[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
VA PROCUREMENT: MADE IN AMERICA
=======================================================================
HEARING
before the
SUBCOMMITTEE ON OVERSIGHT AND
INVESTIGATIONS
of the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
WEDNESDAY, SEPTEMBER 20, 2023
__________
Serial No. 118-32
__________
Printed for the use of the Committee on Veterans' Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via http://govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
54-153 WASHINGTON : 2024
COMMITTEE ON VETERANS' AFFAIRS
MIKE BOST, Illinois, Chairman
AUMUA AMATA COLEMAN RADEWAGEN, MARK TAKANO, California, Ranking
American Samoa, Vice-Chairwoman Member
JACK BERGMAN, Michigan JULIA BROWNLEY, California
NANCY MACE, South Carolina MIKE LEVIN, California
MATTHEW M. ROSENDALE, SR., Montana CHRIS PAPPAS, New Hampshire
MARIANNETTE MILLER-MEEKS, Iowa FRANK J. MRVAN, Indiana
GREGORY F. MURPHY, North Carolina SHEILA CHERFILUS-MCCORMICK,
C. SCOTT FRANKLIN, Florida Florida
DERRICK VAN ORDEN, Wisconsin CHRISTOPHER R. DELUZIO,
MORGAN LUTTRELL, Texas Pennsylvania
JUAN CISCOMANI, Arizona MORGAN MCGARVEY, Kentucky
ELIJAH CRANE, Arizona DELIA C. RAMIREZ, Illinois
KEITH SELF, Texas GREG LANDSMAN, Ohio
JENNIFER A. KIGGANS, Virginia NIKKI BUDZINSKI, Illinois
Jon Clark, Staff Director
Matt Reel, Democratic Staff Director
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
JENNIFER A. KIGGANS, Virginia, Chairwoman
AUMUA AMATA COLEMAN RADEWAGEN, FRANK J. MRVAN, Indiana, Ranking
American Samoa Member
JACK BERGMAN, Michigan CHRIS PAPPAS, New Hampshire
MATTHEW M. ROSENDALE, SR., Montana SHEILA CHERFILUS-MCCORMICK,
Florida
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
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C O N T E N T S
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WEDNESDAY, SEPTEMBER 20, 2023
Page
OPENING STATEMENTS
The Honorable Jennifer A. Kiggans, Chairwoman.................... 1
The Honorable Frank J. Mrvan, Ranking Member..................... 2
WITNESSES
Mr. Michael D. Parrish, Principal Executive Director and Chief
Acquisition Officer, Office of Acquisition, Logistics, and
Construction, U.S. Department of Veterans Affairs.............. 4
Accompanied by:
Dr. Angela Billups, Executive Director and Senior Procurement
Executive, Office of Acquisition, Logistics, and
Construction, U.S. Department of Veterans Affairs
Mr. Andrew Centineo, Executive Director for Procurement and
Logistics, Veterans Health Administration, U.S.
Department of Veterans
Dr. Thomas Emmendorfer, Executive Director for Pharmacy
Benefits Management Services, Veterans Health
Administration, U.S. Department of Veterans Affairs
APPENDIX
Prepared Statement Of Witness
Mr. Michael D. Parrish Prepared Statement........................ 21
Statement For The Record
The Honorable Matthew M. Rosendale, Sr., U.S. House of
Representatives, (MT-02)....................................... 25
VA PROCUREMENT: MADE IN AMERICA
----------
WEDNESDAY, SEPTEMBER 20, 2023
U.S. House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Veterans' Affairs,
Washington, D.C.
The subcommittee met, pursuant to notice, at 3:16 p.m., in
room 360, Cannon House Office Building, Hon. Jen Kiggans
[chairwoman of the subcommittee] presiding.
Present: Representatives Kiggans, Radewagen, Mrvan, and
Pappas.
OPENING STATEMENT OF JENNIFER A. KIGGANS, CHAIRWOMAN
Ms. Kiggans. Good afternoon. I apologize for the delay, but
thank you all for being here today as the subcommittee conducts
this important oversight hearing.
In Fiscal Year 2021, VA ranked fourth among Federal
agencies in procurement dollars obligated at $34.3 billion and
second in number of contract actions at $1.8 million. To put it
simply, the VA buys a lot of stuff, from personal protective
equipment (PPE) to pharmaceutical drugs, hearing aids, and much
more, VA's mission to care for our veterans comes with
tremendous purchasing power.
Congress and both this administration and the Trump
administration made it a priority to ensure the Federal
Government is buying American made products to the greatest
extent possible. Buying from manufacturers in Virginia's Second
congressional District, Indiana's First District, Mr. Mrvan's
district, and every other district in America not only supports
American workers, but makes VA's supply chain more secure.
As we saw during the COVID pandemic, a large percentage of
medical supplies are manufactured overseas, and VA is extremely
vulnerable to shortages if global supply chains are
interrupted. We cannot afford to ignore this glaring weakness.
In response, Congress passed the Make PPE in America Act, which
changed how the VA buys PPE by requiring the VA to buy from
domestic manufacturers on a minimum 2 year contract. I am
concerned that a year and a half after this law was enacted,
there appears to be very little that has changed. I understand
that new legislation takes time to implement, but issues at VA
do not normally get better with time.
A recent Inspector General report highlighted significant
issues with VA's compliance with decades-old made in America
laws. I recently heard from industry leaders that as of a few
months ago, the VA did not even seem to have a plan to
implement the law, which is concerning. I am eager to hear from
our witnesses on what progress the VA has made in the past 18
months, and what we can expect going forward, because American
companies and veterans they hope to serve do not have decades
to wait.
Many American companies have overhauled their production
lines to meet VA's demand for world class goods and supplies.
The VA must similarly change their procurement process to step
up their outreach and market research to identify opportunities
to work with American companies. I am concerned many of these
companies will be forced to close down their operations if the
VA does not immediately follow the law and take a more
proactive approach to buying American.
With that being said, I know that there are occasions when
the VA needs to buy critical supplies from outside our borders.
The VA has many waivers and exceptions at their disposal. If
the VA is unable to buy the materials they need from domestic
manufacturers quickly and at a reasonable price, they can use
these waivers. Waivers are stop gaps that allow VA to serve
veterans even when American supplies are not available. I
support having waivers as an option because even when supply
chains fail veterans must come first. While I have no issue
with the VA using waivers, I am concerned that reports show
they are sometimes a crutch for VA bureaucrats to cut corners
rather than buy American. The waiver process needs to be
transparent so the public can be confident that VA is following
the law and buying quality American supplies whenever possible.
Waivers must also be limited so American companies can invest
with the confidence that VA will buy domestically whenever it
is practical, not just when it is convenient.
I would also like to note my concern over our reliance on
foreign manufactured pharmaceuticals, especially those made in
China. As a nurse practitioner, I know firsthand that many
Americans, especially our older population, rely on life saving
drugs. VA alone cannot fix this issue, but I look forward to
hearing how the VA intends to help incentivize onshoring
pharmaceuticals in solving this dangerous situation.
Ultimately, as the chair of the oversight arm of this
committee, it is my job to ensure that the VA is spending its
procurement dollars wisely and in compliance with Made America
laws. I take this matter seriously, and I trust the witnesses
do as well.
