By Daniel Wilson

Law360 (June 9, 2020, 8:49 PM EDT) -- The U.S. Department of Veterans Affairs' ability to respond to COVID-19 has been hurt by an "antiquated" inventory management system, limiting oversight into its critical medical supply stocks, the U.S. Government Accountability Office said Tuesday.

Long-standing problems with the VA's inventory system meant it could not efficiently keep track of its stocks of key medical supplies used when treating COVID-19, such as N95 face masks and isolation gowns, the GAO said in written testimony outlining the VA's response to the first few months of the coronavirus pandemic. The testimony was submitted to the Senate Veterans' Affairs Committee ahead of a Tuesday hearing to discuss potential improvements to the VA supply chain.

"VA experienced many of the same challenges obtaining medical supplies as most private sector hospitals and other entities in responding to this devastating pandemic," the GAO said. "This situation put stress on an already overburdened acquisition and logistics workforce — resulting in staff initially scrambling to address supply chain shortfalls while simultaneously working with VA's antiquated inventory system."

As part of its response to the coronavirus pandemic, the VA has used a range of contracting offices and mechanisms to try to meet its need for critical medical supplies, including existing local and national contract vehicles, as well as new agreements and supplies from the Strategic National Stockpile, spending about $1.3 billion on related supplies between mid-March and the start of June, according to the GAO.

But the VA's understanding of its need for critical supplies has been hurt by an antiquated inventory management system, which has forced it to use manual spreadsheets to oversee stock, as that sort of data was not systematically tracked before the pandemic, the GAO said.

Although the VA had developed an automated tool by April to help manage the process, information still has to be gathered and manually reported every day by each of the 170 VA medical centers, and the agency has limited access to real-time data, according to the watchdog.

Proper inventory monitoring and management has been a long-standing problem at many VA medical centers, with management practices ranging "from inaccurate to nonexistent," the GAO said.

A planned transition to using the Defense Logistics Agency's more modern inventory management system, Defense Medical Logistics Standard Support, is one of several key parts of an ongoing VA program to modernize its medical supply acquisition processes, but efforts to implement that inventory system have been delayed, the GAO said.

Originally scheduled for a rollout beginning August 2019, the process has been delayed by problems integrating the VA financial system with the DLA system, according to the GAO. Now the changeover will not start until at least October this year, and the VA has said it will take seven years to fully roll it out across all of the agency's medical centers, the watchdog said.

However, Richard Stone, chief of the Veterans Health Administration, said at the hearing that he wants to speed up the planned implementation of the inventory management modernization program, noting that "this pandemic has revealed that [seven years] is too long a time frame to execute that."

That was not the only necessary supply chain change made clear by COVID-19, Stone said. For example, the "just-in-time" model that the VA and many other hospital systems have typically used for decades, in which limited stock is kept on site and regularly refreshed, is not sufficient in a crisis, he noted.

Although no VA facility has yet run out of personal protective equipment, or PPE, the just-in-time system "has not delivered the responsiveness necessary to support the worldwide demand of health providers on medical supplies during this pandemic," Stone said at the hearing.

"More importantly, the pandemic forced us to recognize we cannot rely on the global supply chain to equip VA just in time in a future disaster," he added.

The VA currently has a 30-day supply of PPE but should have a 60-day supply — and up to a six-month supply if a second wave of COVID-19 hits, Stone said. 

The VA will look for both federal and commercial partners to help set up four "regional readiness centers" to keep several months' worth of extra equipment on hand — an effort that will use those partners' systems rather than the VA's "archaic" current inventory management system, the VHA's acting Undersecretary for Health Support Services Deborah Kramer told the committee.

--Editing by Alanna Weissman.

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