January 28, Tonya Modlin Contracting Specialist Department of Veterans Affairs Spotsylvania Ave, Suite 400 Fredericksburg, VA 22408

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1 January 28, 2019 Tnya Mdlin Cntracting Specialist Department f Veterans Affairs Sptsylvania Ave, Suite 400 Fredericksburg, VA Subject: RFI MSPV 2.0 Distributin Draft SOW Dear Ms. Mdlin, Thank yu fr the pprtunity t prvide cmments in respnse t the Department f Veterans Affairs (VA) Request fr Infrmatin (RFI) n the Medical/Surgical Prime Vendr (MSPV) 2.0 prgram, which was published n December 21, The Calitin fr Gvernment Prcurement (the Calitin) is a nn-prfit assciatin f firms selling cmmercial services and prducts t the Federal Gvernment. Our members cllectively accunt fr mre than $10 billin f dllars f Federal healthcare spending, including mre than 40 percent f the spending n the VA Federal Supply Schedules (FSS), and manufacture mre than 70 percent f the prducts n the MSPV frmulary. Calitin members include small, medium, and large business cncerns. The Calitin is prud t have wrked with Gvernment fficials fr 40 years twards the mutual gal f cmmn-sense acquisitin. The Calitin appreciates the VA s effrts t gather feedback frm industry thrugh the RFI and thrugh industry days. As the VA cntinues t develp the strategy fr the MSPV 2.0 prgram, the Calitin ffers the fllwing cmments with the gal f cntributing t a bestvalue slutin fr medical and surgical supplies that meets the needs f ur natin s veterans. MSPV Best Value Attributes T ensure the delivery f best value healthcare slutins t ur natin s veterans, the Calitin fr Gvernment Prcurement recmmends that the future MSPV prgram: 1. Have a clinically led requirements prgram t supprt a rbust Frmulary that meets the needs f VA medical facilities. 2. Include a brad range f prducts at fair and reasnable prices t prvide best value supprt fr healthcare prvider chice and needs. 3. Prvide rapid prduct availability s that VA medical centers can access innvative slutins in a timely manner t supprt veterans healthcare needs. Prduct additins

2 shuld be cmpleted within 2 weeks (cnsistent with the VA Pharmacy PV, DD MSPV, and DD Pharmacy PV), in rder t reduce purchase card use and gray market purchases. 4. Ensure reasnable Administrative csts fr bth the VA and industry. Avid unnecessary, duplicative cntracting actins, reduce cstly and burdensme prcesses, and take a balanced apprach t versight issues. 5. Encurage industry participatin, as well as cmpetitive pricing, by making the MSPV Frmulary a preferred surce fr VAMCs (and cmpliance mnitred). Use vlume cmmitments as apprpriate. 6. Prvide sund business pprtunities fr industry partners, including Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and Veteran-Owned Small Businesses (VOSBs). 7. Establish and maintain adequate resurces fr the MSPV prgram t ensure that it can execute its missin f delivering best value healthcare t ur natin s veterans. Challenges with MSPV As the VA is cnsidering the strategy fr the MSPV 2.0 prgram, it is imprtant t review the lessns learned frm previus prgrams. The VA recgnized that the prcess initially used fr the MSPV NG prgram was nt adding enugh prduct t the frmulary, and the VA respnded by issuing the J&A making the prime vendr cntracts supply and distributin. The MSPV legacy prgram established a frmulary with enugh prducts, hwever the legacy prgram was built n the FSS and as a result it culd take mnths t get new prducts added t the prgram thereby leaving veterans withut access t the latest healthcare technlgies. The MSPV als did nt receive adequate clinical input during the creatin f the frmulary, create sund business pprtunities fr SDVOSBs, cmpete individual items fr the frmulary r have clear prcesses and pints f cntact t add new prducts. The Calitin recmmends that the VA address the unintended cnsequences frm previus iteratins f the MSPV prgram and ensure that they d nt resurface in MSPV 2.0. Adding Prducts t the MSPV On page 55 f the draft Statement f Wrk (SOW), the VA ntes that the FSS will be part f the VA s strategy t prvide prducts fr the frmulary. While the Calitin supprts the use f the FSS prgram in general, Calitin members are cncerned that the FSS is unable t effectively supprt MSPV 2.0, and that the prgram will struggle withut immediate refrms t the FSS. 2

