VA awards $564K for medical gas and cylinder rental, raising questions about competition and value

Contract Overview

Contract Amount: $56,397 ($56.4K)

Contractor: Medical Equipment & Supplies of America LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-10-01

End Date: 2024-09-30

Contract Duration: 365 days

Daily Burn Rate: $155/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MEDGAS AND MEDGAS CYL RENTAL

Place of Performance

Location: RIVIERA BEACH, PALM BEACH County, FLORIDA, 33410

State: Florida Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $56,397.18 to MEDICAL EQUIPMENT & SUPPLIES OF AMERICA LLC for work described as: MEDGAS AND MEDGAS CYL RENTAL Key points: 1. The contract was awarded on a sole-source basis, limiting potential cost savings through competition. 2. Pricing for medical gas and cylinder rental was not benchmarked against market rates. 3. The contract duration of one year with a firm-fixed-price structure offers some cost predictability. 4. The awardee, Medical Equipment & Supplies of America LLC, is a new entity with limited public track record. 5. The contract falls under the Industrial Gas Manufacturing NAICS code, suggesting a focus on supply chain efficiency. 6. Geographic focus on Florida may indicate a localized need for these medical supplies.

Value Assessment

Rating: questionable

Without competitive bidding or established benchmarks, it is difficult to assess the value for money. The $563,971.18 award for a one-year period for medical gas and cylinder rental appears to be a significant expenditure. A comparison to similar contracts for medical gas supply and equipment rental across other VA facilities or government agencies is needed to determine if the pricing is reasonable. The lack of transparency in the pricing structure makes it challenging to ascertain if taxpayers received the best possible value.

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 emergency situations. The absence of competition means that the VA did not benefit from the price discovery and potential cost reductions that typically arise from a competitive bidding process. This raises concerns about whether the most cost-effective solution was secured.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not achieve the most competitive pricing available in the market. This limits the government's ability to leverage market forces for cost savings.

Public Impact

Veterans in Florida will benefit from the consistent supply of essential medical gases and equipment. The contract ensures the availability of critical medical supplies for healthcare facilities serving veterans. The contract's geographic impact is limited to Florida, supporting local veteran healthcare needs. The contract supports the operational needs of healthcare providers within the VA system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may have resulted in a higher price than a competed contract.
Limited public information on the contractor's performance history makes it difficult to assess reliability.
The sole-source justification needs further scrutiny to ensure no viable alternatives were overlooked.
Absence of clear performance metrics makes it hard to evaluate the effectiveness of the service delivery.

Positive Signals

The contract is for a firm-fixed price, providing cost certainty for the duration of the award.
The contract duration of one year allows for consistent supply of critical medical gases.
The awardee is a registered business entity, indicating a formal structure for service provision.

Sector Analysis

The medical gas and equipment sector is critical for healthcare operations, encompassing the manufacturing, distribution, and rental of gases like oxygen, nitrogen, and medical air, along with associated cylinders and delivery systems. This contract falls under the Industrial Gas Manufacturing (NAICS 325120) category. The market is characterized by established players and specialized suppliers. Government contracts in this area often focus on ensuring reliable supply chains for federal healthcare facilities. Benchmarking typically involves comparing pricing for gas volumes, cylinder rental fees, and delivery services against industry standards and other government contracts.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a single entity, Medical Equipment & Supplies of America LLC, does not indicate any direct benefit or opportunity for small businesses within the scope of this particular award. Further investigation into the contractor's own subcontracting practices would be needed to determine any indirect impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. As a purchase order, it is subject to standard federal procurement regulations and oversight. The VA's Office of Inspector General (OIG) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract. Transparency regarding the sole-source justification and the pricing details would enhance accountability.

Related Government Programs

Medical Supplies and Equipment
Industrial Gases
Veterans Affairs Healthcare Services
Federal Purchase Orders

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Limited public information on contractor's performance history.
Lack of detailed pricing benchmarks makes value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $56,397.18 to MEDICAL EQUIPMENT & SUPPLIES OF AMERICA LLC. MEDGAS AND MEDGAS CYL RENTAL

Who is the contractor on this award?

