A Summary of Preaward Reviews of VA Federal Supply Schedule Pharmaceutical Proposals Issued in Fiscal Year 2020

The OIG reviews proposals submitted to VA for Federal Supply Schedule pharmaceutical contracts valued annually at $5 million or greater. These preaward reviews help VA contract specialists negotiate fair and reasonable prices for the government and taxpayers.Individual preaward reviews are not published because they contain sensitive commercial information that is protected from release under the Trade Secrets Act. To promote transparency, the OIG issued a report summarizing the reviews of pharmaceutical contract proposals conducted in fiscal year 2020. This report details how many proposals were accurate, complete, and current, and summarized pricing and prior recommendations for those that were not. It does not include additional recommendations for VA response.In its preaward reviews, the OIG• Provided an opinion as to whether the proposal and commercial disclosures were accurate, complete, and current. Seven of the 15 proposals reviewed were reliable for determining negotiation objectives and, ultimately, fair and reasonable pricing. The remaining eight proposals could not be reliably used for negotiations until the noted deficiencies were corrected.• Made recommendations for pricing based on the vendor’s commercial selling practices. The OIG made recommendations for lower prices than offered for four proposals, resulting in total recommended cost savings of approximately $56.5 million.• Evaluated and suggested alternative tracking customers. “Tracking customers” are selected from among the vendor’s commercial customers; the price reductions they receive are used to determine the price reductions offered to the government. In the 15 proposals reviewed, the OIG determined that for 177 of the 515 offered items, vendors proposed tracking customers that were not adequate for the purposes of the price reductions clause in the contracts. For these 177 items, the OIG recommended different tracking customers.Contract specialists have completed negotiations on the proposals, and the OIG’s recommendations collectively resulted in approximately $42 million in savings for VA.