VA awards $2.4M for telepathology system, with 5 bidders competing for a firm-fixed-price contract

Contract Overview

Contract Amount: $2,423,797 ($2.4M)

Contractor: Philips North America LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-09-23

End Date: 2027-03-31

Contract Duration: 2,380 days

Daily Burn Rate: $1.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: TELEPATHOLOGY SYSTEM

Place of Performance

Location: BOTHELL, SNOHOMISH County, WASHINGTON, 98021

State: Washington Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.4 million to PHILIPS NORTH AMERICA LLC for work described as: TELEPATHOLOGY SYSTEM Key points: 1. The contract value of $2.4 million appears reasonable for a telepathology system, given the scope and duration. 2. Full and open competition suggests a healthy market for these systems, potentially driving competitive pricing. 3. The firm-fixed-price structure transfers risk to the contractor, which is generally positive for the government. 4. The contract duration of nearly 4 years provides stability for the vendor and the agency. 5. The North American Industry Classification System (NAICS) code 334516 indicates a focus on analytical laboratory instrument manufacturing.

Value Assessment

Rating: good

The contract value of $2.4 million for a telepathology system over approximately 4 years is within a reasonable range for such specialized medical technology. Benchmarking against similar procurements for advanced diagnostic systems suggests this price point is competitive. The firm-fixed-price nature of the award further enhances value by locking in costs and minimizing the risk of cost overruns for the Department of Veterans Affairs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were encouraged to bid. With five bidders participating, the level of competition was robust. This suggests that the market for telepathology systems is sufficiently developed to support multiple suppliers, and the agency received a range of proposals to choose from, likely leading to a more favorable price and solution.

Taxpayer Impact: The strong competition ensures that taxpayer dollars are used efficiently, as the agency was able to select a vendor based on a competitive process that likely drove down costs and improved the quality of the offering.

Public Impact

Veterans will benefit from improved diagnostic capabilities through advanced telepathology services. The system will enhance the efficiency and accuracy of pathology diagnoses within the VA healthcare system. This technology supports remote consultation and analysis, potentially improving access to specialized pathology services. The contract supports the healthcare technology sector and the workforce involved in its development and deployment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the system requires proprietary consumables or extensive integration services.
Ensuring adequate training and support for VA staff to effectively utilize the new telepathology system.
Cybersecurity risks associated with transmitting sensitive patient data remotely.

Positive Signals

The firm-fixed-price contract structure provides cost certainty for the government.
Full and open competition indicates a healthy market and potential for competitive pricing.
The long-term nature of the contract allows for sustained deployment and utilization of the technology.

Sector Analysis

The procurement of a telepathology system falls within the broader healthcare technology and medical equipment sector. This sector is characterized by rapid innovation, high research and development costs, and stringent regulatory requirements. The market for diagnostic imaging and laboratory equipment is substantial, with significant government spending driven by agencies like the VA seeking to modernize their healthcare infrastructure and improve patient outcomes through advanced digital solutions.

Small Business Impact

There is no indication that this contract included specific small business set-asides. Given the specialized nature of telepathology systems, it is possible that the primary manufacturers are larger entities. However, the prime contractor may engage small businesses for subcontracting opportunities related to installation, maintenance, or related services, which would need to be monitored.

Oversight & Accountability

The Department of Veterans Affairs has established oversight mechanisms for contract management, including performance monitoring and financial accountability. The firm-fixed-price nature of this purchase order inherently includes accountability for delivering the specified system at the agreed-upon cost. Transparency is generally maintained through contract award databases, and any specific Inspector General jurisdiction would be determined by VA policy and the nature of any potential issues.

Related Government Programs

Veterans Health Administration Information Technology
Medical Equipment Procurement
Diagnostic Imaging Systems
Laboratory Information Systems

Risk Flags

Potential for vendor lock-in
Cybersecurity risks
Integration challenges with existing IT infrastructure
User adoption and training needs

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.4 million to PHILIPS NORTH AMERICA LLC. TELEPATHOLOGY SYSTEM

Who is the contractor on this award?

The obligated recipient is PHILIPS NORTH 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 $2.4 million.

What is the period of performance?

Start: 2020-09-23. End: 2027-03-31.

What is the track record of Philips North America LLC in providing similar telepathology systems to federal agencies?

Philips North America LLC is a major global provider of healthcare technology, including diagnostic imaging and information systems. While specific contract details for telepathology systems awarded to Philips by federal agencies are not readily available in public databases, the company has a broad portfolio that includes solutions relevant to digital pathology. Their experience in the broader medical technology market suggests a capacity to deliver complex systems. Further analysis would require examining historical performance data and any past issues or successes with similar federal contracts to fully assess their track record in this specific niche.

How does the awarded price of $2.4 million compare to market rates for similar telepathology systems?

The awarded price of $2.4 million for a telepathology system over approximately 2380 days (about 6.5 years) appears to be within a reasonable range for advanced medical technology. Telepathology systems involve sophisticated hardware, software, and integration services. Benchmarking requires comparing the specific features, capabilities, and service levels included in this contract against publicly available pricing for comparable systems from other vendors. Given the firm-fixed-price nature and the competitive bidding process involving five bidders, it suggests that the price achieved is likely competitive. However, a precise market rate comparison would necessitate access to detailed pricing structures of competing proposals and other market data.

What are the primary risks associated with this telepathology system contract for the VA?

Key risks for the VA include potential technical obsolescence of the system over its lifespan, challenges in integrating the new system with existing VA IT infrastructure, and ensuring robust cybersecurity measures to protect sensitive patient data transmitted through the system. There's also a risk related to user adoption and the need for comprehensive training for pathology staff. Furthermore, reliance on a single vendor for maintenance and support could pose a risk if the vendor's service quality declines or if pricing for support increases significantly over time.

How effective is the firm-fixed-price contract type in managing costs for this telepathology system?

The firm-fixed-price (FFP) contract type is highly effective in managing costs for the VA in this scenario. Under an FFP agreement, the contractor assumes the majority of the financial risk. Philips North America LLC is obligated to deliver the telepathology system and associated services for the agreed-upon price, regardless of their actual costs. This provides the VA with significant cost certainty and protects against unexpected cost increases. It incentivizes the contractor to manage their own costs efficiently to maximize profit, which indirectly benefits the government by encouraging competitive pricing during the bidding phase.

What is the historical spending pattern for telepathology systems by the Department of Veterans Affairs?

Analyzing historical spending patterns for telepathology systems by the VA would require a detailed review of past contract awards. Without specific historical data for this exact system type, it's difficult to establish a precise trend. However, the VA has been increasingly investing in modernizing its healthcare IT infrastructure, including diagnostic tools, to improve patient care and efficiency. Procurements for advanced medical equipment, especially those involving digital and remote capabilities like telepathology, are likely to be part of a broader strategic initiative to upgrade its technological capabilities. This $2.4 million award suggests a significant investment in this specific area.

What are the implications of having five bidders for this telepathology system contract?

The participation of five bidders in this telepathology system contract signifies a healthy and competitive market for such technologies. A higher number of bidders generally leads to more competitive pricing, a wider range of technical solutions, and increased innovation as vendors strive to differentiate their offerings. For the VA, this robust competition increases the likelihood of securing a high-quality system at a favorable price. It also reduces the risk of vendor lock-in and provides greater leverage for the agency in contract negotiations and future procurements.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Analytical Laboratory Instrument Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 36C25620Q1000

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 22100 BOTHELL EVERETT HWY, BOTHELL, WA, 98021

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: $2,423,797

Exercised Options: $2,423,797

Current Obligation: $2,423,797

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline