Consolidating Procurements of Medical Equipment Could Save Money

NSIAD-85-125: Published: Aug 27, 1985. Publicly Released: Aug 27, 1985.

Additional Materials:

Contact:

Paul F. Math
(202) 512-4587
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

GAO conducted a review to determine whether medical equipment purchased locally by Department of Defense (DOD) and Veterans Administration (VA) medical facilities could have been more efficiently and economically procured in large quantities through consolidated procurement.

GAO found that: (1) DOD and VA facilities buy about 75 percent and 51 percent, respectively, of the value of their equipment requirements locally and procure the rest centrally; (2) DOD could have obtained price savings averaging 11 to 15 percent by centrally procuring certain items; (3) DOD achieved some savings by using indefinite-delivery type contracts to centrally procure some medical equipment; and (4) it could not determine whether VA might have achieved savings through consolidated procurement because of a lack of VA centralized procurement data. DOD and VA officials mentioned several factors that could limit the number of medical items that could be centrally procured, including: (1) physicians' preferences for certain brands of equipment; (2) the need for compatibility with existing equipment; (3) equipment maintenance by vendors; and (4) procurement timeliness. However, GAO found that: (1) while such problems might limit the centralized procurement of some items, they should not prevent DOD and VA from identifying additional equipment that could be procured more economically; (2) even where purchases of different equipment are judged to be appropriate, cost savings could still be achieved through consolidated procurement; and (3) while some delays might occur initially because of the time involved in awarding centralized contracts, close coordination between services and procuring activities should minimize delays. GAO noted that DOD is implementing a plan to increase the consolidated procurement of medical equipment.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: According to VA, procedures and guidance have been provided to ensure that, whenever possible, centralized procurements of medical equipment and supplies occur. The Director of Supply advised that he recently developed guidance for local activities to ensure that repetitive procurements are done centrally, on a shared basis with other agencies, if it makes sense. A copy of guidance was requested.

    Recommendation: The Administrator of Veterans Affairs should: (1) develop procedures for systematically aggregating and analyzing data on medical equipment procured repetitively on a local basis by VA medical facilities; and (2) take steps to consolidate purchases of those equipment items when there is a reasonable basis to conclude that they would be more efficiently procured centrally using either definite quantity/definite delivery contracts or indefinite-type delivery contracts awarded competitively, whenever possible, and to single suppliers of an item whenever appropriate.

    Agency Affected: Veterans Administration

  2. Status: Closed - Not Implemented

    Comments: DOD is monitoring implementation of its plan to accomplish the recommended action. It continues to attempt to consolidate purchases, but has met resistance from the medical community.

    Recommendation: The Secretary of Defense should ensure that the DOD plan as described in its report, "Centralized/Consolidated Medical Equipment Procurement," is properly carried out.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: According to the Office of the Secretary of Defense, all three services are now using available records to identify requests for consolidation under its CENPROME program.

    Recommendation: The Secretary of Defense and the Administrator of Veterans Affairs should give maximum consideration to identifying items for consolidated procurement from available records and implementing a more comprehensive system based on the needs of the agencies and the medical facilities and the cost versus the benefits attainable through centralized procurements.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: VA agreed with this recommendation. In addition to actions being taken jointly with DOD, VA stated that it developed and implemented policies for consolidating and sharing procurements of medical equipment and supplies. DOD officials involved with the CENPROME program, and VA officials stated that they are using available records to identify requests for centralized procurements.

    Recommendation: The Secretary of Defense and the Administrator of Veterans Affairs should give maximum consideration to identifying items for consolidated procurement from available records and implementing a more comprehensive system based on the needs of the agencies and the medical facilities and the cost versus the benefits attainable through centralized procurements.

    Agency Affected: Veterans Administration

  5. Status: Closed - Not Implemented

    Comments: The DOD/VA Interagency Procurement Management Committee: (1) agreed to add medical equipment to the list of items procured jointly; and (2) established a subcommittee to select the items and carry out this recommendation. DOD conducted numerous shared procurements with VA and PHS, but only for high-value equipment. The medical community has resisted efforts to consolidate low-value purchases.

    Recommendation: The Secretary of Defense and the Administrator of Veterans Affairs should consider beginning a program, similar to the program established for drugs and medical supplies, to share procurement of those common medical equipment items which can be procured more efficiently on this basis.

    Agency Affected: Department of Defense

  6. Status: Closed - Not Implemented

    Comments: The DOD/VA Interagency Procurement Management Committee: (1) agreed to add medical equipment items to the list of items procured jointly; and (2) established a subcommittee to select the items. VA conducted numerous shared procurements with DOD and PHS, most notably high-value procurements of radiology equipment. The medical community has resisted efforts to consolidate low-value procurements.

    Recommendation: The Secretary of Defense and the Administrator of Veterans Affairs should consider beginning a program, similar to the program established for drugs and medical supplies, to share procurement of those common medical equipment items which can be procured more efficiently on this basis.

    Agency Affected: Veterans Administration

 

Explore the full database of GAO's Open Recommendations »

Sep 26, 2016

Sep 23, 2016

Sep 21, 2016

Sep 7, 2016

Aug 30, 2016

Aug 11, 2016

Jul 22, 2016

Jul 21, 2016

Jul 6, 2016

Looking for more? Browse all our products here