VA awards $2.7M contract for MRI equipment, highlighting need for advanced medical imaging in San Juan

Contract Overview

Contract Amount: $2,714,445 ($2.7M)

Contractor: Philips North America LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-07-12

End Date: 2026-04-30

Contract Duration: 1,388 days

Daily Burn Rate: $2.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Healthcare

Official Description: XR MRI FOR SAN JUAN PR

Place of Performance

Location: BOTHELL, SNOHOMISH County, WASHINGTON, 98021

State: Washington Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.7 million to PHILIPS NORTH AMERICA LLC for work described as: XR MRI FOR SAN JUAN PR Key points: 1. Contract awarded to a single vendor, suggesting potential for limited competition or specialized equipment. 2. Fixed-price contract with economic price adjustment indicates potential for cost fluctuations over the contract term. 3. Contract duration of nearly four years suggests a long-term need for the medical imaging services. 4. The contract is for irradiation apparatus manufacturing, a critical component for advanced medical diagnostics. 5. Awarded by the Department of Veterans Affairs, indicating a focus on serving veteran healthcare needs. 6. The contract's value is moderate, but its impact on healthcare delivery in San Juan is significant.

Value Assessment

Rating: good

The contract value of $2.7 million for an MRI system appears reasonable given the specialized nature of medical equipment. Benchmarking against similar procurements for advanced imaging systems would provide a clearer picture of value for money. The fixed-price with economic price adjustment structure allows for some flexibility in managing costs related to market fluctuations in manufacturing and materials.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The fact that there were 5 bids suggests a healthy level of interest and competition for this type of medical equipment. This competitive process is expected to have driven a more favorable price and terms for the government.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best value for public funds, ensuring that the awarded price reflects market conditions and not a lack of alternatives.

Public Impact

Veterans in the San Juan, Puerto Rico area will benefit from access to advanced MRI diagnostic capabilities. The contract ensures the provision of critical medical imaging services, improving diagnostic accuracy and patient care. This procurement supports the Department of Veterans Affairs' mission to provide comprehensive healthcare to its beneficiaries. The contract may indirectly support local jobs in installation, maintenance, and operation of the equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to increased costs if market prices rise significantly.
Reliance on a single vendor for equipment and potentially maintenance could pose long-term supply chain risks.

Positive Signals

Awarded through full and open competition, suggesting a robust bidding process.
The contract addresses a critical healthcare need for the veteran population in a specific geographic area.
The fixed-price component provides a baseline cost certainty for a significant portion of the contract value.

Sector Analysis

The medical equipment manufacturing sector is characterized by high research and development costs, stringent regulatory requirements, and a global market. Contracts for advanced imaging equipment like MRI machines represent a significant investment for healthcare providers. The Department of Veterans Affairs is a major purchaser of medical technology, and its spending patterns can influence market dynamics for specialized equipment.

Small Business Impact

Information regarding small business set-asides or subcontracting plans was not explicitly detailed in the provided data. Further analysis would be needed to determine if small businesses were involved in the bidding process or if subcontracting opportunities were mandated or encouraged.

Oversight & Accountability

The Department of Veterans Affairs has established oversight mechanisms for its procurement processes, including contract management and performance monitoring. Transparency is generally maintained through public contract databases. Inspector General oversight would apply to ensure the integrity of the procurement and contract execution.

Related Government Programs

Medical Equipment Procurement
Diagnostic Imaging Services
Veterans Healthcare Services
Irradiation Apparatus Manufacturing

Risk Flags

Potential for cost escalation due to EPA
Long-term vendor dependency
Need for robust performance monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.7 million to PHILIPS NORTH AMERICA LLC. XR MRI FOR SAN JUAN PR

Who is the contractor on this award?

The obligated recipient is PHILIPS NORTH AMERICA LLC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $2.7 million.

What is the period of performance?

Start: 2022-07-12. End: 2026-04-30.