With that, I now recognize Ranking Member Mrvan for his
opening comments.
OPENING STATEMENT OF FRANK J. MRVAN, RANKING MEMBER
Mr. Mrvan. Thank you, Chair Kiggans.
The importance and impact of Buy America for the Federal
Government is something that is felt at a very local level in
Indiana. It is because of these laws, which were reinforced by
the Bipartisan Infrastructure Act, that we can advocate for the
use of the American steel in Federal infrastructure projects.
This impacts the lives and livelihoods of many Americans across
the country.
President Biden has made investing in our manufacturing
base and strengthening our supply chains a priority during his
administration. The creation of the Made in America office,
which was codified by the Bipartisan Infrastructure law,
provides a central clearinghouse to ensure that the billions of
dollars spent for goods and services by the Federal Government
each year take into account investments in American industry.
The administration, as well as the committee, understand that
we must learn the lessons of the pandemic and ensure that
critical supplies like PPE have a domestic manufacturing base.
Relying on foreign products in a time of crisis is a flawed
strategy that unfortunately was felt directly by the VA
employees and veterans. This requires a concerted effort across
VA to comply with the laws and the Presidential directives in
place to provide opportunities for American companies to
provide personal protective equipment and other supplies.
Without a consistent demand for these products, we cannot
ensure that American companies will be around for the next
crisis.
As I have discovered, since joining this committee, VA has
had significant issues and hurdles surrounding the purchase and
tracking of supplies. The continued overuse and reliance on
purchase cards at medical centers hinders VA's ability to track
whether supplies purchased are American made and provide zero
insight on a national level to the needs and requirements of
medical centers so that VA can use its purchasing power to gain
cost efficiencies. The continued use of purchase cards also
means that medical centers are also not making use of the large
Medical Surgical Prime Vendor (MSPV) contracts and blanket
purchase agreements. These contracts are in place for the
benefit of the medical centers and provide greater
accountability and insight into the medical centers and
veterans' needs.
I realize VA is doing their best to change course on this,
but I would like to know how Congress can support this effort.
We need this data for VA to ensure we are purchasing American
products and to assist our oversight.
Because of the decades of lack of emphasis on domestic
manufacturing, this endeavor that I strongly support is a
Herculean task. It is not often that both parties can agree
that we need significant Federal investment and coordination.
That is, what will it take to make a dent in this issue? VA
cannot do it alone. It will require continued support from the
White House and Congress to ensure we are investing in American
manufacturing.
With that, I look forward to hearing from our witnesses,
and I yield back my time.
Ms. Kiggans. Thank you, Ranking Member Mrvan.
We will now turn to witness testimony.
Testifying before us today we have Mr. Michael Parrish,
Principal Executive Director of the Office of Acquisition
Logistics and Construction and Chief Acquisition Officer, and
Dr. Angela Billups, the Executive Director of the Office of
Acquisition Logistics and Construction and Senior Procurement
Executive (SPE), and Mr. Andrew Centineo, Executive Director
for Procurement and Logistics from the Veterans Health
Administration (VHA), and Dr. Thomas Emmendorfer, the Executive
Director for the Pharmacy Benefits Management Service.
Will all the witnesses please stand and raise your right
hand. We will swear you guys in.
[Witnesses sworn]
Let the record reflect that the witnesses answered in the
affirmative.
Mr. Parrish, you are now recognized for 5 minutes to
provide your testimony.
STATEMENT OF MICHAEL PARRISH
Mr. Parrish. Thank you, Chairwoman Kiggans.
Good afternoon, Chairwoman Kiggans. Ranking Member Mrvan,
and members of the subcommittee. I am pleased to appear before
you today to discuss the VA procurement and Department's
compliance with domestic preference rules such as Made in
America that govern the purchase of goods and services from
American sources.
As stated, joining me today are my colleagues, Dr. Angela
Billups, the Executive Director for the Office of Acquisition
and Logistics and our Senior Procurement Executive, Mr. Andrew
Centineo, our Executive Director for Procurement Logistics from
the Veterans Health Administration, and Dr. Thomas Emmendorfer,
the Executive Director of Pharmacy Benefits Management
Services, also from VHA.
VA complies with the Buy America Act by following the
standardized guidance in the Federal and VA mandates. The
Department works diligently to purchase goods made in America
whenever possible and we are committed to the full
implementation of our statutory requirements. We are working in
collaboration with other Federal entities as well as industry,
to identify U.S. made products and to support the rebuilding of
U.S. manufacturing capacity. As a result, the vast majority of
what we purchase comes from domestic sources.
As stated, the COVID-19 pandemic heightened awareness of
our dependence on markets outside the United States for raw
materials in the manufacture of certain products. This
dependence is not just a VA problem, it is a national problem
that is been decades in the making. Essential healthcare items
such as Personal Protective equipment, or PPE, and
pharmaceuticals are two examples where U.S. dependency on
foreign markets over the years has actually increased in
addition to the known information technology challenges.
Nonetheless, VA is committed to working with other federal
agencies to communicate to industry the importance of
domestically produced products, as well as to identify American
made products and support the rebuilding of the United States
manufacturing capacity.
In those instances when VA is unable to buy American made
products, we carefully follow the rules and regulations and
have established procedures for requesting a waiver or applying
an exemption. I personally review each of these requests. For
example, in Fiscal Year 2023 VA has requested and received 52
waivers, 23 of which are for pharmaceutical purchases by our
mail order pharmacy program. This is just over $9 million in
total spend for pharmaceuticals with approved waivers for this
fiscal year. As VA is projected to spend $5.1 billion on
pharmaceuticals, the approved waivers represent approximately
0.2 percent of the total pharmaceutical finished product spend
for our mail order pharmacy program.
It is important to note that these foreign purchases are
our last resort, as you stated. We only approve them because
they are in the best interest of the veterans and we cannot
find an American source. These products are always Food and
Drug Administration (FDA) approved and commercially available.
VA is continuously engaged in efforts to increase opportunities
to purchase domestically manufactured products. Many drugs, for
example, require ingredients that come from or are manufactured
in markets outside the United States. With the veteran's
healthcare needs as our priority, it is not always possible to
obtain the required medication from a domestic source. The Food
and Drug Administration Office of Pharmaceutical Quality's most
recent annual report states that only 42 percent of
pharmaceutical manufacturing sites are U.S. based, with the
rest of the world accounting for 58 percent.
However, compliance is not enough, and neither is the
status quo. We are on offense when it comes to ``Made in
America'' compliance. We are proactively increasing our
outreach efforts and partnerships with American industry,
resulting in invaluable industry insights on the domestic
availability of products, market trends, best practices and
innovations. Our pathfinder tool that you may be aware of,
pathfinder.VA.gov, is one method of capturing this market data.
Another example is VA is piloting a program to find
domestically manufactured drug products.
VA also remains committed to exploring and supporting with
our industry partners all opportunities to make PPE in America.
