VA Leases Olympus Scope for $5.3M, Lacking Competition

Contract Overview

Contract Amount: $5,307,844 ($5.3M)

Contractor: Olympus America Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-09-27

End Date: 2027-03-26

Contract Duration: 910 days

Daily Burn Rate: $5.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ORLANDO OLYMPUS SCOPE LEASE

Place of Performance

Location: CENTER VALLEY, LEHIGH County, PENNSYLVANIA, 18034

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $5.3 million to OLYMPUS AMERICA INC for work described as: ORLANDO OLYMPUS SCOPE LEASE Key points: 1. High lease cost for specialized medical equipment. 2. Sole-source award limits price negotiation and innovation. 3. Potential for higher taxpayer burden due to lack of competition. 4. Long-term lease may not be the most cost-effective solution.

Value Assessment

Rating: questionable

The $5.3M lease over approximately 2.5 years suggests a significant investment. Without competitive bids, it's difficult to assess if this pricing is optimal compared to market rates for similar high-end surgical scopes.

Cost Per Unit: $1,714,000 per year (approximate)

Competition Analysis

Competition Level: sole-source

The contract was awarded solely to Olympus America Inc. without competition. This limits the government's ability to explore alternative vendors or negotiate a lower price, potentially leading to overpayment.

Taxpayer Impact: Taxpayers may bear a higher cost due to the absence of competitive bidding, as the VA could not leverage market forces to secure a more favorable price.

Public Impact

Veterans may experience improved surgical care with access to advanced Olympus scopes. The lease agreement ensures equipment availability for a defined period. Lack of competition raises concerns about long-term value for taxpayer funds.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
High lease value
Long-term commitment

Positive Signals

Ensures access to specific technology
Potential for advanced surgical capabilities

Sector Analysis

This lease falls within the healthcare sector, specifically for surgical equipment. Spending benchmarks for similar high-value medical equipment leases are often influenced by technological advancements and vendor exclusivity.

Small Business Impact

The contract was awarded to Olympus America Inc., a large corporation. There is no indication that small businesses were involved in this sole-source procurement, missing an opportunity for small business participation.

Oversight & Accountability

The sole-source nature of this contract warrants scrutiny. Further review should confirm the necessity of this specific vendor and the justification for foregoing a competitive process to ensure accountability.

Related Government Programs

Surgical Appliance and Supplies Manufacturing
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Lack of competition
Potential for overpayment
Limited vendor options
Long-term financial commitment

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $5.3 million to OLYMPUS AMERICA INC. ORLANDO OLYMPUS SCOPE LEASE

Who is the contractor on this award?

The obligated recipient is OLYMPUS AMERICA INC.

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 $5.3 million.

What is the period of performance?

Start: 2024-09-27. End: 2027-03-26.

What is the justification for awarding this lease on a sole-source basis, and were alternatives explored?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that only one vendor can meet. Without further documentation, it's unclear if the VA thoroughly explored alternatives or if this was a necessary procurement strategy. This lack of competition is a key area for oversight.

How does the annual cost of this lease compare to purchasing similar equipment or leasing from other providers?

Benchmarking the annual lease cost of approximately $1.71M against market data for comparable high-end surgical scopes is crucial. If purchasing outright or leasing from competitors offers better long-term value, this sole-source lease may represent a suboptimal use of taxpayer funds.

What is the long-term strategy for surgical equipment acquisition within the VA, and does this lease align with it?

This lease represents a significant, fixed-cost commitment. Understanding if this aligns with a broader VA strategy for equipment modernization, maintenance, and eventual replacement is important. A sole-source lease might indicate a gap in strategic planning or a reliance on specific vendor relationships.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Surgical Appliance and Supplies Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C24824R0120

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3500 CORPORATE PKWY, CENTER VALLEY, PA, 18034

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

Financial Breakdown

Contract Ceiling: $9,986,475

Exercised Options: $5,307,844

Current Obligation: $5,307,844

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline