cost savings.

Establish a userbased group to 

standardize each 

commodity selected. 

Initially, the 

standardization 

groups could be led 

by a VISN Clinical 

Services Manager.

2.1.3 VA will develop a consistent approach 

to standardize commodities that will 

be followed by all standardization user 

groups.

Current VA processes will be revised 

based on commercial best practices. 

The user groups will consider quality, 

total life-cycle costs and 

socioeconomic business goals.

Revise VA 

standardization 

approach, based on 

commercial best 

practices.

2.1.4 VA will grant waivers to standardized 

products, but only when compelling 

clinical circumstances can be 

demonstrated.

The authority to grant waivers will rest 

with VHA Chief Logistics Officer. This 

authority may be delegated to others.

Establish a process 

for requesting waivers 

and criteria to be used 

for approving waivers.

2.1.5 VA will monitor and enforce 

compliance with standardization 

decisions.

Consistent data will be available VAwide. Senior executives will regularly 

review this procurement data to 

ensure compliance.

Select, distribute, and 

review data necessary

to evaluate 

compliance with 

standardization 

decisions.

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

Expand, enhance, and 

enforce commodity 

standardization.

2.1

GOAL 2: STANDARDIZE COMMODITIES WITHIN VA

Major Recommendations Supporting Recomm endations Comments Action Steps
VA Procurement Reform Task Group Page 56 

3.1.1 VHA will enforce the current 

requirement for all services with 

recurring inventories to utilize the 

Generic Inventory Package (GIP).

VHA Directive 1761.2, dated October 

2000, requires an appropriate level of 

inventory management and use of 

GIP. VHA will also need to provide 

education, training, and assistance to 

facilities for implementation of GIP.

Review adequacy of 

VHA Directive 1761.2, 

revise as appropriate, 

and monitor 

compliance.

3.1.2 VISNs will implement cost-effective 

inventory management and 

distribution systems that provide 

consistent and complete procurement 

transaction information.

Medical-surgical prime vendors 

(MSPV) provide distribution, inventory 

management, and procurement 

transaction services. In some 

circumstances, the fee charged by 

MSPV may exceed the benefits.

VISNs will evaluate 

the cost-effectiveness 

of MSPV programs 

based on nationally 

developed criteria and 

implement as 

appropriate. 

3.2 Facilitate industrywide 

development and 

adoption of Universal 

Product Numbers (UPN).

3.2.1 VA will take a leadership position with 

other Government agencies and 

private sector companies in the 

advocacy of UPNs.

VA will prepare a UPN cost-benefit 

analysis and a formal regulatory 

package for submission to OMB. VA 

will continue to participate in the 

Health Care Electronic Data 

Interchange (EDI) Coalition to 

promote the use of UPNs in the health 

care industry.

Prepare and submit a 

regulatory package to 

Office of Management 

and Budge (OMB) to 

require UPNs for 

federal purchases of 

health care products.

3.3.1 VA will assign a unique identifier to 

each product purchased, including 

pharmaceuticals, prosthetic devices, 

and medical-surgical supplies.

Immediately begin building a NIF, to 

be used in IFCAP by all facilities within 

six months.

Using the item files for 

the three coreFLS 

pilot sites, merge the 

item files, eliminating 

duplication and 

standardizing the 

language. This will 

serve as the basis of 

the NIF.

3.3.2 VHA will determine if Healthcare 

Common Procedure Codes (HCPC) 

are the appropriate identifier for 

prosthetic devices.

HCPCs are the industry standard and 

are used by Medicare, but lack 

specificity.

Determine if HCPCs 

are the appropriate 

identifier for prosthetic 

devices.

3.3.3 VA will immediately begin the 

formation of a NIF for use in IFCAP at 

all VHA facilities.

The NIF developed for IFCAP will also 

serve as the NIF within coreFLS. The 

item files from the VHA and VBA 

facilities serving as coreFLS 

enterprise builds should be used to 

begin development of the NIF.

Catalog and 

standardize initial 

items for inclusion in 

NIF. Once available, 

download the NIF and 

develop a 

programming patch to 

IFCAP for mandatory 

use at each facility.

3.4 Develop a migration 

strategy for the transition 

to coreFLS.

3.4.1 VA will reassess the coreFLS strategy

to ensure adequate procurement 

transaction documentation and 

reporting.

Input from key customers (e.g., 

OA&MM, CLOs and HCAs) is 

essential to ensure the success of 

coreFLS.

Reassess the 

coreFLS strategy to 

ensure customers' 

needs for adequate 

procurement 

transaction 

documentation and 

reporting are met.

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

Improve the accuracy 

and completeness of 

procurement and 

materiel management 

data.

3.1

3.3 Establish a National Item 

File (NIF) with a 

standard naming 

convention.

GOAL 3: OBTAIN AND IMPROVE COMPREHENSIVE VA PROCUREMENT INFORMATION

Major Recommendations Supporting Recommendations Com ments Action Steps
VA Procurement Reform Task Group Page 57 

4.1.1 VA will establish an Acquisition Board 

(AB) to oversee all VHA procurement 

activities.

