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


                                                        S. Hrg. 116-450

               BUILDING A MORE RESILIENT VA SUPPLY CHAIN

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                                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
       
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        Available via the World Wide Web: http://www.govinfo.gov        
        
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-699 PDF                  WASHINGTON : 2021                     
          
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                 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.]

                                APPENDIX

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