Established nearly 60 years ago, the National Acquisition Center (NAC) in Hines, Ill., is the largest combined contracting activity within the Department of Veterans Affairs (VA), responsible for contracting and acquisition support to all VA health care delivery systems.

NAC establishes and administers Federal Supply Schedule (FSS) and national contracts and Prime Vendor Distribution programs for pharmaceuticals, medical and dental surgical supplies and equipment, prosthetics and orthopedic aids, high-tech medical systems, health care-related services, and more.

Headed by Executive Director and Chief Operating Officer Craig Robinson, NAC has seen annual sales grow in recent years to accommodate growing VA requirements stemming from post-9/11 increases in the number of veterans it serves. Robinson spoke to The Year in Veterans Affairs & Military Medicine to explain how NAC’s effort has evolved, where it now stands, and what the future holds.

 

The Year in Veterans Affairs and Military Medicine: What is NAC’s role within the Department of Veterans Affairs?

Craig Robinson: Our mission is to provide health care requirements for VA and other governmental agencies, such as DoD [Department of Defense] – including the individual services. In that, we partner and work with Defense Supply Center-Philadelphia, which is a focal point for many of the individual services’ requirements.

We establish contacts for use on a national level that allow various medical centers throughout the VA, as well as other governmental agencies, to order against our pre-negotiated contracts.

 

With whom do you have contracts?

Manufacturers, dealers, distributors, and, primarily, prime vendors. The way we are set up, we have Federal Supply Schedules through delegated authority. The GSA [General Services Administration] has authority over the schedules program for all things across the government, from IT [information technology] to vehicles to facility leasing. But we were delegated authority for pharmaceutical and medical items. So we have the same type of contracts as GSA, but only for those supply classes delegated to us by GSA.

How has that evolved since it was established in 1951?

I think the intent is the same, as it relates to a centralized source for providing required pharmaceuticals and medical items for the VA. The biggest change has been the migration away from the old depot system, where we generally had three VA-run depots that stored items we bought – pharmaceuticals, medical supplies, [and] subsistence items [long shelf-life items]. Requisitions then were received from the field and items shipped out of the depots.

As technology developed, we implemented improvements, of course. That also helped us migrate from the depot system to what is in place today. The centerpiece of our ability to provide pharmaceuticals and med/surg items on a timely basis is the use of prime vendor contracts that are awarded here at NAC.

At the beginning, the medical treatment facilities were required to have more stock on hand to meet any needs that might come up when working in a situation where requisitions were not quickly filled. Now, through the prime vendor program, they don’t keep a lot of stock on hand because we can turn orders very quickly. Those orders are placed into a contractor-owned electronic ordering system – in a way, an online catalog that gives visibility to those items that can be ordered from that prime vendor. We’ve moved to a just-in-time system.

We do a lot of things in common with DoD, but one thing we do not currently share is our prime vendor programs. VA and DoD are in the early stages of reviewing some consolidation of that where there are joint or co-located facilities, and whether a shared prime vendor contract might be in the best interests of those locations.

Back in the depot days, individual contracts were used to fill the warehouses. We still have some individual contracts, but the prime vendor contracts basically direct the prime vendors to which individual NAC-awarded contracts and FSS are priority for prime vendor use. For example, if we standardize on a med/surg item, we would do a competition at NAC in conjunction with the VHA Chief Logistics Officer [CLO] and, upon award of that standardized national contract, the prime vendor contractor would be instructed that that would be the mandatory source for that item.

If there is no standardized contract, the medical treatment facility placing the order would select from several available sources. If we standardized on a surgical drape, that would be the item provided through the prime vendor as the mandatory source of supply. If we had not standardized and there were several drapes available, the medical treatment facility ordering staff would select the item that best met their needs.

 

What input is there from medical treatment facilities on standardized items?

For standardization, there are integrated process teams, designated by the VA Chief Logistics Officer and comprising a representative set of clinicians and users. That group provides the evaluation that determines the items selected for standardization. There generally are several standardization processes under way at any given time.

There are varying lengths to these contracts, typically for one year with up to four option years. At the end of that period, it would be up to the CLO’s office to validate whether that should continue to be the standard item. And the government reserves the unilateral right to exercise the option or determine if it is in our best interest to resolicit.

Have there been any major changes since 9/11, with the dramatic increase in the number of veterans entering the system?

Our contracts are able to scale to include quantity as related to the growth in the number of veterans. Our office also has grown in order to meet those increasing needs.

We are probably more involved now than in the past in being able to address pandemics or threats associated with terrorism through support to the CDC [Centers for Disease Control and Prevention] and Health & Human Services. For the most part, as it relates to any medical requirements for pharmaceuticals to respond to either of those events, we are one of the leading providers in the federal sector.

Other than the VA, which government agencies does NAC support?

We also provide support to DoD, the Coast Guard, FEMA [Federal Emergency Management Agency], Federal Bureau of Prisons, Department of Health & Human Services – which includes the CDC and Indian Health Care – and, generally, any other federal agency that needs our support.

