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Federal Supply Schedule Contract vs National Contract

The Department of Veterans Affairs (VA) maintains a wide variety of procurement vehicles for its use as well as the use of other Ordering Activities. Two of the most prominent are the Federal Supply Schedule (FSS) contracts and the National Contracts. While both contract types smooth and streamline the procurement process by establishing terms, conditions, and price in advance, the intended purpose of each is very different.

Through delegated authority from the General Services Administration (GSA), the VA establishes FSS contracts, also known as Multiple Award Schedule (MAS) contracts, with a variety of vendors for healthcare-related products. The VA divides FSS needs into nine solicitation categories with the 65 IB for Drugs, Pharmaceuticals, & Hematology Related Products and the 65 IIA for Medical Equipment & Supplies receiving the most utilization. Awarded through standing solicitations, the intention of the FSS contracts is to provide simplified access to a diverse set of products and services while taking advantage of the Government purchasing volume power to obtain best pricing. Any agency may order from a FSS contract. Under these long-term contracts, price is negotiated relative to each vendor’s existing commercial sales practices as well as any direct commercial market competition.

VA National Contracts are mostly issued for pharmaceutical drugs and based on a specifically identified need or requirement with the goal of obtaining the lowest price. These base-year plus four, one-year option contracts include an anticipated quantity to be ordered during the period of performance based on carefully calculated estimates. Only agencies that elect to be included in a National Contract solicitation prior to issuance may place orders against these contracts after award. Participating agencies typically include the VA, Department of Defense (DOD), Indian Health Services (IHS), and Coast Guard. In a National Contract, the solicitation requests proposals from vendors manufacturing a specific class of drug or type of product. As these products are viewed as interchangeable, a National Contract competition becomes primarily about price. Since National Contracts are mandatory use within the VA, these contracts essentially result in a market exclusivity to that Agency. As such, the successful product is always priced lower than that product’s VA FSS price and manufacturers should focus on bidding the lowest profitable price.

Not all solicitations are equal in intention or ultimate result. While a manufacturer must work diligently to achieve sales under a FSS contract, a National Contract ensures a significant and meaningful volume of sales will occur. Manufacturers must understand the Government’s objectives for each type of procurement vehicle in order to develop the best proposal possible and meet its own goals for the Federal Market.


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