A Summary of Preaward Reviews and Examinations of VA Federal Supply Schedule (FSS) Pharmaceutical Proposals Issued in Fiscal Year 2022

The OIG reviews pharmaceutical proposals submitted to the VA National Acquisition Center for Federal Supply Schedule (FSS) contracts valued annually at $5 million or more. VA has delegated authority to award FSS contracts, so all federal customers have access to products with costs that have been negotiated using the collective buying power of the government. OIG preaward reviews assist VA contracting officers with establishing and maintaining fair and reasonable prices on the FSS contracts they award. The reviews are not published because they contain sensitive commercial information protected from release under federal law. To promote transparency, this report summarizes 14 preaward reviews of pharmaceutical proposals that the OIG conducted in fiscal year (FY) 2022. The 14 proposals had a cumulative 10-year estimated contract value of about $11.2 billion and included a total of 808 offered drug items. The OIG team concluded that commercial disclosures were accurate, complete, and current for four of the 14 proposals. This means four proposals were reliable for determining negotiation objectives and for fair and reasonable pricing. The remaining 10 proposals could not be reliably used by VA for negotiations until the noted deficiencies were corrected. The OIG recommended lower prices than offered for 10 of the 14 proposals, resulting in total sustained cost savings of approximately $6.5 million over the life of the contracts. For 29 of the 78 items in the OIG sample, the team determined that proposed tracking customers were not suitable. (Tracking customers serve as a benchmark for potential price reductions during the life of the contract.) The OIG recommended tracking customers that were generally among the vendor’s largest commercial customers or most-favored-customers for the 29 items. This report details the recommendations the OIG made in FY 2022 reviews but does not propose any additional VA corrective actions.