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Federal Market Intelligence for Small Business |
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Set-Aside Alert analysis:Vets vs. vets?Veteran small biz owners at odds with VA purchasing for veteran patientsA controversial recent change in how the Veterans Affairs Dept. purchases medical and surgical supplies could be pitting veteran small business owners against veterans receiving medical care from the VA. At a congressional subcommittee hearing, the head of the National Veteran Small Business Coalition bashed the VA for its revised policy for procuring tens of thousands of medical items such as bandages, splints and wheelchairs. Scott Denniston, executive director of the veterans small business group, said the policy change hurts veteran-owned small businesses (VOSBs) and those owned by service-disabled veterans (SDVOSBs). But the VA says the changes were needed to avoid delays in providing urgent medical supplies for 7 million veterans who are patients at VA medical centers. The VA had warned that patients may be harmed if the revised practices were not implemented. Veterans First law Congress, in the 2006 “Veterans First” law, ordered the VA to give veterans, and especially service-disabled veterans, the first shot at all contracts at the VA. In 2016, the Supreme Court ruled that the Veterans First law applies to all contracts at the VA. In recent years, the VA has awarded a significant share of contracts to SDVOSBs. In fiscal 2017, it was 20%. In some industries, the percentage has been even higher. For example, in construction, SDVOSBs won an average of 61% of all VA prime construction contracting dollars from fiscal 2008 to fiscal 2014, according to Set-Aside Alert’s analysis of U.S. data. Medical Surgical Prime Vendor In April, the VA instituted a controversial policy change in its Medical Surgical Prime Vendor-Next Generation (MSPV-NG) program. VA medical centers are supposed to use MSPV-NG to buy swabs, ice packs, pacemakers and other medical items for millions of patients. Previously, the VA awarded Blanket Purchase Agreements to suppliers of such products, which included a number of VOSBs and SDVOSBs. The medical items were then distributed to the medical centers by prime vendors. In April, the VA filed a “Class Justification & Approval for Other than Full and Open Competition” to change the structure of MSPV-NG. It named four prime vendors--including three small businesses--to provide “distribution and supply” contracts. The VA would no longer have contracts with the suppliers. Instead, the suppliers, including the VOSBs and SDVOSBs, would have the opportunity to subcontract with the prime vendors. The number of VOSB and SDVOSB suppliers affected and the size of those contracts was not immediately available. VA says patient safety at risk The VA says in its class justification that the change was needed because purchasing under the previous policy was inefficient and deliveries were being delayed. “The MSPV-NG contracts have experienced significant challenges in meeting demand, thus jeopardizing patient health and safety,” the VA said in its class justification. The MSPV-NG program was providing only 7,800 medical items on a regular basis, while thousands of other items were being bought through traditional acquisitions, which can take weeks and be delayed by protests. Delays in the supply chain could directly affect VA patient care, the VA said. The VA aims to provide 80,000 medical supply items through the MSPV-NG under the new structure. The new process may have benefits for some small businesses: “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,” according to the SheppardMullin contracting blog (https://bit.ly/2HWZWLq). Veteran small biz owners The House Small Business Subcommittee on Oversight, Investigations and Regulations held its hearing on MSPV-NG on June 7, hosted by Rep. Trent Kelly, R-MS, chairman. At the hearing, Denniston, representing SDVOSBs and VOSBs, was highly critical of the VA. “VA does not see it as part of their mission to implement Vets First,” he said. Davy Leghorn, assistant director of employment and education at the American Legion, broadly dismissed the VA’s concerns about patient safety. “If one contracting program has the ability to cripple an entire federal agency, then the question becomes whether such a contracting program should exist,” he said. Kelly, in a staff memo, partially agreed that some VOSB and SDVOSB jobs are at risk from the policy change: “If the VA does fail to include SDVOSBs and VOSBs at the subcontracting level under its newly proposed structure for MSPV-NG, it will have detrimental effects on the veteran-owned businesses who rely on federal agencies such as the VA for work.” The VA was not represented at the hearing. VA officials were not immediately available.
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