VA awards $75M for COVID-19 test kits, with Becton, Dickinson and Company as the sole provider

Contract Overview

Contract Amount: $74,942,246 ($74.9M)

Contractor: Becton, Dickinson and Company

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-02-15

End Date: 2022-05-31

Contract Duration: 105 days

Daily Burn Rate: $713.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: COVID-19 TEST KITS

Place of Performance

Location: SPARKS GLENCOE, BALTIMORE County, MARYLAND, 21152

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $74.9 million to BECTON, DICKINSON AND COMPANY for work described as: COVID-19 TEST KITS Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract duration of 105 days suggests a short-term need, potentially for immediate pandemic response. 3. No small business set-aside was utilized, indicating a focus on established large-scale suppliers. 4. The fixed-price contract type aims to control costs, but the lack of competition limits benchmarking. 5. The specific product code (325413) points to In-Vitro Diagnostic Substance Manufacturing, a critical area for public health. 6. The award value of $74.9M for a 3.5-month period warrants scrutiny for cost-effectiveness.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and short duration. Without competitive bids, it's difficult to ascertain if the $74.9 million price reflects fair market value for the COVID-19 test kits. The contract's value per day is approximately $713,736, which appears high for a 105-day period. Further analysis would require comparing the unit cost of these specific test kits to similar products procured competitively by other federal agencies or private entities during the same period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Veterans Affairs did not solicit bids from multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in urgent situations. The lack of competition means there was no opportunity for price negotiation or discovery through a bidding process, potentially leading to a higher price than if multiple companies had competed.

Taxpayer Impact: Taxpayers may have paid a premium for these test kits due to the absence of competitive bidding. The government missed an opportunity to leverage market forces to secure the best possible price.

Public Impact

Veterans and VA healthcare facilities benefit from the timely availability of COVID-19 test kits. Ensures continued diagnostic capabilities for the VA's patient population during the pandemic. Supports the VA's public health mission by providing essential testing supplies. The contract impacts the supply chain for diagnostic substances within the healthcare sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Short contract duration may indicate a reactive procurement rather than strategic planning.
Lack of small business involvement could limit broader economic impact and supplier diversity.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established manufacturer (Becton, Dickinson and Company) suggests reliability of supply.
Contract directly addresses a critical public health need during the COVID-19 pandemic.

Sector Analysis

The procurement falls within the broader healthcare and life sciences sector, specifically focusing on diagnostic testing. The market for In-Vitro Diagnostic (IVD) substances is substantial, driven by ongoing public health needs and advancements in medical technology. While specific spending benchmarks for COVID-19 test kits are difficult to isolate due to pandemic-driven demand fluctuations, the VA's spending represents a significant investment in maintaining essential healthcare services. Comparable spending would involve other federal agencies like HHS or DoD procuring similar diagnostic supplies.

Small Business Impact

This contract did not include a small business set-aside, nor is there information indicating subcontracting opportunities for small businesses. The award to a large, established corporation like Becton, Dickinson and Company suggests that the primary focus was on securing a large volume of essential supplies quickly. This approach may limit the direct economic benefits to the small business ecosystem within the diagnostic manufacturing sector for this specific procurement.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of Veterans Affairs. Oversight would typically involve contract administration by the VA's contracting officers to ensure delivery and compliance with terms. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the pricing and justification more critical. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

COVID-19 Testing Supplies
In-Vitro Diagnostics
Medical Supplies Procurement
Department of Veterans Affairs Healthcare Contracts

Risk Flags

Sole-source award
Lack of competition
High daily expenditure

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $74.9 million to BECTON, DICKINSON AND COMPANY. COVID-19 TEST KITS

Who is the contractor on this award?

The obligated recipient is BECTON, DICKINSON AND COMPANY.

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 $74.9 million.

What is the period of performance?

Start: 2022-02-15. End: 2022-05-31.

What is the track record of Becton, Dickinson and Company in supplying COVID-19 test kits to the federal government?

Becton, Dickinson and Company (BD) is a major global medical technology company with a significant role in diagnostic testing. During the COVID-19 pandemic, BD was a key supplier of various testing solutions, including molecular diagnostic tests and antigen tests, to numerous entities, including federal agencies. Their track record includes scaling up production to meet unprecedented demand. While this specific contract is with the VA, BD has likely supplied similar products to other agencies like HHS and DoD. Information on their past performance with the federal government, including any quality issues or delivery delays, would be crucial for a comprehensive assessment. However, the sole-source nature of this VA award suggests that either BD was the only viable option at the time or a specific justification was made for their selection.

How does the awarded price compare to market rates for similar COVID-19 test kits during the contract period?

Comparing the awarded price of approximately $74.9 million for 105 days to market rates is challenging without knowing the exact quantity and type of test kits procured. However, the daily expenditure of roughly $713,736 warrants scrutiny. Market rates for COVID-19 test kits varied significantly based on type (PCR, antigen, rapid), manufacturer, and volume discounts. Given this was a sole-source award, the VA did not benefit from competitive bidding, which typically drives prices down. To assess value, one would need to benchmark against publicly available pricing data from other federal contracts (if competitively awarded) or reputable industry reports detailing average wholesale prices for comparable diagnostic tests during early 2022.

What are the primary risks associated with a sole-source award for critical medical supplies like COVID-19 test kits?

The primary risk associated with a sole-source award for critical medical supplies is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may overpay for the goods. Another risk is reduced innovation and responsiveness, as the sole provider may face less pressure to improve products or delivery times. Furthermore, sole-source contracts can create dependency on a single supplier, which can be problematic if that supplier experiences production issues, supply chain disruptions, or faces geopolitical challenges. For critical items like COVID-19 test kits, this dependency could jeopardize public health response capabilities.

What was the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which implies a sole-source justification was made. Common justifications for sole-source procurements include: urgency of need (e.g., public health emergency), only one responsible source exists capable of providing the requirement, or specific national security reasons. For COVID-19 test kits, the justification likely revolved around the urgent need to secure a supply of essential diagnostic tools during a critical phase of the pandemic, potentially coupled with the assertion that Becton, Dickinson and Company was the only or most capable provider able to meet the VA's specific requirements within the necessary timeframe. A formal Justification for Other Than Full and Open Competition (JOFOC) would contain the detailed reasoning.

How does this contract fit into the VA's overall spending on COVID-19 related medical supplies?

This $74.9 million contract for COVID-19 test kits represents a significant, albeit specific, component of the VA's broader spending on pandemic response. The VA, like other large healthcare providers, has allocated substantial resources towards testing, treatment, personal protective equipment (PPE), and vaccines. Analyzing this single contract in isolation provides limited insight into the total VA COVID-19 expenditure. However, it highlights the ongoing reliance on diagnostic testing as a key strategy for managing the virus within the veteran population. Understanding the historical spending patterns on similar items, the frequency of such awards, and the total budget allocated to COVID-19 supplies would provide better context for this contract's significance.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › In-Vitro Diagnostic Substance Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C10X21R0084

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Becton, Dickinson and CO

Address: 7 LOVETON CIR, SPARKS, MD, 21152

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

Financial Breakdown

Contract Ceiling: $149,996,025

Exercised Options: $149,996,025

Current Obligation: $74,942,246

Actual Outlays: $112,781

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline