    [Senate Hearing 116-450]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 116-450

                   BUILDING A MORE RESILIENT VA SUPPLY CHAIN

    =======================================================================

                                    HEARING

                                   BEFORE THE

                         COMMITTEE ON VETERANS' AFFAIRS
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  JUNE 9, 2020

                                   __________

           Printed for the use of the Committee on Veterans' Affairs

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    44-699 PDF                  WASHINGTON : 2021

    --------------------------------------------------------------------------------------

                     SENATE COMMITTEE ON VETERANS' AFFAIRS

                         Jerry Moran, Kansas, Chairman

    John Boozman, Arkansas               Jon Tester, Montana, Ranking
    Bill Cassidy, Louisiana                  Member
    Mike Rounds, South Dakota            Patty Murray, Washington
    Thom Tillis, North Carolina          Bernard Sanders, (I) Vermont
    Dan Sullivan, Alaska                 Sherrod Brown, Ohio
    Marsha Blackburn, Tennessee          Richard Blumenthal, Connecticut
    Kevin Cramer, North Dakota           Mazie K. Hirono, Hawaii
    Kelly Loeffler, Georgia              Joe Manchin III, West Virginia
                                         Kyrsten Sinema, Arizona

                Caroline R. Canfield, Republican Staff Director
                    Tony McClain, Democratic Staff Director

                                C O N T E N T S

                                  ----------

                             Tuesday, June 9, 2020

                                    SENATORS

                                                                       Page
    Moran, Hon. Jerry, Chairman, U.S. Senator from Kansas............     1
    Tester, Hon. Jon, Ranking Member, U.S. Senator from Montana......     3
    Boozman, Hon. John, U.S. Senator from Arkansas...................    11
    Manchin, Hon. Joe, III, U.S. Senator from West Virginia..........    13
    Rounds, Hon. Mike, U.S. Senator from South Dakota................    15
    Blumenthal, Hon. Richard, U.S. Senator from Connecticut..........    17
    Tillis, Hon. Thom, U.S. Senator from North Carolina..............    19
    Hirono, Hon. Mazie K., U.S. Senator from Hawaii..................    22
    Cassidy, Hon. Bill, U.S. Senator from Louisiana..................    23
    Sinema, Hon. Kyrsten, U.S. Senator from Arizona..................    25
    Blackburn, Hon. Marsha, U.S. Senator from Tennessee..............    27

                                   WITNESSES
                                    PANEL I

    Stone, Dr. Richard A., Executive in Charge, Veterans Health
      Administration: Accompanied by Brazell, Karen, Principal
      Executive Director, Office of Acquisition, Logistics, and
      Construction and Chief Acquisition Officer, and Acting
      Assistant Secretary for Enterprise Integration; Kramer,
      Deborah, Acting Under Secretary for Health for Support
      Services, VHA; and Centineo, Andrew, Executive Director,
      Procurement and Logistics Office, VHA..........................     5

                                    PANEL II

    Oakley, Shelby, Director of Contracting and National Security
      Acquisitions, GAO..............................................    29
    Waldron, Roger, President, Coalition for Government Procurement..    31
    McDonald, Michael, Director of Government Operations, 3M Health
      Care...........................................................    32
    Heyssel, Kurt, Former Chief Supply Chain Officer, Veterans Health
      Administration.................................................    34

                                    APPENDIX

    Moran, Hon. Jerry, Chairman, U.S. Senator from Kansas, prepared
      statement......................................................    48
    Stone, Dr. Richard A., Executive in Charge, Veterans Health
      Administration, prepared statement.............................    50
    Oakley, Shelby, Director of Contracting and National Security
      Acquisitions, GAO, prepared statement..........................    56
    Waldron, Roger, President, Coalition for Government Procurement,
      prepared statement.............................................    69
    McDonald, Michael, Director of Government Operations, 3M Health
      Care, prepared statement.......................................    74
    Heyssel, Kurt, Former Chief Supply Chain Officer, Veterans Health
      Administration, prepared statement.............................    78
    American Federation of Government Employees, AFL-CIO, prepared
      statement......................................................    81

    VA Response to hearing questions submitted by:
      Hon. Jon Tester................................................    87
        Attached PDFs................................................   115
      Hon. Richard Blumenthal........................................    95
        Attached PDFs................................................   125
      Hon. Kyrsten Sinema............................................   102

    GAO Response to hearing questions submitted by:
        Hon. Jon Tester..............................................   108
        Hon. Kyrsten Sinema..........................................   110

    3M Health Care Response to hearing questions submitted by:
        Hon. Jon Tester..............................................   112

                   BUILDING A MORE RESILIENT VA SUPPLY CHAIN

                                  ----------

                             TUESDAY, JUNE 9, 2020

                                           U.S. Senate,
                                Committee on Veterans' Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 3:02 p.m., in
    room SD-430, Dirksen Senate Office Building, Hon. Jerry Moran,
    Chairman of the Committee, presiding.
        Present: Senators Moran, Boozman, Cassidy, Rounds, Tillis,
    Blackburn, Tester, Brown, Blumenthal, Hirono, Manchin, and
    Sinema.

                  OPENING STATEMENT OF CHAIRMAN MORAN

        Chairman Moran. Good afternoon, everyone. The Committee
    will come to order.
        Today's hearing is on building a more resilient VA supply
    chain with a focus on what we have learned from COVID-19's
    pandemic. A bipartisan enduring priority of this Committee is
    to ensure that the VA is equipped to fulfill its core mission
    to deliver timely, high-quality health care to the veterans it
    was created to serve.
        Last August, as the VA entered into partnership with the
    Defense Logistics Agency to speed acquisition for materiel
    support, Secretary Wilkie stated, ``In the 21st century, an ad
    hoc supply chain is not sufficient'' and ``It does not do
    justice to those we are sworn to serve.''
        The VA recognizes the need to build a more resilient supply
    chain. The question is always ``How?'' COVID-19 pandemic has
    put massive stress on the supply chain and created
    unprecedented global demand for personal protective equipment
    and other medical supplies.
        Inherent fragilities in the just-in-time inventory model
    have been severely strained in recent months. This confluence
    of factors has highlighted the need and necessity to reform the
    VA's procurement organization and process.
        The challenge VA confronts is how to strengthen the supply
    chain in real time, while also making it more resilient and
    operationally effective in the long term.
        I am encouraged to see VA is moving quickly, but there is
    also a need to be certain that we are strategic in our
    decisionmaking.
        I understand the need to have more inventory on hand, and
    reestablishing some form of supply depot may be part of that
    effort, but we also must take care not to establish parallel
    and competing supply chains.
        Logistics is also fundamental to this equation. Inventory
    that is unable to move is no use to anyone.
        The Veterans Health Administration is saddled with an
    aging, disparate inventory management system and a medical
    supply chain that was conceived over 30 years ago. Repeated
    reform attempts have too often misfired or added complexity,
    resulting in time-consuming and error-prone inventory counts.
        Transferring supplies between the VA facilities in a
    different Veteran Integrated Service Networks is also
    unnecessarily burdensome and difficult. It is a testament to
    the dedication of VA's clinicians and administrators and staff
    that they make the system work despite the difficulties.
        The Medical Surgical Prime Vendor contracts were once the
    backbone of this supply chain, but this program has been
    chaotic since it was relaunched in 2016. And I believe the
    strategy needs to be reevaluated.
        These supply chain issues are not intractable, but they
    will require sustained attention to develop a modern inventory
    management system across the enterprise.
        This administration has used the Defense Production Act to
    provide loan guarantees and cost-matching grants to help
    domestic manufacturers expand their production capacity in
    response to COVID-19. Many companies have added shifts and
    reconfigured equipment to boost output. For example, Spirit
    Aerosystems in Wichita, Kansas, is using the speed of their
    aircraft manufacturing line to build respirators.
        The DPA also allows the Federal Government to allocate
    materiel and subcontracts on a manufacturer's behalf, and I
    commend the administration for doing so when asked.
        Under the DPA, Federal agencies can prioritize the delivery
    of their contracts, but this results in an inherent tradeoff. I
    would like to understand how the coordination among VA, FEMA,
    and HHS may be affecting the VA supply chain.
        Coordination is key in challenging circumstances, and I
    believe the VA Secretary should be added to the Defense
    Production Act Committee to efficiently facilitate veteran care
    and leverage VA resources.
        Senator Tester and I expressed this desire in a letter to
    President Trump, and it is my understanding the VA concurs.
    There are substantive suggestions on how to strengthen the VA's
    medical supply chain, including recommendations from the
    Commission on Care, the VA's Office of Inspector General, and
    the Government Accountability Office. Each has called for a
    more unified supply chain from the VA's Central Office to the
    medical centers, supported by modern, integrated IT systems.
        I am eager to hear the perspective of our witnesses on the
    second panel as to how the A can rise to this challenge.
        The COVID-19 crisis has compounded persistent VA supply
    chain problems, and there is no better time than the present to
    address them. It would be a mistake to consider this pandemic
    transitory and let our guard down.
        I look forward to hearing the testimony of our witnesses
    and working on solutions that can build a more resilient VA
    supply chain that meets the needs of our Nation's veterans.
        I look forward particularly to hearing from Dr. Stone and
    his colleagues in this first panel, and, Dr. Stone, I take this
    opportunity to thank you for once again being before our
    Committee. It has become commonplace, and I appreciate your
    availability as well as that of your colleagues.
        Let me now turn to the Senator from Montana, Senator
    Tester, the Ranking Member, for his opening Statement.
        Jon?

                  OPENING STATEMENT OF SENATOR TESTER

        Senator Tester. Thank you. Thank you, Chairman Moran. I
    appreciate your remarks. I think you are spot on in a number of
    areas. I am going to touch on just a few of them, and before I
    start, I want to also welcome Dr. Stone and his leadership team
    to this hearing.
        Look, we have been through some hard times with COVID-19.
    It showed where our weaknesses were in our supplies, and quite
    frankly, it has put a staff of frontline employees that have
    done an incredible job out there serving not only our veterans,
    but also nonveterans during this pandemic in a difficult
    situation.
        We had austerity measures that were taken in April, and
    quite frankly, even now, Dr. Stone--and I brought this up in a
    previous hearing--we are hearing of shortages. We are hearing
    folks that are asked to reuse their mask, and even in the best
    of times--even in the worst of times, that is not something we
    should be doing.
        So the bottom line is this hearing's title is ``Building a
    Resilient VA Supply Chain.'' The Chairman mentioned in his
    opening remarks--I do not think we want to have VA setting up a
    whole bunch of PPE, along with HHS doing their own thing, with
    Commerce doing their own thing, and FEMA doing their own thing,
    and DoD doing their own thing. Hopefully, everybody is going to
    be working together, and that is why, by the way, the Chairman
    and I sent off that letter to the President saying--the VA
    needs to be part of the Defense Production Act Committee,
    because this needs to be a whole-of-government approach.
        Now, make no mistake about it. If VA's staff needs to have
    personal protective equipment, VA needs to make sure it's
    available. And if the VA cannot depend upon FEMA or HHS to make
    sure that personal protective equipment is there or any other
    equipment as far as that goes, then I get it. You guys have to
    take care of your own staff because our veterans are too
    important for us to fail.
        But the bottom line is that a government that works for the
    people works together, and that is why I think the Chairman and
    I feel so strongly about you guys being part of the Defense
    Production Act Committee. As I said earlier, you have the
    biggest integrated health care system in this Nation, and if
    you are not part of the equation, then I do not know who should
    be a part of that equation. You absolutely should be a part of
    it.
        To add complexity to this whole situation, the VA is
    putting in three--and maybe more, but three new computer
    programs to do their outdated IT, one in electronic health
    records, one with the financial system program, one with DMLSS
    which is a DoD acquisition program that will, as I understand
    it, be replaced not long after you start it. All that has
    impacts on the supply chain, and how the VA is going to deal
    with that, it is going to be interesting to hear in this
    hearing, because we spent a fair amount of money over two
    different administrations on EHR. That is for sure, and making
    sure that EHR works not only for electronic medical records,
    but also for making sure that we have the resilient supply
    chain that we need is critically important.
        So I am not going to take up a lot more time. I would just
    say that I look forward to this hearing. I think it should be a
    good one. I look forward to figuring out how different agencies
    could work together to meet the needs. I look forward to
    hearing from the second panel, how much of things like masks
    and shields and gowns, regardless if you are a company that is
    domiciled here, how much of that is made in China.
        Quite frankly, we heard stories of China saying, ``You know
    what? This is a pandemic. This stuff is being made here. We are
    going to take care of ourselves first.'' I do not deny them
    that ability, but it shows that we have an inequity in our
    system. And I believe that much of that personal protective
    equipment, masks, shields, gowns, those sort of things, need to
    be built right here in America so that when we need them, we
    got them, and we can ramp it up. I will be pushing that moving
    forward, and hopefully, the folks from 3M and others would
    agree with that. But we will find that out during the second
    panel.
        With that, Mr. Chairman, I am going to turn it back to you.
    I look forward to hearing from Dr. Stone and his leadership
    group, and we will have some good questions for him when he
    gets done with his presentation.
        Thank you.
        Chairman Moran. Senator Tester, thank you.
        I share your views in regard to the supply chain in China,
    and I look forward to working with you and our colleagues to
    accomplish a different circumstance in the near future.
        Let me introduce our first panel from the Department of
    Veterans Affairs. Dr. Richard Stone is the executive in charge
    of the Veterans Health Administration. He is accompanied by Ms.
    Karen Brazell, principal executive director, Office of
    Acquisition, Logistics, and Construction, and Chief Acquisition
    Officer and Acting Assistant Secretary for Enterprise
    Integration--how do you have time to be with us today?--and Ms.
    Deborah Kramer, Acting Assistant Under Secretary of health and
    Support Services--just because your title is shorter, I could
    say the same ting to you, Deborah--and Mr. Andrew Centineo,
    executive director of the VHA Office of Procurement and
    Logistics.
        I will reserve introductions of our second witness panel
    representing the Government Accountability Office and industry
    perspectives and now recognize our lead witness, Dr. Stone, for
    his opening remarks.
        Dr. Stone, as I said earlier, thank you very much for your
    presence.

                                PANEL I

     STATEMENT OF RICHARD A. STONE: ACCOMPANIED BY KAREN BRAZELL;
                  DEBORAH KRAMER; AND ANDREW CENTINEO

        Dr. Stone. Chairman Moran, Ranking Member Tester, and
    distinguished members of this Committee, thank you for the
    invitation to testify today about VHA's response to COVID-19
    and our efforts to build a more resilient supply chain.
        You have already introduced my fellow members here. We are
    all veterans. Andrew has joined us virtually. Andrew has been
    assigned to FEMA since the beginning of this pandemic as our
    lead logistician to represent VHA's interest.
        Let me say that both Deborah and Andrew have deployed and
    been recognized for their work in combat, and I appreciate
    between the three of them, 60 years of supply chain experience
    to accompany me here today.
        Chairman Moran. Dr. Stone, let me express the Committee's
    gratitude for yours and their service and particularly their
    expertise on this topic, but mostly thank you for your service
    in caring for our Nation.
        Dr. Stone. Thank you, sir.
        COVID-19 has forever changed the world's approach to
    medical supply. For decades, the long-acclaimed just-in-time
    supply system kept shelves stocked because there was always
    another delivery of materiel on the way, usually from a prime
    vendor or a manufacturer who acted as an intermediary. The
    prime vendor is acting as an intermediary between manufacturers
    and the end user.
        This system has not delivered the responsiveness necessary
    to support the worldwide demand of health providers on medical
    supplies during this pandemic.
        More importantly, the pandemic forced us to recognize that
    we cannot depend on the global supply chain to equip VA just in
    time in a future disaster. VA is able to cross-level supplies,
    equipment, and personnel across our integrated system. No
    facility at VA ever ran out of protective equipment, and we are
    taking steps to ensure that we never risk exhaustion of our
    supplies in future disasters.
        We are working diligently to not only prepare for a
    potential second wave of COVID-19 but also for any other
    disaster the Nation might face.
        As the Secretary told this Committee last week, COVID-19
    has shown the Nation what VA is truly capable of. In executing
    our fourth mission, VA has demonstrated extraordinary
    flexibility and responsiveness as we continue to delivery an
    integrated response to a first-in-a-hundred-year public health
    event, thus, allowing us to provide health care support to 46
    States, Territories, and Tribal regions.
        One of the good news stories to come out of this pandemic
    will be the positioning of the VA firmly at the center of the
    Nation's response to future public health disasters.
        I could not be more proud of the fact that VA employees at
    every level have served with extraordinary heroism. VA
    professionals have responded day and night, week after week to
    save lives and make a difference in this pandemic, including
    hundreds who have volunteered to travel to the cities most
    impacted by this disease.
        Never in our history has VA's fourth mission to backstop
    the American health care system been so expansive, and we
    continue to rally to this cause.
        We cannot do our duty to America's veterans without an
    effective, responsive, and resilient supply chain. As the
    Nation's largest integrated health system, our demand for a
    complex combination of expendables, durables, equipment, and
    computers is unique in American medicine because of our sheer
    size.
        I want to directly address the negative perception of our
    relationship with FEMA caused by a published article. At no
    time did FEMA ``take'' our supplied. There was a short period
    of time immediately after the activation of the Defense
    Production Act that every vendor and supplier in this Nation
    paused delivery of some materiel to await further guidance. As
    a result, there was a single week where we simply were not
    receiving supply orders; therefore, we employed measures to
    ensure our employees had the PPE needed to be safe. We followed
    CDC guidance for conservation and prioritization of equipment,
    and there was never a point that a VA health care worker was
    put in danger treating COVID-19 patients without the materiel
    they needed.
        Our relationship to FEMA has always been and remains today
    strong, collegial, and productive across all levels. The safety
    of the heroic VA personnel serving our Nation's veterans
    remains my No. 1 priority.
        As I close, I want to thank the Committee for the
    productive dialog and strong relationship between our
    Department and all members of your Committee in response to
    this pandemic. VA is better positioned today to provide health
    care services to veterans and support our Nation because of
    what we have learned in our response to COVID-19.
        My colleagues and I look forward to answering your
    questions, sir.
        Chairman Moran. Dr. Stone, again, thank you.
        Let me begin a round of questions. Let me first start with
    building on the current system. Obviously, the VA needs to deal
    in an all-encompassing, holistic approach to manage its system
    to make improvements. My question is if you set up supply
    depots with the existing inventory management system, GIP, I
    worry that you are building on something that in and of itself
    is not a very solid foundation.
        But my understanding is to implement the new system, the
    Defense Medical Logistics Standard Support, is expected to take
    7 to 8 years.
        So how do those two things, the timing of replacing the
    existing system and the creation of the supply depots, how do
    they fit together?
        Dr. Stone. Sir, we have the prototype sites in Chicago and
    the Pacific Northwest that we will exercise during this Fiscal
    Year for the DMLSS modernization.
        You mentioned in your opening statement that the EHRM is
    the centerpiece of our modernization, but that must be
    supported by a modernized IT system for logistics and supply as
    well as a financial modernization system.
        I will defer to Deb Kramer and Andrew Centineo for their
    comments on how we will proceed with this.
        We do have funding this year that we are spending on the
    DMLSS modernization. We also have requested funds in the 2021
    year and the 2022 year to do this, but the original plan was to
    go out 7 years in this modernization. This pandemic has
    revealed that that is too long a timeframe for us to execute
    that.
        I will refer to Ms. Kramer.
        Ms. Kramer. Good afternoon, sir.
        Chairman Moran. Yes, ma'am.
        Ms. Kramer. Yes, sir. We were going to be looking for
    commercial and potentially Federal partners for the regional
    readiness centers. The most likely outcome is probably a
    combined, potentially, DoD commercial sector.
        Those organizations already have IT systems. They already
    use electronic data interchange, or EDI, and through that, we
    can communicate with the existing VA systems.
        You are absolutely right. CHIP is archaic. It is an
    inventory management system and not a supply chain management
    system. So we need to get DMLSS out there as well, but we can
    do the regional readiness centers using our partners' IT
    system.
        Chairman Moran. Ms. Kramer, my impression--you can correct
    me if I am wrong, but the Department of Veterans Affairs has
    had significant challenges with IT systems in the past and the
    present. What assurance should I have that this one is going to
    be what is needed to solve the problem and we are going to be
    able to accomplish the IT system that will go with the changes
    that you are proposing?
        Ms. Kramer. Yes, sir. The fact that we are using DMLSS,
    which is already in the field in DoD, a proven medical supply
    chain system, one that I used while I was on active duty, that
    is what we are doing. We are not doing a one-off. We are not
    developing our own system. We are going with a proven system,
    and we are working with DoD to do that implementation.
        We are also not doing it ourselves. This is a full
    partnership with the Department of Defense.
        Dr. Stone. Sir, Andrew may have some additional comments.
        Chairman Moran. Oh, yes.
        Mr. Centineo. Yes, Dr. Stone. Yes, Senator Moran.
        In addition to that, you mentioned how can we look at
    getting supportive energy behind this. The Department of
    Defense, both the Defense Health Agency, which is the element
    that supports the IT enabler DMLSS, and the Defense Logistics
    Agency, which is tied to the supply chain, are both going to be
    critical for the success moving forward.
        You mentioned in the opening remarks a whole-of-government
    approach. Leveraging this application is certainly a whole-of-
    government approach, and it will take us well beyond just the
    supply element. It will also tie into the equipment. It will
    tie into the facilities.
        Key to this PPE response was obviously our consumables, but
    we also had an equipment requirement. That certainly would be
    able to be facilitated through the DMLSS application, being
    able to see the equipment that we needed, versus having to go
    through a manual process.
        But, certainly, this is not VA alone. This certainly is
    going to require the partnership through our statute, 8111, to
    partner with other whole-of-government agencies.
        Chairman Moran. Thank you very much.
        Maybe this was answered, but, Dr. Stone, you indicated
    there were two depots planned or in the works, and you
    mentioned Chicago and the Northwest. Is that the plan?
        Dr. Stone. No. Those are the two prototype sites----
        Chairman Moran. Prototype sites.
        Dr. Stone [continuing]. for DMLSS and to expand that
    relationship with the Defense Logistics Agency as a vendor for
    us.
        Chairman Moran. You absolutely did say that, but I had in
    my mind the question I had intended to ask you. How many supply
    depots do you intend to have, and what do you expect their
    locations to be?
        Dr. Stone. So we see four readiness centers, which will not
    only house equipment for us but also house excess medical
    equipment that needs biomeds in order to sustain them, like the
    ventilators you talked about in your opening statement, as well
    as to house the four Battelle systems that we have attained
    from HHS and from FEMA that can sterilize reusable equipment.
    And we are in the process now of sterilizing masks for future
    waves.
        Chairman Moran. I will take from my vocabulary ``depots''
    and replace it with ``readiness centers,'' which is a much more
    appealing concept.
        Dr. Stone. I think both you and Ranking Member Tester have
    brought up the point that this should not be independent.
        We are a behemoth of health care system. At the height of
    this pandemic, we were consuming a quarter of a million N95
    masks a day. That, when you begin to discuss with any supply
    chain system, is a daunting amount, and we do believe that our
    relationship to DoD, which is active--I meet with the DLA
    director on a monthly basis, also with their acquisition lead
    every 2 weeks. I also meet with Admiral Polowczyk, the admiral
    from the FEMA lead who has done the supply chain, on a weekly
    basis. We are unified in our approach to this but recognize
    that a future pandemic wave may test all of us in our
    preparation.
        Chairman Moran. Senator Tester?
        Senator Tester. Thank you, Mr. Chairman.
        So I kind of want to followup a little bit with you, Dr.
    Stone, and whoever you want to refer to on DMLSS. DMLSS is not
    fully implemented currently. Is it implemented at all?
        Ms. Kramer. Sir, we are in the process of implementing it
    at the Federal Health Care Center, James A. Lovell Federal
    Health Care Center. That will go live in August of this year.
    So that will be our first site and followed this fall by two
    sites in the Northwest.
        Senator Tester. Okay. So you talk about how critical this
    was as it applied to the supply chain. I am not putting words
    in your mouth now, right? That is what you said, right?
        Ms. Kramer. That is correct, sir.
        Senator Tester. So when do you anticipate DMLSS will be
    fully implemented?
        Ms. Kramer. Sir, the current schedule calls for a 7-year
    fielding that would complete the----
        Senator Tester. Okay. That is the 7 years that Dr. Stone
    talked about, because that was my next question. It is too
    long. Boy, is it ever too long. I mean, we are not talking
    DHRM. We are not talking the financial system program. We are
    talking DMLSS, and both of those others impact our supply chain
    too, correct?
        Ms. Kramer. Yes, sir.
        Dr. Stone. Yes, sir. That is correct.
        Senator Tester. So how do you shorten this up? What kind of
    timeframe are you looking at? If it is not 7 years, is it 5
    years? I assuming working with the private sector is one way to
    shorten it up, but is there any other way you could shorten it
    up to get it done quicker? Because, gosh, within the next 7
    yeas, we will probably have another pandemic. There is a
    possibility for a second wave. There is all sorts of bad crap
    that can happen.
        Ms. Kramer. Yes, sir. I think 5 years is perhaps possible,
    but we have got to talk to our Department of Defense
    colleagues. They are on the critical path to getting this
    system fielded. We cannot do it without their support, and we
    need to understand what their constraints are before we can
    actually tell you what a realistic schedule would be.
        Senator Tester. And it is my understanding the DMLSS is
    fully operational within DoD, correct?
        Ms. Kramer. That is correct.
        Dr. Stone. It is the supply chain system, sir, that we use
    in deployment. All of us are familiar with DMLSS, and it has
    supported us throughout the years of the war.
        Senator Tester. I got it.
        But it is also an old system, right, Dr. Stone? I mean, it
    is also a system that is pretty short term. No? I see someone
    shaking his head no.
        Dr. Stone. Yes. It is being replaced. Actually, the next
    generation of DMLSS----
        Senator Tester. Okay.
        Dr. Stone [continuing]. is going to be called LogiCole, and
    LogiCole is DMLSS On a cloud-based system----
        Senator Tester. I got it. Okay.
        Dr. Stone [continuing]. which is scheduled to come out in
    2022.
        Senator Tester. I have go to tell you, there are some
    things about virtual hearings that I really like. It is when I
    say something that nobody agrees with and I see two people
    shaking their head no before you even spoke, Dr. Stone, so that
    is good. That is good.
        Say, tell me where we are at right now, Dr. Stone. What is
    the current State of the VA's PPE and medical supply chain and
    reserves? You talked about a second wave. If a second wave
    happened in 2 weeks, are you set up to take care of it and
    protect our frontline employees?
        Dr. Stone. The answer is yes. Ms. Kramer and her team have
    developed a manual system that every day is updated from every
    single medical center in the Nation, and so we are at
    approximately 30 days on all PPE.
        And I will defer to Ms. Kramer and Andrew for----
        Senator Tester. Dr. Stone, what does that mean? What does
    that mean, 30 days? Does that mean you have got a 30-day
    supply?
        Dr. Stone. Yes.
        Senator Tester. And you believe that to be adequate?
        Dr. Stone. No. I believe that we need to move to a 60-day
    supply. I believe that for a full second wave, we will need an
    additional 6 months of supply, and either that can be supplied
    by the vendors----
        Senator Tester. So we are----
        Dr. Stone [continuing]. a manufacturing system, or must be
    in our readiness centers.
        Senator Tester. So, Dr. Stone, we are not where we need to
    be?
        Dr. Stone. That is correct.
        Senator Tester. Okay. So the question is, When are we going
    to be where we need to be, and what is the issue? It sounds
    like--and I cannot say this because our cases in Montana are
    actually going up recently, but it sounds like we are kind of
    in a dip in this whole COVID-19 thing.
        We have seen the cases--I mean, I heard the other day there
    were no deaths from it in New York City, for example. That is a
    very good thing.
        But the question is, Are we taking advantage of this lag,
    or are we even seeing all that? You guys are not as busy as you
    were 2 months ago, are you?
        Dr. Stone. So we have seen a reduction in the amount of
    hospitalization, and therefore, we have seen a reduction in our
    ICU demand. But what we have not seen is a reduction in
    materials that are necessary for us to even reopen our
    ambulatory services. Every single ambulatory services now needs
    masks, now needs PPE, needs cleaning materials, the sort of
    things that you have seated around this room on your desks. We
    are not----
        Senator Tester. So it sounds to me like, Dr. Stone, if we
    have a second wave, we are going to be back in the same boat we
    were in April.
        Dr. Stone. Well, sir, my job on behalf of the Secretary is
    to make sure that we do not, and therefore, let me defer to
    Andrew and Deb to give you some comments on what we are doing
    to bring us to a readiness for wave two.
        Ms. Kramer. Thank you, sir.
        We are working with our partners at DoD, FEMA, and Health
    and Human Services and our commercial partners to get the
    materiel to buildup and to sustain the operations that we
    currently have today.
        But what I need to share with you is that supply chain
    system is still broken. There is still a tremendous demand on
    all of PPE, not just in the United States, but worldwide. And
    the manufacturing capacity has not caught up to the
    requirement. We are working hard every day to pull materiel in
    and to sustain operations, and we cannot let down.
        And we are going to need your help in helping bring things
    onshore in terms of manufacturing. We need more 3M production.
    We need more production from every N95 mask producer. We need a
    U.S.-based gown manufacturing capacity here that can support
    readiness, but the current supply chain is still struggling to
    support not just our needs but the needs of every health care
    system and hospital in the country.
        Senator Tester. I am going to give this up right now, but
    as the Chairman already pointed out, I think you have got
    bipartisan support to give you whatever help you need to make
    sure that this manufacturing occurs.
        I yield, Mr. Chairman. Thank you.
        Chairman Moran. You have nothing to yield.
        Senator Boozman?

                          SENATOR JOHN BOOZMAN

        Senator Boozman. Thank you, Mr. Chairman, and thank you all
    for being here. We really do appreciate you, Dr. Stone, and
    your team and really all of those throughout the system that
    are working. They work so very hard, anyway.
        In the midst of a pandemic, you mentioned that you truly
    have a huge system, an unimaginably large health care system.
    We appreciate all that you have done.
        Also, being forward thinking and dealing with the problems
    of the telehealth, the tele-mental health, all of that has been
    a great success. Again, that is the ability of your team to
    really adapt and ramp up. So we appreciate that.
        I agree with Senator Tester about the concerns of PPE, but
    the problem is that as we reopen--I am talking the daycares.
    They are being required to have all of this stuff, all of our
    businesses. As we reopen, we are still required--people are
    getting out more, so they are wearing the stuff more rather
    than sitting in their homes. So it is just a huge problem with
    the demand versus what even as we have ramped up, and it does
    tend to, in my mind, think of the importance of perhaps doing
    the stockpile that you suggested that we used to do.
        Do you need any additional authority to do that?
        Dr. Stone. Karen?
        Ms. Brazell. Thank you, Senator.
        At the time, what I would offer is that at least we have
    some--the authorities we have in place today will provide what
    we need, but we do need to make sure that VA is at the table
    anytime there are discussions with relationship to health care
    support across the Nation. That is one thing this pandemic has
    provided, but the authorities we have today will meet our
    needs.
        Dr. Stone. Let me just add, sir, one thing, and that is
    following Desert Storm, DoD was given a authority called
    ``Warstopper.'' War stopper allowed them to pre-commit
    inventory from a manufacturer.
        When you heard about DoD committing 10 million masks to
    FEMA, that came from Warstopper, and what it does is it allows
    DoD to pre-commit that inventory. It is kept in a warehouse,
    but the manufacturer actually rotates it and keeps it fresh. So
    that if it begins to go toward expiration, it is a guarantee at
    a fraction of the cost to keep that fresh.
        We believe having that type of authority would be very
    beneficial to VA also or to allow us to partner with DoD to
    actually execute that.
        Senator Boozman. That was really going to be my next
    question. Can you assure us that that would not be the case?
    Because, sadly, we have had some instances of that during this
    crisis that we found that the stuff was pretty old and maybe
    not where we would like for it to be. So that is good to know.
        Tell me about the IG report regarding delivery orders and
    things. There is some concern there. I think they found that a
    percentage, a significant percentage perhaps, were getting the
    wrong stuff. I think there was an IG report in December, is
    that correct, the Medical/Surgical Prime Vendor program?
        Dr. Stone. Andrew, do you have that one?
        Mr. Centineo. Senator Boozman, I am not quite sure I
    understood the question. That there was a shortage or an
    inability to get materiel?
        Senator Boozman. They reviewed delivery orders and
    estimated that the medical centers received incorrect orders
    about 60 percent of the time, so a significant number.
        Dr. Stone. Sir, I am going to have to take that one for the
    record.
        Senator Boozman. Okay.
        Dr. Stone. I am not familiar with that report.
        Senator Boozman. Very good.
        Are you adopting the Department of Defense Medical
    Logistics Standard Support system? Does that ring true? Are we
    upgrading that?
        Ms. Kramer. Well, we are going to adopt DMLSS. DoD is in
    the process of doing a tech refresh. That tech refresh is
    called ``LogiCole.'' So we would begin fielding DMLSS, and then
    we would switch from DMLSS to LogiCole.
        Senator Boozman. So would that help with that kind of a
    problem?
        Ms. Kramer. It would help with that kind of a problem
    because we have much better ability to track everything that we
    are doing inside DMLSS. GIP does not give us that opportunity.
    In fact, our supply techs need to swivel between systems. They
    have to work in multiple systems at one time for a single order
    to make things work. In DMLSS, it will all be done in one box.
        Senator Boozman. Right.
        Ms. Kramer. Much simpler.
        Dr. Stone. So, as the Secretary has discussed this
    extensively in previous testimony, because of this fractured
    system, a large percentage of our purchases are done locally at
    medical centers using government purchase cards with literally
    billions of dollars traversing those government purchase cards.
    So it is very difficult for us to track those as well as to
    track the contracts that are being used and to assure the
    validity and the transparency of the system that you expect.
        Senator Boozman. Okay. Thank you, guys. We do appreciate
    you very much.
        Chairman Moran. Senator Boozman, thank you.
        Senator Manchin?

                          SENATOR JOE MANCHIN

        Senator Manchin. Thank you all very much. Let me turn on my
    mic.
        Like many of us, I am worried about the surge of cases in
    the fall and the winter and did not know what you all had
    planned to do to make sure that every frontline VA employee has
    the protections.
        We have had some complaints, as you know, and you and I
    have talked about it before, Dr. Stone. It concerns in our VA
    hospitals that they did not have the proper protection and were
    not getting as much as they needed and were concerned about
    their own welfare.
        So the gowns and the new masks that they are needing, I am
    sure you guys have been working on that, and I am hoping that
    you are able to fulfill that. But do you think the surge would
    be a strain on basically the supply chain that you have now?
        Dr. Stone. Yes. I think the surge is a complete unknown.
    All we have to go by is what happened in the fall of 1918 with
    the influenza pandemic where the second wave had a dramatically
    greater mortality than the first wave.
        Senator Manchin. Correct.
        Dr. Stone. Certainly, a second wave is not an absolute. Dr.
    Fauci has said that in his testimony as well as his public
    Statements. It depends on the activity of the American people,
    and it depends on the virus and----
        Senator Manchin. Let me ask this question. Are we moving in
    an area to be prepared in case it does happen? Do you think
    that we are as a country? Do you think we are as the Veterans
    Administration?
        Dr. Stone. I think that we are moving in the correct
    direction in order to develop the resilience that will allow us
    to meet a second wave. It is why we have now hired over 18,800
    employees and continue to hire to prepare for the second wave.
        But prior to this, we purchased $10 million a month worth
    of PPE as the VA. We are now purchasing $100 million of PPE a
    month.
        Now, certainly, costs have gone up dramatically as part of
    this, but that does reflect a massive consumption of PPE in
    which the industrial base of this Nation must be developed in
    order to develop that.
        Ms. Kramer has been----
        Senator Manchin. We have been begging the President to do
    the Defense Production Act on PPEs. We think, first of all, it
    would hold the price down. Next of all, it would increase the
    amount of supply all over our country, cannot figure out why we
    have not moved in that direction.
        Dr. Stone. Sir, from our standpoint, every day Andrew and
    Deb's teams are in discussions with domestic vendors who are
    making investments in order to move us forward with a domestic
    supply chain.
        The difficulty they have--and you may hear that in your
    second panel--is when all of this is over, how do they maintain
    that investment?
        I think this is one of the things I would ask you to
    consider in the Warstopper program that has allowed DoD to do
    exactly that since Desert Storm for these type of materials.
        Senator Manchin. But the Federal Government has a
    responsibility to make sure that we do have necessary
    equipment.
        Dr. Stone. Yes, sir.
        Senator Manchin. Ms. Kramer, would you want to respond to
    that?
        Ms. Kramer. Yes, sir.
        I am actually a member of the committee that is working on
    the next-generation SNS with DoD, with Health and Human
    Services, with FEMA, and with a number of executive branch
    partners. And they are working very hard on working to set up
    that industrial base capability that we need.
        Senator Manchin. Have you been on that for a while----
        Ms. Kramer. I have been on that for about 4 weeks, sir. It
    is just getting started and----
        Senator Manchin. Have you all evaluated how we got behind
    the curve and got caught so flat-footed?
        Ms. Kramer. Well, sir, I think that no one ever--well, I
    had a chance to speak to a former Chairman of the Joint Chiefs
    this spring who had called the lead for PPE because he cares
    about veterans, and he shared that in his war-gaming
    experience, DoD never played out the biodefense events the
    whole way to the end, because it was just too hard to do. And
    what we are going to need to do now, sir, is play it out to the
    end to see how it really works.
        It was a tough problem; it is a tough problem now. And we
    have a long way to go to bring us back to where we need to be.
        Senator Manchin. Are you all looking at basically a
    deposit, if you will, a depot that we will have for national
    defense, have the PPEs that we need so we do not have to reply
    on other nations, other countries?
        Ms. Kramer. The Strategic National Stockpile is going to
    reestablish so that they can meet the second wave and then
    continue their readiness mission. We would like to work with
    DoD and our commercial sector partners to do things like the
    Warstopper program, Vendor-Managed Inventory, smart things that
    allow us to buildup what we need.
        But just in time for PPE is not the way to go, because a
    just-in-time supply chain cannot support a tremendous surge.
        Senator Manchin. We know that, yes.
        Ms. Kramer. Yes, sir.
        Senator Manchin. We know we have been caught behind, but
    the bottom line is bring manufacturing back. And unless we are
    going to have a stockpile, then you are right, Dr. Stone, they
    are not going to invest in that because they are going to say,
    ``What happens when it goes away?'' Well, it is never going to
    go away. We are going to have to continue to be prepared, and
    we have not been.
        Thank you.
        Chairman Moran. Thank you, Senator Manchin.
        Senator Rounds?

                          SENATOR MIKE ROUNDS

        Senator Rounds. Thank you, Mr. Chairman.
        First, to the entire panel, thank you for your service to
    our veterans and to our country. Thanks for being here to talk
    today about one of the VA Secretary's top priorities.
        I want to ask you about the VA's ongoing issues with its
    latest prime vendor program model, Next Gen 2.0.
        Right now, the tiered acquisition rules give special
    considerations to certain small businesses. I recognize that
    that is important, but we also want to be sure that when it
    comes to large-scale critical missions like the VA supply chain
    that we are contracting with suppliers who have the experience
    and capability to deliver, even when times get tough.
        But right now, as I understand it, it is up to the
    individual contracting officer who is reviewing the 2.0 supply
    contract bids to determine what fair and reasonable pricing is
    per the Kingdomware Decision that they are--that they are under
    right now.
        This is one of the most important criteria involved in the
    contract award process. So my question is, What is the VA doing
    to set up standard criteria for defining fair and reasonable so
    that when they talk about pricing, we can be sure that these
    contracts are going to folks who have the supply and the
    distribution capability to succeed?
        Ms. Brazell. Thank you, Senator.
        Fair and reasonable pricing is driven--what we would do is
    we would look at the market. So a market research is going to
    drive the prices and who can provide that, being a supplier or
    a distributor.
        I do want to point out, though, that the MSPV 2.0 contract
    is an active solicitation. So there is not a lot we can go
    into, other than the fact that we took the lessons learned from
    the previous MSPV Next Generation and GAO's recommendation as
    well as Congress, and we brought our clinicians in.
        So this time around, it is clinically driven sourcing, and
    it is going to be competitive. We are going to have tier
    reviews. So our service-disabled veteran-owned community is
    your tier one. Your tier two is your veteran-owned small
    businesses. Then your tier three would be the larger
    businesses.
        Those will all be vetted. They are going to be competitive,
    and again, the market research is going to drive what would be
    the fair and reasonable pricing.
        Senator Rounds. Let me just kind of followup a little bit
    on some examples, perhaps. Let us take PPEs as an example. Let
    us take the gowns.
        Right now, how many different providers, how many different
    markets are there for the gowns that you would need?
        Ms. Kramer. There are a number, and most of them are
    located overseas. There is very little cloth textile
    manufacturing in the United States, and we want to get to more
    reusables because that reduces the demand on the supply chain.
        Senator Rounds. During this pandemic, have you had the
    opportunity to actually look at or negotiate with any
    manufacturers or suppliers that would do that within the United
    States?
        Ms. Kramer. Actually, that is something that the SNS Next
    Generation Committee is doing. So through DoD, they are
    actually having those discussions right now.
        Senator Rounds. Were they successful during this pandemic
    in making any of that happen within the United States?
        Ms. Kramer. I think, sir, that that is a question that is
    probably addressed to DoD and FEMA.
        Senator Rounds. So the VA probably would not be the lead
    agency in working through any of those? You would be tagging on
    with what others were doing?
        Ms. Kramer. Sir, we would be providing our requirements so
    that industry would understand what the government requires.
        Senator Rounds. Would the same thing be true with regard to
    other necessary items within the realm of the PPEs----
        Ms. Kramer. Yes, sir.
        Senator Rounds [continuing]. masks, face guards, and so
    forth?
        Ms. Kramer. Yes, sir.
        Senator Rounds. Are there any examples where we have
    actually had progress made after this pandemic or during this
    pandemic where we started bringing any of those back into the
    United States?
        Ms. Kramer. Again, sir, I am not intimately involved with
    what DLA is doing with that effort between them. FEMA and they
    can provide the best answer to that question. It is also under
    solicitation, so there are some concerns about discussing it in
    an open forum, sir.
        Senator Rounds. Would it be fair to say that making a
    transition from existing providers to new providers under
    emergency circumstances leave something to be desired right
    now?
        Ms. Kramer. Well, sir, what we would like to do is the
    current providers--we would like them to bring things back
    onshore, do it here.
        Senator Rounds. But in order to do that, do not they have
    to be assured that you would continue to use their resources,
    even after this pandemic is over? I mean, they cannot just
    simply go out and put in whole new lines without having some
    assurance that you would participate with them for an extended
    period of time; is that fair?
        Dr. Stone. Sir, you are exactly correct in that, and
    therefore, it has been very slow progress in this during the
    pandemic to move.
        Every bit of domestic manufacturer has been completely
    overwhelmed by the demand. So if we are up 800, 900, 1,000
    percent, so is every other health care system in America.
        Let me give you one area of hope, and that is not clearly
    about PPE. As you know, there has been a worldwide shortage of
    swabs to do the testing on for COVID. We have been a leader in
    3D manufacturing. We have been manufacturing a few thousand
    swabs a month--I am sorry--a week. We now have a plan in place
    to expand our swab manufacturing using advanced 3D
    manufacturing printers to the tune of about 100,000 a week by
    this fall.
        So I think there is hope, but every small manufacturer we
    deal with in the United States is questioning a capital
    investment and whether that will be enduring.
        Senator Rounds. Mr. Chairman, the only thing I would say--
    thank you. My time has expired, but I think we really have to
    talk about during an emergency situation when we run out of
    supplies. How do we cut through the bureaucracy to actually be
    able to award contracts on an emergency basis to individual
    entities who might very well be perfectly capable of providing,
    whether it be masks or other gowns and so forth, if allowed to
    do so in a timely fashion and with the appropriate assurances
    that it will not be a one-time shot that basically breaks them
    up in business?
        I think we have got--as you say, I think we have got a long
    way to go, and perhaps the VA could be a part of helping to
    solve that problem.
        Thank you, Mr. Chairman.
        Chairman Moran. Thank you, Senator Rounds.
        Senator Blumenthal?

                       SENATOR RICHARD BLUMENTHAL

        Senator Blumenthal. Thank you, Mr. Chairman.
        Thank you all for being here.
        Dr. Stone, a GAO report last year on VA's Office of Health
    Equity--I am sure you are familiar with it--made two
    recommendations. One was to ensure that the VA was collecting
    reliable racial and ethnic data on veteran patients, and the
    other was to ensure that any Health Equity action plan included
    measurable criteria and clear lines of responsibility to
    specific offices within the VA.
        These steps are really important--again, I do not need to
    tell you why--because racial and ethnic minority veterans
    currently make up about 22 percent of the total veteran
    population, and they are projected to make up 40--or almost 40
    percent of the total veteran population by 2040.
        The VA has identified worse health care outcome for some
    diseases among minority veterans at VA facilities with recent
    data showing that COVID-19 is affecting African Americans at a
    higher rate than any other racial or ethnic population.
        I find it unacceptable that the VA has not implemented any
    meaningful reforms to address racial disparities within the VA
    system. You have established the Office of Health Equity to
    identify and address health care outcome disparities and to
    develop an action plan, but the GAO report published last year
    found that there are no clear lines of accountability or
    measurable data.
        So my question is whether you are committed to act on these
    recommendations, when you will do so, and what immediate steps
    you can take to change the fact that black Americans are
    treated differently than others and what we can do in Congress
    to support you.
        Dr. Stone. Senator, when I came back to the VA in 2018, it
    was about the time that this report was circulating. We
    established the Office of Health Equity under my principal
    deputy, Dr. Lieberman.
        Right at the beginning of this pandemic, we began sending
    to the field, information on data on the relative risk of the
    black male population and the fact that they were testing
    positive at a higher rate than other ethnic groups.
        What we have not seen is an enhanced death rate, unlike
    other health care systems, or the broader American population.
        This is similar to what we have seen in prostate cancer, in
    black males enrolled in the VA health care system, where black
    males in the American public actually die at a higher rate from
    prostate cancer than do Caucasians or other ethnic groups.
        That disparity is erased in the VA. We believe that that is
    erased in the VA because of our care of the comorbidities that
    exist with prostate cancer. We do not think that the disease is
    fundamentally different in black males versus Caucasian males
    or American Indian males, but we have been able to erase that
    disparity.
        This is an absolute priority for us and reflects the
    respect that we hold for all veterans and our responsibility to
    deliver the utmost value in this integrated health care system.
        Senator Blumenthal. Do you attribute the absence of
    different death rates from COVID-19--if I understood you
    correctly, the death rates are the same for African American
    veterans as they are for Caucasians? Is that due also to your
    addressing the comorbidity factors? You just talked about
    prostate cancer, but is that the same?
        Dr. Stone. For COVID, we believe the same thing, but it is
    too early to absolutely tell.
        Since the beginning, our research team has been working
    this, and it is just too early to get the data out and to
    really discuss it, but it is an absolute priority. And they are
    meeting weekly and briefing me biweekly on the results of this.
        Steve Lieberman, my deputy, is taking this on a weekly
    basis and working our way through.
        But I think the question that you ask is really about the
    value of a fully integrated health care system in erasing
    access to health care problems that exist across American
    society, and that is the beauty of this system and why all of
    us choose to work within it.
        Senator Blumenthal. I agree totally that the thrust of the
    question is to address health care inequities, disparities in
    access to health care generally, which is, in my view, the
    reason why there are different death rates among black and
    brown Americans as opposed to others resulting from COVID-19.
    It is those comorbidity factors, whether it is respiratory
    problems or diabetes or--you can identify them better than I.
        But if the VA is addressing those factors and diminishing
    disparities, I think that will be important to know.
        Dr. Stone. So, with your forbearance, sir, we just took a
    look at a gene present in prostate cancer that allows the
    metastasis of prostate cancer and compared that to a gene that
    is present that opens lung cells to the penetration of COVID.
    It is that type of research and effort that you allow to go on
    by funding us in the manner you do that I think carries great
    hope and shows why all of this interrelates.
        Senator Blumenthal. I think that is very important.
        One last question, and I am pretty much over time, but
    since the Chairman is not giving me a negative sign, I am going
    to go ahead quickly and ask it.
        Active COVID-19 cases are on the rise in several States:
    North Carolina, Arkansas, Alaska, Texas. And my understanding
    is also on the rise in some VA facilities. Is it on the rise in
    those States or in other States? Is there an overlap in the
    incidence of that trend?
        Dr. Stone. Sir, as we discussed earlier with your
    colleague, our number of cases in both our med-surg units and
    our ICU continues to go down. I had predicted that we would
    stay at a 500-600 occupancy for COVID. We are down at 345 this
    morning, and so it continues to go down.
        However, you have listed a number of very troublesome
    States. I would add to that Arizona, which in major areas are
    seeing an increase in cases. We have not seen that increase in
    cases correlate well to the veteran population; therefore, we
    remain with substantial capacity in those areas that we think
    the commercial health care systems may call upon us to execute
    our fourth mission if this wave continues in those multiple
    States.
        Senator Blumenthal. And you may have asked this already, in
    which case you can just say, ``I have answered it.'' You do not
    have to be polite. Have you identified the reason for that non-
    correlation?
        Dr. Stone. No, no. But I think it is part of the research
    that we have to go through.
        We have questioned--70 percent of America's veterans have
    deployed. So they have been exposed to multiple immunizations.
    We have wondered is there something different about the
    American veteran that is allowing us to do very well in this.
        With that being said, I think it is too early for me to
    really extrapolate that, and the researchers will be working on
    this for a fair length of time.
        Senator Blumenthal. Thank you. Thanks very much.
        Chairman Moran. Senator Blumenthal, I always look at the
    clock, and it is an inverse to the respect that one shows the
    Chairman once it goes beyond 5 minutes.
        I recognize now Senator Tillis.

                          SENATOR THOM TILLIS

        Senator Tillis. Thank you, Chairman Moran. I am sorry you
    are not going to be able to see my face. I am having a problem
    with the camera, but I hope my audio feed is going Okay.
        Chairman Moran. We hear you well.
        Senator Tillis. I have got a real quick question. One
    question, I know that the DMLSS system of the VA medical center
    is not going to be implemented, I believe, until 2027, and the
    DLA is--I guess the VA is going to need to pay the DLA to
    support the DMLSS system.
        The question I had is--we are going to be in a situation. I
    think there is also a relationship between the EHRM
    implementation and DMLSS, that they kind of roll out alongside
    one another. So I am just trying to get my head around some of
    the sequencing in some of the decisions that you all thought
    about.
        The two questions that I have on the rollout really is, No.
    1, have you all assessed the feasibility of speeding up the
    DMLSS implementation or the rollout of it? And I know that a
    part of that depends on the delay that we have seen with the
    EHRM system, but have you looked at how you sequence those and
    potentially speed up the rollout? That is one question.
        The other question is, Have you all assessed the cost
    versus benefits to just transitioning all the VMACs to--is it
    LogiCole?
        Dr. Stone. Yes, sir. It is LogiCole.
        I am going to defer to Andrew Centineo to give the most
    depth to this, but our plan has been to field the DMLSS
    solution no less than 60 days prior to go live of EHRM, so that
    we would get out of their way.
        One of the beauties of doing EHRM is we are upgrading all
    of our closets, all of our communication closets to accommodate
    these systems.
        There has already been a more rapid effort to improve the
    closets in EHRM, which would allow DMLSS to go faster. I would
    not characterize the cost to do that at this point. I think we
    can work our way through that.
        We have money in the 2021 and 2022 budget, but if we wanted
    to accelerate it, which we think is appropriate, that would
    cost additional dollars.
        So let me defer to Andrew for additional details.
        I want to make sure, because I made some comments before
    you go, Andrew. LogiCole is not a new software system. It is
    simply moving DMLSS to a cloud-based system, and so, Andrew, do
    you want to go ahead?
        Mr. Centineo. Yes, Dr. Stone, I will. Thank you so much,
    and thank you, Senator Tillis, for the question.
        So one of the key elements, as has been discussed here, has
    been documented in GAO reports, is to be able to have systemic
    business processes. So DMLSS needs to be the application. It
    has been decided to be the application to provide holistic
    enterprise logistics support.
        I will just quickly touch on a few of the items because I
    do not want to lose sight of the fact that it will give us
    supply capability. It will give us enterprise equipment,
    ordering, receiving, accountability, maintenance. It will
    provide us facility management to include space or space file.
    So if we took, for example, today's environment for PPE, the
    need to expand our negative pressure rooms for patients, having
    that information resident in DMLSS could have an enterprise
    pull and an enterprise view for Dr. Stone to look at all of his
    facilities to say where do I have negative pressure rooms or
    where do I have capacity.
        This enterprise application is fully integrated, unlike the
    current applications that we have today, AEMS/MERS, GIP, and
    Maximo, three islands, three completely separate instances
    across 170 facilities customized at every one of those
    locations.
        So if we just look at the rudimentary business processes,
    DMLSS will give us the structural foundation to do that.
        The question has been raised before. Senator Tillis, a
    great question. LogiCole is the future advancement. It will
    give us enhanced enterprise capabilities, but what we need to
    do is start with the technology that gives us the business
    processes and migrating it to that next level, which was
    already programmed within DoD. It will be nothing more than
    having it go from a Microsoft Office Version 1.0 to 2.0 with
    mild enhancements that then the end user will have to get
    prepared with.
        I mentioned it early, and I would like to reiterate the
    point that this is not a journey for the VA alone. The way it
    thrusts to enable ourselves to do this is the partnership with
    the Defense Logistics Agency, which is the supply chain side of
    the house, and the Defense Health Agency, which is the IT
    enabler, to bring the capability to our organization.
        Dr. Stone talked about funding. Funding is a component of
    it, but the capability and capacity for DoD to be lock step
    with us is absolutely something that we will need support with
    to make sure that we have a fundamental whole-of-government
    approach that positions VA, DoD, and other partners in the
    environment of the supply chain specifically for DMLSS for DoD
    and the VA.
        I would personally ask for consideration from the Committee
    to look at how we can position ourselves with language to be
    able to get ourselves in that direction.
        Senator Tillis. Well, I would be happy to speak with you
    about that.
        I have got limited time. I can barely see the clock, but
    one thing I just wanted to bring to your attention more than
    anything, we just got a recent announcement from HHS BARDA at
    Corning, got a $204 million contract to expand production lines
    for glass vials and preparation in anticipation of the vaccine.
        So one of the questions I just had for VA, I would not
    expect you to answer it here, but just think about it. If you
    are taking a look at the promising reports that we are getting
    on the development of a vaccine and a large population and a
    fair number are in the at-risk category within the VA system,
    what are you all doing right now thinking through--let us say
    the clock ticks. We get into September-October. We could
    potentially have a vaccine that has already got the
    manufacturing capability to be manufactured at scale. What
    would you all need to think about now to make sure that you
    could take full advantage of that?
        And then another question around syringes, other vials,
    other challenges. Are you thinking through the supply chain
    challenges for the vaccine response to COVID-19?
        Ms. Kramer. Yes, sir.
        We are working with FEMA and Health and Human Services on
    this. That is a whole-of-government approach. They are
    producing it for the Nation, and we will be part of the group
    that is supported with that.
        And we are evaluating our requirements for syringes and
    needles to be able to administer those, the vaccine, but we
    need to understand a little bit more about what FEMA and SNS
    are doing so we do not duplicate what they are also doing. They
    are planning on acquiring quite a few syringes and needles.
        Dr. Stone. And our medical research team is participating
    with the development of the vaccine.
        Chairman Moran. Senator Tillis, that is an excellent
    question, and I look forward to hearing more about the plans
    for utilization of vaccines as they become available. And it is
    worthy of our Committee spending some time on.
        I now recognize Senator Hirono.

                          SENATOR MAZIE HIRONO

        Senator Hirono. Thank you, Mr. Chairman.
        Tragically, 33 VA employees have died due to COVID-19. Dr.
    Stone, does the VA have any data or accounting of how many of
    those employees were working in a facility that had implemented
    austerity measures with regard to the use of PPEs, and are you
    concerned that lack of proper PPEs led to employee deaths?
        Dr. Stone. Senator, my No. 1 responsibility is the safety
    of veterans and safety of the employees that have pledged their
    work lives to the VA.
        It is impossible for any of us to understand how these
    employees got this disease, and we can go through privately the
    events regarding a number of these.
        We had an early death that occurred in someone who was
    moonlighting in another facility and carried it back to a
    number of coworkers in an area that really was in no-patient
    contact.
        So to suggest----
        Senator Hirono. The record----
        Dr. Stone. To suggest--please give me a minute here. To
    suggest that somehow we have endangered our personnel is just
    not borne out by the facts. We will be happy to go through and
    look at every single one. We are doing that at this time, and
    OSHA is involved in every one of our deaths, and so I
    appreciate it.
        So let me say one other thing. In Italy and in Spain, 10 to
    15 percent of health care workers actually caught COVID-19. In
    Detroit, which is one of the few health care systems that has
    actually talked about their infection rates, their rate of
    infection is between 2.5 and 4 percent. We are at 0.8 percent
    on our personnel who have become infected. That to me reflects
    the fact that we have done a good job of working to protect our
    workers.
        Thank you.
        Senator Hirono. On the other hand, Dr. Stone, at our last
    hearing, VA acknowledged that it is not there yet with COVID-19
    testing for employees, and VA specifically cited a lack of
    cartridges and swabs.
        So you know that there is a very low rate of hospitals
    testing positive, but then we are told that you are not there
    yet with regard to adequacy of your testing program.
        What is VA doing to procure enough testing supplies for
    robust testing of VA employees, and when do you expect to have
    sufficient supplies?
        Dr. Stone. So----
        Senator Hirono. And once you have enough supplies, will
    there be restrictions on which VA employees can receive tests?
        Dr. Stone. So what we would like to get to and I think what
    our employees deserve is on-demand testing. We, as of today,
    are just under 50,000 of our employees have been tested, which
    is about 17 percent of our work force. That is dramatically
    higher than the American population.
        We have tested all of our work force in certain high-risk
    areas, including our CLCs as well as our spinal cord treatment
    areas.
        We have the capacity at this time to test about 60,000
    tests a week. We are running between 600 and 700 employees a
    day through that testing, and we hope to get there soon. But it
    is not the equipment that we need. It is really the cartridges
    and the swabs that we must get to in order to get to the amount
    of testing that I think both you and I would agree would be the
    right amount of testing that any employees could feel safe
    going home at night, that they are safe for their family.
        Senator Hirono. So there is acknowledgement that you do not
    have enough cartridges and swabs. So are you getting them?
        I realize that 50,000, that only represents 17,000 of your
    work force, but many of your work force work directly with
    patients who are, therefore, in a risk category. So I think it
    is more important that the people who are working directly with
    patients in the VA system get tested. So where are you
    procuring the cartridges and swabs that you need to perform
    adequate testing?
        Dr. Stone. So these are coming from multiple manufacturers
    based on the multiple different types of machines that we have.
        Ms. Kramer or Andrew, do you have----
        Ms. Kramer. Yes, sir.
        And they come from a variety of places. Some of these are
    actually centrally controlled by Health and Human Services and
    are actually sent out on allocation. Again, these are products
    where there are shortages nationally. Swabs and these
    cartridges are not a challenge just for VHA. They are a
    challenge for many health care systems. So we get that
    allocation.
        As they are able to--the manufacturers are able to speed up
    production and as we develop, there is only two--three swab
    manufacturers that I am aware of in the world: one in Italy,
    one here in the United States, one in China. We are hoping more
    people get into that market and begin producing more swabs that
    would actually relieve some of the shortages that we are
    experiencing today.
        Senator Hirono. Well, this is one of the reasons that so
    many of us have advocated that the President fully utilize the
    Defense Production Act because it is just unacceptable--that is
    kind of a nice way of putting it--that a system as large as the
    VA does not have an adequate amount of these kinds of
    materials, and yet you have to compete with other systems.
    Every State is competing for these materials.
        I mean, I do not necessarily want to put you on the spot,
    Dr. Stone, but it would make a lot of sense if the Defense
    Production Act had been fully mobilized to produce all of these
    necessary testing supplies. I do not know if you care to
    answer. Would you care to answer?
        Chairman Moran. Senator Hirono, let me see if Dr. Stone
    wants to say something. If not, we will move on to Senator
    Cassidy.
        Dr. Stone. I think that when you are dealing with a once-
    in-a-hundred-year pandemic, there are lots of lessons learned.
    One of them is how we use domestic manufacturing.
        Chairman Moran. Senator Cassidy?

                          SENATOR BILL CASSIDY

        Senator Cassidy. Thank you all. Again, Dr. Stone, thank you
    for the assistance the VA gave to the people in New Orleans,
    and you all stepped up. When I hear that your infection rate is
    0.8 percent, as a physician, that is incredibly impressive, and
    so let me just say that as well.
        Let me get to my question. Here is something. Let me just
    ask you. The VA clearly has enormous buying power. You can get
    the lowest price, if you wish, of all products.
        Now, I hear from doctors, and they are telling me that they
    were not necessarily consulted in the decisions made as to what
    products to purchase.
        It comes to mind that when I was practicing medicine, I
    worked in a State-run hospital, and you know those little
    packets of K-Y jelly that we use for endoscopy. We put it on
    the end, and we pass it. Somebody went out and bought a
    substitute for the normal vendor, and it turns out they only
    gave three-quarters of the amount per packet. So we ended up
    using more packets than we would have, even though they got a
    better price on the packets.
        If they had asked a clinician who actually used it, we
    would have known.
        So I am hearing from some of my folks within the VA that
    these standardization decisions are made as regards to
    purchasing, but the clinician himself or herself is not
    consulted in that decisionmaking process.
        One more thing I will say, I think this is called the Next
    Generation Medical-Surgical Prime Vendor contracts, and as
    subsequent, it has not been embraced by the clinicians.
        I will also say I had a bill pass in 2018, the VA Medical-
    Surgical Purchasing Stabilization Act, which was to ensure
    clinician input on formulary decisions, but again, I am hearing
    that that has not been implemented as per the purpose of the
    law.
        So, Dr. Stone, what comments do you have on that? How
    involved are the clinicians in driving the contracting
    strategy?
        Dr. Stone. Senator Cassidy, thank you.
        You are talking about clinically driven sourcing, and I
    think that Andrew Centineo can talk a bit about that, as can
    Karen.
        So, Andrew, do you want to take this?
        Mr. Centineo. Yes, Dr. Stone, I will.
        Thank you, Senator Cassidy, for the question.
        Unequivocally, clinically driven strategic sourcing is at
    the center of where we are.
        True, in our old-generation med-surge prime vendor
    contracts, that was lacking or perhaps not there.
        I would offer that last year, we actually assembled over
    150 clinicians as part of the clinically driven strategic
    sourcing initiative. That does have clinicians across the
    entire VA in areas of specialty that are required to be able to
    help us source our material as we are doing our MSPV 2.0
    solicitations. It is with clinical technical review teams
    before those products are put into the sourcing selection.
        We unequivocally have brought in leaders, to include Dr.
    Paul Varosy, who is one of the premier cardiologists. He is in
    there leading it from his vantage point, and he is working with
    the chief medical officers across all of our VISNs to be able
    to have their input providing clinically driven sourcing.
        I would offer you have to have a background in supply and
    logistics to look at the factors that go in there. We also have
    to bring in there, how do we bring our buying power.
        Although the VA is large, only if we are brought together
    in a larger entity, if we look at a whole-of-government
    approach, do we really start to see market share.
        If we were to partner with DoD, we would probably get to
    the 4 to 5 percent market share. That is where we are. Although
    we have 170 medical facilities, we do not really dominate that
    much of a market, but we certainly can get buying power by
    collaborating more closely, but we----
        Senator Cassidy. Well, let me ask that because I am almost
    out of time. Thank you for that answer, and that is reassuring.
        One of the problems we have right now, at least in
    pharmaceuticals, is that there can be a price driven so low
    with the sole-source provider that you end up with only one
    provider of a generic drug.
        And I see you nodding your head. This is something we all
    recognize.
        DoD will actually pay a little bit more to make sure that
    they have at least two providers of a certain widget, if you
    will, whatever they need to make things happen.
        So has there been any consideration for VA to perhaps
    invest in--as some other big systems are--invest in making sure
    that we have more than one provider of key elements of that
    which we need?
        And, Karen, you seem teed up to address it.
        Ms. Brazell. Yes, Senator Cassidy. Thank you.
        I just want to make clear that the current MSPV 2.0
    contract is under active solicitation, but I can tell you what
    they did for MSPV Next Generation.
        First and foremost, it was not competitively bid. What they
    did is took 400,000 items, and we were directed by GAO and, of
    course, Congress to bring in the clinicians for it to be
    clinically driven sourcing. So we are down to 22 categories,
    that each of those categories had a physician as part of that
    team in the development process.
        Competition is what is going to drive the price, and so
    this contract is going to be competitively bid. And we are
    going to have it tier-reviewed. So there will be three
    different levels of tier review, starting first with our
    service-disabled, veteran-owned community.
        Senator Cassidy. That addressed my first but not my second,
    but I am out of time. So I will yield back. Thank you.
        Chairman Moran. Thank you, Dr. Cassidy.
        Now Senator Sinema.

                         SENATOR KYRSTEN SINEMA

        Senator Sinema. Thank you, Mr. Chairman, and thanks to our
    Ranking Member for holding this hearing.
        Thank you to all of our witnesses for being with us today.
        This topic is extremely important to ensure VA can protect
    its staff and the veterans it serves as they continue to treat
    veterans during the coronavirus pandemic and prepare for future
    health emergencies that might occur.
        My first question is for Dr. Stone. The VA has multiple
    avenues for procuring medical and surgical equipment and
    supplies, including government procurement cards for ad hoc
    purchases.
        Given the short supply and high demand for personal
    protective equipment and other supplies during the pandemic,
    facilities have been making purchases in some cases from
    unknown or new vendors. Some of these purchases resulted in the
    VA facilities receiving expired or otherwise compromised
    supplies.
        Does the VA Central Office have a way to identify and track
    these purchases to ensure that the VA does not spend taxpayer
    dollars on fraudulent sales?
        Dr. Stone. Not as effectively as we should.
        Ms. Kramer has been working this.
        Ms. Kramer. Yes. And I just actually would like to go back
    to Senator Cassidy's question to also mention that Warstopper
    is another way that we can make sure that we can maintain more
    than one manufacturer out there, but we do not have that
    authority. And we would need that authority to be able to
    support two manufacturers, especially if one is offering a
    significantly lower price.
        We have a very difficult time, given the systems that we
    have at VA, on being able to see the government purchase card
    orders in real time. We are catching these typically later and
    typically after someone has reported a problem. That is one of
    the other big reasons that we need the Defense Medical
    Logistics Standard Support System because the government
    purchase cards are put into that system, and it can only be
    used through that system. And the system will actually stop you
    from making a purchase where there is a better source.
        We are putting guidance out to support the facilities in
    terms of how to identify counterfeit products so they do not
    acquire those, and it sounds like I need to put a little more
    training out in the field in terms of how to identify
    manufacturers who can deliver FDA-cleared products.
        Senator Sinema. So a followup question to that, then. As
    the VA is moving forward with a plan to modernize the
    procurement systems, have you considered creating systems that
    have the capability to prevent flagged vendors from conducting
    business with the VA while also allowing the incorporation of
    vetted local suppliers that can provide local VISNs with more
    flexibility and shorten the supply chain, basically doing two
    things at once, stopping the guys who are fraudulent so no one
    else makes that same mistake and then also incentivizing using
    local folks who are trusted and proven?
        Ms. Brazell. Senator, this is Karen Brazell.
        Yes. We do have methods. When we have what we call a ``bad
    actor,'' we flag those. So that message is promulgated
    throughout the VA, and that messages are sent out from our
    senior procurement executive.
        And then we also flag it in our contract management
    systems. When we do have those bad actors, we make sure that we
    communicate to the entire acquisition community at the VA, what
    to look for and how to address fraud, waste, and abuse.
        Senator Sinema. Thank you.
        My office has heard concerns from some VA health care
    personnel that as PPE shortages increased, they were given less
    PPE, and they did not understand why one person would receive a
    surgical mask while someone else would get an N95 respirator.
        There were also strong concerns that we heard in our office
    that new CDC guidelines related to reusing and conserving
    certain types of PPE put the health of personnel and veterans
    at risk.
        So, Dr. Stone, as part of evaluating the proper use of PPE
    during this pandemic, can the VA and other Federal agencies
    work with the CDC to reevaluate their guidelines? And can the
    VA and other Federal agencies track and evaluate the impact of
    changing PPE guidelines in the years to come?
        Dr. Stone. I think we can, and I think we should. I think
    that one of the frustrations in a health care system not under
    stress is that you can throw a lot of things away that have
    usable life.
        I think we saw that with the N95 masks. If I go into a
    surgery that I need a surgical N95 and that surgery takes 6
    hours, I wear that mask for 6 hours, but yet on a floor when we
    are out in a med-surg floor, in an ICU, we might throw that
    mask away in 5 minutes, even if it has not been soiled or
    contaminated in some manner.
        So when we said to employees that you can use a mask for
    your shift, whether that be 8 or 12 hours, it was done with CDC
    guidance and only after the CDC guidance, and it was reflecting
    the fact that studies have shown that those masks will work for
    that 8 to 12 hours.
        So there was a lot of discomfort in that on the floors, and
    it has been an education for all of us who for my nearly 40
    years of being a physician have just simply thrown those things
    away when I walked out of a room.
        This was different but also reflected the experience that
    we have around the world as well as the research that has been
    done demonstrating those material safety.
        Senator Sinema. Thank you.
        My time has expired. Mr. Chairman, thank you.
        Chairman Moran. Senator Sinema, thank you very much.
        Now Senator Blackburn.

                        SENATOR MARSHA BLACKBURN

        Senator Blackburn. Thank you, Mr. Chairman, and thank you
    to each of you for being there.
        As we talk about having this inventory system, having the
    purchasing system, let me ask something I have not heard you
    mention in this hearing. How many purchasing agents does the VA
    employ, and where are those agents located?
        Ms. Brazell. Thank you, Senator.
        Specifically, I can address at least your contracting
    officers because purchasing agents may be like GPC cardholders
    vice a contracting officer.
        So within the VA, we have at least 3,300 contracting
    officers geographically dispersed. The proponent of them reside
    in VHA. So about 2,200 of those contracting officers reside in
    VHA to make those decisions and award contracts.
        Senator Blackburn. And how many hospitals are in the VA
    system?
        Dr. Stone. 175.
        Senator Blackburn. Say that again
        Dr. Stone. 175.
        Senator Blackburn. Okay. For 175 hospitals, you have 3,300
    purchasing agents, and in addition to that, you have
    individuals that hold the GPD cards. Am I correct about that?
        Dr. Stone. Yes. I think there are 17,000 GPC cards that are
    in the field.
        Senator Blackburn. Let me ask you this. First of all, let
    me say your 7-to-8-year implementation plan is just way too
    long. That means the job is never going to get done, but let me
    ask those of you on the panel. Have any of you looked at any of
    the hospital chains, the hospital management companies like HCA
    or Community Health or LifePoint Health, and looked at their
    purchasing departments and the number of people that are there
    and how they make their purchasing decisions? Have you done a
    deep dive on this?
        Dr. Stone. So I have, and I will defer to everybody else to
    answer also.
        So we took this concept of moving to a more centralized and
    a more accountable system, and we took a look at Ascension
    Health, which is about the same size as us and has gone through
    multiple procurements of other hospitals. We presented this
    concept to our special medical advisory group, which has a
    number of health care leaders, including leaders from HCA.
        We have dramatically more purchasers of materiel than any
    of the other commercial health care systems which is----
        Senator Blackburn. Probably several hundred-fold.
        Dr. Stone. Yes, ma'am.
        Senator Blackburn. If most of those have purchasing
    departments, that would be about 25 people. Am I correct on
    that?
        Dr. Stone. I am not sure it would be that austere.
        Senator Blackburn. I think I am correct on that. Yes.
        Dr. Stone. But you are correct that we are severalfold
    greater, and hence, we have a system that does not deliver the
    transparency or the level of accountability that either you or
    I would expect.
        Senator Blackburn. So looking at that answer--and I know it
    is difficult to do this by video. So looking at that answer,
    then before we get going down into replacing any kind of
    system, we need to look at your structure and find a way for
    you to, first of all, take you--you would be better served to
    have 130 people as opposed to 3,300 people. You would be better
    served not to have 17,000 additional that can go make
    purchases, but looking at a different way to approach this and
    doing it more like a hospital system.
        Ascension is a good one because they deal with
    pharmaceuticals. They deal with the hospitals. They deal with
    clinics. They deal with a variety of facilities within that
    framework. So you need a structural overhaul before you can
    even address your problem.
        Mr. Chairman, I would recommend that we go back to the
    drawing board on this and that we work with the VA in a way to
    get their structural system in order first and then give them a
    timeline that is going to be more realistic. Seven or 8 months,
    they ought to be able to do this as opposed to 7 or 8 years.
        I yield back.
        Chairman Moran. Senator Blackburn, thank you very much.
        I would ask our witnesses, Dr. Stone, do you or any of your
    colleagues want to add anything to what has been said
    previously, any opportunity to correct to add or modify any of
    your testimony?
        Dr. Stone. The only addition I would make, sir, is to
    reemphasize what I said at the opening.
        The collegial relationship we have with your Committee and
    each of the principals is a dynamic and excellent discussion
    that helps us through all of these issues.
        When the Secretary and I came to the VA, we recognized
    there were three major systems that must be fixed: our
    information system for collecting clinical records, the EHR;
    the supply chain; as well as financial modernization.
        We have hit today on the second pillar, but in this
    pandemic, it is that pillar that has really created most risk
    for us.
        We appreciate the manner of the questions and how you have
    conducted this and look forward to our next discussion.
        Chairman Moran. Dr. Stone, thank you to you and your
    colleagues, and we will now call the second panel for their
    testimony.
        We have with us today: Ms. Shelby Oakley, the Government
    Accountability Office's director for Contracting and National
    Security Acquisitions; Mr. Roger Waldron, president of the
    Coalition for Government Procurement; Mr. Michael McDonald,
    director of Government Operations at 3M Health Care; and
    finally, Mr. Kurt Heyssel, a principal with Sightline
    Performance Advisors and the former Chief Supply Chain Officer
    at the Veterans Health Administration.
        I am not sure who all are appearing in person and who are
    appearing by technology.
        Thank you very much for joining us today and for providing
    your testimony and the conversation that I know we will have,
    and we will begin by recognizing Ms. Oakley.

                                PANEL II

                       STATEMENT OF SHELBY OAKLEY

        Ms. Oakley. Thank you.
        Mr. Chairman, Ranking Member Tester, and members of the
    Committee, thank you for having me here today to discuss our
    observations on VA's medical supply chain and its response to
    the COVID-19 pandemic.
        Like most medical institutions nationwide, VA has faced
    difficulties obtaining personal protective equipment for its
    work force in recent months. VA's existing mechanisms for
    obtaining medical supplies, such as its Medical-Surgical Prime
    Vendor program and other national contracts, were not able to
    meet the demands for PPE at its 170 medical centers.
        Global shortages of supplies led VA officials to use
    whatever means available to obtain supplies, including existing
    and new contracts and other means such as government purchase
    cards.
        VA mobilized its work force, and it was--and still is--an
    all-hands-on-deck effort to respond. I commend VA's contracting
    and logistics work forces for their tireless efforts.
        While some of the challenges VA experienced during the
    height of the pandemic were a result of an unprepared global
    supply chain, some were due to longstanding problems with VA's
    acquisition management function that we have reported on in our
    work and that led us to elevate VA's acquisition management to
    our high-risk list in 2019, problems such as an ineffective
    program for purchasing medical supplies and old and unreliable
    systems.
        VA has taken steps to address some of its acquisition
    management challenges, but our ongoing work indicates that some
    will not go far enough, and others are years away. For example,
    preliminary observations from our ongoing work show that VA has
    made improvements to the Medical-Surgical Prime Vendor program
    that have mitigated a few of the shortcomings we identified in
    prior work.
        These shortcomings, including a limited catalog of
    supplies, led to low usage of the program by medical centers.
        Despite making some improvements, medical center officials
    report continued challenges, even under normal circumstances,
    with receiving timely supplies. VA's planned improvements to
    the program will not likely address these challenges or others.
        VA has a just-in-time inventory supply model, a practice
    employed by many hospital networks. As you can imagine, a
    strategy premised on historical demand signals, small stocks,
    and daily deliveries, if disrupted, could quickly lead to a
    situation where a medical center is lacking necessary supplies.
        VA's current inventory management system does not provide
    decisionmakers with real-time information to monitor and assess
    supply levels and support critical decisions about where gaps,
    needs, or surpluses are located.
        As early as February, the Nation faced unprecedented supply
    chain paralysis, bringing VA's lack of visibility into its
    agencywide inventory of PPE front and center. In March, VA
    officials implemented a patchwork approach to obtaining
    information that relies on daily manual reporting from its 170
    medical centers on their provisions of PPE for COVID response.
        VA has evolved this system over the past few months, for
    example, by putting in place a dashboard for decisionmakers and
    by issuing guidance to assure more consistent data, but the
    bottom line remains. Our Nation's largest integrated health
    care system relies on an antiquated inventory management system
    that even in the best of circumstances is inefficient.
        While VA has improvements planned as part of its supply
    chain modernization efforts, a recent status update indicates
    that they are at critical risk of not meeting modernization
    milestones, even before COVID. For example, VA plans to roll
    out a Defense Logistics Agency system which provides more real-
    time inventory management. Technology integration issues,
    however, have delayed near-term implementation, and complete
    implementation throughout the VA hospital enterprise is not
    planned for at least 7 years.
        In conclusion, VA experienced many of the same challenges
    obtaining PPE as private-sector hospitals and other entities in
    responding to this devastating pandemic; however, VA was
    particularly ill-positioned to respond efficiently, given its
    existing acquisition management and supply chain challenges,
    despite the valiant efforts of its work force.
        Chairman Moran, Ranking Member Tester, and members of the
    Committee, this concludes my oral Statement. I would be happy
    to answer any questions that you have.
        Chairman Moran. Thank you very much. Mr. Waldron?

                       STATEMENT OF ROGER WALDRON

        Mr. Waldron. Chairman Moran, Ranking Member Tester, and
    members of the Committee. Thank you for the opportunity to
    appear before you today to address the challenges facing the
    Department of Veterans Affairs as it builds a resilient supply
    chain supporting the health care of our Nation's veterans.
        I am Roger Waldron, president of the Coalition for
    Government Procurement, and our association is pleased that the
    Committee is focusing on the VA's supply chain and its role in
    delivering best value health care to veterans.
        By way of background, the Coalition is a nonprofit
    association of small, medium, and large businesses collectively
    representing more than $145 billion in annual purchases through
    government contracts for commercial products and services.
        Coalition members provide more than $12 billion in medical-
    surgical products and pharmaceuticals to support health care
    needs of our Nation's veterans and warfighters.
        Today my remarks summarize my written testimony, which has
    been submitted to the Committee and which I ask to be included
    in the record.
        Chairman Moran. Without objection.
        Mr. Waldron. Coalition members strongly support the VA's
    efforts to implement a clinically led program office to develop
    sound requirements. These requirements will define the scope of
    the VA's formulary and the commercial and medical-surgical
    products available through the MSPV program, national
    contracts, and the Federal Supply Schedules.
        A clinically led program office serves as a bridge between
    program entities generating requirements and VA procurement
    professionals and contractors by identifying, collecting,
    analyzing, and communicating formulary requirements across the
    Department and to industry.
        Given this central role in the VA logistics supply chain,
    it is vital that the program office be managed and led by
    clinicians. This management includes the naming of a medical
    supply chain leader responsible for formulary management and
    engagement with industry along with the investment of resources
    to implement a robust clinically led program office for medical
    requirements development.
        Further, this office should serve as the lead point of
    contact for industry about new products and innovations. This
    role would provide industry with a clear, direct channel
    through which it can engage with the Department and should have
    the latest developments in the rapidly evolving field of
    medical and surgical technologies.
        Engagement with industry, however, is just one factor in
    developing a robust formulary. Input from health care providers
    and treatment facilities across the VA along with the
    availability and analysis of transactional data are critical to
    developing an efficient, effective formulary. The lack of
    meaningful, accurate purchase data undermines the development
    of a comprehensive, holistic formulary. In this regard, the
    current significant reliance on government purchase cards
    undermines the VA's formulary because it fails to provide such
    data.
        The condition is circular. Treatment centers use the
    purchase card because items are not on the formulary, and as a
    result of that use, the VA lacks the data necessary to improve
    the formulary.
        The VA should enhance and expand the formulary to reflect
    clinical needs. This effort would provide the VA with a sound
    spend data, and that combined with clinical input can be used
    to improve the formulary incrementally, standardizing product
    categories, where appropriate, while providing clinical
    flexibility and choice in other product categories.
        A first step in expanding the formulary would be to allow
    firms to offer their full product lines rather than picking and
    choosing subsets of products, lines, or individual products.
        Coalition members support the VA's efforts to modernize its
    financial and logistics systems. These systems are critical,
    indeed foundational, to creating, managing, and collecting data
    to support clinically led sourcing.
        With regard to DMLSS, transparency regarding implementation
    schedule, milestones, and operations will assist all
    stakeholders in responding to changes in the Federal health
    care market. The VA's industry partners need to understand the
    implications for their business of a transition to this new
    logistics channel.
        Correspondingly, all stakeholders will need to understand
    how the DLA contracts will evolve over time with the expanded
    scope and increased usage by the VA.
        Finally, regarding acquisition generally, streamlining
    processes and streamlining regulations would help the VA meet
    its needs.
    Efficiencies could also be obtained by centralizing procurement
    operations. This coordinated management would allow the
    Department to focus on all aspects of the supply chain,
    including small businesses.
        Chairman Moran and Ranking Member Tester, the job is
    complicated, but the suggestions made here could help the VA
    improve the supply chain programs that serve our Nation's
    veterans.
        Thank you again for the opportunity to address the
    Committee. I look forward to answering questions.
        Chairman Moran. Thank you for addressing the Committee. Now
    Mr. McDonald.

                     STATEMENT OF MICHAEL McDONALD

        Mr. McDonald. Chairman Moran, Ranking Member Tester, and
    distinguished members of the Committee, thank you for the
    opportunity to appear before you today.
        Mr. Waldron. I think you have to press that button.
        Mr. McDonald. Good afternoon, Chairman Moran, Ranking
    Member Tester, and distinguished members of the Committee.
    Thank you for the opportunity to appear before you today . My
    name is Michael McDonald. ``Mac,'' they call me. I am the
    director of Government Operations for 3M's Health Care Business
    Group.
        Prior to joining 3M in 2013, I served in the United States
    Army for 30 years. I retired at the rank of colonel. My area of
    medical specialty was as a medical logistician in the Medical
    Service Corps.
        Arriving here, given my experience, I hope that my
    testimony today will provide helpful to your Committee and
    reviews possible steps and strengthens and improves the supply
    and delivery of medical materiel throughout Veterans Health
    Administration.
        3M is a leading provider of personal protective equipment
    and medical solutions worldwide for medical professionals,
    workers, and the public. Besides disposable N95 respirators, we
    are also a leading manufacturer and supplier of reusable
    respirators.
        In addition, 3M provides other critical solutions in
    support of a pandemic response, including hand antiseptics,
    industrial cleaning, and any microbial testing and monitoring.
        3M is playing a unique role in the fight against COVID-19,
    and it is a responsibility we take seriously. Beginning in
    January, 3M began increasing its production of N95s and other
    respirators, doubling its global output. In the United States
    alone, we activated our surge capacity and made an additional
    investment, increasing our N95 rate from 22 million per month
    pre-pandemic to 35 million per month today.
        By the end of this month, we will be producing at a rate of
    50 million per month, and by the end of October, we will be
    producing 95 million a month. Total for the annual year
    projection, we will be producing 1.1 billion N95 respirators.
    That is four times pre-pandemic production rates.
        In addition, 3M has launched a global effort to combat
    fraud and price gouging and help protect the public against
    those who seek to exploit the demand of critical 3M products
    during a pandemic. Most important, 3M has not and will not
    increase the prices for N95s and other respirators as a result
    of the pandemic. We have also created and made available a
    number of resources to help purchasers of respirators and the
    public to avoid price gouging and other unlawful activities.
        3M and the VA have partnered together for well over 25
    years, with 3M providing solutions through multiple contract
    vehicles and responding to the COVID-19 crisis. The VA has
    contracted with 3M and additionally has received 1.8 million
    respirators to date and have contracted for over 25,000 powered
    air purifiers and 25,000 elastomeric, which are the reusable
    respirators.
        While working with the VA to deliver critical medical
    supplies during the ongoing COVID-19 pandemic, we observed that
    there would be value in implementing a clinically integrated
    supply chain system to ensure systemwide visibility and
    requirements-driven solutions. Going forward, the concept of a
    sale to centralize and coordinate acquisition and logistical
    efforts should be considered as a best practice.
        Furthermore, VA should be considered a stockpile program,
    much like DoD. 3M currently works with the Department of
    Defense incorporating contingency matters that allows them to
    work rotatable sticks.
        While significant reforms have been adopted to modernize
    the VA, Medical Surgical Prime Vendor program still remains a
    work in progress.
        Health care supply chain transformation starts with the
    patient, clinical provider, and reform should aim to address
    those topics directly, a clinically driven, integrated, and
    clinical adopted solution where clinicians are involved in the
    decisionmaking. Automating systems and the process is just one
    component of that. Standardizing and simplifying processes
    will, indeed, increase efficiencies throughout the Department
    of Veterans Affairs. Besides these and other reforms that are
    delineated in my written testimony, one key concept in this
    development of this process is a process map, not 7 years,
    because this actually began in 2012 when they did a proof of
    concept with DMLSS at the level facility. So that process map
    will prove to be very effective.
        3M is a proud leader and supplier of personal protective
    equipment and other health care-related solutions to assist not
    only with the COVID-19 pandemic but also enabling the VA to
    achieve its main goal and function, to serve our Nation's
    veterans.
        We are committed to continuing to work with and to be a
    strong partner with the VA as they move forward in their
    efforts and modernization, their current procurement processes.
    We are dedicated in serving as a resource in both agency and
    the Committee during this ongoing process.
        I would like to thank you again for this opportunity to
    appear before you today and happy to answer any of your
    questions.
        Chairman Moran. I thank you, Mr. McDonald, for appearing
    before our Committee. Mr. Kurt Heyssel is recognized.

                       STATEMENT OF KURT HEYSSEL

        Mr. Heyssel. Thank you, Chairman Moran, Ranking Member
    Tester, and honored Senators. It is an honor for me to be here
    today as much as it was when I was originally asked to serve
    our veterans over 2 years ago. I believe there is no higher
    mission for this Nation than to ensure the care and well-being
    of those who have served to protect all that we know and love.
        A lot has been said today regarding various issues facing
    the VA, and they are all pressing issues. However, I believe a
    fair amount of what ails the VA supply chain is due to an
    organizational structure that has evolved over time. The
    current structure lends itself not to a unity of mission,
    vision, or a shared sense of purpose, but to operational and
    functional independence. This creates a bias for action to do
    what is thought best locally, without thinking of the larger
    organization and oftentimes without all or much of the
    information. As a result, any nationwide standards of
    performance or best practices or efforts to develop systems of
    management are hard to implement and monitor, which leads to
    the greatly varying results across the system we see today.
        It leads to an expenditure of effort and resources to
    create transparency and to understand the big picture facing
    VHA supply chain. Oftentimes, the left hand does not know what
    the right hand is doing.
        VA corporate is not in control as it must be to achieve
    supply chain success. Many large private-sector health systems
    when faced with this same issue implemented a shared service
    organization. I believe this is the answer for the VA.
        Again, this is not the fault of any one person or group of
    persons. It took years to become this way, and this situation
    is, in my opinion, the single largest reason the VHA runs a
    high risk of failure and often does fail whenever a large
    systemwide effort is undertaken, and the result is a failure to
    serve our veterans.
        VHA supply chain can and should be much more effective than
    it is, and the very good news is that this is a fixable
    condition.
        I am anxious to get the conversation started. Thank you so
    much for your time.
        Chairman Moran. Thank you for your time.
        Let me begin with questions, and then I will turn it to
    Senator Tester.
        I assume that you listened to the testimony in the previous
    panel, Dr. Stone and his colleagues. Let me just ask you. If
    you were in my place or our place, what did you hear that I
    should be asking questions about? What did you hear in regard
    to their plans that raises the significant concerns, any
    significant concerns? Help me know what it is that we should be
    observing and pursuing as we continue to look at this issue of
    procurement.
        I ask that of any and all of you.
        Mr. Heyssel. Mr. Chairman, if I might?
        Chairman Moran. Please.
        Mr. Heyssel. This is Kurt Heyssel.
        A good bit of time is spent talking about the contracting
    process and how there are so many contracting officers employed
    by the VA versus what the private sector has. While the
    difference is almost staggering, I think what does need to be
    recognized is I think the VAAR or FAR needs to recognize what a
    source is. A source for anything, be it an N95 respirator or a
    scalpel or a clip applier is not whoever can sell it to you.
    The source is the manufacturer. This is at the heart of the
    contracting issues the VA and perhaps the rest of the Federal
    Government's procurement and contracting offices have.
        I think the VA, VHA--and even VHA, all the Federal agencies
    involved in health care need and should contract directly with
    the manufacturer and then hold separate contracts with the
    people or companies they are choosing to buy from. That is what
    happens in the private sector. I would have 1,600 contracts
    with 1,600 different manufacturers, and then I had a contract
    with my distributor and perhaps a contract with other
    independent distributors. We pay a guaranteed price for the
    suture, and then we pay a guaranteed markup to our distributor,
    oftentimes anywhere from 1.75 percent to 3 percent.
        Then in order for the distributor to stay in business,
    because the distributor needs to make at least 8.5 percent to
    keep their doors open, they had a relationship with the
    manufacturer, and they would pick up back-end money or a rebate
    from the manufacturer, which was essentially the manufacturer's
    recognition of the important role the distributor plays. The
    distributor creates elasticity in the supply chain. The
    distributor helps the manufacturer by making sure the
    manufacturer is not managing 5-or 6,000 ship-to's, and the
    distributor is helping its customer by making sure the health
    system is not managing 5-or 6,000 purchase-from sites.
        So this is something that really would help the VHA
    incredibly. It would shorten the time needed to make a
    procurement. It would actually shorten some time needed to make
    a decision as to what they are going to buy and from who.
        Chairman Moran. Thank you very much.
        Others?
        Ms. Oakley. This is Shelby.
        First off, I would say that, unfortunately, I think the
    situation that Mr. Heyssel is describing is only going to get
    worse under the 2.0 contracts, but that gets a little
    technical. So I am not going to get into that. I can share it
    with your staff.
        But one of the things that I would be asking questions
    about of VA is, What are their supply chain goals? It seems
    like, since we have been reviewing their medical supply program
    over the past several years, that it is a flavor-of-the-week
    kind of thing where it is one goal 1 day, one goal the next
    day, ``Oh, wait. We are going to go look at DoD's MSPV program.
    Maybe that is our panacea,'' and I think that it has led to a
    kind of lack of focus on what the actual goals are of the
    medical supply program within the VA. So I would really be
    pressing them on all of their different approaches that they
    are taking to obtain medical supplies and all their pilots that
    they are going to be holding with regard to DLA's MSPV program
    and find out what, in fact, is their goal that they are trying
    to achieve through all of these efforts, because it is taking a
    lot of time and resources to continue to move forward with MSPV
    2.0 and do all these other things on the side as well.
        Chairman Moran. Thank you.
        Mr. Waldron. Senator, I would just pick up on what Shelby
    said in talking about goals. I think how you set goals is you
    have the leadership to focus on a clinically led program office
    for the Prime Vendor program in particular and establishing the
    formulary.
        The discussion in the last panel was about there were
    clinicians participating in, quote, the evaluation of offers or
    looking at products in different categories, but we are
    thinking about a comprehensive, strategic, overall approach led
    by a clinician and developing a formulary, which ultimately the
    goal is to serve our veterans.
        So I would focus on that because, at the end of the day, I
    have worked in procurement for the government for over 20
    years. I worked in the private sector. It is foundational, and
    the key that I always found, regardless of the industry or the
    sector, it is requirements development is the key to success,
    successful contract performance on behalf of whatever mission
    you are performing. And that is what the formulary is about.
    That is what a clinically led program office is about,
    overarching approach--and I think it dovetails with what Kurt
    said as well, an overarching approach to how you serve the
    veterans across 175 different hospitals and other treatment
    centers across the board.
        Chairman Moran. Thank you.
        Mr. McDonald?
        Mr. McDonald. Chairman Moran, the aspect that I bring to
    the table is I actually was part of the DMLSS development
    process, and prior to that, I worked with the Army's TMIS
    development system. I have seen what takes change, the
    necessary elements for change to occur, and you have to have,
    as we all said, clear goals. But you have to have a milestone
    and objectives that you want to bring your partners together.
        So we had three different stovepipes: Army, Air Force,
    Navy, et cetera. And how do we get them operating on an
    integrated, combined, clinically driven system? This is not a
    short panacea or a quick fix.
        To do that implementation at the largest health care system
    in the United States, 13th largest in the world, it will be a
    yeoman's challenge to get done, phased in and implemented
    correctly, but when they are giving you a timeline could it be
    done faster or can it be done quickly, do you want it right, or
    will we be back here 5 to 7 years looking for another solution?
        So taking a path and commitment and allowing them to
    establish clear process maps, so regardless who is in this room
    here today, you hold their feet to the fire for the execution
    of implementing and integrate clinically accepted supply chain
    system, and that will improve the VA's Veterans Health
    Administration moving forward.
        Chairman Moran. Well, thank you all. I may come back to
    request additional conversation about those topics, but let me
    now turn to the Ranking Member, Senator Tester.
        Senator Tester. Yes. Thank you, Mr. Chairman.
        Look, we will get back to the IT systems here in a second.
    I have said this before in this Committee and other committees
    that it seems like every time we deal with IT systems, it ends
    up costing a lot of money. We end up with a bag of cow manure
    in the end. I mean, we have been dealing with electronic health
    records for a long time now, $7 billion right now. We have got
    nothing to show for it, at least not from my perspective. Let
    us put it that way.
        I am not a techie. So I do not get all this stuff. I do not
    understand how you cannot take a system that DoD is using and
    roll it into your agency. I know it is a big agency. It is the
    second biggest in the government, but I just do not get why it
    takes 7 years to do that.
        So I want to set up timelines, and I want to set up
    benchmarks, but to be honest with you, I do not want to set up
    ones that are unreasonable. But I do want to hold these birds
    accountable, and they know that, by the way. They are watching,
    and they know this is part of the deal. Moran is the same way I
    am. We want to make sure we are getting the biggest bang for
    the buck, and we want to make sure the doggone thing works for
    the veterans.
        So we may have to have this conversation further because it
    is unfortunate that we are at the end of the day with you guys.
        Mr. McDonald--or, Mac, I want to ask you something. You
    talked about 95 million masks a month that 3M is putting out.
    Look, I think 3M is a great company. I am not being critical of
    3M at all. You guys run an incredible business. When you talk
    about 95 million masks being built a month now, that is
    impressive. The question I have is, Are any of those built in
    the United States?
        Mr. McDonald. Senator Tester, in my previous capacity as a
    director of logistics at DLA and when this similar, not to this
    extent, but when we were hit with the avian pandemic flu, we
    were in the process of acquisitioning for the Department of
    Defense. As the director, I was saying there was only one
    company that actually made the mask that we needed, and it was
    3M. So I learned in 2005, and hence, here I am in 2020 with
    that company that never left the United States.
        They do have and support regionally accordingly by ensuring
    that we work with sources locally to ensure that our
    manufacturing capability can surge much like we did from 22
    million, now at 35 million. By the end of this month with the
    help of the DFAS through the utilization of Title VII and Title
    III authorities, accelerating production capability--and we
    never left. We always maintained manufacturing capability here
    in the United States, and with the help of the Department of
    Defense and the Federal Government, we will continue to have
    those lines now and in the distant future to move forward to
    support the U.S. as required.
        Senator Tester. So when you are talking about 95 million
    masks being built a month, you are talking about 95 million
    masks being built in the United States of America a month?
        Mr. McDonald. Yes, sir, I am. We currently have----
        Senator Tester. That is good. Sorry for cutting you off,
    but the reason I ask that is because there were--and I believe
    it was a 3M manufacturing plant in China, and I could be wrong
    on this. You correct me if I am. That it was basically
    nationalized by the Chinese government when they needed masks,
    and they said, ``No. We are keeping them here because they are
    for our people. They are built here. We are keeping them here.
    You are not shipping them anywhere else in the world, the
    United States or anywhere else, because we need them.''
        But what you are saying is you can build domestically, 3M
    can, 1.1 billion masks a year now?
        Mr. McDonald. With the additional manufacturers that have
    come online with 3M under the Title III authorities, by the end
    of November, we will be producing roughly 95 million masks a
    month, and yes, we----
        Senator Tester. And then those are all domestic? Those are
    all domestic manufacturers? There are not a bunch of folks from
    Indonesia or China or Brazil or wherever?
        Mr. McDonald. No.
        Senator Tester. They are all here?
        Mr. McDonald. Yes, sir. Those are all domestic
    manufacturing plants. We have one, a new one coming online in
    Aberdeen, and the other one, I believe, is also in South
    Dakota.
        Senator Tester. Look, Montana is a much better place to do
    business than South Dakota. Rounds is sitting over there.
        [Laughter.]
        Senator Tester. Well, that is good news. That is really
    good news.
        I mean, that is just one component. I mean, we have also
    got shields and gowns and all that, but I can take that up via
    emails with you guys, if you want.
        I just have a question, and any of you can answer it. Mac,
    you have done enough talking. So any of the others who have not
    talked yet can answer this. What kind of benchmark should we be
    setting up for the DMLSS fully integrated into the VA? How long
    should that take? What is a reasonable timeline?
        I am hearing a lot of silence.
        Mr. Heyssel. I will take a stab at it. To make a
    comparison, it took me 6 months to simply upgrade one academic
    medical center, a couple jumps forward in our Materials
    Management Information System. It is a complex process to
    upgrade a new system, much less implement one.
        That being said, I think 7 years is a long time. I think we
    could find ways to compress that to 4, maybe 5, but recognizing
    that the more we compress the implementation timeline, the
    larger we expand the chances of something going wrong. So we
    have to find a way to mitigate all those risks.
        It can be done any number of ways. I have always been more
    of a big-bang person than an evolution person, but I think 5
    years is probably a doable timeframe. There is a lot of
    training that needs to happen. We have to make sure every
    facility has the right PCs. Even at this point, when I left as
    chief supply chain officer, there were facilities in the VA
    that had not upgraded their PCs to anything that is close to
    capable of running something as sophisticated as DMLSS. So all
    of that needs to be taken into consideration.
        Senator Tester. Anybody else want to answer that?
        Mr. Waldron. Yes, Senator Tester.
        I was just going to mention the challenges the government
    faces in a lot of places--and I think VA is no different--are
    legacy systems, systems that have been around for 20, 30 years,
    and trying to modernize or move away from those systems creates
    huge challenges.
        I think your question fundamentally should go directly to
    the VA. One of the things that our members are very interested
    in is transparency from the VA with regard to the rollout of
    DMLSS. What are the steps necessary? What are the expectations?
    What does the training look like for the hospitals that are
    going to be utilizing the new system?
        Companies need to understand that timeline, just like
    Congress does, because companies want to be able to serve the
    VA and be able to react and respond.
        So I think it would be great to have the VA lay out their
    implementation plan so we all could take a look.
        Senator Tester. I am way, way, way over time, but thank
    you, Mr. Chairman. I want to thank all of you.
        Mr. Chairman, I just might add this is really a good panel,
    and we did not get them--at least I did not get the challenges
    as far as the questions. I hope they will accept some written
    questions in the free time that I have got to be able to answer
