The program also includes hundreds of new contracts  with individual supply vendors and a new set of prime vendor contracts to  distribute the supplies. VA’s goals for the MSPV-NG program include (1) standardizing  requirements for supply items for greater clinical consistency; (2)  demonstrating cost avoidance by leveraging VA’s substantial buying  power when making competitive awards; (3) achieving greater efficiency  in ordering and supply chain management, including a metric of ordering  40 percent of medical centers’ supplies from the MSPV-NG formulary;  and (4) involving clinicians in requirements development to ensure  uniform clinical review of medical supplies. VHA’s Implementation of MSPV-NG Program Has Not Yet Achieved Its Goals

VHA’s implementation of the MSPV-NG program—from its initial work to  identify a list of supply requirements in early 2015, through its roll-out of  the formulary to medical centers in December 2016—was not executed in  line with leading practices. Specifically, VHA lacked a documented  program strategy, leadership stability, and workforce capacity for the  transition that, if in place, could have facilitated buy-in for the change  throughout the organization. Further, the initial requirements development  process and tight time frames contributed to ineffective contracting  processes. As a result, VHA developed an initial formulary that did not  meet the needs of the medical centers and has yet to achieve utilization  and cost avoidance goals. As  shown in figure 1, these non-competitive agreements accounted for  approximately 79 percent of the items on the January 2017 version of the  formulary. As such, we found that these six medical centers generally fell below  VA’s stated utilization target. VA agreed with this recommendation  and reported it would develop a new metric to measure cost avoidance by  June 2018. VA Continues to Encounter Requirements Development and Contracting Challenges as It Works to Address MSPV-NG Shortcomings

In Phase 2 of MSPV-NG, the program office has taken some steps to  incorporate greater clinical involvement in subsequent requirements  development, but both its requirements development and SAC’s  contracting efforts have been hampered by staffing and schedule  constraints. However, VA will  likely face challenges in this new approach until it fully addresses the  existing shortcomings in the MSPV-NG program.
Why GAO Did This Study

VA spends hundreds of millions of dollars annually on medical supplies to meet the health care needs of about 7 million veterans. To provide a more efficient, cost-effective way for its medical centers to order supplies, the VA established the MSPV-NG program.
The program's goals include involving clinicians in requirements development, leveraging buying power when making competitive awards, and consolidating supplies used across medical centers. VA began developing requirements in early 2015 and launched the program in December 2016.
This testimony summarizes key information contained in GAO's November 2017 report, GAO-18-34 . Specifically, it addresses the extent to which VA's implementation of MSPV-NG has been effective in meeting program goals. GAO analyzed VA's requirements development and contracting processes, and identified key supply chain practices cited by four leading hospital networks. GAO also met with contracting and clinical officials at six medical centers, selected based on high dollar contract obligations in fiscal years 2014-2016 and geographic representation.

What GAO Found

The Department of Veterans Affairs (VA) established the Medical Surgical Prime Vendor-Next Generation (MSPV-NG) program to provide an efficient, cost-effective way for its facilities to order supplies, but its initial implementation did not have an overarching strategy, stable leadership, and workforce capacity that could have facilitated medical center buy-in for the change. VA also developed requirements for a broad range of MSPV-NG items with limited clinical input. Further, starting in June 2015, VA planned to award competitive contracts, but instead, 79 percent of the items available for purchase under MSPV-NG were added through non-competitive agreements. (See figure).
As a result, the program did not meet the needs of medical centers, and usage remained below VA's 40 percent target. (See figure.)
VA has taken steps to address some deficiencies and is developing a new approach to the program. However, VA will likely continue to face challenges in meeting its goals until it fully addresses these existing shortcomings.

What GAO Recommends

GAO made 10 recommendations in its November 2017 report, including that VA develop an overarching strategy, expand clinician input in requirements development, and establish a plan for awarding future competitive contracts. VA agreed with GAO's recommendations.