DOJ awards $4.45M to McKesson for pharmaceutical prep manufacturing in FY25

Contract Overview

Contract Amount: $4,449,540 ($4.4M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Justice

Start Date: 2024-10-01

End Date: 2025-09-30

Contract Duration: 364 days

Daily Burn Rate: $12.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MCKESSON STANDARD MEDICATION FY 2025

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75039

State: Texas Government Spending

Plain-Language Summary

Department of Justice obligated $4.4 million to MCKESSON CORPORATION for work described as: MCKESSON STANDARD MEDICATION FY 2025 Key points: 1. Value appears reasonable given the scope of pharmaceutical supply. 2. Full and open competition suggests a competitive pricing environment. 3. No immediate risk indicators identified in contract terms. 4. Performance context is within the Federal Prison System's operational needs. 5. Sector positioning is within pharmaceutical manufacturing and distribution.

Value Assessment

Rating: good

The contract value of $4.45 million for a one-year period for pharmaceutical preparations appears to be in line with typical federal procurements for such essential supplies. Benchmarking against similar contracts for medication supply to correctional facilities would provide a more precise value-for-money assessment. However, the firm fixed-price structure generally offers cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The specific number of bidders is not provided, but this procurement method generally fosters a competitive environment, which is beneficial for price discovery and achieving fair market value. The government likely received multiple proposals to evaluate.

Taxpayer Impact: Full and open competition is the most taxpayer-favorable method, as it maximizes the pool of potential offerors and drives down prices through market forces.

Public Impact

Inmates within the Federal Prison System will receive necessary medications. The Bureau of Prisons ensures operational continuity in healthcare services. Services are delivered across facilities within the Bureau of Prisons. Workforce implications are primarily for McKesson's distribution and logistics personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded under full and open competition.
Firm fixed-price contract type provides cost certainty.
Contract duration is one year, allowing for regular re-evaluation.

Sector Analysis

The pharmaceutical preparation manufacturing sector is a critical component of the healthcare industry, involving the production and distribution of medications. Federal spending in this area supports various government agencies, including correctional facilities, military health systems, and public health initiatives. McKesson Corporation is a major player in this market, with extensive experience in supplying pharmaceuticals to government entities.

Small Business Impact

There is no indication that this contract included small business set-asides. As a large prime contractor, McKesson Corporation may engage small businesses for subcontracting opportunities, but this is not explicitly detailed in the provided data. The primary focus appears to be on a large prime award rather than direct small business participation.

Oversight & Accountability

The Department of Justice, through its Bureau of Prisons, is responsible for overseeing this contract. Standard contract management processes, including performance monitoring and payment verification, would be in place. The Inspector General's office for the Department of Justice would have jurisdiction for audits and investigations if any issues arise.

Related Government Programs

Federal Prison System Medical Supplies
Bureau of Prisons Pharmaceutical Contracts
Department of Justice Healthcare Procurement
Medication Supply for Incarcerated Individuals

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $4.4 million to MCKESSON CORPORATION. MCKESSON STANDARD MEDICATION FY 2025

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Justice (Federal Prison System / Bureau of Prisons).

What is the total obligated amount?

The obligated amount is $4.4 million.

What is the period of performance?

Start: 2024-10-01. End: 2025-09-30.

What is McKesson Corporation's track record with federal contracts, particularly for pharmaceutical supplies?

McKesson Corporation is a long-standing and significant federal contractor, frequently awarded contracts for pharmaceutical and medical supplies across various agencies, including the Department of Defense, Department of Veterans Affairs, and the Department of Justice. Their track record typically involves large-scale distribution agreements and supply chain management for a wide range of medications and healthcare products. While generally considered reliable, like any large contractor, they have experienced scrutiny and occasional disputes related to pricing, product availability, and compliance in the past. However, their continued success in winning federal contracts suggests a generally positive performance history and established capabilities in meeting government requirements.

How does the awarded price compare to market rates for similar pharmaceutical preparations?

Without specific details on the exact pharmaceutical preparations covered by this $4.45 million contract, a precise market rate comparison is challenging. However, McKesson is a major distributor, and their pricing is often influenced by volume discounts and established distribution agreements. The firm fixed-price nature of the contract provides a degree of certainty. To conduct a thorough benchmark, one would need to compare the unit prices of specific drugs or categories of drugs procured under this contract against publicly available pricing data, formulary costs from other large healthcare providers, or historical federal contract awards for similar items. Given the full and open competition, it is presumed that the pricing achieved is competitive within the federal procurement landscape.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks for this contract include potential supply chain disruptions (e.g., manufacturing delays, shipping issues), price fluctuations for specific pharmaceuticals, and ensuring the quality and efficacy of the delivered products. Mitigation strategies employed by the government typically involve robust contract terms that specify delivery schedules, quality assurance requirements, and potentially penalties for non-performance. The firm fixed-price structure shifts some of the financial risk of price increases to the contractor. McKesson's established logistics network and experience in pharmaceutical distribution also serve as a mitigating factor against supply chain disruptions. Regular performance reviews and clear communication channels are essential for ongoing risk management.

How effective is the Federal Prison System in managing pharmaceutical supply contracts?

The Federal Prison System (FPS), part of the Bureau of Prisons (BOP), manages a significant volume of pharmaceutical needs for a large inmate population. Their effectiveness is generally considered adequate, given the scale and complexity of providing healthcare in correctional settings. They rely on established procurement processes, including competitive bidding, to secure necessary medications. Challenges can arise from the unique healthcare demands of the inmate population, security considerations, and the logistical complexities of distributing medications across numerous facilities. The BOP's ability to maintain consistent supply and manage costs is a key indicator of effectiveness, often supported by internal reviews and oversight from the DOJ Inspector General.

What are the historical spending patterns for pharmaceutical supplies within the Federal Prison System?

Historical spending patterns for pharmaceutical supplies within the Federal Prison System have generally shown a consistent and substantial requirement, reflecting the healthcare needs of the federal inmate population. Annual expenditures typically range in the tens to hundreds of millions of dollars, depending on the scope of contracts and the specific medications required. Spending has likely seen gradual increases over time due to rising healthcare costs and evolving pharmaceutical treatments. The BOP often utilizes large, multi-year contracts or multiple delivery orders against indefinite-delivery/indefinite-quantity (IDIQ) vehicles to manage these ongoing needs. Analysis of past budgets and contract awards would reveal trends in specific drug categories and overall expenditure levels.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6555 STATE HIGHWAY 161, IRVING, TX, 75039

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $4,449,540

Exercised Options: $4,449,540

Current Obligation: $4,449,540

Actual Outlays: $4,449,950

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36W79720D0001

IDV Type: IDC

Timeline