38 U.S.C. § 8125: Procurement of health-care items

Except as provided in subsections (b) and (c) of this section, the Secretary may not procure health-care items under local contracts. the procurement is within the limits prescribed in paragraph (3) of this subsection; and the item is not otherwise available to the Department medical center concerned, procurement of the item by a local contract is necessary for the effective furnishing of health-care services or the conduct of a research or education program at a Department medical center, as determined by the director of the center in accordance with regulations which the Under Secretary for Health shall prescribe, or procurement under a local contract is demonstrably more cost-effective for the item. In the case of the need for an emergency procurement of a health-care item, such item may be procured under a local contract, but no greater quantity of such item may be procured by a local contract than is reasonably necessary to meet the emergency need and the reasonably foreseeable need for the item at the medical center concerned until resupply can be achieved through procurement actions other than emergency procurement. Except as provided in subparagraphs (C) and (D) of this paragraph, not more than 20 percent of the total of all health-care items procured by the Department in any fiscal year (measured as a percent of the total cost of all such health-care items procured by the Department in that fiscal year) may be procured under local contracts. Local contracts for the procurement of health-care items shall, to the maximum extent feasible, be awarded to regular dealers or manufacturers engaged in the wholesale supply of such items. The Secretary may increase for a fiscal year the percentage specified in subparagraph (A) of this section to a percentage not greater than 30 percent if the Secretary, based on the experience of the Department during the two fiscal years preceding such fiscal year, determines that the increase and the amount of the increase are necessary in the interest of the effective furnishing of health-care services by the Department. The authority to increase such percentage may not be delegated. Items procured through an emergency procurement shall not be counted for the purpose of this paragraph. A provision of law that is inconsistent with subsection (a) or (b) of this section shall not apply, to the extent of the inconsistency, to the procurement of a health-care item for use by the Department. The term “health-care item” includes any item listed in, or (as determined by the Secretary) of the same nature as an item listed in, Federal Supply Classification (FSC) Group 65 or 66. Effective December 1, 1992 , such term also includes any item listed in, or (as determined by the Secretary) of the same nature as an item listed in, Federal Supply Classification (FSC) Group 73. Such term does not include perishable items. The term “local contract” means a contract entered into by a Department medical center for procurement of an item for use by that medical center. The term “emergency procurement” means a procurement necessary to meet an emergency need, affecting the health or safety of a person being furnished health-care services by the Department, for an item. Subsections (a), (b)(1), and (b)(2) of section 5025 [now 8125] of title 38, United States Code (as added by subsection (a)), shall take effect one year after the date of the enactment of this Act [ May 20, 1988 ]. Subsection (b)(3) of such section shall apply to health-care items procured for use by the Veterans’ Administration [now Department of Veterans Affairs] after September 30, 1990 .” requires the Secretary to award contracts to multiple regional prime vendors instead of a single nationwide prime vendor; and prohibits a prime vendor from solely designing the formulary of such supplies. In carrying out the formulary of supplies under the Medical Surgical Prime Vendor program, or successor program, the Secretary shall ensure that each employee of the Department of Veterans Affairs who conducts formulary analyses or makes decisions with respect to including items on the formulary has medical expertise relevant to the items for which the employee conducts such analyses or makes such decisions. Not later than 30 days after the date of the enactment of this Act [ Dec. 31, 2018 ], and every six months thereafter with respect to any updates, the Secretary shall submit to the Committees on Veterans’ Affairs of the House of Representatives and the Senate a list of each employee described in paragraph (1) and the relevant medical expertise of the employee, listed by the categories of items in the formulary described in such paragraph.”