The journey requires support beyond the Federal healthcare
space of VA to achieve that goal while maintaining supply chain
resiliency and to reduce dependency on overseas markets for
these PPE requirements. In April 2023, VA participated in a
Make PPE in America Industry Day hosted by the Department of
Health and Human Services (HHS). At that joint event, all
Federal agencies expressed their commitment to work toward full
implementation of the Make PPE in America Act, with the end
State of buying 100 percent of Made in America PPE.
Unfortunately, in many circumstances, we found that certain
inputs of PPE are not yet manufactured in the United States, as
much of the raw materials are manufactured overseas.
Our efforts also extend beyond PPE and pharmacy as we work
in support of increasing the purchase and manufacture of all
products made in America. Regarding infrastructure and the Buy
America, Build America Act, to date, we indeed have had only
two waivers, and that is because we are complying with the law.
We have incorporated construction clauses in all our contracts
and are enforcing that America made materials are used in all
of our construction projects.
Additionally, we are working closely with our interagency
partners to address foreign owned and controlled interests, to
identify and mitigate cybersecurity vulnerabilities, as well as
potential threats to our supply chain, and to protect our
veterans' information, both personal and health data.
As a Chief Acquisition Officer and Senior Accountable
Official for the Department, I am a very strong proponent of
purchasing products that are made in the United States, and I
welcome all industry partners who can meet the FDA and Made in
America compliance requirements. Additionally, we embrace the
opportunity to continue to partner with you and your staff, as
well as the White House to improve our national manufacturing
base. Our veterans deserve no less.
Chairwoman Kiggans, Ranking Member Mrvan and members of the
subcommittee, I agree with your concerns, and I thank you for
the opportunity to speak about VA procurement and the
opportunities to increase manufacturing production in the
United States and to reduce our dependency on overseas markets
for certain raw materials and finished products.
My colleagues and I are pleased to answer any questions you
may have.
[The Prepared Statement Of Michael Parrish Appears In The
Appendix]
Ms. Kiggans. Thank you, Mr. Parrish.
We will now move to questions, and I yield myself 5 minutes
first.
A September 2022 Office of Inspector General (OIG) report
detailed issues with Buy American Act compliance at Regional
Procurement Office Central. The report found that ``contracting
officers did not always meet the intent and requirements of the
Buy American Act because of insufficient oversight and
training.'' The OIG found over half of sample contracts and
associated files contained evidence of non compliance with the
Buy American Act and associated laws, regulations, and
policies.
Dr. Billups, what has the VA done to correct this?
Dr. Billups. The VA actually started working on the Buy
American Act (BAA) and trying to make some corrections because
we actually received a similar finding in the 2018 timeframe
from Government Accountability Office (GAO). One of the things
that we did at that time, we established some new training. In
addition to establishing the new training, we did a stand down
day, to say 100 percent of the workforce needed to attend the
training, and the BAA was part of that training at that time.
Some of the things that we also did at the end of that--
going into 2020, we did a compliance review so that we could
see how we were doing. We did find that we were not doing as
well as we had hoped to do. So, you fast forward to 2021 when
Infrastructure Investment and Jobs Act (IIJA) was passed, some
of the things that we did then: we took all of the information
that we had learned from the previous updating of the training,
as well as helping people to understand what are the things
they should do, we implemented some new guidance, we put some
tools into the guidance so that they would know the things they
needed to think about when they were making these purchases.
In addition to that, at the beginning of Fiscal Year 2023,
all the information that we had learned, we established an
innovation lab where there was participation across all of the
buying activities. Everyone had to have a representative in
that innovation lab so that we could all understand the
problems are, what are the things that we need to do. We
implemented those things in the 2023 timeframe, and we are
already scheduling a lessons-learned as it relates to the Buy
American Act, IIJA, the changes for Fiscal Year 2024. The
planning started for that in September, and of course, we will
let the buyers get through the end of the Fiscal Year and we
will start that new innovation lab. Hopefully we will learn
something today that will also be useful for that purpose.
Ms. Kiggans. Great.
Could you share one of or some of what those lessons
learned were? Do you have maybe a few top three or four?
Dr. Billups. Some of them was that people just did not
understand the--like in the Buy American Act itself, so much a
percentage of the materials and those percentage of those
materials have changed over the years now that there are
emphasis on Buy American. They did not understand the
difference between the manufacturer in America and the
component piece and putting those two things together. They did
not really understand what they were looking at.
Some of the other areas was sometimes people would look at
the Trade Agreements Act and the Buy American Act and there was
some confusion between those two Acts. Then you turn around and
throw IIJA on top of that, which is a little different from
even Buy American in 100 percent components, 100 percent
manufacturing. We continuously reach out. I have my compliance
group to just look at all of the different awards that we are
making so that we can make sure we are following. When we find
there is a compliance issue, we immediately reach out to those
heads of those contracting activities.
Ms. Kiggans. Some continuous training, it sounds like, and
oversight.
Dr. Billups. Yes.
Ms. Kiggans. I am glad to hear the VA is taking the issue
seriously.
However, the Make PPE in America Act went into effect 18
months ago and brought about significant changes to how we buy
PPE. I am concerned the VA's past issues complying with the Buy
American Act do not bode well for the Make PPE in America Act
implementation.
Mr. Parrish, has your office published any guidance on the
Make PPE in America Act yet?
Mr. Parrish. Ma'am, let me go back to--if I can respond
also to your previous question, just other data points so you
are aware, is we have submitted for closure those open items to
the OIG as far as the training, and we have also had ongoing
trainings. We said we just had our nationwide enterprise-wide
acquisition workforce summit, where Made in America training
was reinforced, was retrained there.
When it comes to the PPE Made in America Act compliance,
let me pass that off to Mr. Centineo and he could talk more
specifically about that.
Mr. Centineo. Thank you for that question.
For Made in America, as was discussed earlier, in April we
met with all of our Federal partners, we engaged with industry.
Over 600 participants were in the event with the Federal and
the industry partners that were there. We have continuous
outreaches, we have biweekly engagements with those folks that
are actually vendors, suppliers, and manufacturers with the VA.
We continue to have that outreach every 2 weeks with our
programs that are within the Medical Surgical Prime Vendor
Program, which was mentioned earlier.
Then the larger purview is the PPE industry. In that PPE
industry we have got about 1,500 products for our product list
that we are expanding to look at. We have inputted, and we have
asked for self-certification, which we have received 109
products on our product list self-certified by vendors to say
that they are 100 percent Made in America. We continue to have
an outreach every single time. We let our folks know if there
is a product that is out there, please let us know, because we
want to move in the direction where industry is so that we are
absolutely compliant with that.
As was mentioned earlier in some of the opening remarks,
this is a decades long challenge, so industry realizes it and
they are leaning toward us the same way we are leaning to them
to be partners in this.
Ms. Kiggans. My time has expired. Thank you very much.
I would now yield to Ranking Member Mrvan for his
questions.
Mr. Mrvan. Thank you, Chairwoman.
Mr. Parrish, as part of the bipartisan infrastructure law,
the Build America, Buy America Act re-emphasizes the
requirement for Federal infrastructure to use domestically
produced steel, which I am a huge proponent of. Can you explain
to me or to the committee how you are overseeing the use of
U.S. steel on all VA infrastructure projects?
Mr. Parrish. Thank you for that question, sir.
