VA SURGICAL IMPLANTS

Shortcomings in Implant 

Purchasing and Tracking

Statement of Randall B. Williamson 

Director, Health Care

Testimony

Before the Subcommittee on Oversight 

and Investigations, Committee on 

Veterans’ Affairs, House of 

Representatives

For Release on Delivery 

Expected at 10:00 a.m. EST

Wednesday, January 15, 2014

GAO-14-271T

United States Government Accountability Office
Page 1 GAO-14-271T

Chairman Coffman, Ranking Member Kirkpatrick, and Members of the 

Subcommittee:

We are pleased to be here today to discuss our work on the purchase 

and tracking of surgical implants at Department of Veterans Affairs (VA) 

facilities. VA’s Veterans Health Administration (VHA) is one of the largest 

purchasers of surgical implants, which include biological implants, such 

as skin and bone grafts, and non-biological implants, such as cardiac 

pacemakers and artificial joints. VHA spent about $563 million on surgical 

implants in fiscal year 2012, an increase of 28 percent since fiscal year 

2008. Surgeons and other clinicians at VA medical centers (VAMC) 

determine veterans’ needs for surgical implants, request the implant of 

their choice for purchase, and perform the clinical procedures to implant 

the items. While VA has negotiated competitive contracts for a variety of 

implants, VAMCs or VHA’s regional network contracting offices (NCO) 

can purchase a specific surgical implant requested by a clinician from the 

open market with appropriate clinical justification, rather than purchasing 

a similar item through a VA-negotiated competitive contract.1

At a May 2012 hearing of this subcommittee, concerns were raised about 

the extent to which VAMCs and NCOs purchase surgical implants from 

the open market without appropriate justification, as well as VHA’s 

oversight of surgical implant purchases.

Upon 

purchase, identifying information is recorded, such as the serial and lot 

numbers of the item, which can be used later to identify veterans who 

received a particular implant if one is recalled by a manufacturer or the 

Food and Drug Administration due to safety concerns.

2

 1

VA negotiates national, regional, and local competitive contracts with vendors for all 

types of items—including surgical implants. Items that are not purchased from these 

contracts are referred to as open-market purchases. There are 21 NCOs throughout 

VHA’s health care system that manage the contracting activities of the VAMCs within each 

of VHA’s 21 Veterans Integrated Service Networks. These networks oversee the day-today functions of VAMCs that are within their network.

More recently, members of 

Congress raised concerns about VHA’s ability to identify patients who 

received a surgical implant that was subjected to a recall and raised 

allegations about vendor representatives providing direct patient care to 

veterans at three VAMCs. My remarks today will address the following 

two areas: (1) VAMC compliance with VHA requirements for documenting 

2

Purchasing Perspective: VA’s Prosthetics Paradox, Before the Subcomm. on Oversight 

and Investigations of the H. Comm. on Veterans’ Affairs, 112th Cong. (2012).
Page 2 GAO-14-271T

surgical implants purchased from the open market, and VA and VHA 

oversight of compliance with these requirements; and (2) VHA’s ability to 

identify veterans who received an implant that is being recalled by the 

manufacturer or the Food and Drug Administration. My remarks on 

surgical implant purchasing and VHA’s ability to identify veterans who 

received recalled implants are based on our report, released earlier this 

week, entitled VA Surgical Implants: Purchase Requirements Were Not 

Always Followed at Selected Medical Centers and Oversight Needs 

Improvement.

3 For this report, we visited four VAMCs that serve large 

veteran populations and assessed compliance with VHA requirements by 

reviewing a diverse selection of 257 surgical implant purchases from 

different vendors. The purchases we reviewed represented from about 

6 percent to about 83 percent of the applicable purchases at each VAMC 

in the first 6 months of fiscal year 2013.4

GAO also investigated an allegation that surgical implant vendor 

representatives had participated in direct patient care at three VAMCs. 

The results of our investigation are summarized in appendix I. Our 

investigative work was conducted from February 2013 to January 2014 in 

accordance with standards prescribed by the Council of the Inspectors

General on Integrity and Efficiency, as further detailed in appendix I. 

During our investigation, we conducted field interviews, performed 

document reviews, and reviewed relevant policies and procedures 

relative to the allegations presented.

While these results cannot be 

generalized to all VAMCs, they provide insight into VAMC and NCO 

compliance. We also interviewed officials from VA, VHA, and from four 

networks, which oversee VAMCs, and reviewed pertinent statutes, 

regulations, and VA and VHA documents. Furthermore, we reviewed 

agency documents and interviewed VA and VHA officials on VHA’s 

processes for tracking surgical implants placed in patients. Our work was 

performed in accordance with generally accepted government auditing 

standards. Further details on our scope and methodology are included in 

our report.

