Major Changes in Procurement of Medical and Surgical Items for Department of Veterans Affairs


On December 18, 2020, the United States Department of Veterans Affairs (VA) and Department of Defense’s (DoD) Defense Logistics Agency (DLA) expanded the VA’s adoption of the Defense Medical Logistics Standard Support (DMLSS) inventory management system. Over the course of a multi-year rollout, the VA and DoD will adopt a single logistics and supply management system for medical and surgical items and services using the DMLSS platform, leaving open questions about the future of the VA Federal Supply Schedule (FSS) program.

In Depth

Background: On December 18, 2020, the DLA signed an agreement expanding upon the Interagency Agreement signed on August 12, 2019, creating a strategic partnership allowing the VA to pilot adoption of the DMLSS inventory management system. DMLSS serves as the primary system for DLA’s Medical Surgical Prime Vendor (MSPV) program. VA has implemented this program in lieu of the VA’s MSPV 2.0, for which, according to a recently issued GAO report, the VA delayed implementation from April 2020 to early 2021.

History: The August 2019 agreement was intended to allow the VA better quality of care and access to medical and surgical items by leveraging the DoD supply chain and creating a centralized ordering system, rather than using the separate VA and DoD systems that currently exist. As part of the pilot program, the agreement allowed VA’s Captain James A. Lovell Federal Health Care Center (FHCC) in North Chicago, Illinois, and VA Northwest Health Network (Veterans Integrated Service Network (VISN) 20) to order medical supplies via the DMLSS ordering system and DLA’s Prime Vendor Program. According to the GAO report, FHCC initially started the DLA pilot using the electronic catalog (ECAT) system, then transitioned to DMLSS in August 2020. The pilot’s second phase, originally planned to start in October 2019 at two VISN 20 medical centers, Spokane and Puget Sound, was delayed until July and August 2020, respectively, using ECAT. These centers are scheduled to move to DMLSS in fiscal year 2021.

Summary of Changes: The agreement signed on December 18, 2020, expands the program, allowing all VISNs to use the DLA program, and the VA plans on conducting a multi-year rollout of this program. It is still unclear how implementation of this program will be coordinated with the VA FSS and existing VA agreements.

Key Considerations for VA Contractors: The transition to the DMLSS ordering system is a replacement of existing VA supply chain management systems, joining the procurement power of the DoD for medical supplies. This aligns with the additional coordination between VA and DoD related to electronic health records as well as financial management systems, but it remains to be seen what these changes will mean for the existing VA FSS program related to medical and surgical products and services. We will continue to monitor and report on any developments.

Our team at McDermott has extensive experience advising clients on issues relating to VA Federal Supply Schedule contracts, Defense Health Agency Procurement, Federal Contract compliance requirements and government investigations and audits. Please let us know if we can assist you and your business.