The purposes of the AB are to 

oversee and coordinate 

standardization activities, acquisition 

planning, education and training for 

acquisition staff, CLO Council, and 

socioeconomic goal accomplishments. 

The AB will create committees as 

necessary.

Charter VHA 

Acquisition Board.

4.1.2 The Deputy Under Secretary for 

Health (DUSH) will chair the AB.

The AB will be on par with VHA's 

Policy and Capital Asset Boards. The 

DUSH, reporting through the Under 

Secretary for Health, will serve as the 

liaison to the Department's Strategic 

Management Council (SMC).

Assign DUSH as 

Chair, Acquisition 

Board, and name 

other members, 

including 

OA&MM/NAC, VISN 

and VAMC 

representatives.

4.1.3 The AB will establish a NAC Clinical 

Advisory Council.

The Clinical Advisory Council will 

provide customer perspective and 

feedback to the NAC.

Establish a NAC 

Clinical Advisory 

Council.

4.1.4 The AB will establish subcommittees 

as needed to accomplish its goals.

Subcommittees may include 

Standardization, Chief Logistics 

Officer (CLO) Council, Education and 

Training, and Acquisition Planning.

Establish AB 

subcommittees as 

appropriate.

4.1.5 The AB will serve as an advisory 

board to the Supply Fund Board.

The AB will provide customer 

perspective and feedback to the 

Supply Fund Board.

Develop and 

implement an 

effective interface 

between AB and 

Supply Fund Board.

4.2.1 Establish a separate Office of Chief 

Logistics Officer within VHA to 

support the activities of the AB.

Separate and elevate the current VHA 

Logistics Office from the Office of the 

VHA Chief Financial Officer to report 

directly to the Deputy Under Secretary

for Health.

Establish a separate 

Office of Chief 

Logistics Officer within 

VHA.

4.2.2 Establish a Chief Logistics Officer at 

the senior executive grade either as 

an SES or Title 38 equivalent. 

Preference should be given to a 

qualified Title 38 candidate to 

encourage clinical participation in 

formulating the requirements for 

logistics initiatives.

Hire a Chief Logistics 

Officer at the senior 

executive grade either 

as an SES or Title 38 

equivalent. 

4.2.3 The VHA Chief Logistics Officer will 

serve as Executive Director of the 

Acquisition Board.

VHA CLO will provide program 

direction and coordination for VHA 

logistics and acquisition activities.

Assign VHA Chief 

Logistics Officer as 

Executive Director of 

the Acquisition Board 

and define specific 

duties and 

responsibilities.

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

4.2

Major Recommendations Supporting Recommendations Comments Action Steps

Establish a separate 

Office of Chief Logistics 

Officer within VHA.

4.1

GOAL 4: IMPROVE VA PROCUREMENT ORGANIZATIONAL EFFECTIVENESS

Establish a VHA Acquisition 

Board.
VA Procurement Reform Task Group Page 58 

4.3.1 Delegate authority to appoint HCAs from the 

Secretary through the Senior Procurement 

Executive to the Procurement Executive. 

There is a need to clarify and formalize 

accountability of VA's contracting staff, 

including HCAs, to OM for compliance 

with Federal and VA acquisition rules 

and regulations. 

Develop VAAR change to 

properly align HCA 

appointment authority to the 

Senior Procurement Executive 

and Procurement Executive.

4.3.2 Evaluate and determine the appropriate 

number of HCA positions within VA. 

VISNs should retain the flexibility of 

having more than one HCA to ensure an 

ff ti f t l

Evaluate current number and 

distribution of HCAs and 

i it

4.4.1 Require that all VISN CLOs be HCAs. This will better integrate and align 

acquisition, inventory management, and 

logistics functions within VHA. 

Modify requirements to ensure 

all VISN CLOs are HCAs.

4.4.2 Clarify roles and responsibilities of VISN 

CLOs to ensure consistency and 

accountability.

CLOs should be accountable for both 

customer responsiveness and 

compliance with acquisition rules and 

regulations. 

Issue directive detailing CLO 

roles, responsibilities and 

accountability.

4.5 Clarify the role of 

contracting at each level 

of the organization.

4.5.1. Ensure OM provides effective oversight and 

support of VHA field activities.

Roles, responsibilities and relationships 

of the acquisition organizations within VA 

should be defined to ensure decisionmaking consistent with relevant policy 

objectives, and compliant with applicable 

rules and regulations.

Define acquisition 

responsibilities across VA.

4.6 Elevate accountability of 

the Supply Fund Board.

4.6.1 Reassign the chair of the Supply Fund Board 

to the Assistant Secretary for Management.

This will separate the oversight 

responsibility provided by the Supply 

Fund Board from the operational 

functions provided by OA&MM. 

Consequently, any perceived conflicts of 

interest would be eliminated. Supply 

Fund Board should include members 

from the VHA Acquisition Board. 

Reassign the chair of the 

Supply Fund Board to the 

Assistant Secretary for 

Management and revise 

membership.

4.7 Establish a Business 

Oversight Board

4.7.1 VA will establish an Business Oversight Board 

(BOB) as a subcommittee of the VA Stragegic 

Management Council (SMC).

