On September 9, the Department of Veterans Affairs (“VA”) Office of Inspector General (“OIG”) released its findings based on a review of the VA Federal Supply Schedule (“FSS”) Program. See, VA Federal Supply Schedule Contracts. The VA and other government agencies annually purchase approximately $25 billion in medical equipment, pharmaceuticals, and services through the VA FSS Program. The OIG’s findings are based on information identified during its VA FSS contract audits. The report sets forth opportunities to improve the efficiency of the VA FSS Program and strengthen price protections to ensure the government obtains the best possible prices using taxpayer dollars.
The OIG identified three primary areas for improvement:
1. Improving Tracking Customer Guidance
The Price Reductions clause is unique to FSS contracts. Under the Price Reductions clause, a tracking customer (or basis of award customer) is used to track price reductions FSS contract holders provide to tracking customers during the term of an FSS contract. The FSS contract holder is required to pass on the price reductions to the government. During contract negotiations, the parties agree on the tracking customer or category of customers. The broader the tracking customer, the more transactions an FSS contract holder must monitor.
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