Implications of the Next Generation- Medical/Surgical Prime Vendor catalog for government contractors

On Thursday, March 10, the Coalition for Government Procurement (CGP) hosted senior leaders from the Department of Veterans Affairs (VA), Defense Health Agency (DHA), and industry constituents to discuss the future of healthcare procurement at its annual Healthcare Forum in Washington, DC. During the half-day session, Michael O’Bar (Component Acquisition Executive, DHA), EG Primus (Deputy Associate Executive Director, VA Strategic Acquisition Center), and Jodi Cokl (Medical/Surgical Prime Vendor Program Manager) among others, shared key insights regarding recent developments that will impact the future of healthcare procurement including the Next Generation – Medical/Surgical Prime Vendor (NG-MSPV) catalog and DHA’s collaboration with the General Services Administration (GSA) to establish a Health Information Technology (HIT) Special Item Number (SIN) under Schedule 70.

NG-MSPV

The NG-MSPV program, which is slated to commence on July 20, 2016 for a 20-month base period, followed by two 20-month option periods, seeks to provide “a customized distribution system to meet or exceed facility requirements by providing an efficient, cost-effective, just-in-time distribution catalog ordering process via prime vendor contracts.” NG-MSPV prime vendor contracts have already been awarded to Kreisers, Inc., American Medical Depot, Cardinal Health 200, LLC, and Medline Industries, Inc., each of which will maintain a catalog of medical, surgical, dental and select prosthetic and laboratory supplies contracted by VA and categorized under 20 unique CLINs. One key difference between NG-MSPV and the predecessor program is that suppliers will no longer be charged distribution fees by prime vendors. Other expected benefits of the program include:

  • Improved ease of ordering;
  • Reduced number of purchase orders;
  • Reduced number of shipments/invoice processing by medical centers;
  • Reduced inventory levels at VA facilities; and
  • Enhanced flexibility for VA customers.

Despite these benefits, many from the industry have voiced concerns about the program scope, structure and purpose – particularly as it relates to the existing VA Schedules program. The VA is currently reviewing responses to its recent RFI, and expects to produce the final catalog groupings (which are expected to closely resemble what was originally proposed) in the near future.  

Schedule 70 - HIT SIN

Before deciding to partner with GSA to facilitate the procurement of health related IT services under Schedule 70, DHA considered developing and administering its own contract vehicle. However, after publishing its business case and reviewing responses from the National Institutes of Health (NIH), VA and GSA, the agency determined that GSA could largely meet its more traditional IT needs (i.e., computer facilities management services, design services and data processing) through existing GWACs including Alliant, VETS and 8(a) STARS II. With the establishment of the HIT SIN under Schedule 70, DHA and GSA have developed a solution for custom computer programming services that aligns with DHA’s goals and the Federal Health IT Strategic Plan, without duplicating requirements under the Defense Healthcare Management System Modernization contract.

With 2015 Health IT spending of approximately $31B and projected annual growth of 7.4% based on increased agency demand for these products and services, GSA believes that a dedicated HIT SIN will:

  • Provide a comprehensive solutions for Health IT products and services;
  • Increase Health IT vendor visibility;
  • Facilitate agency access to Health IT vendors;
  • Differentiate Health IT products and services from non-Health IT products and services;
  • Allow for tracking of Health IT spend data; and
  • Incorporate standards and best practices for Health IT.

Having already published its RFI and hosted an industry day in early 2016, GSA expects to publish a draft solicitation in late April with a final solicitation to follow at the end of May on the GSA Schedule 70 Interact webpage. In the meantime, additional updates will be provided via the DHA/GSA Health IT community page on GSA Interact. Companies who offer these types of services should pay close attention and assess the value of adding this SIN to their contract portfolio.

If you have any questions, please contact us for additional information.

For CGP’s comments in response to both RFIs, please see: NG-MSPV and Health IT SIN

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.