As I mentioned that we only have two waivers in place. We
are mandating that the Made in America material requirements,
in particular, are covered on all our construction projects.
The way we do that is, we have our resident engineers for
the major construction projects. They are onsite and they
validate the bill of materials, and they ensure that all the
products that are coming into the system to include steel--
because I agree with you that it needs to be America made
steel--they are indeed America made. The other part that we
have is we have an Indefinite Delivery Indefinite Quality
(IDIQ) contract, and we have 13 service disabled veteran owned
small businesses around the Nation that handle our construction
management services. Part of that independent review is also to
make sure that we have a double check on ensuring that with the
Buy America Build America Act.
Mr. Mrvan. Okay.
There is a current backlog for infrastructure projects at
the VA, and I hope that Congress can put more of an emphasis on
funding these requirements. They directly benefit veterans as
well as domestic manufacturers.
Mr. Parrish, are you aware of what the current backlog of
infrastructure projects at the VA would cost?
Mr. Parrish. Yes, sir. We have had significant discussions
about infrastructure where we are looking at the next coming
years as being our year of infrastructure. As you are well
aware, that our facilities debt, if you will--the average age
of our facilities are over 60 years old when the average age of
civilian hospitals are approximately 18. We have a lot of
challenges on maintaining and ensuring that we properly size
and focus on the--with the The Sergeant First Class Heath
Robinson Honoring our Promise to Address Comprehensive Toxics
(PACT) Act in particular--on where our veterans are moving to.
I am aware, and I believe that we have other presentations
for you at different dates for that.
Mr. Mrvan. Okay.
Then my follow-up question, do you know how much the VA has
appropriated for infrastructure projects in Fiscal Year 2023?
Mr. Parrish. I do not have that off top of my head, but I
could find out for you, sir.
Mr. Mrvan. Okay.
With that, I yield back.
Ms. Kiggans. Thank you very much.
The chair now recognizes Ms. Radewagen for 5 minutes.
Ms. Radewagen. Thank you, Chairwoman Kiggans, Ranking
Member Mrvan, for holding this hearing today. This is an issue
which is very important to my home district.
The administration's overuse of exemptions harms local
economies like American Samoa's fishing and canning industry.
We are in direct competition with foreign processors who
underpay their workers and have lower standards for illegal and
unreported fishing. This not only harms our economy and the
environment, but a lack of support for American industry and
self sufficiency opens us up to national security concerns.
Unscrupulous actors, such as China, who do not have the same
commitment to quality and safety as the U.S., will capitalize
on every bit of business we cede to other countries, be that
directly or indirectly.
Our agenda today focuses on VA procurement, but the
importance of upholding the Buy American Act across the board
cannot be understated.
These questions are for any of the VA witnesses.
Roughly how many nonavailability waivers has VA granted
since Executive Order (E.O.) 14005 was issued in January 2021?
Mr. Parrish. I did mention in my hearing, ma'am, that for
the year, we have had 52 waivers. The full--since 2021. I do
not know if we have--we will have to take that for action and
get you information.
Ms. Radewagen. What types of products has VA historically
requested non availability waivers for? Excuse me.
Mr. Parrish. Sure. Since they come to me personally, like I
said, I review every single one of the packets and that, you
know, gets through a rigorous process through Dr. Billups'
organization and mine. It is always started--you know, as I
say, acquisition is a team sport. Those requirements start at
the clinical level and are clinically driven for how we serve
our veterans. Half of them or majority of them are
pharmaceutical, as I mentioned in my initial address. Also we
have quite a few of medical devices that we have come through.
Ms. Radewagen. Okay. Anybody else want to jump in?
What steps has VA taken to identify domestic producers of
these types of products and what groups have you worked with?
This is for any of the witnesses.
Mr. Parrish. Sure. I mentioned mine, so I will pass it off
to--let me start with Mr. Centineo, and he could talk about
the--what we are doing with medical and maybe pass it off to
Mr. Emmendorfer for pharma.
Mr. Centineo. Sure. We have continuous outreaches. We have
one of the great partners that we have is a coalition for
government procurement, a major nonpartisan group that meets
with us, and it is small and large businesses, and we engage
with them continually. We get feedback from them because of the
fact that they have a large market share of the medical supply
business, both supplies and equipment. We are able to have
those engagements with that particular group. Then we also do
it with, as I mentioned earlier, for our medical supply
program, and that is a continual process as we move toward our
next generation of our Medical Surgical Prime Vendor.
I will pass it to Tom.
Mr. Emmendorfer. Thank you for the question.
We do have a pilot that was initiated as a joint Federal
initiative with the White House and the Made in America Office.
We selected two drugs from the Food and Drug Administration's
drug and biologic essential medicines, medical countermeasures,
and critical inputs for the list described in section three of
the Executive Order 13944. The two drugs that we selected were
atropine injection and hydralazine injection. The reason that
we selected those drugs is because they are injectable drugs,
have been known to be prone to drug shortages, and so we have
developed those clinical requirements and giving a preference
toward domestic manufacture.
The reason that we just started with two for the pilot is
when you look at the Food and Drug Administration Center for
Drug Evaluation and Research report on the state of
pharmaceutical quality, they estimate that 52 percent of the
essential medicines are completely reliant on foreign
manufacturing sites. That means that we are really--VA, we are
trying, but we also are moving at the speed of industry.
When you look at the report, about 8 percent of the
essential medicines, the critical input, the active
pharmaceutical ingredient that makes up the final drug dosage
form, those are made solely domestically. Then when you look at
the manufacturing of the final dosage form, that goes up to
about 18 percent being available completely domestically. If
the pilot is successful, we will definitely look at expanding
it.
Mr. Parrish. I will also add Congresswoman, that we work
very collaboratively with the Made in American office and the
White House, along with our other partners, both industry and
other Federal agencies.
The other thing, because I am actively pursuing American
products, and as I mentioned in my original testimony, that
some of the concerns is there are some American manufacturers
but they are not fully through the FDA approval process. I
think that is something that we can help them with or all of us
as government can help with.
The other part is, as I mentioned, Pathfinder. We created
this tool mainly to be able to capture new manufacturers and
new vendors for us. We have to date had about 1,000 submissions
that have helped us identify people that could actually produce
the products for us as needed.
Ms. Radewagen. Thank you, chairwoman.
I yield back.
Ms. Kiggans. Thank you, Ms. Radewagen.
The chair now recognizes Mr. Pappas for 5 minutes.
Mr. Pappas. Thank you very much.
This subcommittee has had several hearings over the last
few years on supply chain modernization. There were concerns
before the pandemic when VA acquisition was added to the high
risk list, there were certainly serious concerns during the
pandemic when we saw widespread disruptions to the availability
of the supplies that VA needed, and obviously since as efforts
to modernization unfortunately have not moved forward as
quickly as many on this committee would like. We thank you for
your work and your commitment to getting this right.
I am hearing issues from veteran owned small businesses
around this matter where medical centers are continuing to use
purchase cards rather than some of the already competed tools,
MSPV and blanket purchase agreement vehicles. I think this
presents a real challenge for us to be able to track purchases
and know exactly what we are buying and how we are buying
American made products wherever possible.
I was wondering if the panel could answer that question
around the purchase cards and what it will take to change
things at VA to get away from this or to have better
transparency into what we are actually purchasing with these
cards?
Mr. Parrish. Yes, thank you for that question, Congressman
Pappas.
As you know, our supply chain modernization solicitation is
ongoing and one of our known gaps, as you are well aware, when
we started the supply chain modernization effort, is our lack
of enterprise visibility into inventory management and
inclusive of the Made in America aspect. You will note that the
four key deliverables as a reminder of the supply chain
modernization effort is enterprise visibility of inventory, so
across all systems, it is also enterprise visibility of asset
management, which is our capital equipment as well as our
facilities, enterprise visibility of order management, and that
gets to how are we buying things, and then the final one is
this enterprise visibility, supply chain risk management.
I glanced over the idea of the foreign own controlled
interest concerns. For everyone is, awareness is the way the
foreign actors are operating they would come in and they would
create a shell company, an American made company, that kind of
perceives that they are American made when they are truly owned
by potentially bad actors. One of the big concerns that we have
in the enterprise acquisition teaming effort that we are doing
in the spirit of jointness and transparency in VA, is to make
sure that all entities are well aware of what we are doing is
integrated. We have the Office of Information and Technology
(OIT) team, our security team, our hospital staff, all ensuring
that if we are forced to have to buy some of these foreign
products, that there is no way, shape or form that they are
able to touch our data or our systems. That is coming. That
piece we are working actively on a human basis. With the supply
chain modernization effort, the goal is to be able to see that
proactively and not react to that.
I am excited for the future, but it is going to take some
time, probably another year or so before we get to that point.
Mr. Pappas. Do you have a sense of how big a problem this
is?
Mr. Parrish. For PPE using credit cards, it is about 42
million. It is not insignificant. It is a decent amount of
money and I personally want to find a way to--and we are
working across the processes to ensure that we are using best
in class contracts, the category management, and other efforts.
It is a training effort, but it is also a way to ensure that
our field is using the contracts.
I think MSPV, the new Medical Surgical Prime Vendor
contract, is in place. We have some enforcement mechanisms, as
you know, with other kind of major programs to ensure that the
distributor is able to deliver the products on time and on
budget, because one of the backups or the excuses I have heard
is, hey, we have had problems with a distributor, so therefore
we got to use the credit card on an emergency buy. We want to
make sure that--and I believe the new contract that is getting
put in place should be able to stop that or significantly
reduce that. We are focused on that effort.
Mr. Pappas. Well, thank you. I appreciate your attention to
that. I think it is kind of a weak link here and appreciate any
additional information you can provide on it.
I am just curious, when it comes to workforce and having
the acquisition workforce that we need to be able to deliver on
Buy America and the host of other challenges that you face in
VA, can you tell us where we are there and what Congress can do
to support you? Is it just appropriations? Are there other
things that you need to ensure that we can hire up and have the
workforce that is well trained and knowledgeable in these
areas.
Mr. Parrish. I think I will take that for action, come back
and see you with a more full throated answer. My personal view
is, I think that we again, not just VA, but as we do have gaps
and we do have resource constraints and have dependencies,
unfortunately, on contract staff, I believe that the hiring
process in Federal Government could be improved to help speed
the ability to get people through the system. We will take that
and come back to discuss that further with you, sir.
Mr. Pappas. Okay, thank you.
I yield back.
Ms. Kiggans. Thank you very much.
We will go to round two. I have a couple other questions,
if any other members do as well.
Let us see. Recently I joined a domestic pharmaceutical
manufacturing caucus that is bipartisan that we have here in
Congress. I also was on even a panel this morning, healthcare
panel. We were talking about some of the statistics of drugs
that we import that are made in China. From that panel, some of
the statistics were pretty shocking. That said, we import
almost all of our over the counter pain medications from China,
70 percent of acetaminophen, 95 percent of ibuprofen. On top of
that, 90 percent of prescription medications are made in China,
including antidepressants, chemotherapy treatment for children
and adults, medication for Alzheimer's, HIV, diabetes,
Parkinson's, and epilepsy. A recent U.S. Department of Commerce
study found that 97 percent of all of our antibiotics come from
China. These are pretty shocking statistics. Would you say that
the VA is aligned with these statistics, or what percentages--
what we are trying really hard to at least have the VA focus on
made in America pharmaceuticals. What percentages? Is it this
high or is it different for the VA that relies on China for
pharmaceutical drugs or components of those drugs?
Mr. Parrish. I agree with your concerns, and it is a
frustration for me personally. However, I will pass the details
off to Dr. Emmendorfer.
Mr. Emmendorfer. Yes. I mean definitely share your
concerns, and thank you for the question.
With the contracting, we have to be compliant with the
Trade Agreements Act. We do have cases where there is also
another law, Public Law 102-585. For your innovator drugs where
there is not any generics available, there are cases where our
contracting officer does need to make an award where it is
coming from a country that is not compliant with the Trade
Agreements Act. That is really because we need to put the
veterans first in their health care and their needs. I do want
to assure everyone that when VA is procuring drugs, we are
procuring drugs that are approved for sale in the United States
by the Food and Drug Administration. The Food and Drug
Administration has the overarching responsibility for ensuring
that the manufacturing plants meet the quality standards to
sell the drugs in this country, as well as meeting the safety
and efficacy.
We do have some instances of drugs being on contract that
are not compliant with the trade agreements.
Ms. Kiggans. Do we test them in this country randomly at
any point to ensure that we are getting a quality product?
Mr. Emmendorfer. Thank you. That is another great question.
That responsibility--we are a healthcare system, so it is
not our responsibility to be testing the end product. When that
is being done, it is being done by our regulators, the Food and
Drug Administration. They are responsible for ensuring that the
manufacturing plants meet current good manufacturing practices.
According to the one report that I referenced earlier, it does
reference some of the sample and testing that the Food and Drug
Administration does. We as an agency do not.
Ms. Kiggans. Okay. We will make sure we get the FDA here
next time.
Then you mentioned in the pilot program for the
pharmaceutical drugs that you had two, injectables that you
were starting with. What preference--are you prioritizing
injectables or what is the rollout plan after those two?
Mr. Emmendorfer. We preferenced--we selected two
injectables because injectables can be more prone to some
shortages, as I am sure you are aware with your background. The
reason that we selected those two is because they are on the
FDA's essential medication list. We have to start somewhere, so
we are starting with those two. We submitted the clinical
requirements at the end of June, and now our acquisition staff
is--they are working on the acquisition package. We did give
preference to domestic manufacturers, for example, if the
active pharmaceutical ingredient was sourced from this country.
We built in some of those, so. We started with two drugs. There
is a list, I want to say of about 186, so we had to start
somewhere.
Ms. Kiggans. What is the next down on the list? Are you
just going to stay in the injectable department, or is there--
--
Mr. Emmendorfer. I do not know. I think we just have to
wait to see what happens with this contract and make an
assessment and analyze the results. If we are able to make the
award, try to determine through collaborative market research
with our contracting officers where the next steps may take us.
Ms. Kiggans. Great.