We also leverage our contracts and open them up to the other agencies we support. So if we award a contract to support VA, we write it in such a way that the other agencies could utilize that contract.

Does NAC play a role in the selection and validation of health care supplies, technologies, and equipment?

In the standardization process, we support the process from the acquisitions side, but we don’t make decisions about technology or what is the best item. The clinicians make those decisions based on technical reviews, and we provide the acquisition support to contract for those items.

What are Prime Vendor Distribution programs?

We award competitive contracts for a base with options, with separate med/surg, pharmaceutical, and subsistence prime vendor programs. There are several performance metrics, but the basic requirement is the provider’s ability to acquire the items needed and make timely deliveries.

Typically, when we negotiate a contract and award for firm fixed prices, we also perform contract administration functions to ensure the contractors deliver the items they proposed for that contract. The end users report back to the contract administrator any problems related to contract performance, from timely shipment to quality of items received. We then follow up to allow the contractor to correct any discrepancy.

What role does NAC have in ensuring VA health care has the latest state-of-the-art technology?

One of the sections within the NAC is the Federal Supply Schedule Service, which are contracts that follow the GSA model and therefore offer open and continuous opportunities for vendors to either submit offers for new contracts or add items to existing contracts. As new commercial items become available, that allows these vendors to offer them up, at any time, to be added to the federal supply schedules.

Is NAC ever proactive in seeking out new technologies or capabilities?

Not really. Researchers, clinicians, and other technical staff are responsible for that function.

In acquiring such technology, how does NAC obtain best pricing, terms, and conditions?

As is preferred by the federal acquisition regulations, the way we ensure best pricing is to procure in an environment that encourages competition. That doesn’t always mean the lowest price. Depending on the requirement, we seek the best value for the government.

We solicit for both technical proposals and price, and in the evaluation process we provide a trade-off analysis which is inherent in the best value decision. So you can look at a technically superior offer and the prices offered and determine how much the technical superiority is actually worth to the agency. In creating solicitation evaluation procedures, we establish the relative importance of the technical or non-price factors to price.

In many cases when items are not significantly differentiated technically, low price becomes the determining factor for award.

The two main approaches to evaluation are best value, where the technical capabilities are more important than price, or low priced technically acceptable, where technical offers are substantially equal.

There are numerous ways to set evaluation standards in advance of soliciting, but, once decided, you have to stick with that game plan during the evaluation.

How are you dealing with the government’s seemingly universal shortage of trained, experienced contractor and acquisition personnel?

We’ve been able to keep ourselves staffed at an acceptable level, but continue to use new methods to seek out and recruit trained staff through outreach to college campuses and widening advertising options related to job announcements. Obviously, experienced acquisition and contracting personnel leaving the active military are targets through the normal recruitment process.

In addition, the Office of Acquisition and Logistics [OAL], to whom we answer, does have an Acquisition Academy that trains interns and other VA acquisition staff in Frederick, Md., co-located with the Center for Acquisition Innovation, which also is part of the OAL. The academy offers a two-year internship and that initial class has one year remaining, so we aren’t yet sure how those interns will be distributed across the VA.

This internship brings in applicants who already meet the acquisition career field’s educational requirements; through the internship, they are provided with both additional classroom training and rotational on-the-job training at various VA offices.

What have been the highlights of the past year for NAC?

We have continued to look for ways to improve our electronic processes as it relates to both the posting of our catalog as well as interfacing with the vendor community.

What are the largest purchases, by dollar amount?

Pharmaceuticals are the largest piece of the pie, followed by med/surg.

Sales against our contracts equaled about $14.4 billion for FY 08 for both VA and other government agencies. We’ve been seeing slight increases annually in the past couple of years and expect a larger increase for FY 10.

What are the biggest challenges currently facing NAC?

Outside of the growth of the veteran population, we continue to try to look at processes that will help us operate as efficiently as possible internally. For the most part, that revolves around further automation in contracting.

We have a contract writing tool, for example, and in the future need to work on the ability to interface with the vendor community to receive proposals electronically and share other information through that tool. That is a VA-wide initiative, not just an NAC issue. It affects us, but we are not the owner of that process, so we are standing by to take advantage of any advancements that come down the line.

Any final thoughts?

We continue to adapt to changing and growing needs, and med/surg and pharmaceutical markets related to VA, DoD, and other federal agency requirements, and look forward to the challenges of the future. Those include continued growth in the veteran population and changing requirements based on the changing demographic of that population, which is getting younger and includes more females.

As we see the continued emphasis on standardization and on writing national contracts, which includes the FSS, in order to leverage the VA’s buying power – and that of other government agencies – NAC will be an integral part of carrying out that mission. We are already established as the leader in medical health care contracting in the federal government and our position now, as it relates to having expertise in that area, will only contribute to our growth as a national resource.

This article was first published in The Year in Veterans Affairs and Military Medicine: 2009-2010 Edition.