The obligated recipient is MEDICAL EQUIPMENT & SUPPLIES OF 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 $56,397.18.

What is the period of performance?

Start: 2023-10-01. End: 2024-09-30.

What is the track record of Medical Equipment & Supplies of America LLC in fulfilling federal contracts, particularly for medical gases?

Based on the provided data, Medical Equipment & Supplies of America LLC is the awardee of this purchase order. However, there is no readily available public information or historical data presented that details their track record in fulfilling federal contracts, especially for medical gases. As a sole-source award, this might be an initial contract or a contract with a relatively new entity. Further due diligence would be required to assess their past performance, reliability, and experience in supplying similar goods or services to government agencies. The lack of a public performance history raises a flag regarding potential risks associated with contractor reliability and quality of service.

How does the pricing of this contract compare to similar medical gas and cylinder rental contracts awarded by the VA or other federal agencies?

The provided data does not include specific pricing details beyond the total award amount, nor does it offer benchmarks for per-unit costs of medical gases or cylinder rentals. Therefore, a direct comparison to similar contracts is not possible with the given information. To assess value for money, one would need to analyze the unit prices for different types of medical gases, cylinder sizes, rental durations, and associated delivery fees. Benchmarking against contracts awarded by other federal agencies, particularly those with similar geographic locations or patient volumes, would be crucial. The absence of this comparative data, especially given the sole-source nature of the award, makes it difficult to ascertain if the pricing is competitive or represents a fair market value.

What specific risks are associated with awarding a sole-source contract for essential medical supplies like gases?

Awarding a sole-source contract for essential medical supplies like gases carries several risks. Primarily, it eliminates the potential for cost savings that competition typically provides, potentially leading to higher prices for taxpayers. It can also reduce the incentive for the sole-source provider to innovate or improve service quality, as there is no direct competition to outperform. Furthermore, it raises concerns about the thoroughness of the market research conducted; there's a risk that viable alternative suppliers were overlooked or that the justification for sole-sourcing was not sufficiently robust. This lack of competition can also limit the government's flexibility if the sole-source provider experiences performance issues or supply chain disruptions.

What is the expected effectiveness of this contract in ensuring a reliable supply of medical gases to VA facilities in Florida?

The effectiveness of this contract in ensuring a reliable supply of medical gases hinges on several factors not fully detailed in the provided data. The contract is a firm-fixed-price purchase order for one year, which provides a degree of cost certainty and commitment. However, the effectiveness is contingent upon the contractor's capability to consistently meet demand, maintain quality standards, and adhere to delivery schedules. Given that it's a sole-source award to a potentially less-established entity, rigorous monitoring of performance metrics and delivery timelines by the VA would be essential. The contract's effectiveness will be measured by the uninterrupted availability of necessary medical gases for patient care within the specified Florida facilities.

What has been the historical spending pattern for medical gas and cylinder rental by the Department of Veterans Affairs, and how does this award fit within that pattern?

The provided data snippet focuses on a single award and does not offer historical spending patterns for medical gas and cylinder rental by the Department of Veterans Affairs (VA). To understand this award's context, one would need to analyze VA's procurement history for similar goods and services over several fiscal years. This would involve examining total spending, the number and types of contracts awarded (competed vs. sole-source), average contract values, and spending trends across different VA regions or facilities. Without this historical perspective, it's difficult to determine if this $564,000 award is typical, an outlier, or indicative of a shift in procurement strategy for these essential supplies.

Industry Classification

NAICS: Manufacturing › Basic Chemical Manufacturing › Industrial Gas Manufacturing

Product/Service Code: CHEMICALS AND CHEMICAL PRODUCTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6848 HOFFNER AVE, ORLANDO, FL, 32822

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $56,397

Exercised Options: $56,397

Current Obligation: $56,397

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline