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VA Streamlines MSPV-NG Acquisition through Distribution and Supply Agreements

The Department of Veterans Affairs issued a Justification and Approval (J&A) for Other than Full and Open Competition on April 12, 2018, to allow prime vendors currently performing “distribution” contracts under the Medical/Surgical Prime Vendor Next Generation program (MPSV-NG) to choose potential suppliers. Currently, the VA conducts a more traditional procurement process to identify supply sources and awards BPAs to suppliers who can meet the VA’s price requirements. The VA does not place orders under the BPAs; rather the BPAs serve as authorization for prime vendors under the program to enter distribution agreements with those suppliers, and the prime vendors distribute those products to VA facilities. Under the J&A, which converts these existing contracts to “distribution and supply” contracts, prime vendors now will identify potential sources for clinical products and submit them, along with pricing information, to the VA Strategic Acquisition Center and the MSPV Program Office for approval. Once both entities approve, the VA will add those items to the Government’s master product list, and prime vendors may execute distribution agreements with those suppliers and distribute the items to VA facilities as they do currently.  

Products selected and supplied through this process will be available on the master product list for 24 months before they must be awarded through normal competition. The current master product list contains only 7,800 items, and the VA estimates it needs more like 80,000 items to supply its medical centers adequately. This J&A temporarily will shift some of the burden of identifying reliable and economical sources of medical and surgical supplies to prime vendors, who have established supply chains and are familiar with the products hospitals need most and the best sources for those products. The J&A acknowledges that the current MSPV-NG program has left VA health centers undersupplied, encouraging inefficiencies such as the VA supplementing the MSPV supply with government purchase card transactions and local/regional contracts. The VA warned of “significant adverse consequences” affecting patient care and treatment if the J&A were not implemented.

Recently, the VA has foreshadowed a complete overhaul of the current MSPV-NG model, with the stated goal of achieving a clinically driven supply model that provides VA medical centers with medical and surgical supplies with the best clinical outcomes. Rather than standardizing products across all facilities, the VA will seek to supply a breadth of items to accommodate regional preferences, nuanced needs for particular treatments, and other clinical considerations. This J&A comes following months of meetings between VA and VHA officials and interested vendors in which vendors have provided their critiques of the current MSPV-NG program and their ideas for improvement.

How the VA will accomplish this overhaul, and how it will impact contractors, is yet to be seen. The VA has stated it anticipates awarding contracts under the new “MSPV 2.0” Program before April 2020. It seems the next two years may serve as a research phase for the VA to identify the most essential products and suppliers to incorporate in its formulary going forward. This may be an opportune time for medical and surgical item suppliers not previously in the government contract space to gain access to the VA supply chain through the J&A’s streamlined acquisition process.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.


About this Author

Keeley A. McCarty, Sheppard Mullin, Government Investigations Lawyer, International Trade Attorney

Keeley McCarty is an associate in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Ms. McCarty’s practice focuses on government contracts litigation and counseling, including contract termination appeals, litigation and arbitration of subcontractor disputes, and internal investigations.  Ms. McCarty has counseled clients on a broad range of legal topics, including FAR mandatory disclosure rules, title passage under government contracts, and corporate compliance with the FCPA...