Office of Academic Affiliations
Sole Source Affiliate Contracting (SSAC) Between VA & AffiliatesVHA Publications | VA Publications
MSO facilitates Veteran-centric care through safe and cost-effective health care resource (HCR) sharing agreements and contracts with our affiliate partners and community care providers.
Our goal is to continually improve the quality and timely processing of procurements through on-going HCR training, effective quality oversight programs, policy development and quality improvement plan implementation.
Our vision is to strengthen partnerships with stakeholders understanding and exercising VA Sharing authority under Title 38 U.S.C. 8151-8153.
VA health care facilities have authority through warranted contracting officers to enter into sharing agreements under 38 USC 8153 through its partnerships with affiliated academic institutions sharing health care resources (HCR). The information on this webpage addresses many of the issues related to development and management of HCR contracts.
VA Directive 1663 was published on May 10, 2018 (see Policy tab). Virtual training will be offered by the MSO Training Officers*.
VA DIRECTIVE 1663 – CHANGES:
a. Revised and replaced the previous VA Directive 1663 that was issued August 10, 2006
b. Condensed content from 32 pages to 10 pages
c. Relocated contracting processes from content of 1663 to the VHA Procurement Manual (VHAPM) and the MSO Share Point site
d. Clarified usage of 38 USC 8153
e. Reminded stakeholders that affiliates are the preferred method authorized to sole source HCR requirements under 38 USC 8153
f. Notified affiliates and other health care entities affiliated with VA that they may become a Choice provider (services must not include participation of residents paid by VA funds)
g. All health care resources (HCR) requirements beyond medical specialties or those that are non-clinical in nature, the concept (business case) must be processed for approval by MSO
h. HCR contracts valued at $400,000 or greater annually processed through MSO must be submitted to OIG for pricing verification.
* Please note: Handbooks and directives are reviewed and updated on a regular basis. The links provided below are to the most current versions.
Health Care Resources Contracting - Buying - Title 38 U.S.C. 8153
Sets forth revised policies and responsibilities for implementing and managing HCR contracts under Title 38 USC 8151-8153. Published May, 2018
VA Directive 1663 Adobe Acrobat file
Health Care Resource Sharing Authority - Selling
VHA Directive establishes policy and responsibilities entering into sharing agreements for selling and generating revenue of VHA HCR. Published June, 2018
VHA Directive 1660.01 Adobe Acrobat file
Joint Acquisition of Medical Equipment
This program promotes joint acquisition and use of medical equipment; sharing between VA and other eligible providers.
Note: this handbook, published in August, 1997, is currently available for usage; however, it will be replaced in the near future with a VHA Directive.
VHA Handbook 1660.2 Adobe Acrobat file
Conflict of Interest for the Aspects of Contracting for Sharing of Health-Care Resources (HCR)
VHA Handbook 1660.03 provides guidance regarding avoidance of prohibited conflicts of interest (COI) and clarifies COI laws to VA employees involved in contracting for HCR contracts, especially to those employees who have appointments at educational institutions affiliated with VA. Published November, 2015
VHA Handbook 1660.03 Adobe Acrobat file
Enhanced Sharing Use of Space Program
VHA Directive 1820 clarifies the application of sharing use of space under 38 USC 8153. Published November, 2017
VHA Directive 1820 Adobe Acrobat file
VHA P&LO, MSO Program Office:
Central Office Program responsible for providing acquisition policy, acquisition curriculum, training, technical reviews, and facilitate negotiations and pricing assistance when buying, sharing or exchanging HCR under 38 USC 8153
Sandra Hallmark, CPCM
Department of Veterans Affiars
VHA P&LO (10NA2)
Director, Medical Sharing Affiliate Office (MSO)
Frequently Asked Questions
Contracting for Health Care Resources
When must a health care resources contract be competitively awarded?
All Health Care Resources contracts, that do not require the acquisition of the services of Affiliated University faculty members to perform the services of the contract, must be awarded competitively when two or more providers that can fulfill VA contract requirements of the health care resource are available.
(VA Directive 1663 Para. 2. c.)
When do health care resources contracts require a pre-award audit?
All Health Care Resources contracts awarded non-competitively that exceed the dollar thresholds defined in VA Directive 1663 require a pre-award audit by the Office of Inspector General (OIG) to be completed within the timeframe set forth in this Directive. When unusual and compelling urgency requires immediate contract award and performance, an audit must be performed post-award.
All non-competitive initially signed proposals valued at $500,000 or more require a pre-award audit by the OIG, prior to beginning price negotiations, except as set forth in the following.
- The OIG must complete the pre-award audit within 20 business days. Thereafter, the Contracting Officer may proceed with award.
- Upon determination by the Contracting Officer that unusual and compelling urgency requires immediate award without a pre-award audit, the OIG shall perform a post-award audit of the contract.
- Following the OIG review, negotiations with the Contractor commence. If the contract is under $5,000,000, the VA Contracting Officer may execute the contract upon incorporation of any required changes and final negotiations.
(VA Directive 1663 Para. 2. d. & Para. 4 b. (8)(a)(b), (9))
May an affiliate include an allowance for profit in a sole-source contract for work performed at the affiliate?
Profit is discouraged because these contracts are non-competitive, and the medical school receives other benefits through its affiliation with VA. The Affiliate derives significant benefits from the affiliation agreement such as VA's training of residents at VA medical centers.
NOTE: If any profit is allowed, it must be shown as a discreet item in the cost or pricing data.