 3

GAO, VA Surgical Implants: Purchase Requirements Were Not Always Followed at 

Selected Medical Centers and Oversight Needs Improvement, GAO-14-146 (Washington, 

D.C.: Jan. 13, 2014).

4

The range in percentages is the result of large differences in the number of open-market 

purchases at each VAMC.
Page 3 GAO-14-271T

We provided VA with a draft of this statement. VA provided one technical 

commented, which we incorporated.

Our work at four VAMCs found that these VAMCs did not always follow 

VHA requirements for documenting open-market purchases of surgical 

implants. Specifically:

• None of the four VAMCs fully complied with VHA requirements for 

obtaining waivers required for open-market purchases of surgical 

implants because they were focusing on other priorities or lacked 

awareness of the requirements, among other factors.5

• None of the four VAMCs fully complied with additional VHA 

requirements for documenting open-market purchases that are part of 

a new process VHA implemented in fiscal year 2013 for surgical 

implant purchases above the Federal Acquisitions Regulation’s micropurchase threshold of $3,000 and below its simplified acquisition 

threshold of $150,000.6 VAMC and regional office officials attributed 

noncompliance mainly to insufficient VHA guidance and VA staff’s 

inexperience in completing these requirements.7

• Three of the four VAMCs did not comply with a VHA requirement 

pertaining to agreements with vendors that provided surgical implants 

 5

VHA policy stipulates that all open-market purchases of non-biological implants require a 

waiver approved by the VAMC Chief of Staff when a comparable item would have been 

available through a VA-negotiated national committed-use contract. At two of the VAMCs 

we visited, VHA data indicated that waivers were not being completed for open-market 

purchases of non-biological implants when a comparable item would have been available 

through a national committed-use contract. At the other two VAMCs, we selected 20 and 

30 purchases for which VHA data indicated that such waivers were on file and reviewed 

whether those waivers were on file and whether they were complete. All open-market 

purchases of biological implants require a waiver by VHA’s Procurement and Logistics 

Office when a decision is made to purchase an item from the open market rather than 

from a Federal Supply Schedule contract. At each VAMC, we selected 20 to 30 purchases 

of biological implants that, based on VHA data, appeared to have been purchased from 

the open market for review. For the open-market purchases, we assessed whether a 

waiver was obtained for those purchases, and if so, whether the waiver was complete.

6

We reviewed between 15 and 28 purchases over $3,000 at each VAMC we visited.

7

If a clinician requests a surgical implant over $3,000 from the open market, the following 

are required: (1) a statement affirming that the vendor’s price was fair and reasonable and 

the basis for this determination; and (2) a justification for other than full and open 

competition that cites the legal authority for purchasing a surgical implant where the 

VAMC solicited only one source in making the open-market purchase.

Surgical Implant 

Purchase 

Requirements Were 

Not Always Followed 

at Selected VAMCs, 

and VA and VHA 

Oversight Needs 

Improvement
Page 4 GAO-14-271T

to them on consignment. Under a consignment agreement, the vendor 

maintains vendor-owned items at the VAMC, and the VAMC 

purchases only the items actually used. A consignment agreement 

may be useful when the requirement for a surgical implant is 

immediate and it is not possible to predetermine which of several 

types or models are required. These agreements, which clinicians 

likely established to ensure timely access to implants, did not comply 

with a VHA requirement that consignment agreements must be 

authorized by a VHA contracting officer.

The lack of full compliance with these requirements limits VHA’s ability to 

determine why VAMCs are purchasing surgical implants from the open 

market and VHA’s ability to ensure that it is paying a fair and reasonable 

price for surgical implants. To improve compliance with VHA 

requirements, in our report, we recommended that the Secretary of 

Veterans Affairs take several actions, including providing clear guidance 

to VAMCs on when and how to complete required waivers, establishing 

internal controls to ensure VAMCs’ compliance with waiver requirements, 

and providing additional training on how to properly document openmarket purchases over $3000.8

In addition, we found that VA and VHA’s oversight of surgical implant 

purchases to detect and correct instances of noncompliance needs 

improvement. Specifically:

VA concurred with our recommendations 

and noted that VHA’s Procurement and Logistics Office will emphasize 

the waiver process through webinar trainings and standard operating 

procedures guidance, and it will develop a checklist for documentation of 

open-market surgical implant purchases over $3,000.

• Although VA and VHA have recently begun conducting oversight of 

surgical implant purchases over $3,000 to assess compliance with 

VHA’s new requirements, VHA officials told us that they have not 

ensured that corrective action has been taken to address identified 

noncompliance because of poor communication between VA and 

VHA and insufficient staffing to follow up on identified issues. VA’s 

Office of Acquisition and Logistics did not provide VHA with 

information on the VAMCs at which noncompliance was identified, 

according to a senior VHA official. The official also explained that 

VHA’s policy is largely intended to be consultative in nature and that 

 8

GAO-14-146.
Page 5 GAO-14-271T

VHA’s Procurement and Logistics Office is not sufficiently staffed to 

ensure that corrective action is taken.

• Moreover, VHA assesses each VAMC’s performance on metrics 

established for surgical implant purchasing, such as the extent to 

which VAMCs purchased surgical implants from a national committeduse contract or obtained a waiver allowing clinicians to use an 

alternative item. However, as of November 2013, VHA did not have a 

policy governing how any identified deficiencies should be addressed 

and the corrective actions necessary for VAMCs and VHA’s regional 

networks to take. Absent such a policy, the degree of monitoring and 

corrective actions taken varied among the four networks we visited.

Network prosthetics officials at two of the four networks told us that 

they regularly monitored the results from VHA’s assessments and 

took steps to ensure that VAMCs address identified deficiencies, such 

as correcting data-entry errors. In the other two networks that did not 

ensure that VAMCs address deficiencies, VHA’s metrics identified a 

relatively high rate of noncompliance with surgical implant purchases 

from VA-negotiated national committed-use contracts. In one of these 

networks, this noncompliance included a high percentage of 

purchases missing serial numbers or lot numbers, which has 

potentially significant patient safety and cost implications.

Without ensuring that noncompliance with purchasing requirements or 

deficiencies in performance measures are appropriately addressed, VA 

and VHA run the risk of these issues recurring or continuing. To address 

this shortcoming, our report recommended that VHA revise existing 

guidelines to require that VAMCs and NCOs document the measures 

they are taking to address noncompliance and report their progress (via 

corrective action plans) in achieving those measures through the VHA 

and VA management chains of command.9 VA concurred with our 

recommendation and stated that VHA will require documentation of 

measures taken to address noncompliance identified in audits.

 9

GAO-14-146.
Page 6 GAO-14-271T

We also noted that VHA is limited in its ability to identify and locate 

patients who receive an implant, which is particularly important in the 

event of a recall by the manufacturer or the Food and Drug Administration 

because of safety concerns. For example, VA has noted instances across 

its health care system where lot numbers and serial numbers for such 

purchases were not entered into the prosthetics purchasing system and 

has initiated corrective actions, although these actions appear stalled as 

of December 2013.10

Specifically, in 2008, VA’s Office of Information Technology began 

developing the Veterans Implant Tracking and Alert System (VITAS), 

which was designed to track and retrieve identifying information—

including the lot and serial number—of surgical implants placed in 

patients VHA-wide. VITAS was developed to address identified 

shortcomings in VHA’s existing ability to track surgical implants. 

According to VHA, these shortcomings include the following:

• The lot number and serial number of items implanted in patients is not 

always entered into the prosthetics purchasing system by purchasing

and procurement staff, as required.

• While VHA clinicians from most specialties track identifying 

information of items implanted in their patients using standalone 

systems or spreadsheets that are particular to the clinicians’

specialties, VA found that information on surgical implants recorded in 

these systems is neither standardized nor is it shared across VAMCs. 

Furthermore, VA found that identifying information on surgical 

implants used in certain clinical specialties, including 

gastroenterology, interventional radiology, and pulmonary, is not 

tracked in any system.11

According to VA and VHA officials involved in the development of VITAS, 

this system’s development was suspended as of the end of fiscal year 

2012 due to data-reliability challenges stemming from inaccurate or 

missing entries in the prosthetics purchasing system and interoperability 

 10The prosthetics purchasing system is used to record the purchase of all prosthetics, 

including surgical implants.

11According to VA, for these clinical specialties VHA was unable to verify that the items 

purchased by the prosthetics department were actually implanted in the patients for which 

they were purchased.

VHA Is Limited in Its 

Ability to Identify and 

Locate Patients Who 

Receive a Surgical 

Implant
Page 7 GAO-14-271T

challenges between VITAS and other VHA systems that store information 

on surgical implants. VA and VHA are in the process of reevaluating 

VITAS; however, as of December 2013, VA and VHA had not decided 

whether to resume the development of VITAS. As a result, VHA’s ability 

to identify and locate patients who received an implant remains limited.

Chairman Coffman, Ranking Member Kirkpatrick, and Members of the 

Subcommittee, this concludes my statement. I would be pleased to 

respond to any questions that you may have.

