Senate Committee Reviews VA Supply Chain Challenges During COVID-19 Response

Key Takeaways:

• VA experienced many of the same medical supply acquisition and logistics problems as other health care systems during the pandemic response.
• VA is undergoing multiple delays in establishing a new contracting mechanism for obtaining medical supplies in the form of the MSPV 2.0 initiative.
• VA is making progress in implementing DOD’s medical logistics system. However, it will take a number of years for the VA to deploy it across all medical facilities to effectively meet veteran health care needs.

Last week the Senate’s Committee on Veterans Affairs convened a hearing regarding building a more resilient VA supply chain and to assess VA’s COVID-19 response given current medical supply acquisition and management processes.

VHA’s Executive in Charge, Dr. Richard Stone, testified that “VHA was able to sustain operations in locations experiencing high demand (e.g., New York City, New Orleans) by cross-leveling staff, PPE and ventilators from areas with lower levels of disease.”  VA is experiencing some of the same supply chain challenges as other hospital systems in the world due to the pandemic, according to Stone. 

Prior to the pandemic, VA began a supply chain modernization initiative entitled VALOR (VA Logistic Reform) for procuring medical supply equipment. VA will be using DOD’s Defense Medical Logistics Standard Support (DMLSS) system. 

Karen Brazell, VA’s Chief Acquisition Officer, spoke about the initiative in an interview with Federal News Network in February. According to Brazell, the new system is an enterprise-wide, one-stop-shop application that does strategic sourcing, inventory management, biomedical equipment maintenance, property management, facility management, distribution and transportation management, tracks contingency, housekeeping, construction, and leasing. “VALOR is the redesign program and DMLSS will be the application in the system that they use to point to VA's catalog or the DLA's troop support catalog,” Brazell said. DMLSS was planned to come on board in VISN 20 in August of 2020 following its launch of the Cerner EHR. 

Stone stated in his testimony, that VA’s current medical inventory system was deployed in the 1970s and faces numerous challenges “and is not equipped to address the complexity of decision making and integration required across functions.”  VA’s implementation of DMLSS will ensure enterprise visibility and decision-support tool capabilities that integrate with DOD prime vendor capability to deliver the right products to the right places at the right time, according to Stone.

Additionally, Stone spoke about VA’s Medical-Surgical Prime Vendor (MSPV) program which is the acquisition vehicle designed to help drive the modernization of the VA health care supply chain.  VA is preparing to deploy and stand-up MSPV 2.0 to replace MSPV-Next Generation, in order “to ensure clinicians and other patient-centered teams have the right supplies in the right place, at the right time, and for the right price.”

To fill capability gaps, according to Stone, VA intends to establish Regional Readiness Centers, which will be geographically distributed to support the four VISN Consortiums. A VISN Consortium is a partnership between multiple VISNs located in the same region of the country. VISNs formed consortiums to foster collaboration among medical centers and to enhance operations and the delivery of health care to veterans. The consortiums use regional contracts, joint networks, and share FTEs and materiel. The Regional Readiness Centers will build resiliency into the supply chain to enable VHA to sustain continuous services to veterans and the resumption of normal pre-COVID-19 operations. They will also support VHA readiness for local, regional and national COVID-19 outbreaks by minimizing medical supply chain disruptions due to increased global demand for PPE as well as other critical items such as ventilators, dialysis machines, and laboratory equipment.

GAO’s Shelby Oakley, Director Of Contracting And National Security Acquisitions, testified that longstanding problems in acquisition and medical supply management posed additional challenges in VA’s COVID-19 response.VA spends hundreds of millions of dollars annually on medical supplies to support veteran health care needs. Due to VA acquisition and supply chain management problems for medical supplies, GAO added VA acquisition management to its high-risk list in March 2019.

As far back as November 2017, GAO began reporting on weaknesses in VA’s implementation of its Medical-Surgical Prime Vendor Next Generation (MSPV-NG) program. VA is working on the next iteration of the program, called MSPV 2.0 which is intended to address some of the shortfalls of the current program, such as lack of an effective medical supply procurement strategy, clinician involvement, and reliable data systems. Unfortunately, MSPV 2.0 has been plagued by bid protests and other procurement delays. Program implementation was originally slated for March 2020, but may now be pushed back as far as February 2021.

Oakley also testified that VA’s antiquated inventory management system limited VA management’s ability to oversee real-time supply data at its 170 medical centers. VA experienced difficulty obtaining several types of supplies needed to protect its front-line workforce during the COVID-19 response, ranging from N95 masks to isolation gowns. Senior VA procurement and logistics officials told GAO that medical centers had to use manual spreadsheets to report levels of PPE on hand, usage, and gaps on a daily basis in an attempt to provide real-time information to senior VHA officials. The new DMLSS system will provide VA with information it could use to analyze order history and find recommendations for future purchases, however VA’s implementation schedule shows that it will take seven years to roll out DMLSS to all medical centers.

Oakley also noted that VA used various contracting organizations and mechanisms for COVID-19 emergency procurements. In order to obtain critical medical supplies and try to meet PPE needs, VA used national and regional contracting offices, and existing contract vehicles, as well as new sources. VA also collaborated with FEMA in order to access the Strategic National Stockpile.

According to GAO’s research, VA experienced many of the same challenges obtaining medical supplies as most private sector hospitals during pandemic response efforts. “This put stress on an already overburdened acquisition and logistics workforce—resulting in staff initially scrambling to address supply chain shortfalls while simultaneously working with VA’s antiquated inventory system, through manual, daily reports on PPE levels to VA leadership,” Oakley stated. Oakley concluded that even though VA is making progress in addressing acquisition and supply chain management issues, it will take many years for VA to establish a modern supply chain management system to effectively serve veteran health care needs.