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Office of Public and Intergovernmental Affairs

Remarks by Former Deputy Secretary W. Scott Gould

Chief Acquisition Officers Council Strategic Sourcing Working Group
Washington, DC
April 21, 2010

Good afternoon and welcome to VA Central Office.

I want to thank you for taking valuable time out of your day to participate in this important SSWG and allowing the VA to host you. I trust you will find us a gracious host and if there is anything we can assist with, please let us know.

We are fully committed to strategic acquisition and sourcing and the potential in this area for us to gain real savings and cost avoidance across the federal government. In an era of increasing federal deficits, soaring national debt, and potentially scarce funding allocations, we owe it to our constituents—in our case both the Veterans we support and the taxpayers we serve—to make the most effective and efficient use of the resources we are provided. Strategic acquisition and sourcing can provide us the leverage and the edge to collectively better accomplish our multitude of important missions.

As you know, the VA serves the over 23 million living men and women who have earned the honored title of Veteran, and their families, and the families of those who gave their lives in service to America.

We deliver our services nationally and globally through a network of:

  • 153 VA hospitals
  • Over 1400 medical support sites including
  • 909 Outpatient Clinics
  • 135 Nursing Homes and continuous care facilities
  • 47 Residential Rehabilitation treatment programs
  • 232 Veterans Centers
  • 108 Comprehensive Home Care programs
  • 57 Regional Benefits Offices
  • 131 National Cemeteries

We are responsible for managing billions of dollars of VA funds to acquire the material and services that our VA employees need to serve these Veterans and their families.

In FY2009, VA totaled over $22 billion in spending for goods and services—everything from physician services to home oxygen to gravestones to office supplies. This is over 35% of our discretionary spend, and we are committed to transforming our acquisition practices and processes in order to become more efficient in how we spend these funds to acquire material and services in support of our Veterans.

VA is the fourth largest federal agency in terms of procurement dollars spent, with annual procurement exceeding $15 billion. It is also one of the most complex procurement and logistics operations. But for various reasons, VA has been slower than some other departments at evolving its acquisition capabilities. One reason is that the size of our acquisition workforce has not kept up with the volume of our acquisitions. We estimate that VA currently has less than three-quarters of the contracting professionals it needs to handle $15 billion in procurements—short about 592 contracting professionals. We are currently working to make up that deficit, while also providing additional training to over 5,000 contracting and project management professionals already at VA.

We know there is a direct link between an organization’s investment in employees and organizational performance. That’s why VA is investing a record $300 million in HR this year including $200M in training alone.

We are looking to train 22,000 people in change management and transformational leadership, and another 22,000 in leadership, management, and supervision. We have also identified 42,000 positions that are essential to accomplishing VA’s mission and require additional critical skills training in subjects such as project management, acquisition, HR, and IT certification.

We’ve recently begun a new initiative to recruit, train, develop, and retain a dedicated corps of highly qualified contracting officers and program managers. In support of this new Acquisition Corps, we’ve created a VA Acquisition Academy to provide high-quality instruction and certification of acquisition competencies that have been approved by the Federal Acquisition Institute and designed to establish consistent competencies and standards for those performing acquisition-related work in civilian agencies.

This spring we’re conducting the Michigan State University Supplier Perception Survey with over 15,600 VA suppliers. Later we’ll hold three regional forums with supplier participation, to deepen our shared business intelligence and understanding of regional concerns. Sometime this fall, we’ll host a “State of the Union” forum to share what we’ve learned from a full year of Supplier Relationship Transformation. Our goal is Perfect Order Fulfillment—defined as the ability to deliver the right service or product, at the right place, at the right time, with the right quality, and with proper documentation.

This fiscal year we’ve begun implementing a new acquisition service delivery structure that defines an organization’s contracting responsibilities and establishes designated acquisition centers to initiate and manage large complex procurements and put in place the strategic sourcing vehicles the VA needs to accomplish its mission and leverage our collective buying power.

On April 1, Secretary Shinseki approved the Acquisition Transformation Model that will consolidate and integrate contracting functions. The model provides a specific set of metrics—so that in 18 to 24 months from now, if outcomes are not satisfactory, we’ll know to move to a more centralized model.

We have also begun an ambitious transformation of our supply chain starting with an across the board look at what and how we buy with an eye towards strategic acquisition of those items and services that make sense and can help us save resources. We are working to develop and instill a rigorous and comprehensive focus on proper program and project management as well as the modernized enablers that will allow us to better understand and manage cost control and subsequently build towards a full total cost of ownership approach for all of our major programs.

As part of the Federal Strategic Sourcing Initiative, we have committed 100% of the VA office product spend to the upcoming FSSI-2 office products contracts—with the hope that this is only the first of many that we can all collectively support. We continue to realize significant savings through the use of the FSSI Domestic Delivery Services initiative and have forecast over $20 million per year in savings through use of the new DDS2 contract.

In response to the July 2009 challenge from OMB, we identified and submitted our plan for significant savings on our VA Acquisition Savings Plan with a substantial focus on better use of strategic acquisition and enterprise level contracts. Although we are gaining some of these savings and cost avoidances now, our new VA hypothesis-driven analysis approach to strategic sourcing, which our acquisition team will brief you on during your meeting, has identified a number of areas that can yield substantially greater savings which can be gained quickly. We are pursuing these and would offer them up for other agency participation where applicable.

We have also looked to the commercial health care arena to investigate areas where we can adopt best practices and leverage commercial capabilities to help us procure medical material more efficiently. We have been in discussions with a number of the leading health care group purchasing organizations, with an annual purchasing volume exceeding $115 billion supporting over 7,000 acute care hospitals and over 100,000 non-acute care medical facilities, to help us look at our medical supply chain and bring to bear as many of the best commercial industry supply chain innovations as possible. This initiative holds great promise not only for VA but potentially for the entire Federal government.

So as you can see, we are driving forward on a broad front across many initiatives to better support our Veterans and help us become better stewards of the public trust.

I know that you have an ambitious agenda and an important mission. Please rest assured that the VA is fully committed to these efforts and that we are willing to take the lead on any of these challenges.

Again, welcome to the VA and have a productive day!