Then also we know that many of the components of
pharmaceuticals and medical devices are produced overseas, and
the VA only represents a small portion of the market. What
would it take to truly reshore some of these pharmaceutical
supply chains and medical device supply chains? What type of
thing should Congress be focused on?
Mr. Emmendorfer. I do not know that I can speak to that
globally, but I did not provide the statistics on what part of
the market share we represent and that I can speak to.
Our mail order pharmacy this year is going to spend about
$5.1 billion. Our whole healthcare system as a whole spends
right around $8 billion on pharmaceuticals. When you look at
that into the context of what we spend in the United States for
pharmaceuticals, that represents somewhere between 1 to 2
percent. I think with that type of market share, that is why we
are kind of reliant on the speed of the industry as well. I do
not know that we have the market share to make any significant
shifts in where corporations and manufacturers may decide to
manufacture their drugs.
Dr. Billups. I would like to just add a little bit to that
question--I mean to that response.
That is some of the things that we can do, a lot of times
when you are looking at new areas that you kind of need to
infuse industry, you really have to use other vehicles other
than the Federal Acquisition Regulation. When I was the SPE at
HHS, it was something happening with antibiotics and HHS has
the authority to do OTAs, other transaction authority. Then
that helped us at that time at HHS to have a cost sharing.
Industry had their role, we had our role in the Federal
Government and we brought those things together and we were
able to get a result a lot faster than going through the
processes that you have to go through with the Federal
Acquisition Regulation.
That is one of the things that Congress can do to help us.
Really just to understand the market that is out there now,
because some of the guidance that we have and the way that we
have to go about procuring things, it really does not help when
you have the issues that we have in front of us that is
impacting the entire country.
Ms. Kiggans. I hear you. Trying to marry it with the
civilian sector a little bit better.
Dr. Billups. Yes.
Ms. Kiggans. Thank you very much.
My time has expired. I yield to Mr. Mrvan for 5 minutes.
Mr. Mrvan. As I stated in my opening statement, our country
has relied for decades now on foreign production of supplies
and goods and I am very pleased to see that President Biden has
made it a core issue to ensure that we invest in American
manufacturing. VA is a part of this, but cannot do it on its
own.
Mr. Centineo, do you have any information on what the
market share for VA and Department of Defense (DoD) for the
purchase of medical supplies?
Mr. Centineo. Thank you for that question.
Yes, and in fact, I mentioned earlier, our partners, the
Coalition of Government Procurement, just sent us some
information indicating that the market share that the DoD and
VA possess is somewhere between 2 to 3 percent of the total
supply chain. As was mentioned earlier, some of the
conversation was we move at the speed of industry and we are
all leaning forward to get there. The challenge is going to be
to make sure that we have the right energy to get industry to
be postured to do that so we can all be successful.
Mr. Mrvan. I guess one of the follow-up questions that I
have, and the chairwoman alluded to it, but how is the private
industry, along with you are moving at that same pace, is there
a movement to onshore the production of pharmaceuticals here in
the United States?
Mr. Emmendorfer. Again, that is really outside of what we
can control in VA on what industry is making decisions on
manufacturing. We are trying to make efforts within our agency
by developing the clinical requirements and trying to give
domestic preference to some of the contracts.
The procurement decisions that are made out in the private
sector, I can say that they are going to be procuring all drugs
that are approved by the Food and Drug Administration. If you
go to a private sector pharmacy, they are also going to be
buying drugs that are approved by the Food and Drug
Administration for sale in the country.
Mr. Mrvan. Okay. Part of the compliance with Buy America
requires that there is standardization across the VA when
procurement officials are purchasing supplies. The long-term
solution to this supply chain modernization, but as we all
know, that has had fits and starts for years.
What are you currently doing to push these requirements out
to the Veterans Integrated Services Networks (VISNs) and
medical centers to ensure compliance with the Buy American
laws?
Dr. Billups. Thank you for the question.
Some of the things that we are doing in 2024, some of what
we are going to do is really identify those--because we know
who the clinicians are. The clinicians come up with the
requirements from the standpoint of what they need to support a
patient. Then you get to that next step of the acquisition
lifecycle, which is someone has to put that together. It gets
over to the contracting office and the contracting office
finally does contract execution. All of these things kind of
have to be happening lockstep and what we are doing in VA in
2024 is bringing the right people to the table so everybody
kind of understands.
It is just like, this morning we were talking about
something and a comment came up around market research. Market
research a lot of times is thought about once the package gets
over to the contracting officer. It is too late to think about
market research when the package gets to the contracting
officer because the market research should be done before you
finalize your requirements development. It is all of these
various types of things that we just need to bring the right
people, bring them together in a way so that we can push
forward some of these things that are very, very important in
VA. As it relates to healthcare of veterans it is always very
important and it does not matter whether it is one veteran or
ten.
Mr. Mrvan. Okay.
With that, I yield back.
Ms. Kiggans. Thank you. Mr. Mrvan.
The chair now recognizes Ms. Radewagen for 5 minutes.
Ms. Radewagen. Thank you, Madam Chair.
Mr. Centineo, in remarks you recently gave during Make PPE
in America Industry Day you discussed challenges VA faces
acquiring domestically sourced PPE and noted industry issues
domestically producing PPE. You also indicated VA was working
to identify domestically produced PPE.
Can you explain VA's process for identifying domestic PPE
sources?
Mr. Centineo. Yes. Thank you for that question.
As was mentioned in April, we met with our industry
partners and with our Federal partners in the initiative for
100 percent Make PPE in America. Since that time, we have held
not only our Medical Surgical Prime Vendor industry
opportunities--again, I mentioned earlier, we have our bi-
weekly engagements with industry. We actually met, it was
mentioned earlier AWIS, the Acquisition Workforce Innovation
Symposium, where industry was there. We engaged at all these
opportunities and we continue to reach out and have outreaches.
We have had outreach prior to that April timeframe for our
Medical Surgical efforts, but this has actually hyper focused
us on where we need to be with industry and working for
industry.
Again, the industry feedback to us is, we will provide you
the products. We have to make sure that the demand signal is
there. It goes right back to the conversation of the earlier
remarks of this is a decades long challenge that we have where
everyone is in the same space for the same products. The
challenge is that much of it has been overseas. We have to work
with industry a little bit more closely, and we continue to do
that on our outreaches continually through multimedia.
Ms. Radewagen. Has VA entered into any PPE procurement
contracts since the law was enacted? If so, what percentage of
these contracts are compliant with the Make PPE in America Act?
Mr. Centineo. For our Medical Surgical Prime Vendor program
we do not have contracts, we have blanket purchase agreements.
Those are pricing agreements. Those pricing agreements are
established through a solicitation that is actually done
through tiered evaluation to be able to get to the vendor that
can provide us those items at the best price and cost for the
VA. Oftentimes those are service disabled, veteran owned
businesses. Then we place our orders through what is called a
Prime Vendor distributor or distribution contract. Our orders
are placed to the distributor. Those distributors actually go
to those suppliers to actually source the material. They are
not contracts, they are pricing agreements. Our contracts are
through our Prime Vendors sourcing distribution contracts.
Mr. Parrish. I am sorry.
Ma'am, just to also add to that is part of the compliance
for Made in America, those distributors, like on the
construction side, they have to self-certify that they are
compliant with the Made in America products. That is something
we do.
