Table of Contents
National Performance Review
Reinventing the Department of Defense
ASSISTANT SECRETARY OF DEFENSE (HEALTH AFFAIRS)
- Prime Vendor. Prime Vendor cuts red tape and puts customers
first in the procurement of pharmaceutical and medical/surgical
. Prime Vendor, an initiative jointly sponsored by the Assistant
Secretary of Defense (Health Affairs) and the Deputy Under Secretary
of Defense (Logistics), permits medical treatment facilities (MTFs)
to order pharmaceutical and medical/surgical items directly from
vendors using electronic commerce/electronic data interchange.
Prior to Prime Vendor, the order and ship time for pharmaceutical
and medical/surgical items, the prices paid for them, and the
inventories of these items at both the wholesale level and MTFs
were excessive. The process for ordering, receiving, and paying
for these items was burdened with paper. Under Prime Vendor,
a personal computer based system administered jointly by the Department
of Defense Group Purchasing Organization, Defense Personnel Support
Center (DPSC) and the Defense Medical Logistics Standard Support
(DMLSS) Program Management Office (PMO), the MTF electronically
orders items directly from the prime vendor, receives confirmation
electronically, and receives the materials within 24 hours. An
electronic invoice is then sent to the bill payer and funds are
electronically transferred to the prime vendor's bank account.
Transactions are paperless.
In support of Prime Vendor, DPSC negotiates Distribution and Pricing
Agreements (DAPAs) with manufacturers of pharmaceutical and medical/surgical
items. DAPAs establish prices to be paid for these items. DPSC
then awards a single Prime Vendor pharmaceutical and Prime Vendor
medical/surgical contract for each geographical region. The number
and type of products stocked and distributed by each prime vendor
are determined by demand factors from the MTFs and DAPAs.
For the past two years, Prime Vendor has been deployed to MTFs
and other ordering sites world wide. When deployment is complete
in fiscal year 1996, Prime Vendor will be deployed to 160 pharmacy
and medical/surgical sites.
Benefits associated with implementation of Prime Vendor are substantial.
For fiscal years 1991 - 1995, benefits attributable to Prime
Vendor include: $382 million reduction in wholesale inventory,
$71 million reduction in retail inventory, and $92 million reduction
in the cost of drugs. Delivery took only 24 hours which resulted
in a 95 percent level of availability for pharmaceutical and medical/surgical
items at medical treatment facilities.