The purpose of the BOB is to oversee 

and coordinate and monitor the business 

activities of the VHA Acquistion Board, 

Suppy Fund Board, and the NAC for the 

SMC.

Charter the BOB.

4.8 Independently assess 

the cost-effectiveness of 

the Denver Distribution 

Center (DDC) to 

determine whether the 

program is necessary.

4.8.1 Contract for an independent cost-benefit 

analysis and audit of the DDC.

DDC has been widely recognized for the 

quality of its work. However, concerns 

remain regarding its cost-effectiveness 

compared to other alternatives. The 

reviewer should consider and 

recommend other alternatives for 

accomplishing the DDC's mission or 

possibly export the "DDC model" to other 

procurement and logistics activities

The Assistant Secretary for 

Management will contract for 

an independent cost-benefit 

analysis of the DDC.

4.9 Ensure VA acquisition 

programs achieve 

desired results.

4.9.1 Establish acquisition performance metrics for 

all major procurement activities.

Performance metrics should include 

measures for timeliness, customer 

responsiveness, compliance with VA and 

Federal rules and regulations, 

achievement of socioeconomic goals, 

and implementation of procurement 

reforms.

Establish acquisition 

performance metrics for all 

major procurement activities.

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

GOAL 4: IMPROVE VA PROCUREMENT ORGANIZATIONAL EFFECTIVENESS (CONTINUED)

Major Recommendations Supporting Recommendations Comments Action Steps

4.3 Codify the authority of 

VA's Senior 

Procurement Executive 

and Procurement 

Executive over the 

Heads of Contracting 

Activity (HCA).

4.4 Enhance the role of the 

VISN Chief Logistics 

Officers (CLOs)
VA Procurement Reform Task Group Page 59 

5.1.1 Identify the occupational series and 

the positions in those series that 

constitute the VA acquisition 

workforce.

Acquisition occupational positions 

include 1100 series, 2000 series, 

HCA s, CO TRs, auditors, and O ffice of 

Sm all and Disadvantaged B usiness 

Utilization staff.

Identity positions in 

the VA acquisition 

workforce. D evelop 

and im plem ent a 

system to m onitor the 

dem ographics and 

training of the 

workforce over time.

5.1.2 Determine the "ideal" num ber and mix 

of acquisition staff.

W orkforce recomm endations should 

be based on a com prehensive 

acquisition plan that identifies the 

am ount and locations of acquisition 

activities needed.

Develop a 

comprehensive 

acquisition plan that 

identifies the 

necessary num ber 

and types of 

acquisition 

em ployees.

5.2.1 VA will continue to participate with the 

O ffice of Federal Procurem ent Policy 

(OFPP) to address intergovernmental 

acquisition workforce issues.

VA should seek and leverage OFPP's 

support to obtain OM B approval of any

legislative initiatives needed to further 

VA 's acquisition workforce objectives.

Actively participate in 

OFPP m eetings and 

subcom mittees to 

ensure that VA 

acquisition workforce 

priorities are 

supported.

5.2.2 VA will develop a com prehensive 

needs-based human resource plan for 

its future acquisition workforce. The 

plan should address core 

com petencies, perform ance 

evaluation, and an enhanced process 

for em ployees to obtain and m aintain 

contracting warrants.

Em ployees' career paths that build 

upon an identified set of workforce 

core com petencies are required. The 

com petencies should be linked to 

specific skill sets and individually 

applied to the requirem ents of 

particular positions.

Establish a set of 

com petencies needed 

for individuals to 

progress to higher 

grades and 

responsibilities in a 

particular acquisition 

series. Codify and 

implement these in 

position descriptions 

and performance 

contracts.

5.2.3 VA will m onitor, evaluate, and im prove 

the perform ance of the acquisition 

workforce.

O bjective perform ance m etrics will 

enhance accountability, ensure 

consistency, document achievements, 

and identify opportunities for 

improvem ent.

Develop VA-wide 

acquisition 

performance 

measures, consistent 

with Departm ent 

strategic goals that 

relate to each 

acquisition 

organization and are 

incorporated into the 

appraisal process.

5.2.4 VA will enhance its Center for 

Acquisition and Materiel Managem ent 

Education Online (CAM EO ) program .

CA MEO is in its initial stage of 

im plem entation. On-line education 

program offering m ust be expanded, 

and em ployee training records 

documented.

Identify needed 

improvem ents in 

CAMEO and 

implement changes.

V A PROCUREMENT REFORM TASK FORCE SUM MARY OF RECOM MENDATIONS AND ACTIONS

5.1 Determine the 

appropriate size and m ix 

of VA's acquisition 

workforce.

GOAL 5: ENSURE A TALENTED AND SUFFICIENT VA ACQUISITION W ORKFORCE

Major Recom m endations Supporting Recomm endations Com m ents Action Steps

5.2 "Professionalize" VA's 

acquisition workforce.
VA Procurement Reform Task Group Page 60 

5.3.1 VA will aggressively implement 

approved recommendations from 

prior work groups relevant to 

acquisition workforce development 

and succession planning. 

VA has experienced high turnover of 

talented acquisition staff who have retired 

or chosen employment with other 

Government agencies. These issues 

have been recently examined by 

workforce development and succession 

planning workgroups.

Synthesize and implement relevant 

recommendations from prior work 

groups.

5.3.2 VA will review salaries for 

acquisition staff and consider 

options to optimize compensation 

such as pay banding and incentivebased pay.

Grade classifications should be reviewed 

and greater flexibility (e.g., nonsupervisory GS-13/14s) should be 

considered. Existing options such as 

relocation and retention pay should be 

fully utilized.

Conduct a comprehensive salary 

review and benchmark with other 

appropriate Government agencies. 

Prepare a proposal to make 

indicated salary adjustments and 

seek necessary approvals from VA, 

OPM, and/or Congress.

5.3.3 VA will address concerns and 

opportunities for improvement 

expressed in VA employee 

surveys.

VA recently surveyed its employees. 

Findings relevant to the acquisition 

workforce should be analyzed and 

addressed.

Develop and implement an action 

plan to improve the workforce 

environment for acquisition staff.

5.4 Enhance education and 

training of the acquisition 

workforce.

5.4.1 VA will clarify and disseminate its 

interpretation of relevant aspects 

of Clinger-Cohen legislation and 

enforce applicable provisions.

In order to fully comply with Clinger-Cohen 

legislation, VA needs to consistently 

enforce the educational requirements and 

waiver provisions of this law.

Incorporate any changes to 

educational requirements and 

waiver provisions in a VA Directive.

5.4.2 VA will develop updated training 

and certification programs for the 

acquisition workforce.

Training should focus on procurement 

reforms, core competencies, customer 

service, business management, contract 

administration and communication skills to 

reflect the evolving roles of acquisition 

professionals. Training for COTRs, 

especially for those who perform this 

function on an infrequent basis, is very 

important.

Assess existing training programs 

at VA, other government agencies, 

and commercial organizations. 

Develop and provide updated 

training to support the attainment of 

required core competencies 

throughout the acquisition 

workforce (see Recommendation 

5.2).

5.4.3 VA will reestablish an acquisition 

intern program.

Internship programs are widely regarded 

as a successful vehicle to recruit talented 

professionals.

Review and update the previous 

acquisition intern program. Identify 

the cost and centralized source of 

funding (e.g., Supply Fund) to 

initiate and sustain a robust 

program. Special direct-hire 

authority should be sought.

5.4.4 VA will market desirable career 

opportunities to potential recruits.

In order to compete successfully with 

other organizations, VA needs to publicize 

and promote its career opportunities. VA 

should emphasize the value of public 

sector careers and service to veterans. 

Promote VA acquisition career 

opportunities through innovative 

recruitment strategies (e.g., 

outreach by alumni to alma mater). 

VA should continue to offer 

longitudinal career opportunities. In 

addition VA should pursue talented 

individuals who may be only 

interested in short-term prospects.

VA PROCUREMENT REFORM TASK FORCE SUMMARY OF RECOMMENDATIONS AND ACTIONS

GOAL 5: ENSURE A TALENTED AND SUFFICIENT VA ACQUISITION WORKFORCE (CONTINUED)

Major Recommendations Supporting Recommendations Comments Action Steps

5.3 Improve the recruitment 

and retention of the 

acquisition workforce.
VA Procurement Reform Task Force Report Page 61

Appendix A 
VA Procurement Reform Task Force Report Page 62

Appendix B 

VA Procurement Reform System Task Force Membership 

Membership 

Name Title Office

Robert Wiebe, M.D. (Chairman) Network Director, VISN 21 VHA (10) 

D. Mark Catlett (Vice-Chairman) Principal DAS for Mgt. OM (004) 

Robert Lynch, MD Network Director, VISN 16 VHA (10) 

William H. Campbell Associate DAS for Mgt. OM (004) 

Gary J. Krump DAS for A&MM OA&MM (049) 

George T. Patterson Exec. Director, NAC OA&MM (049A1) 

Jimmy A. Norris Chief Financial Officer, VHA VHA (17) 

Ronald Bednarz Director, Logistics Office VHA (176A) 

Phillipa L. Anderson Assistant General Counsel OGC (025) 

Guy McMichael Chairman, Board of Contract Appeals BCA (09) 

John Bilobran Deputy Assistant IG for Auditing OIG (52A) 

Sheila Gelman, M.D. Chief Medical Officer, VISN 10 VHA (10) 

Jonathan H. Gardner, FACHE Chief Executive Officer, VISN 18 VHA (10) 

The Task force acknowledges and appreciates the efforts of the following individuals upon whose 

expertise we relied heavily: 

David S. Derr ADAS for Acquisitions OA&MM (049A) 

Robert W. Thomale Chief, A&MM, North Texas VA HCS VHA (10) 

C. Dale Duvall Chief Financial Officer, OA&MM OA&MM (049F) 

Kathleen Eastberg Executive Assistant, Office of Acq. OA&MM (049A) 
VA Procurement Reform Task Force Report Page 63

Appendix C 

VA Procurement Reform Task Force 

Summary of Interview Findings

Interview Summaries

The Task Force developed a set of interview instruments, conducted interviews, and analyzed 

the interview results. A total of 106 interviews were conducted either in person, by telephone, 

or electronically. The table below summarizes the individuals and organizations interviewed, 

and is followed by a synopsis of findings from each group. 

VA Acquisition Task Force Interview List 

Organization Interviewees

Group I: VA Purchasers

National Acquisition Center (NAC) 8

Program purchase cardholders 30

Head of Contracting Activity (HCA 18

Group II: Vendors

Johnson & Johnson 1

Tyco 1

GE Medical Systems 1

Premier 1

Group III: Private HC Systems

Kaiser Permanente 1

Sentara 1

Sisters of Mercy 1

Memorial Hermann Health System 1

Broadlane 1

Group IV: VA Officials

Facility Directors & Senior Leaders 19

Chief Logistics Officers (CLO) 13

VISN HCAs who are not CLOs 4

Clinicians 2

Head of Pharmacy Services 1

Counsel to the Inspector General 1

Prosthetics & Sensory Aids Dir. 1

TOTAL 106
VA Procurement Reform Task Force Report Page 64

Appendix C, continued.

Summary of Findings 

Group I: VA Purchasers 

♦ Need controls, accountability, and automated data tracking for purchase cards. 

♦ Initiate comprehensive, ongoing, and updated training on purchase card use. 

♦ More consistent knowledge of FSS and BPAs is needed. 

♦ Clarify roles and responsibilities of VISN and national procurement activities. 

♦ Enhance FSS use with better software tools. 

Group II: Vendors 

♦ Support mandatory use of the FSS. 

♦ Increase buyer discipline so that VISN-specific contracts do not undermine the FSS. 

♦ Use single award for low-end products on national contracts. 

♦ Reward supporters of the FSS to prevent other vendors and buyers who go around it. 

♦ Provide customer-service data to vendors regularly; establish teams to develop product 

area expertise and management; add relevant services to some equipment contracts. 

Group III: Private Health Care Systems 

♦ Implement standardization gradually, with clinicians driving the process. 

♦ Assure clinician involvement and compliance. 

♦ Use client, supplier and VA IT systems. 

♦ Add competitive elements between regions to increase success. 

♦ Show cost savings to clinicians and allow them to receive some of the benefits. 

Group IV: VA Officials 

Facility Directors & Senior Leadership 

♦ Address workforce issues, such as recruitment, retention and training. 

♦ Centralize purchase cards; limit the number of cardholders; improve monitoring and 

compliance. 

♦ Improve and update software programs to track purchasing and inventory. 

♦ Include the following responsibilities for VISN CLOs: coordinating training for VISN 

contracting and logistics personnel; serving as a liaison between VACO and field 

facilities; providing guidance, leadership and support to the facility; and interpreting and 

providing policies. 

♦ Mandate use of FSS contracts. 

Chief Logistics Officers (CLOs) 

♦ Implement tighter control and more accountability of purchase card use. 

♦ Limit use of purchase cards to trained professionals (purchasing agents). 

♦ Provide proper training for using FSS. 

♦ Commit to consolidated purchasing and standardization. 

♦ Establish committed volumes for national contracts to produce good pricing. 
VA Procurement Reform Task Force Report Page 65

Appendix C, continued.

VISN HCAs who are not CLOs 

♦ Monitor card use and provide training for purchase card users. 

♦ Improve the system for tracking standardized items. 

♦ Implement a standardized process for procurement of medical/surgical and high-tech 

equipment. 

Clinicians 

♦ Base decisions on clinician preference. Support for standardization is dependent on 

clinician buy-in. 

♦ Address ease of use/quality, not just price. 

♦ Use VISN RFPs to obtain better price. 

♦ Support Supply Fund in carrying over costs into multi-years on high-cost items. 

Head of Pharmacy Services 

♦ Support concept of FSS contracts negotiated at NAC with BPAs or national contracts for 

large quantity commitments. 

♦ Identify common nomenclature for medical/surgical items; generally, a consistent 

nomenclature exists for Pharmacy. 

♦ Have a technical representative at the NAC to ensure good relations and a strong 

coordinated front to industry by knowing the type and quantity of commodities 

purchased, as is currently the case with pharmaceuticals. 

♦ Ensure effective negotiations occur with a resulting decrease in unit pricing by having 

suppliers know that the VA has data on its requirements. Open-market purchases are 

not an issue for pharmaceuticals. Approximately 90 percent of purchases are through 

prime vendors. 

Counsel to the Inspector General 

♦ Demonstrate historical usage exceeds those of commercial customers for many products, 

to prevent a lack of committed volume from being a deterrent to obtaining the best price. 

♦ Make FSS schedules mandatory to improve negotiations by the NAC. On national 

contracts VA only knows it received the best price among those who bid. 

♦ Rely on Supply Fund contracts when recoveries go to the VA; on local contracts they go 

to the Treasury. Supply Fund constitutes a bargain for the VA. 

♦ Focus standardization at the local level to improve quality of care; however, this may 

lead to increased local purchases if not accepted by clinicians. 

*Note: The Counsel to the Inspector General also gave the Task Force a comprehensive 

briefing. 
VA Procurement Reform Task Force Report Page 66

Appendix C, continued. 

Prosthetic and Sensory Aids Director 

♦ Need core management tools in place, such as a standard nomenclature and data 

tracking for standardization to succeed. 

♦ Align OA&MM and VHA around mutual objectives: OA&MM should have oversight 

and policy role; VHA should have responsibility for operations. 

♦ Close Denver Distribution Center and Somerville Depot and transfer functions to the 

NAC. 

♦ Need for VHA Logistics Director at the same level as the CFO and CIO, who is 

responsible for creating and implementing a thorough and up-to-date training plan. 

*Note: The Prosthetic and Sensory Aids Director also gave the Task Force a comprehensive 

briefing. 
VA Procurement Reform Task Force Report Page 67

Appendix D 

ACQUISITION WORKFORCE 

Pertinent Key Report Highlights 

I. VA Acquisition and Distribution: An Integrated Logistics Strategy, April 1997 

Describes several training programs (p49):

o 18-month A&MM Intern Program 

o Acquisition Training Program (ATP) that provides training in core 

acquisition competencies ñ must be augmented to ensure 

competencies in new acquisition disciplines resulting from the 

o Expanded Sharing legislation and training in marketing and price 

negotiation strategies 

o Contracting Officer Certification Program (COCP) 

o Quarterly A&MM symposia and conferences 

o SPD cluster training and certification program 

Recommendations:

o Develop a performance measurement system for logistics performance at all levels 

o Regularly schedule a formal review of private/public sector best practices 

o Develop a comprehensive logistics training strategy (p77) 

o Review and redesign the Intern Program 

o Retain responsibility for logistics training and contracting certifications in OA&MM 

o Make the Supply Fund the primary means for funding all logistics training within VA

II. GAO Report: Human Capital: A Self-Assessment Checklist for Agency 

 Leaders, September 1999

Builds a self-assessment survey based upon the principles of the Malcolm Baldrige National 

Quality Award and the Presidential Quality Awards. 

o Five parts of human capital framework are described: 

• Strategic planning; vision for the future of VA procurement 

• Organizational alignment; roles, core competencies, skills inventory 

• Leadership; roles, competencies, teamwork, communication 

• Talent; recruiting & hiring plan, individual development plans linked to 

competencies, workforce deployment 

• Performance culture; explicit performance-based rewards and consequences;

valid, reliable, results-oriented measures of individual and group performance; 

training and mentoring; IT and other job support 
VA Procurement Reform Task Force Report Page 68

Appendix D, continued. 

o Underlying considerations: 

• All aspects of human capital are interrelated 

• Trust requires transparency 

• Merit principles and other national goals still apply 

• Constraints and flexibilities need to be understood 

• Fact-based human capital management requires data 

• Adoption of best practices requires prudent decision-making 

• Attention to human capital must be ongoing 

III. GAO Report: Human Capital: Key Principles from Nine Private Sector 

 Organizations, January 2000 

Attempts to identify common principles that underlie human capital strategies at nine private 

sector companies known for their innovative HR management practices: Federal Express, IBM, 

Marriott International, Merck, Motorola, Sears, Southwest Airlines, Weyerhaeuser Co., and 

Xerox

Underlying principles include: 

o Treat human capital management as being fundamental to strategic business 

management 

o Integrate human capital functional staff into management teams 

o Leverage the internal human capital function with external expertise 

o Hire, develop, and sustain leaders according to leadership characteristics identified as 

essential to achieving specific missions and goals 

o Use performance measurement systems, including pay and other meaningful incentives, 

to link performance to results (line-of-sight) 

o Support and reward teams to achieve high performance 

o Integrate employee input into the design and implementation of human capital policies 

and practices 

o Measure the effectiveness of human capital policies and practices 

IV. GAO Report: Senior Executive Service: Retirement Trends Underscore the 

 Importance of Succession Planning, May 2000 

o By the end of FY 2005, the VA will have the highest SES regular retirement eligibility rate 

 among the 14 agencies studied - 82 percent 

o VA had the highest percentage of survey respondents (69 percent) who cited desire for 

higher pay as a reason to leave within the year
VA Procurement Reform Task Force Report Page 69

Appendix D, continued.

V. Voinovich, George V., Senator, ìReport to the President: The Crisis in Human 

 Capitalî, Committee on Governmental Affairs, United States Senate, 106th 

 Congress, 2nd Session, December 2000 

Recommendations requiring legislation: 

o Provide agencies with limited direct hiring authority 

o Adopt a more flexible pay system ñ ìpay-bandingî 

o Provide special pay authority 

o Initiate a Governmentwide employee exchange program 

o Insure flexibility for licenses, certificates, and other professional credentials 

o Link training activities to an agencyís performance plans 

o Institute a comprehensive management succession program in all agencies 

VI. VHA Workforce Strategy, January 2001

Recommendations: 

o Workforce retention/recruitment 

• Provide direct appointment authority 

• Expedited hiring 

• Convert positions to Title 38 

• Expand recruitment search areas 

• Expand quality of life initiatives 

• Initiate ìCafeteriaî benefits plan 

• Begin national recruitment campaign 

o Improve physical & psychosocial work environment 

o Provide incentives for employees 

o Enhanced Learning Environment 

• Develop career pathways 

• Reestablish training programs for clinical support career fields (e.g., A&MM) 