(VA Directive 1663 Para. 4. b. (6))
What monitoring procedures must be used by the VA to ensure contract compliance?
Monitoring procedures must be able to demonstrate through time and attendance logs, operating room records, minutes of meetings or other appropriate electronic records, that VA has received services called for under the contract. This description must identify the VA official(s) by title to be designated as the Contract Officer Technical Representative, who is responsible for verifying contract compliance.
(VA Directive 1663 Para. 4. d., 2)
When should sole-source awards with affiliates be considered?
Sole-source awards with affiliates must be considered the preferred option whenever education and supervision of graduate medical trainees is required (in the area of the services contracted). The contract cost cannot be the sole consideration in the decision on whether to sole source or to compete.
(VA Directive 1663 Para. 4. a., 2, (a))
What determines fair and reasonable pricing?
While complying with all applicable laws and regulations, the price basis for acquiring health care resources should be as flexible as possible. At a minimum this should include the direct purchasing of provider time (by FTE or by hour) and health care services (cost per procedure or relative value unit (RVU)-based contracts), as appropriate. Similarly, VHA should be allowed to use the same reimbursement methodologies as other government agencies, such as the Centers for Medicare and Medicaid (CMS), Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA), or TRICARE.
Contracts should be based on market prices as assessed by appropriate local and regional market analyses. Contracts should not exceed applicable Medicare rates unless there is adequate justification documented in the contract file.
Additional requirements for contract physicians (such as administrative activities, supervision of trainees, on call availability, rounds, etc.) and/or additional contract requirements (such as credentialing, technology infrastructure, etc.) may be examples of potential justifications for exceeding the Medicare rate. Medicare itself acknowledges the additional costs of providing medical education through the Indirect Medical Education supplement provided to teaching hospitals.
(VA Directive 1663 Para. 4. b., (1), (a)(b)(c))
Conflict of Interest
What specific activities are prohibited to VA physicians or clinicians who have a financial interest in a contract with an affiliated medical school?
- Drafting specifications or solicitations
- Acting as Contracting Officer's Technical Representative
- Negotiating any parts of the contract, including price
- Evaluating bids or proposals
- Selecting or recommending the contractor
- Reviewing, certifying, or approving the contract itself, or any award, modification, extension, specification, bid, proposal, payment voucher, time record, or any other document of significance to the contract
- Reviewing or reporting time and attendance for contract administration purposes
NOTE: These prohibitions also apply to any non-affiliated entity in which a VA employee has a financial interest.
(VHA Handbook 1660.3 Para. 6)
What specific activities are permissible by VA physician or clinician who has a financial interest in a contract with an affiliated medical school?
- Supervising professional services provided under the contract solely for purposes of ensuring quality of care
- Developing workload projections, so long as such projections are developed independently of the contract for purposes of operating the VA facility and not developed for purposes of contract specification or for contract renewal
- Providing direct patient care within VA responsibilities
- Performing oversight and administration within the employee's VA responsibilities, including record keeping, and quality assurance activities conducted as part of medical facility operations
- Participating in any manner in any particular matter in which neither the employee nor the school has a financial interest, (e.g., acting as Contract Officer Technical Representative (COTR) in another contract which does not involve the physician's or clinician's outside employer)
- Engaging in permissible outside activities, such as approved teaching by a full-time employee
(VHA Handbook 1660.3 Para. 7)
Joint Acquisition of Medical Equipment
Who must review and approve proposals for the Joint Acquisition of Medical Equipment?
- All proposals with project costs below $500,000 shall be reviewed by Regional Counsel and shall be approved by the Veterans Integrated Service Network (VISN) Director, or designee
- Proposed projects in excess of $500,000 shall be forwarded to VA Central Office, Medical Sharing Office (166).
(VHA Handbook 1660.2 Para. 4, d, e)
May new lithotripters and Positron Emission Tomography (PET) be purchased under the Joint Acquisition of Medical Equipment program?
No. However, upgrades for lithotripters and PETs previously purchased under this program can be considered by the medical center or VISN.
(VHA Handbook 1660.2 Para. 7)
Who owns the title to equipment jointly purchased?
Title to the equipment will be jointly held by each sharing partner.
(VHA Handbook 1660.2 Para. 8)
May VA transfer jointly owned equipment to another VA facility?
Where programmatically appropriate and economically feasible, and with the consent of the sharing partner, a VISN Director may upgrade and transfer equipment purchased under this program to any other location in VHA that has appropriate workload volumes and requirements.
(VHA Handbook 1660.2 Para. 8)
May sharing partners use their own resources to make capital improvements to existing VHA space?
Yes. However, VA Central Office must approve the proposed VA medical center-sponsored non-recurring maintenance or partner-sponsored capital improvements in advance.
(VHA Handbook 1820.1 Para. 4, e)
May construction program funds be used to renovate existing VHA space that is to be used solely by the sharing partner?
No. Neither major nor minor construction program funds may be used.
(VHA Handbook 1820.1 Para. 4, g)
May a sharing partner sublet the use of VHA space obtained through a use of space sharing agreement?
No. Not under any circumstances.
(VHA Handbook 1820.1 Para. 4, j)
Can supplies be included in a proposal for sharing the use of space?
Usually, no. However, providing supplies may be considered only if the supply component is a minor portion of the total cost to the sharing partner.
(VHA Handbook 1820.1 Para. 4, i, (1), (2), (3))