VA's Pharmacy Prime Vendor contract with McKesson Corporation saw $42.7M in September 2020 spending

Contract Overview

Contract Amount: $42,663,492 ($42.7M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-09-01

End Date: 2020-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.5M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV)FY2020 SEPTEMBER

Place of Performance

Location: BAY PINES, PINELLAS County, FLORIDA, 33744

State: Florida Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $42.7 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV)FY2020 SEPTEMBER Key points: 1. The contract is a significant portion of the VA's pharmaceutical spending. 2. McKesson Corporation is a major player in the pharmaceutical distribution market. 3. Potential risks include supply chain disruptions and price fluctuations. 4. The sector is highly regulated and essential for public health.

Value Assessment

Rating: good

The contract's firm fixed price structure provides cost predictability. Benchmarking against similar VA pharmaceutical contracts would offer further insight into its value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process that likely led to favorable pricing for the VA.

Taxpayer Impact: The competitive award process aims to ensure taxpayer funds are used efficiently for essential pharmaceutical supplies.

Public Impact

Ensures timely access to essential medications for veterans. Supports the VA's healthcare mission by providing necessary pharmaceutical supplies. Contributes to the stability of the pharmaceutical supply chain for a critical government agency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Dependence on a single vendor for a large volume of pharmaceuticals.
Potential for price increases in future contract renewals.
Vulnerability to McKesson's business decisions or market shifts.

Positive Signals

Established vendor with a proven track record.
Firm fixed price contract provides budget certainty.
Full and open competition ensures market-driven pricing.

Sector Analysis

This contract falls within the pharmaceutical distribution sector, which is critical for healthcare delivery. Spending benchmarks for similar federal pharmaceutical contracts would provide context for this $42.7M monthly expenditure.

Small Business Impact

While this specific contract is with a large corporation, the broader pharmaceutical industry includes many small businesses involved in drug development and specialized services. The VA's overall procurement strategy may include opportunities for small businesses in related areas.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Regular performance reviews and audits are crucial to ensure compliance and value for taxpayer money.

Related Government Programs

Pharmaceutical Preparation Manufacturing
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Vendor Lock-in
Supply Chain Vulnerability
Price Escalation Risk
Market Concentration

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $42.7 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV)FY2020 SEPTEMBER

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

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 $42.7 million.

What is the period of performance?

Start: 2020-09-01. End: 2020-09-30.

What is the historical spending trend for this Pharmacy Prime Vendor contract over multiple fiscal years?

Analyzing historical spending data would reveal if the $42.7M in September 2020 represents a typical monthly expenditure or an anomaly. Trends can indicate changes in demand, pricing strategies, or contract scope, providing a clearer picture of long-term value and potential budget impacts.

How does the unit cost of key pharmaceuticals under this contract compare to market rates or other federal agencies?

Benchmarking unit costs against market rates and similar contracts with other federal agencies is crucial for assessing cost-effectiveness. Significant deviations could indicate potential overpricing or exceptional value, informing future negotiation strategies and ensuring fair pricing for taxpayers.

What are the key performance indicators (KPIs) for this contract and how has McKesson performed against them?

Evaluating McKesson's performance against established KPIs, such as delivery timeliness, order accuracy, and product quality, is essential for understanding contract effectiveness. Consistent high performance validates the contract's value, while persistent issues may signal risks and necessitate corrective actions.

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: $42,663,492

Exercised Options: $42,663,492

Current Obligation: $42,663,492

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36W79720D0001

IDV Type: IDC

Timeline