Business board to oversee VA procurement reforms

Anthony Principi has added a new title to his daily job. Along with being secretary of the Veterans Affairs Department, he is now chairman of the board.

Determined to make VA function more like a business, Principi recently formed an oversight board to monitor the department's efforts to adopt private-sector practices. He chairs the board, which met for the first time Oct. 21 and includes executives from across the department and outside consultants.

"The impetus was, I don't like to leave money on the table," Principi said during an interview with Government Executive. "I believe we need to do a much better job to realize greater efficiency."

The board's primary focus is procurement reform. The VA spends nearly $6 billion each year buying everything from pharmaceuticals to information technology systems and construction services. It ranks second behind the Defense Department among federal agencies in terms of the number of purchases made annually. Last May, Principi announced a series of procurement reforms designed to leverage the department's buying power and reduce costs.

At the center of the reforms is relying more on national contracts for commonly used items such as medical supplies. As it is now, VA hospitals and region directors can contract locally for such goods. For instance, 38 different vendors supply the VA with stents, devices used to keep arteries from collapsing, for which the department paid $20 million last year. By consolidating purchasing power into fewer contracts, Principi believes the department can drive down costs. In fact, VA expects to save between $250 million and $450 million in medical and prosthetic supplies alone over the next five years.

Getting VA officials in various regions to use national contracts will be a tough sell for Principi. He is aware of the challenge, but points to the success of the department's pharmaceutical program, which relies heavily on national contracts and has saved the department billions.

"The pharmacy program is one of the great success stories of VA and the nation," he said. "We need to take that to everything else we do."

One purpose of the business oversight board is to ensure that procurement reforms are implemented across all VA agencies. The board will also keep tabs on how small businesses-particularly those owned by disabled veterans-fare under the reforms. Principi acknowledged that under the new approach, many small businesses will have difficulty becoming prime contractors. Currently, small businesses have been awarded 35 percent of standardized VA contracts.