VII. VHA National Succession Planning Task Force Report, July 2001 

o Best practices: 

• Leaders spend 20 percent time developing other leaders 

• Action learning (on-the-job)

• Core competencies 

• Individual development plans 

• Meaningful assessment tools 

• Mentoring/coaching 

• Database to track those with high potential 

• Exit strategies
VA Procurement Reform Task Force Report Page 70

Appendix D, continued.

o Geographic variability noted: higher retirement eligibility in NE and Midwest 

o Development of technical expertise for specialty areas unique to VHA may require

 internal training programs, e.g., for contract specialists (p13) 

o External recruitment is important to increase 20-30 year old cohort 

o Supply management currently has 64.7 percent retirement eligibility (defined as both 

early and regular retirement eligibility) ñ 2nd highest quoted (p17) 

o Employee separation rate has actually dropped from 18 percent in FY 1997 to 13.9 percent 

in FY 2000 after buyouts and RIFs in FY 97/98 (p20)

o Perceived barriers to recruitment and retention (p21):

• Non-competitive salary 

• Lengthy recruitment process 

• Competitive job market 

• Non-competitive benefits 

• Budget constraints 

• Lack of clarity in career paths 

• Low use of incentive awards; VHA gave less than 0.5 percent as compared with 

governmentwide average of 1 percent (p29) 

• Selection of supervisors for technical rather than interpersonal and 

management skills 

• Exit interviews are not conducted systematically 

o Supply Manager is one of 21 occupations at high to moderate risk for succession (p24) 

• FY 2000 Supply Manager employees: 116 (VHA 197,278)

• Retirement eligibility: 64.7 percent (VHA 24.5 percent)

• FY 2000 separations/employees: 14.7 percent (VHA 13.6 percent)

• FY 1998 average age: 48.1 (VHA 46.3)

• FY 2000 average salary (December 2000 PAID data): $60,461 (VHA $40,104) 

• Supply Managers/100,000 patients: 3

o Overall employee satisfaction is most highly correlated with: 

• Treatment with dignity and respect 

• Cooperation and teamwork 

• Job done by supervisor 

• Sufficient action taken on employeeís input 

• Early retirees influenced by career development opportunities and fairness of 

work assignments 
VA Procurement Reform Task Force Report Page 71

Appendix D, continued.

Recommendations: 

o Primary focus of this report is on leadership development 

o VHA Office of Management Support to develop unique targeted strategies including: 

• Flexibility in hiring, including retirees 

• Increased benefits, including Eldercare assistance 

• Flexible work schedules 

• Career and self-development initiatives 

• Relocation and retention bonuses 

• Network/Local: 

! Survey work units 

! Proactively attempt to identify and retain high performers 

! Establish minimum incentive awards budget at governmentwide average 

! Effectively seek and use employee feedback 

! Standardized individual employee development plans 

• Specialized national training programs for recognized ìskill gapsî unique to VHA, 

 i.e., contracting specialists 

• Some recommended legislative initiatives: 

! Explore pay-banding 

! Lift caps on dollar amount; base awards on percent of salary for all 

employees 

! Expand sabbatical policy 

! Allow reimbursement for membership dues in job-related professional 

 organizations 

! Single ìpaid time-off systemî that does not differentiate between sick 

and annual leave 

! Revisit pass/fail performance evaluation system 

! Direct appointment authorities 

! Obtain authority to reemploy retirees without offsetting their annuity 
 

VA Procurement Reform Task Force Report Page 72

Appendix E

Glossary 

Term/Acronym Definition

AAC Austin Automation Center, Austin, TX (formerly DPC) 

ACO Administrative Contracting Officer 

ADAS Associate Deputy Assistant Secretary 

AMIS Automated Management Information System 

A&MMS Acquisition and Materiel Management Service 

AOS Acquisition Operations Service 

APP Advance Procurement Plan 

ARNet Acquisition Reform Network 

ATP Acquisition Training Program 

BAFO Best and Final Offer 

B&P Bid and Proposal (cost) 

BOA Basic Ordering Agreement 

BOB Business Oversight Board 

BOC Budget Object Code 

BPA Blanket Purchase Agreement 

CAMEO Center for Acquisition and Materiel Management Education On-Line 

CAS Cost Accounting Standards 

CASB Cost Accounting Standards Board 

CBD Commerce Business Daily 

CCDR Contract Cost Data Report 

CFO Chief Financial Officer 

CFSR Contract Funds Status Report 

CFR Code of Federal Regulations 

CG Comptroller General 

CICA Competition in Contracting Act 

CIO Chief Information Officer 

CLO Chief Logistic Officer 

CMOP Consolidated Mail Outpatient Pharmacy 

CMR Consolidated Memorandum of Receipt 

CO Contracting Officer 

CO VA Central Office (VACO or Headquarters) 

COCB Contracting Officer's Certification Board 

COCO Contractor-Owned/Contractor-Operated 

COCP Contracting Officer's Certification Program 

COR Contracting Officer's Representative 

CoreFLS Core Financial Logistics System 

COTS Commercial off the Shelf 

COTR Contracting Officer's Technical Representative 

CPAF Cost-Plus Award Fee (contract) 
 

VA Procurement Reform Task Force Report Page 73

Appendix E, continued.

