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The Honorable Dr. Robert A. Petzel, M.D.

The Honorable Dr. Robert A. Petzel, M.D., Under Secretary for Health Veterans, Health Administration, U.S. Department of Veterans Affairs

Chairwoman Buerkle, Ranking Member Michaud, and Members of the Subcommittee:  thank you for the opportunity to speak about the Department of Veterans Affairs’ (VA) prosthetics procurement reforms.  I am accompanied today by Mr. Philip Matkovsky, Assistant Deputy Under Secretary for Health for Administrative Operations, Veterans Health Administration (VHA); Dr. Lucille Beck, Chief Consultant, Rehabilitation Services, Director, Audiology and Speech Pathology, and Acting Chief Consultant, Prosthetics and Sensory Aids Service, VHA; and Ford Heard, Associate Deputy Assistant Secretary, Office of Acquisition and Logistics.

VA testified before this Subcommittee and the Subcommittee on Oversight and Investigations in May 2012 regarding our efforts to maintain the high quality of prosthetics VA provides to Veterans while instituting reforms to improve compliance with the Federal Acquisition Regulation (FAR), the Competition in Contracting Act, and to improve our management of government resources.  In follow-up to those hearings, the Chairwoman and Ranking Member submitted a letter to the Department on June 21, 2012, requesting a response by July 6, 2012, that would offer additional information about these reforms.  On July 12, 2012, VA submitted information to the Subcommittee on Health to begin to address the Subcommittee’s request.  Our interest was in responding as quickly as possible to your request, and we regret our submission of July 12, 2012, did not sufficiently address your concerns.  

You also have asked for an update on the actions the Department has taken to reform the prosthetics procurement process since the May hearings.  I am pleased to report that on May 23, 2012, VA issued a Memorandum to the field advising them that it is VA’s policy that those engaged in the ordering of biological implants comply with the FAR and VA Acquisition Regulation (VAAR).  This Memorandum provides further information and guidance to staff to ensure they understand our objectives and procedures.  That Memorandum states that the VA official performing the purchasing activity is to comply with a physician’s prescription when it is indicated.  Furthermore, in response to your advice to transition our warrant procurement program with deliberation and caution, VA extended the date for finalizing this transition from July 1 until September 30, 2012. This transition continues with ongoing communication and coordination with the Veterans Integrated Service Networks to ensure that procurement services are not disrupted.  We are closely monitoring the staffing levels for our contracting organizations, the workload levels, and most importantly, the timeliness of the procurement actions.

Finally, you asked me to address the potential impact these prosthetics procurement reforms could have on Veterans.  As we testified in May, we do not believe that Veterans will be adversely impacted in any way.  We believe that many of our reform efforts are acceptable to all concerned parties.  For example, VA is instituting more audits of purchases to ensure that we are getting the best value for our dollar when we procure a prosthetic or other device.  We also will begin tracking our purchasing trends to identify when and where we can enter into negotiated contracts.  Further, we are streamlining and standardizing elements of the procurement process to reduce variation and accelerate purchases so Veterans can receive their devices and equipment faster.

The proposals that have raised interest are our plans to standardize the purchasing of prosthetics and other devices, and our plan to transition procurement decisions to warranted contracting officers.  On the first plan, many of the products VA purchases are either going to become a part of a Veteran or will be a critical part of their daily lives, helping them walk, work, and interact with their families.  We understand the critical value these devices offer, and the independent clinical judgment of our providers will remain fully intact.  This aspect guides the decision-making of our leadership and will be preserved in our policies and procedures.  Clinicians, in consultation with Veterans, will decide what devices we procure.  Our reforms are designed only to modify how we procure them.  When products are generally available and interchangeable, competitive procurements may be appropriate, and we are hoping that in the long term we can develop a catalog that will facilitate, more cost effective purchasing decisions.  

On the second plan, concerning the transitioning of procurement decisions, I again emphasize that this is only changing how we purchase, not what we purchase.  By shifting to contracting specialists, we can ensure that we secure fair and reasonable prices for products while still delivering state-of-the-art care.  

In conclusion, VA has been engaging in prudent and appropriate reform to improve the business processes governing the procurement of prosthetic devices for Veterans.  We take great care to ensure that these changes improve the accountability of these purchases while maintaining the high quality of care and clinical decision making critical to Veterans’ health care.  Clinicians determine the prosthetic needs of Veterans as a part of their clinical care, and VA procures the devices necessary to achieve personal clinical outcomes.  Our reform efforts will not disturb this arrangement, which will remain the centerpiece of prosthetics care in VA.  We appreciate the opportunity to appear before you today to discuss this important program.  My colleagues and I are prepared to answer your questions.