I will also add that, as you are aware, there is an
Independent Verification and Validation (IVV) law or bill that
is being processed through the staff and through your areas,
and we are not waiting on that, we are actually creating an IVV
process ourselves. That is going to be used to focus on some of
these self-certifications to do the independent validation and
verification of items.
It is a long term process, but we anticipate having that in
place as part of----
Ms. Radewagen. How does VA ensure that the PPE it purchases
from its vendors is Make PPE in America compliant?
Mr. Parrish. That is the certification I mentioned. The
distributors--you know, part of that MSPV contract was the Made
in America compliance, that they self-certified, which if they
are fraudulent about, that is a felony, violating Federal
certification standards. Then the other part is we need to
strengthen that. That is the independent validation component
that I had just mentioned that we are putting in place.
Ms. Radewagen. My staff has met with a number of
organizations that manufacture PPE who feel that they are being
under utilized by VA. Do you disagree with their conclusions?
Mr. Parrish. I will personally state and just reinforce for
all of our industry partners who are watching this and
listening to us now, that we are looking actively and for you
to come to sell to us. As I mentioned in my oral testimony, a
lot of people are not fully certified, and that is part of the
challenge. We will embrace and we fully want to buy from
American manufacturers that are fully compliant. If they are
there and we are not aware of it, I encourage them, again, use
pathfinder.VA.gov to make us aware of it if we do not know who
they are.
Ms. Radewagen. Does the cost of purchasing domestic PPE
ever dissuade VA from looking to work with domestic producers?
Mr. Parrish. I do not think cost is our driver because we
are focusing--one of the changes we are also doing in VA is
focusing on best value for major programs. For commodity type
purchases, as Mr. Centineo mentioned, that we are doing
purchase agreements that are price structured, and then we buy
from there through our distributors.
I do not know if you want anything.
Ms. Radewagen. Add anybody else want to add to it?
Dr. Billups. The only thing that I would add to that, the
preference as it relates to the different pieces of
legislation, one of the things that we also did, we have
something that we--well, at the federal level they have
something called a mythbuster around some of the issues with
buying things. We adopted that concept at the VA. We recently
did a mythbuster because one of the issues that came up was,
well, the only thing that we have to do at VA is look to see if
we have two veteran owned companies. The answer is not that we
have two veteran owned companies, because if you are buying
PPE, you also have to comply with IIJA. What we did with the
mythbusters, we just helped people understand what is that
decision tree that you have to look at to get to, because in
some cases the veteran owned company may not have a product
that is 100 percent ``Made in America'' as well as 100 percent
manufactured (in America), but there could be another small
business or some other company. So the preference in that case,
they would have to go to what company can comply with IIJA.
Ms. Radewagen. I see.
Thank you, Madam Chairwoman. I yield back.
Ms. Kiggans. Thank you, Ms. Radewagen.
Ranking Member Mrvan, do you have any closing remarks?
Mr. Mrvan. I do. Thank you, Chair Kiggans.
I appreciate the testimony and the answers from our
witnesses today. I would like to re-emphasize my support for
all that the administration and VA are doing to ensure that we
make Buy America a priority.
I think Mr. Parrish and the rest of our witnesses have a
huge task ahead, but I appreciate their commitment to continue
to make this a priority, and I look forward to continuing this
oversight.
I yield back.
Ms. Kiggans. Thank you, Mr. Mrvan.
I just want to thank our witnesses for taking time to
educate us today and for prioritizing domestic manufacturing of
our pharmaceuticals, medical devices, and PPE. It is really an
issue of national security, so thank you for continuing to just
prioritize that and work on that issue.
I ask for unanimous consent that all members shall have 5
legislative days in which to revise and extend their remarks
and include any extraneous material.
Hearing, no objection, so ordered.
The committee stands adjourned.
Thank you.
[Whereupon, at 4:07 p.m., the subcommittee was adjourned.]
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A P P E N D I X
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Prepared Statement of Witness
----------
Prepared Statement of Michael Parrish
Good afternoon, Chairwoman Kiggans, Ranking Member Mrvan, and
Members of the Subcommittee. I am pleased to appear before you today to
discuss VA Procurement and the Department's compliance with domestic
preference (for example, Made in America) statutes, other laws,
Executive Orders, regulations and policies that govern the purchase of
goods and services by Federal entities. Joining me today are my
colleagues, Dr. Angela Billups, Executive Director, Office of
Acquisition and Logistics, OALC, and Senior Procurement Executive; Mr.
Andrew Centineo, Executive Director for Procurement and Logistics from
the Veterans Health Administration (VHA); and Dr. Thomas Emmendorfer,
Executive Director, Pharmacy Benefits Management Services, VHA.
The Coronavirus Disease 2019 (COVID-19) pandemic heightened
awareness of our dependence on markets outside the U.S. for the raw
materials and the manufacture of certain products. This dependence is
not just a VA problem, but a national problem that has been decades in
the making. During those decades, U.S. industry has outsourced
manufacturing and supply chain capabilities to overseas entities.
Essential health-care items, such as, personal protective equipment
(PPE) and pharmaceuticals, are two examples where U.S. dependency on
foreign markets over the years has increased. With this vulnerability
in mind, Congress, the Administration and industry have placed renewed
emphasis on the manufacture and purchase of products made in the U.S.
However, achieving the goals espoused in these statutes, policies and
executive orders takes time. VA is committed to full implementation of
our statutory requirements and we are working in collaboration with
other Federal entities and industry to identify U.S.-made products and
support the rebuilding of U.S. manufacturing capacity.
As CAO for the Department, I am a strong proponent of purchasing
products that are made in the U.S. The VA's primary mission is
providing high quality health care, benefits, goods and services to
Veterans. We saw first hand the fragility of some of the supply chains
upon which we depended during the pandemic and are committed to
ensuring we are not in this position in the future. The Buy American
Act (BAA) and the Build America, Buy America Act (enacted as part of
the Infrastructure, Investments and Jobs Act (IIJA)), each include
specific language espousing a preference for the procurement of
domestic products. VA operates the largest integrated health care
system in the U.S. The population of Veterans receiving care in VA
health care facilities is expected to grow, the present VA population
served is just over 9 million enrolled Veterans, out of the U.S.
population of 337 million people.
Availability of 100 percent domestically produced PPE requires a
clear and organized federal demand signal to support the existing and
future industry investments, innovation as well as a long-term
commitment. VA is committed to working with other Federal agencies to
communicate to industry the importance of domestically produced PPE.
VA Compliance with the Buy American Act
VA complies with the BAA by following the standardized guidance in
the FAR, VA Acquisition Regulation (VAAR) and the VA Acquisition Manual
(VAAM), where appropriate. VA has also published IIJA requirements and
standardized guidance in the VAAM, building on the BAA guidance in the
FAR, identifying the difference between the BAA and IIJA requirements,
along with establishing and publishing other standardized guidance
specific to IIJA in the VAAM, which was effective in February 2023.
Contracting officers and heads of contracting activities responsible
for making these assessments have ready access to information and tools
needed to effect BAA compliance and other requirements. When needed,
there are established procedures for requesting a waiver or applying an
exemption that I review personally.
VA Pilot to Preference Domestically Manufactured Drug Products
One area where VA has had to request waivers of Made in America
requirements concerns the purchase of pharmaceuticals. Many drugs
require ingredients that come from, or are manufactured in, markets
outside the U.S. With Veterans' health care needs as our priority, it
is not always possible to obtain the required medication from a
domestic source. However, VA is continuously engaged in efforts to
increase opportunities to purchase domestically manufactured products.
As an example, VA Pharmacy Benefits Management (PBM) Services and
OALC will pilot a program to preference domestically manufactured drug
products. VA PBM Services will start by selecting two drug products and
OALC will develop the acquisition strategy which will include a
preference for domestically sourced and manufactured products. If the
pilot is successful, VA will evaluate potential expansion to additional
products. To enable this work, VA PBM Services will choose two drugs
from the Drug and Biologic Essential Medicines, Medical Countermeasures
and Critical Inputs for the List Described in section 3(c) of Executive
Order 13944; Executive Order on Ensuring Essential Medicines, Medical
Countermeasures, and Critical Inputs Are Made in the United States; to
develop a concept of need and requirements. PBM Services will then
submit the concept of need and requirements to OALC to develop the
acquisition strategy. VA anticipates initiating the pilot by the end of
the first quarter of fiscal year 2024 with a final decision leading to
an award for the effort within 12 months after.
Working with Industry
VA's ability to achieve BAA goals involves regular and open
communication with industry. As part of VA's outreach to and
partnership with industry, VA staff have conducted numerous industry
days in support of VA's Medical Surgical Prime Vendor (MSPV) program.
Additionally, VHA procurement and logistics staff regularly engage
manufacturers and suppliers to better understand how entities interpret
VA requirements and new developments and innovations in the
marketplace. These bidirectional conversations are invaluable and
provide industry insights on the availability of products, market
trends, best practices and innovations.
In April 2023, VA participated in Make Personal Protective
Equipment (PPE) in America Industry Day hosted at the U.S. Department
of Health and Human Services (HHS). Federal agencies expressed their
commitment to work toward full implementation of the Make PPE in
America Act, with the end-state of buying 100 percent ``made in
America'' PPE. In many circumstances, we've found certain inputs of PPE
are not yet manufactured in the US. raw materials manufactured
overseas.
Additionally, VA is committed to collaborating with other agencies
and the Office of Management and Budget to fully implement the Make PPE
in America Act. For example, VA efforts to implement the Make PPE in
America Act include, but are not limited to:
(1) developing an executable acquisition strategy for each PPE
item identified in the PPE Act that has been prioritized for
action,
(2) developing common requirements and an acquisition strategy
for all items on the consensus PPE list by the end of calendar
year 2023, and
(3) reporting noteworthy accomplishments toward the development
of a long-term PPE strategy under the President's Management
Agenda. This reporting amplifies the Administration's
commitment to organize federal demand and strengthening the
domestic supply chain for PPE through increased program,
project, and buying office participation.
Following Industry Day, VA issued a request for information to the
Blanket Purchase Agreement (BPA) holders participating in VA's MSPV
program to gauge how many are fully compliant with Made in America Act
requirements. To date, through vendor self-certification, VA has
identified 129 items on its MSPV product list that are 100 percent Made
in America compliant. Through this process we also identified items
that are not; for example, none of the BPA holders participating in
VA's MSPV program offer nitrile gloves, a critical PPE item that
currently meet the requirements of the Make PPE in America Act.
VA remains committed to explore and support with industry partners
all opportunities to realize Make PPE in America. The journey requires
support beyond the Federal health care space of VA (and DoD) to achieve
the goal, maintain supply chain resiliency and reduce dependency on
overseas markets for PPE requirements ranging from raw materials to
finished products. Our efforts, however, extend beyond PPE as we work
in support of increasing the purchase and manufacture of products Made
in America.
Conclusion
Chairwoman Kiggans, Ranking Member Mrvan, and Members of the
Subcommittee, thank you for the opportunity to speak about VA
procurement and the opportunities to increase manufacturing and
production within the United States and to reduce our dependency on
overseas markets for certain raw materials and finished products. My
colleagues and I are pleased to answer any questions that you may have.
Statement for the Record
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Prepared Statement of Matthew Rosendale
Thank you, Chairwoman Kiggans, for holding this important hearing.
The Biden Administration's policies have decimated the American
middle class. Americans are now paying higher prices at the grocery
store and gas pump due to inflation caused by Democrats' reckless
spending policies. Last week, the United Auto Workers announced a
strike over disagreements with management over pay and benefits for
workers.\1\ The 1,000-pound donkey in the room is that the Biden
Administration's push for electric vehicles has harmed the industry and
led to the disastrous situation we now find ourselves in.
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\1\ https://www.reuters.com/business/autos-transportation/uaw-
detroit-three-automakers-try-reach-deal-before-strike-widens-2023-09-
18/#:81:text=The%20union%20and%20companies%20are,UAW%20is%20demanding%20
through %202027.
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Since the 1930's, preferences for domestically produced goods and
services have existed in federal procurement. Specifically, the Buy
American Act is the primary federal procurement law providing a
preference for domestically produced goods and services.\2\ It makes
sense to support American small businesses as opposed to large foreign
multinational companies when federal agencies are making procurement
decisions. For too long, leaders in both parties have sold out American
workers for cheap, Chinese labor.
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\2\ https://crsreports.Congress.gov/product/pdf/R/R46748
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Under President Trump's visionary leadership, American
manufacturing was prioritized again. He issued an executive order
``Maximizing Use of American-Made Goods, Products, and Materials.''
Realizing how popular President Trump's actions were with the American
people, President Biden has paid lip service to building on his legacy.
Unfortunately, this lip service has resulted in very little concrete
action by the Biden Administration.
In Montana, we have seen firsthand the disappointing effects of
Biden and federal agencies not enforcing the law, which has harmed
domestic industries. I have had the pleasure of visiting the Center of
the Nation of Wool in Billings. From the Revolutionary War to the
present day, wool has been an important component of U.S. military
uniforms.\3\ The Berry Amendment requires that all U.S. military
uniforms be made from 100 percent domestic products, protecting
domestic wool from offshore competition.
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\3\ https://www.sheepusa.org/blog/newsmedia-sheepindustrynews-
pastissues-2017-january2017-woolinthemilitary
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According to the CRS, the items covered by the Berry Amendment have
varied over the years; currently, the law applies to DOD purchases of
textiles, clothing, footwear, food, hand or measuring tools, stainless
steel flatware, and dinnerware. DOD purchases of these items must be
entirely grown, reprocessed, reused, or produced in the United States.
However, over the last few years, DOD has bought wool from overseas in
violation of the Berry Amendment. This has harmed Montana wool growers
and is unacceptable. I remain focused on helping Montana wool growers
and will continue to press the Department of Defense to ensure that our
servicemembers have their uniforms made from American wool.
Congress must provide proper oversight of the executive branch,
particularly the Biden Administration, which has been selling American
workers down the road. Thank you, Chairwoman Kiggans for your
leadership. I yield back.
[all]