3 The MSPV legacy prgram relied almst exclusively n the FSS, but the prgram ften faced delays fr adding new prducts. Calitin members reprt that prduct additin mdificatins n the FSS can take mnths. Once the mdificatins are apprved, the prducts may be ut f date, which means that veterans may nt receive access t the highest quality care that the VA seeks t prvide. The delays in adding prducts t the VA Schedules are unnecessary. In cntrast, GSA can award sme prduct additin mdificatins in as little as 24 hurs. Calitin members reprt that n average a GSA prduct additin mdificatin can be cmpleted in less than a week. The DD ECAT prgram can als prcess prduct additins in as little as a week r tw. The Calitin has already submitted a white paper and tw sets f streamlining recmmendatins fr the Schedules prgram t the VA. The VA shuld implement FSS refrms befre MSPV 2.0 launches r the VA faces the risk f having a frmulary that is nt rbust enugh t supprt veterans health. Fast Track fr Adding Prducts As the VA develps the acquisitin strategy fr MSPV 2.0, the Calitin recmmends that the VA adpt a fast track fr adding items in rder t ensure the viability f the prgram. Instead f underging additinal fair and reasnable price determinatins, the VA can rely n the determinatins already made thrugh ther Gvernment prgrams such as the DD ECAT, the current MSPV NG frmulary, and the VA FSS. Questins Calitin members have several questins abut the MSPV 2.0 that were nt answered in the draft statement f wrk. We wuld appreciate any clarificatin that the VA culd prvide in future RFIs r ther industry cmmunicatins. What will be the entry level requirement fr a prduct t cmpete fr placement n the frmulary? Fr example, will FSS, ECAT, r DAPA be required? Will the prducts need t be supplied by a Veteran-Owned r Service Disabled Veteran-Owned Small Business? What cntract vehicle(s) will be used t build the frmulary? What prcess will be used t cmpete the prducts? What categries will be used? What is the timeline fr the cmpetitin? Hw will VA facilities be measured n their use f the MSPV prgram? What utreach is being cnducted t the facilities in preparatin fr the transitin t 2.0? On the legacy MSPV, prime vendrs prvided FSS prducts withut further cmpetitin. Will MSPV 2.0 wrk in the same way? If nt, what will the prcess be fr adding prducts t the frmulary? Hw is the VA imprving the FSS t ensure the timeliness f mdificatins t add prducts? What are the rules regarding VA facilities access and use f ECATs? Will there be a cmpetitive prcess that will be required fr an ECAT purchase? 3

4 What is the prcess t receive a DAPA awarded by the SAC? There did nt appear t be any language restricting cmmercial terms between manufacture/suppliers and the Prime Vendrs. Typical cmmercial terms that leverage industry best practices include the fllwing. Please advise whether any f these will be prhibited under MSPV 2.0: Cash Discunts fr prmpt payment Administrative fees Reprting/tracing fees Distributin fees Inventry management fees Return fee Recall Management fee Penalties arund nn-cmpliance f rder fulfillment, fill rate, EDI, etc. Agreements n shipping, rdering, minimums, inventry management and drp ships. Culd the fees charged by prime vendrs be tied t the level f use f the MSPV cntract by each VISN? Higher VISN usage culd then supprt lwer fees. This wuld share the risk between industry and the VA and help the prime vendrs recver capital investments. When will the VA reach a decisin n the whether MSPV 2.0 is set-aside fr small businesses? Will industry be given enugh pprtunity t respnd t the RFP nce the VA s decisin has been made? Please cnfirm that MSPV 2.0 rders fr supplies frm directed suppliers placed under VA apprved cntracts will be cunted as prime cntract rders t FSS and ther VA cntract suppliers as they have been in the past? This apprach will cntinue t earn the VA small business prime cntractr credit when awarded t a small business. Since the prime vendr must btain supplies frm directed suppliers, are the prime vendr rders placed with these suppliers under the prime vendr Cmmercial Agreements cnsidered subcntracts fr the purpses f any required small business subcntracting plan gals? If prime vendr rders t directed suppliers under cmmercial agreements are nt cnsidered subcntracts, des that require large businesses t primarily meet all small business subcntracting plan gals by subcntracting distributin tasking? The statement f wrk states that the VA will establish cntracts thrugh a cmpetitive prcess fr the supplies. What is the plan and schedule fr these awards? Wh is respnsible fr making the awards? Will each item have a ptentially unique supplier? Can existing inventry items be prvided by a prime vendr if thse items are prvided at the nt t exceed price? Hw des this new plan cmpare t the previus MSPV NG apprach t cmpetitively btain suppliers fr frmulary items? Will these be best value awards? Will there be a preference fr service disabled veteran-wned and veteranwned small businesses? 4

5 Hw will the VA transitin frm current MSPV NG frmulary suppliers t the MSPV 2.0 catalg directed suppliers? Will the current MSPV frmulary suppliers be extended t supprt MSPV 2.0 catalg, r will thse cntracts end prir t the start f MSPV 2.0? Will the cmpetitins be fr brand name items r brand name r equal? There is sme cnfusin ver the cntent f cmmercial agreements. Can the VA prvide examples f what can and cannt be in a cmmercial agreement? Will the directed supplier cntracts require each supplier t supprt a gd faith effrt t meet the 30-day schedule fr establishing a bilateral cmmercial agreement? Can these cmmercial agreements include negtiated discunts fr quantity prime vendr buys? Is there any incentive fr either the directed supplier r fr the prime vendr t negtiate a discunt t the apprved nt t exceed price fr an increase in rder quantity? Will these cmmercial agreements be allwed t augment the VA cntract prvisins when necessary t ensure cmpliance with MSPV 2.0 cntract requirements? Will prime vendrs be permitted t acquire supplies frm FSS cntracts that prvide access t ver ne millin medical/surgical items? Will prime vendrs be permitted t place rders n FSS that are under the $10,000 Micr-purchase Threshld withut cmpetitin? Will prime vendrs be permitted t issue sle surce rders n FSS if the required item is nly available n FSS frm ne surce? What FSS rders by the prime vendr will require the prime vendrs t seek multiple ffers r t cmpete the rder? Des a prime vendr have any respnsibility t meet VetsFirst requirements fr prime cntract awards r directed supplier rders? May a prime vendr use ECAT t prvide required prducts? The SOW des nt permit the prime vendr t require a directed supplier t cmply with any term r cnditin nt required by law r regulatin, r generally accepted cmmercial practices amng prime vendrs in the medical/surgical industry. Can the prime vendr require a supplier t cmply with MSPV 2.0 requirements fr EDI and ther infrmatin which exceed VA cntract requirements? Can the EDI requirements instead be met and prvided by the prime vendr fr the directed supplier fr a fee negtiated in the cmmercial agreement? Can rebates be negtiated in cmmercial agreements with directed suppliers based n quantity buys? If the prime vendr negtiates a lwer price than the VA apprved nt t exceed cst, will such cst savings remain with the prime vendr given this is a firm fixed price cntract? Is there any cntract incentive fr the prime vendr t acquire supplies at lwer than the nt t exceed cst? Are there any generally accepted cmmercial practices that the VA cnsiders cunter t any law r regulatin? 5

6 The strategy seems t require bth a primary prime vendr and back-up prime vendr fr each VISN. Will the VA cnsider a simpler alternative supply chain strategy that requires the primary VISN cntract winners t als agree t serve as back-up suppliers fr adjacent VISN custmers if/when required? Given the high-level f perfrmance required by each prime vendr, the amunt f business any backup PV wuld receive appears t be bth randm and minimum. Can the VA prvide any data n the vlume f these backup cntracts may have? What is the business case that might supprt bidding as a backup prime vendr under the current SOW perfrmance requirements? Hw many regins is the VA cnsidering fr MSPV 2.0? If the MSPV 2.0 awards are based by VISN, what is the purpse fr dividing int regins? Will SDVOSBs be prvided pririty and preference ver VOSBs? The small business subcntracting plan requirement in the SOW requires clarificatin. What type f small business subcntracting plan will be required fr the MSPV 2.0 prpsal? Wh will evaluate the subcntracting plans and what are the evaluatin criteria? What will the SDVOSB subcntracting gal be fr the plans? If the fferr plans that fail t meet the minimum gal be fund unacceptable r will they be evaluated lwer than ther plans? Since crprate subcntracting plans are based n a single year, hw will these plans be evaluated fr the life f the MSPV cntract term? Will subcntracting plans be updated r revised ver the life f the cntract? Will failure t meet the plan gals with gd faith effrt be cnsidered a ptential breach f cntract? Will the VA seek a waiver t the nn-manufacturer rule fr MSPV 2.0? Is the VA currently capable f using all EDI transactins requested in the SOW? If nt, will they be prir t implementatin r is this a restrictive requirement? The Calitin appreciates the pprtunity t submit cmments in respnse t the MSPV 2.0 Distributin RFI. If there are any questins, please cntact me at rwaldrn@thecgp.rg r (202) Regards, Rger Waldrn President 6