    those.
        Chairman Moran. Senator Tester, you are over time, but you
    are welcome to remain over time if you would like to ask
    another question.
        Senator Tester. Well, I mean, I appreciate that. I think
    most of it has to do with--Mac answered my question on the
    masks being built here.
        I would ask that same question for shields. I would ask the
    same question for gowns. I would ask that same question for
    test kits. I would ask the same question for media that
    revolves around that. But I do not know that 3M does all those
    things.
        Chairman Moran. I do not know whether that was rhetorical
    or not, Mr. MacDonald.
        Mr. McDonald. Sir, we do not do gowns at this time.
        Senator Tester. Right. And it is the same thing on all of
    them. I think the masks are good news. Those N95 respirators
    are good news that we have got them built here. We need to do
    the same thing with those gowns.
        Somebody mentioned--I believe it was on this panel--that
    said we need to--no. I think it was actually on the previous
    one. We need to work with gowns that are washable and can be
    reused because that helps with the supply chain. I agree with
    that, but the truth is we have got to get them built first.
        Anyway, thank you, Mr. Chairman.
        Chairman Moran. Thank you, Senator Tester.
        Let me followup with a few more things. Mr. Waldron, let me
    start with you. At least there are reports of bidding between
    various Federal and private entities, Federal, State, and local
    businesses for the same equipment, and tell me whether that is
    true.
        One of the primary purposes of FEMA task force and the
    Defense Production Act was to prevent bidding wars. Has it
    worked? Do you want to shift to Mr. McDonald?
        Mr. Waldron. What I have heard from members is around the
    issue of communication on the Federal level because our members
    focus primarily on the Federal level, and just, I guess, two
    things. One, understanding where the requirements are coming
    from and who is coordinating them, and I think the government
    over time has done a better and better job of that, the
    initial--just like this has not happened for 100 years, right?
    So we are all reacting, adjusting, and changing direction, and
    just the focus on a national strategy across a government
    versus local entities, you know, going out to buy because they
    are a local facility, needs the product immediately, and how
    you find that right balance. And I think that is kind of where
    the communication between the government and the producers of
    product could be a bit more focused. But that is just sort of a
    general reaction.
        I think overall, the performances have improved over time
    in terms of that communication.
        Chairman Moran. Are there circumstances in which an entity
    has a contract, in your case, a Federal entity or, in other
    cases, a private company has a contract to be supplied, but the
    market forces change, the circumstances change, and you can
    make more money selling to someone else that you have not
    previously contracted for? You do not have more to sell. You
    just have a better buyer, a buyer that is willing to pay a
    higher price than what you previously contracted for.
        Mr. Waldron. Sure.
        Chairman Moran. Is that a problem? Is that real or just
    kind of talk?
        Mr. Waldron. I have not--our members have not reported that
    they have had that kind of issue.
        My reaction to that is it goes to the idea, if you have a
    government contract and the government orders from you, there
    are consequences for not fulfilling that order at the price
    that has been negotiated in the contract.
        Companies sign up to that. They have their obligations
    under the contract. Orders are placed. They have to fulfill
    those orders. Otherwise, bad things happen to them in terms of
    their contract performance and that sort of thing. That is part
    of the remedy, and other things that would be in this context
    would be the Defense Production Act and utilization of that.
    That creates priorities.
        I think one of the things that I have heard is it is very
    effective and it works when the government sits down with a
    major supplier and works through those supply issues and
    figures out how to proceed forward, not necessarily a meeting
    immediately going to issuing a rated order under the Defense
    Production Act. That way, the company understands the
    expectations, understands how to react quicker. You have worked
    together initially before you have actually placed the order
    and move forward from that perspective.
        Chairman Moran. Let me see if I can paraphrase what you are
    saying because this has become--I do not know whether it is a
    political conversation, but it has become a topic of
    conversation among colleagues.
        You are saying that while the Defense Production Act can
    get a company's attention, rather than its full implementation
    or its full force and effect, that conversations, discussions,
    you can reach a better result?
        Mr. Waldron. The Defense Production Act will get the full
    attention of a company. Let me assure you of that. That is not
    what I was trying to say.
        What I was trying to say is that there are multiple ways to
    go about attacking the supply issue. You can issue rated orders
    and more forward immediately. The company has to react to that.
    There are other people's orders who would go to the back of the
    line because of the rated order. Having conversations and that
    communication between government and industry in partnership to
    address that planning goes a long way to ensuring you will meet
    the Federal Government's requirements and at the same time be
    able to adjust and meet those order orders as well.
        So I am promoting the idea of communication between
    government and industry, especially in our current context.
        Chairman Moran. I was trying to give you the opportunity to
    do that, but I must have inartfully asked my question. I was
    not suggesting that you did not believe the Defense Production
    Act was sufficient to get somebody's attention.
        Mr. Waldron. yes.
        Chairman Moran. But its full authorities forcing somebody
    to do something may not be the best way to get the result that
    you are looking for and also may be damaging to others who are
    trying to acquire, in this case, personal protection equipment
    for their own and very valid uses. Is that a better summary?
        Mr. Waldron. That is a fair way to look at it. One size
    does not fit all in the supply chain, and there is going to be
    different companies and different situations as well. And there
    are going to be different obligations between the government
    and the producer as well. So, yes, that is a fair, a good
    characterization of it.
        Chairman Moran. Ms. Oakley, I cannot tell if your hand is
    up, but I guess your finger is on the button.
        Ms. Oakley. Yes. I just wanted to comment on how it worked
    with the Medical-Surgical Prime Vendor program contracts, and I
    think that while Mr. Waldron is correct, you are signed up to a
    government contract, you have to fulfill those needs. But those
    supply contracts are based upon demand signals. So your
    historical demand signals are what drives what those prime
    vendors have in stock for you.
        So what you saw at the beginning of the pandemic was this
    surging increase in demand from the VA contracts, from the VA
    medical centers, that was not supported by those prime vendor
    contracts because they did not have that demand signal in the
    past.
        So then what ended up happening was that VA ended up
    getting its allocation of its percentage of business that they
    were typically for whatever supplier through that prime vendor.
    So that is where you saw some of the challenges with meeting
    those surge-in-demand needs from VA. So that is just kind of
    how it worked, at least initially, under the prime vendor
    contracts.
        Chairman Moran. Thank you for that.
        Mr. Heyssel. Mr. Chairman?
        Chairman Moran. Yes.
        Mr. Heyssel. This is Kurt Heyssel.
        Chairman Moran. Yes, sir.
        Mr. Heyssel. If I might give one brief Statement. What
    happened with the health care supply chain since December-
    January was a test I have never seen before. Everybody from the
    manufacturer through the distributor to the health care
    provider was caught flat-footed. I am not sure there is
    anything that could have been done to avoid what we went
    through.
        We all said after the end of the avian flu, ``Oh, we will
    never be caught flat-footed again,'' and slowly but surely, as
    organizations do, we tend to forget.
        But even if we had stayed prepared at the level we were for
    the avian flu, it would not have even touched the need created
    over the last 5, 6 months.
        Chairman Moran. Thank you.
        There sometimes are the answers that nothing is going to
    work perfectly in the circumstances that we are in, and we are
    all looking for ways to make certain that everything works just
    as we wish it would.
        I think maybe this is my concluding question. I will ask
    this of Mr. Heyssel. It seems to me that the VA is attempting
    to blend a just-in-time inventory system with a depot system.
    If we look back at the VA supply chain compared to other large
    health organizations, what are the strategic factors that need
    to be considered here?
        Mr. Heyssel. The first I had really heard of the depot
    system was today, and if I heard it correctly, they are talking
    about four strategically located centers around the Nation to
    hold emergency stockpiles, which is something that I believe
    other private health care systems may be doing to be sure they
    have at least a month's worth of supply on hand to handle
    something like this.
        The just-in-time approach has been working for years in the
    private sector. The just-in-time approach, I believe, is the
    least costly of all the methods of acquiring what is needed to
    adequately care for our patients, care for the veteran, care
    for any patient.
        The notion that the VA should--I do not know if anybody is
    discussing it, but just in case they are, the notion that the
    VA should move back to what was the old system in 1992 of the
    VA doing its own acquisition and distribution is probably a
    sizable mistake.
        Certainly, you cannot do it without a system with at least
    the sophistication of DMLSS, but it is redundant. It actually
    adds a lawyer of cost for the supplies to the VA.
        If you recall, I said the average distributor needs to make
    about an 8.5 percent margin to keep the doors open. So that can
    be applied to the costs of running those depots and the self-
    distribution around the Nation to feed the VA its products, and
    then you have the heightened risk of unused inventory spoiling,
    unused capital investment in that inventory--in other word
    waste. I just do not think that is the way it should be.
        The distributors today are incredibly sophisticated.
    Cardinal, Owens & Minor, Concordance, Medline, you name them,
    they have the information systems set up. They have the
    logistics set up to do an amazing amount of work on behalf of
    the VA.
        There is one distributor out there who can handle pretty
    much all of the health system's orthopedic implant needs and
    ships sterile containers of implants to the hospital according
    to the surgical schedule. That sort of partnership between
    distributor and health care provider and manufacturer is really
    what is needed rather than taking a step back into the 1990's
    and having distribution centers pretty much around the United
    States.
        Chairman Moran. Let me ask you about another partnership.
    It seems a natural fit--but I want you to tell me whether it is
    or is not--that we model ourselves or partner with the
    Department of Defense at the VA, and we see that in a number of
    circumstances and certainly trying to get an integrated health
    care system that takes care of a veteran from service to post--
    I should not say it that way--to being a veteran as compared to
    being a member of the active military. Is that a model that we
    should at least initially assume is a pretty good idea when it
    comes to the VA?
        Mr. Heyssel. I do believe it should be investigated. I
    think it should be investigated in depth.
        If you were to bring the VA and the Department of Defense
    together in such a manner, using the same information system,
    DMLSS, you then have the power to aggregate the purchasing
    volume across both networks of care, and the supply cost should
    drop. That would be a very good thing, but it would also
    require that clinicians from both organizations be heavily
    involved in the choice of products being selected and
    purchased.
        You want to offer alternatives, but you do not want the
    Wild West, and you do not want the VHA using 15 different
    things and Department of Defense using 15 different things in
    the OR, if all of them do the same thing. When that occurs, you
    lose your leverage with the manufacturers.
        But I think it is a model that must be investigated. VHA,
    DLA have already proven that they are pretty good at what they
    do. When I was with Owens & Minor, I worked very closely with
    Langley Air Force Base and Portsmouth Naval Medical Center. As
    a representative, I got to know their processes very well, and
    they were on top of the game.
        So I think it should be investigated closely.
        Chairman Moran. Ms. Oakley--Senator Tester, I am going to
    conclude, but, Ms. Oakley, in your reviews and observations, I
    guess I will not ask you to--I do not know that it is a fair
    question to ask you to compare how DoD operates as compared to
    the Department of Veterans Affairs, and they are both large
    organizations, huge organizations. Is there ever a sense that
    the Department of Veterans Affairs is so large that we cannot
    get the services, the efficiency--we cannot get the VA to
    operate the way that we want it, just because of the size, or
    is size always to our advantage?
        Ms. Oakley. I do not think that that should be the excuse
    for the VA not to be able to operate efficiently and
    effectively.
        I think it really harkens back to part of what Mr. Heyssel
    was saying. Structurally, they have a lot of challenges with
    regard to executing and efficient procurement function within
    the organization, and part of that is driven by the fact that
    VHA drives so much of the procurement dollars within the
    Department of Veterans Affairs.
        So I think from my perspective, it is less about how large
    VA is, and it is more about how leadership plans and implements
    large-scale change and transformation within the organization,
    and how even in the short time that I have been doing this work
    over the past 5 years, I have seen a number of different things
    come and go. So I think there is something to be said for
    laying out that plan for transformation and putting milestones
    associated with it and being held accountable to making those
    changes.
        There is nothing wrong with modeling themselves after DoD
    or leveraging what they can from DoD, but there is stuff to be
    learned.
        In fact, in our ongoing work on the MSPV program, we are
    taking a look at VA's pilot program where they are going to be
    using DLA's MSPV program. It is a very limited pilot at this
    point, but one of our preliminary findings is showing they do
    not even have a plan in place for assessing the outcomes of the
    pilot, to know is this something that we should do, is this
    something that we can scale within the Department of Veterans
    Affairs and apply to all of VA.
        And I think just--I have to mention it because I am from
    the Contracting and National Security Acquisitions Team. VA
    does also have very specific procurement requirements that it
    has to abide by in the Kingdomware requirements, and that makes
    that kind of collaboration a little bit more challenging than
    DoD collaborating with any other organization.
        Chairman Moran. I make it a practice of asking any
    witnesses before our Committee if they have something they
    would like to augment what they said, correct what they said,
    add to what they said, anything that you would like to make
    clear for us or improve what you thought you said, which is
    always a chance I wish I had. Are we good?
        [No response.]
        Chairman Moran. Senator Tester?
        [No response.]
        Chairman Moran. All right. We will conclude this hearing,
    then. I thank you for joining us. Thank you for the opportunity
    to learn from you.
        The hearing record will remain open for 5 legislative days,
    should any member wish to add a written Statement or submit a
    question for the record.
        With that, this hearing is now adjourned. Thank you.
        [Whereupon, at 5:29 p.m., the Committee was adjourned.]

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