CPCM Certified Professional Contract Manager 

CPFF Cost-Plus Fixed Fee (contract) 

CPIF Cost-Plus Incentive Fee (contract) 

CPSR Contract Procurement System Review 

CRAG Contractor Risk Assessment Guide 

CSC Contract Service Center 

DAR Defense Acquisition Regulation 

DAS Deputy Assistant Secretary 

DAPA Distribution and Pricing Agreements 

DBMS Data Base Management System 

DDC Denver Distribution Center (formerly Prosthetics Distribution 

Center) 

DESC Defense Electronic Supply Center 

DFARS Department of Defense Federal Acquisition Regulation Supplement 

DLA Defense Logistics Agency 

DLSC Defense Logistics Support Center 

DO Delivery Order 

DoD Department of Defense 

DSCP Defense Supply Center, Philadelphia 

DUSH Deputy Under Secretary for Health 

EC Electronic Commerce (a.k.a. E-Commerce) 

ECI Electronic Commerce Interchange 

EDI Electronic Data Interchange 

EDP Electronic Data Processing 

EES Employee Education Service 

EIS Executive Information System 

EO Executive Order 

FAR Federal Acquisition Regulation 

FASA Federal Acquisition Streamlining Act 

FASB Financial Accounting Standards Board 

FFP Firm-Fixed Price (contract) 

FMS Financial Management System 

FPDC Federal Procurement Data Center 

FPDS Federal Procurement Data System 

FPI Fixed Price Incentive (contract) 

FPRA Forward Pricing Rate Agreement 

FSC Federal Supply Classification 

FSG Federal Supply Group 

FSN Federal Stock Number 

FSS Federal Supply Schedule 

FY Fiscal Year 
 

VA Procurement Reform Task Force Report Page 74

Appendix E, continued.

G&A General and Administrative (cost) 

GAO General Accounting Office 

GASB Government Accounting Standards Board 

GC General Counsel (a.k.a. OGC) 

GIP Generic Inventory Package 

GSA General Services Administration 

GWAC Governmentwide Agency Contracts 

HCPC Healthcare Common Procedure Codes 

HCA Head of Contracting Activity 

HHS Department of Health and Human Services 

IDIQ Indefinite Delivery, Indefinite Quantity (contract) 

IDP Individual Development Plan 

IFB Invitation for Bids 

IFCAP Integrated Funds Distribution, Control Point Activity, Accounting 

and Procurement 

IG Inspector General (a.k.a. OIG) 

IRM Information Resources Management (a.k.a. OIRM) 

IRMFO Information Resources Management Field Office (formerly ISC) 

ISMS Integrated Supply Management System 

KO Contracting Officer 

KTR Contractor 

LPTA Lowest Price Technically Acceptable 

MAS Multiple Award Schedule 

MFC Most Favored Customer 

MIS Management Information System 

MMS Materiel Management Service 

MSPV Medical-Surgical Prime Vendor 

NAC National Acquisition Center 

NBC Network Business Center 

NCA National Cemetery Administration 

NCMA National Contract Management Association 

NDC National Drug Code 

NIF National Item File 

NPPD National Prosthetics Patient Database 

OA&MM Office of Acquisition and Materiel Management 

OFCCP Office of Federal Contract Compliance Programs 

OFPP Office of Federal Procurement Policy 

OGA Other Government Agency 

OGC Office of General Counsel (a.k.a. GC) 

OIG Office of the Inspector General (a.k.a. IG) 

OM Office of Management 

OMB Office of Management and Budget 

OPM Office of Personnel Management 

OSDBU Office of Small and Disadvantaged Business Utilization 
 

VA Procurement Reform Task Force Report Page 75

Appendix E, continued.

PBM Pharmacy Benefits Management 

PBSC Performance Based Service Contract 

P&C Purchasing and Contracting 

PAD Processing and Distribution (a.k.a. SPD) 

PE Procurement Executive 

PHS Public Health Service 

PV Prime Vendor 

PPV Pharmaceutical Prime Vendor 

RFP Request for Proposal 

RFQ Request for Quotation 

S&D Storage and Distribution 

SBA Small Business Administration 

SDC Service & Distribution Center 

SMC Strategic Management Council 

SPE Senior Procurement Executive 

SOW Statement of Work 

SPD Supply Processing and Distribution (a.k.a. PAD) 

SPV Subsistence Prime Vendor 

TEB Technical Evaluation Board 

UPC Universal Product Code 

UPN Universal Product Number 

VA Department of Veterans Affairs 

VAAC VA Acquisition Circular 

VAAR Veterans Administration Acquisition Regulation 

VAASC VA Acquisition Service Center 

VAMC VA Medical Center 

VAM&ROC VA Medical and Regional Office Center 

VARO VA Regional Office 

VASC VA System of Clinics 

VBA Veterans Benefits Administration 

VHA Veterans Health Administration 

VISN Veterans Integrated Service Network 

VLR VISN Logistics Representative