What is the track record of PHILIPS NORTH AMERICA LLC in supplying similar MRI equipment to federal agencies?

PHILIPS NORTH AMERICA LLC is a well-established global leader in medical technology, including diagnostic imaging. They have a history of supplying MRI systems and other advanced medical equipment to various federal agencies, including the Department of Defense and the Department of Veterans Affairs. Their track record typically involves providing high-quality equipment, installation, training, and maintenance services. Specific contract performance data for past VA or DoD MRI procurements would offer a more granular view of their reliability, adherence to schedules, and post-installation support effectiveness. However, their broad market presence suggests a capacity to fulfill large federal contracts.

How does the awarded price compare to market rates for similar MRI systems?

The awarded contract value of $2.7 million for an MRI system needs to be benchmarked against current market rates for comparable Philips models or equivalent systems from other manufacturers. Factors influencing price include the specific model's capabilities (e.g., magnetic field strength, imaging sequences), included software, warranty, installation, and training packages. Without detailed specifications of the awarded system and a comparison to recent sales data or other federal/commercial contracts for similar configurations, a precise value-for-money assessment is challenging. However, the presence of 5 bids suggests the price was competitive within the market for such advanced medical technology.

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

Key risks include potential cost overruns due to the economic price adjustment clause if material or manufacturing costs escalate unexpectedly. Another risk is the long-term reliance on a single vendor for maintenance and potential future upgrades, which could lead to vendor lock-in or higher lifecycle costs. Mitigation strategies likely involve careful contract negotiation, including caps on price adjustments, and robust performance monitoring by the VA. The VA may also have service level agreements (SLAs) in place to ensure timely and effective maintenance, and they could explore multi-vendor strategies for future procurements or maintenance contracts to foster competition.

How effective is this contract in meeting the VA's objective of providing advanced diagnostic imaging to veterans in San Juan?

This contract is directly aimed at fulfilling the VA's objective by procuring a critical piece of diagnostic equipment. The effectiveness hinges on the timely delivery, successful installation, and reliable operation of the MRI system. Assuming the equipment functions as specified and is integrated into the VA's healthcare workflow, it should significantly enhance the diagnostic capabilities available to veterans in the San Juan region, potentially leading to earlier diagnoses, more accurate treatment plans, and improved health outcomes. The contract duration suggests a commitment to sustained service delivery.

What are the historical spending patterns for MRI equipment by the Department of Veterans Affairs?

The Department of Veterans Affairs historically spends significant amounts on medical equipment, including diagnostic imaging systems like MRI machines, to support its network of healthcare facilities. Spending patterns can fluctuate based on infrastructure upgrades, replacement cycles for aging equipment, and the expansion of services. The VA often procures these systems through competitive bidding processes, sometimes utilizing large, multi-year contracts or delivery orders against existing indefinite-delivery/indefinite-quantity (IDIQ) vehicles. Analyzing past VA spending on MRI equipment would reveal trends in contract values, vendor choices, and the geographic distribution of these investments.

What is the potential impact of the economic price adjustment (EPA) clause on the total contract cost?

The economic price adjustment (EPA) clause allows for modifications to the contract price based on changes in specified economic factors, such as labor costs, material costs, or inflation indices. For this $2.7 million contract, the EPA introduces uncertainty regarding the final cost. If the indices used for adjustment increase significantly over the contract's nearly four-year duration, the total amount paid could exceed the initial $2.7 million estimate. The specific formula and any caps or floors defined in the contract will determine the extent of this potential increase. Careful monitoring of these indices and the contractor's justification for adjustments is crucial for fiscal oversight.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Irradiation Apparatus Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 36A79722Q0004

Offers Received: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 22100 BOTHELL EVERETT HWY, BOTHELL, WA, 98021

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

Financial Breakdown

Contract Ceiling: $2,714,445

Exercised Options: $2,714,445

Current Obligation: $2,714,445

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797H17D0022

IDV Type: IDC

Timeline