For questions about this statement, please contact Randall B. Williamson 

at (202) 512-7114 (williamsonr@gao.gov). Individuals making key 

contributions to this testimony and the report on which it is based include 

Wayne McElrath, Director; Gary Bianchi, Assistant Director; Kim Yamane, 

Assistant Director; Ashley Dixon; Cathleen Hamann; Julie Spetz; and 

Michael Zose.
Appendix I: Patient Care Provided by Vendor 

Representatives at Department of Veterans 

Affairs Medical Centers (VAMC)

Page 8 GAO-14-271T

This appendix summarizes the results of the investigative work we 

conducted to review an allegation that surgical implant vendor 

representatives had participated in direct patient care at three VAMCs by 

applying skin grafts to patients or debriding patients’ wounds. We visited 

the three VAMCs at which the alleged actions had occurred and 

interviewed clinical staff, such as physicians, and nonclinical staff, 

including hospital administrators, to determine whether vendor 

representatives had participated in direct patient care, and, if so, the 

circumstances under which the direct patient care occurred. At each of 

the three VAMCs, we also reviewed documentation, such as VAMC 

vendor policies and clinical progress notes, which document patient care 

episodes. Furthermore, we interviewed vendor representatives who 

provided skin graft products to these VAMCs. The findings from these 

three VAMCs are not generalizable to other types of surgical implants, to 

other clinicians, or to other VAMCs. We did not identify the frequency of 

vendor representatives participating in the provision of direct patient care 

for all types of surgical implants at the VAMCs we visited, or for the 

Veterans Health Administration (VHA) as a whole. We conducted this 

investigative work from February 2013 to January 2014 in accordance 

with standards prescribed by the Council of the Inspectors General on 

Integrity and Efficiency.

We were able to affirm that, in some instances, vendors were 

participating in direct patient care at one of the three VAMCs we 

investigated, as recently as August 2013. At the two other VAMCs, we 

were unable to affirm these allegations. Specifically, several clinicians at 

one VAMC stated that vendor representatives applied skin grafts to 

patients or assisted Department of Veterans Affairs (VA) clinicians with 

the application of skin grafts on multiple occasions. Patients’ clinical 

progress notes we obtained from this VAMC confirmed that a vendor 

representative had applied skin grafts to several patients or assisted in 

the application of the grafts. One physician assistant who disclosed that a 

vendor representative had occasionally assisted in the application of skin 

grafts stated that vendor representatives may have assisted with this 

procedure because the VAMC lacked available clinical staff to provide 

such assistance. A physician who stated that vendor representatives 

were present during the application of skin grafts at this VAMC told us 

that he did not know what the official vendor policy was at the VAMC, and 

he was not aware of a VAMC policy that addressed vendor roles.

Appendix I: Patient Care Provided by Vendor 

Representatives at Department of Veterans 

Affairs Medical Centers (VAMC)

Results of 

Investigation
Appendix I: Patient Care Provided by Vendor 

Representatives at Department of Veterans 

Affairs Medical Centers (VAMC)

Page 9 GAO-14-271T

Our review indicates that VA allows vendor representatives who supply 

an implant to be present during a surgical procedure—in which an implant 

is placed in a veteran—and to provide technical assistance to the clinical 

staff. We also found that VHA’s policy governing vendor access to 

VAMCs and involvement during clinical procedures is broad in nature. It 

requires each VAMC to develop its own procedures on vendor access 

and does not provide guidance on what these procedures should entail. 

Based on the written procedures we reviewed and interviews with officials 

at the three VAMCs we visited, we found varying degrees of specificity in 

current local procedures governing vendor access and participation in 

patient care. For example:

• At two VAMCs, officials stated that the local procedures require 

background screening (for possible criminal history) for vendor 

representatives who are present in clinical areas; the third VAMC had 

no such requirement.

• At one VAMC, written procedures also prohibited vendors from 

providing direct patient care, specifying that “vendors will not ‘scrub in’

or physically perform any part of a procedure”; the other two VAMCs 

had no such prohibition.

Moreover, we found that the VAMC where we affirmed that vendors were 

participating in direct patient care was not in compliance with its written 

procedures covering vendor access to the facility. According to an official 

from the VAMC director’s office, no documentation was on file regarding 

vendor qualifications, training, and other certifications and competencies 

for the vendor representatives who are present in clinical areas at this 

VAMC. This is not in compliance with the VAMC’s procedures that require 

that such information must be maintained on file for all vendor 

representatives who are present in clinical areas at the VAMC.

Our findings on vendor involvement in patient care at the three VAMCs 

we visited cannot be generalized to VHA as a whole. However, our 

findings raise questions about the extent of vendor involvement in patient 

care at other VA facilities. Accordingly, we plan to refer the specific cases 

we found on vendor involvement in direct patient care to the VA Office of 

the Inspector General for further investigation if deemed appropriate.

(291184)
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