VA awards $16.3M for surgical implants, highlighting potential value concerns due to sole-source nature

Contract Overview

Contract Amount: $16,344 ($16.3K)

Contractor: Terumo Medical Corp

Awarding Agency: Department of Veterans Affairs

Start Date: 2026-04-06

End Date: 2026-07-06

Contract Duration: 91 days

Daily Burn Rate: $180/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: SURGICAL IMPLANT

Place of Performance

Location: SOMERSET, SOMERSET County, NEW JERSEY, 08873

State: New Jersey Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $16,344.15 to TERUMO MEDICAL CORP for work described as: SURGICAL IMPLANT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Short contract duration of 91 days suggests a potential gap-filling or urgent need. 3. The specific product category, surgical implants, can involve high-value, specialized items. 4. Lack of competition raises questions about whether the government secured the best possible value. 5. Analysis needed to benchmark pricing against similar implants and market rates. 6. Oversight is crucial to ensure the necessity and cost-effectiveness of this sole-source award.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to definitively assess the value for money. The $16.3 million award for a 91-day period suggests a high per-diem cost. Benchmarking against similar surgical implant procurements, especially those that were competed, would be necessary to determine if the pricing is fair. The absence of competition inherently introduces a risk that the government may not have obtained the most advantageous terms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor, Terumo Medical Corp, was solicited. This approach bypasses the standard competitive process, which typically involves soliciting offers from multiple qualified bidders. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price competition and potentially higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that competitive bidding often generates. This can result in higher overall spending for the same goods or services.

Public Impact

Veterans Affairs medical facilities will receive essential surgical implants. The contract directly supports patient care within the VA healthcare system. The primary beneficiaries are patients requiring surgical procedures utilizing these implants. The contract's geographic impact is likely concentrated around the VA facilities receiving the supplies. Workforce implications are minimal, as this is a supply contract rather than a service requiring new personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to overpayment.
Short contract duration may indicate an urgent need or a temporary solution, requiring further justification.
Lack of transparency in the selection process due to sole-source nature.
High dollar value for a short-term contract warrants scrutiny of unit pricing and necessity.

Positive Signals

Ensures timely availability of critical surgical implants for VA patients.
Award to a known entity (Terumo Medical Corp) may imply a pre-existing relationship or specific product requirement.
The contract specifies a firm fixed price, providing cost certainty for this period.

Sector Analysis

The surgical appliance and supplies manufacturing sector is a critical component of the healthcare industry, providing essential medical devices. This contract falls within the broader healthcare procurement landscape, where the Department of Veterans Affairs is a significant purchaser of medical supplies and equipment. Spending in this sector is often driven by patient demand, technological advancements, and the need for specialized medical devices. Benchmarking this contract against other VA or DoD procurements for similar implant types would provide valuable context on pricing and volume.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. As a sole-source award, opportunities for small businesses to participate as prime contractors or through subcontracting are likely limited unless Terumo Medical Corp voluntarily engages them. Further investigation into Terumo's subcontracting plans would be needed to assess any potential 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. Given it's a purchase order, the level of formal oversight might differ from larger, more complex contracts. Transparency is limited due to the sole-source nature. The VA Office of Inspector General (OIG) would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this award.

Related Government Programs

VA Medical Equipment Procurement
Surgical Supplies Contracts
Medical Device Manufacturing
Federal Healthcare Spending

Risk Flags

Sole-source award
High dollar value for short duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $16,344.15 to TERUMO MEDICAL CORP. SURGICAL IMPLANT

Who is the contractor on this award?

The obligated recipient is TERUMO MEDICAL CORP.

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 $16,344.15.

What is the period of performance?

Start: 2026-04-06. End: 2026-07-06.

What is the specific type of surgical implant being procured, and why was Terumo Medical Corp the sole source?

The data indicates the North American Industry Classification System (NAICS) code is 339113 for Surgical Appliance and Supplies Manufacturing. However, the specific type of surgical implant is not detailed. Terumo Medical Corp was likely selected as the sole source due to possessing unique technology, proprietary designs, or specific product lines essential for particular surgical procedures that cannot be met by other manufacturers. Alternatively, a sole-source justification might have been used to address an urgent and compelling need where only Terumo could provide the required items within the necessary timeframe. A detailed review of the contract's justification for other than full and open competition (J&A) would be required to ascertain the precise reasons.

How does the $16.3 million cost for a 91-day period compare to market rates for similar surgical implants?

The total award of $16.3 million over 91 days equates to approximately $179,120 per day. This figure represents the total value of surgical implants to be delivered. To assess value for money, this daily burn rate needs to be broken down into per-unit costs for the specific implants. Benchmarking these per-unit costs against publicly available pricing data, industry reports, or prices paid by other federal agencies or large healthcare systems for comparable implants is crucial. Without knowing the quantity and specific types of implants, a direct comparison is challenging, but the high daily expenditure suggests these are likely high-value, specialized devices.

What are the potential risks associated with awarding a sole-source contract of this magnitude?

The primary risk of a sole-source award is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved through a competitive process. This reduces the overall value for taxpayer money. Another risk is the potential for vendor lock-in, where the agency becomes reliant on a single supplier, limiting future flexibility and negotiation power. Furthermore, sole-source awards can sometimes mask inefficiencies or a lack of proactive market research by the agency to identify alternative, potentially more cost-effective solutions. Ensuring the necessity and justification for the sole-source award is robust is critical to mitigate these risks.

What is the historical spending pattern for surgical implants by the Department of Veterans Affairs?

Analyzing historical spending patterns for surgical implants by the VA is essential for context. This would involve examining previous contract awards for similar items, including their values, durations, and whether they were competed or sole-sourced. Significant year-over-year increases or a trend of sole-source awards for specific implant categories could indicate potential issues with market research, pricing, or increasing demand. Conversely, consistent spending on competed contracts might suggest a healthy, competitive market. Without access to historical VA procurement data specifically for surgical implants, it's difficult to provide precise figures, but such an analysis would reveal trends in demand, pricing, and sourcing strategies.

What oversight mechanisms are in place to ensure the quality and necessity of the surgical implants provided under this contract?

Oversight for this contract would involve several layers. The VA's contracting officer's representative (COR) is typically responsible for monitoring contract performance, ensuring delivery of goods meets specifications, and verifying that the services or products are necessary and used appropriately. Quality assurance procedures are likely built into the contract, requiring Terumo Medical Corp to adhere to specific standards. The VA's supply chain management and clinical departments would also play a role in overseeing the utilization and effectiveness of these implants. The VA Office of Inspector General provides an additional layer of oversight, investigating potential fraud, waste, or abuse.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 265 DAVIDSON AVE STE 320, SOMERSET, NJ, 08873

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: $16,344

Exercised Options: $16,344

Current Obligation: $16,344

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline