VA Federal Supply Schedule Purchases Top $11 Billion Annually in Medical and Healthcare Related Products and Services – Is Your Company on the List?

The U.S. Department of Veterans Affairs Federal Supply Schedule (“FSS”) program is a group of indefinite delivery, indefinite quantity – meaning the Government doesn’t know itself the quantity of supplies or services it will purchase during the contract period — contracts with suppliers of “commercial items,” (i.e., supplies and services sold in the commercial marketplace) in the healthcare industry. The benefit to a commercial company in participating in VA’s FSS program is that, once an FSS contract has been executed, the VA and all other Federal Government agencies (plus a few non-federal entities, the District of Columbia and certain public health organizations authorized by statute to access the VA FSS) may place their orders directly with that commercial company to meet their needs. With FSS purchases topping $11 billion in 2013, participation in this program is worth consideration by any company selling medical and healthcare-related product and services such as medical equipment and supplies, dental equipment and supplies, drugs, pharmaceuticals and hematology related products, patient mobility devices, invitro diagnostics, reagents, test kits and test sets, x-ray equipment and supplies, cost-per-test clinical laboratory analyzer, professional and allied healthcare staffing services, and medical laboratory testing and analysis services.

FSS contracts are awarded in accordance with standing solicitations – meaning that a company selling medical and healthcare related products and services can submit a proposal at any time as opposed to having to wait for a solicitation to be issued only when the Government has a definite need and responding by submission of a proposal by a certain due date. The first step in the process for any company is developing a price proposal.

The second step is for a company to provide commercial sales practices information and a CSP chart to the VA – which shows the company’s pricing, terms and conditions for sales of its products and services to its commercial customers. The next step is for the company to select a “Basis for Award” or “tracking” customer and to track the pricing offered to that customer. The Basis of Award customer can be any agreed-on type of customer (such as dealers or resellers); it can even be the Federal Government. VA must actually approve the company’s tracking process to ensure it is accurately tracking the customer discount relationship process. Every company is obligated to inform VA if or when it lowers its commercial prices to the contract tracking customer because, if that happens, a company is obligated to offer FSS customers the same percentage reduction. There are special rules which govern the FSS prices of covered drugs where the FSS price is set at the FCP.

It should also be noted that the standing solicitation for pharmaceutical supply and certain commoditycontracts is subject to the World Trade Organization Government Procurement Agreement. Therefore, companies seeking to offer products for sale under the FSS contracts must determine the country of origin of end items to be acquired under the contract and certify that they are U.S. or designated country end items (federal regulations identify the list of countries that quality as designated countries). The test for determining country of origin – where a product is wholly made or has been substantially transformed – is based on Customs rulings for determining duties and tariffs. These rulings have established, generally, that for pharmaceutical products, the country of origin is the country in which the active pharmaceutical chemical ingredient is made. The VA has included a field in its pharmaceutical pricing spreadsheets for companies to identify the drug’s country of origin. If a product is not a U.S. or designated country end item, the VA may not include it in the awarded contract.

Ultimately, the FSS is an essential marketing tool for any company interested in selling its medical and healthcare related products and services to the Federal Government. It is important to remember, however, that being listed on the FSS itself is not enough to guarantee orders. Your company will need to market its products and/or services to Federal Government customers with as much, if not more effort as it does to its commercial customers.

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