DMLSS Supply Chain Management System Deployed with Operational Gaps That Risk National Delays

VA manages about $10 billion each year in medical supplies and equipment inventory. In March 2019, VA directed the deployment of the Defense Department’s Defense Medical Logistics Standard Support (DMLSS) System to modernize and standardize Veterans Health Administration (VHA) supply chain management and replace up to 12 legacy systems. The deployment is expected to cost $2.2 billion over 15 years. The Office of Inspector General (OIG) reviewed VA’s oversight and coordination of the system’s implementation at the pilot site, the Captain James A. Lovell Federal Health Care Center in North Chicago, Illinois, to identify challenges that could affect future deployments. The OIG found operational gaps that should be addressed to prevent recurrence and delays at future sites. The system did not meet more than 40 percent of the high priority essential business requirements identified by Lovell staff when it deployed on August 4, 2020. Consequently, Lovell staff had to develop work-arounds to maintain day to day operations. Although VA’s acquisition framework policies outline a process to ensure the DMLSS system meets high priority requirements, the VA Logistics Redesign (VALOR) program manager did not follow the framework as required. The VALOR program office tasked with overseeing the effort also had a slow and unsteady start. The office was created in early 2019 to manage deployment of the DMLSS system but did not receive funding until January 2020. Additionally, VALOR did not effectively coordinate with key stakeholders early enough to minimize operational issues. VALOR also had six program managers since VA made the decision to adopt the DMLSS system. VA concurred with OIG recommendations and reported progress on the VALOR program office aligning the DMLSS deployment process with VA’s acquisition framework policy; better identifying unmet high priority business requirements and post deployment challenges; and obtaining adequate staffing and stable leadership.