VA awards $2.17M Olympus scope lease, highlighting potential value in surgical equipment maintenance

Contract Overview

Contract Amount: $2,168,725 ($2.2M)

Contractor: Olympus America Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2021-09-21

End Date: 2026-09-20

Contract Duration: 1,825 days

Daily Burn Rate: $1.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 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 $2.2 million to OLYMPUS AMERICA INC for work described as: OLYMPUS SCOPE LEASE Key points: 1. Lease agreement for Olympus scopes suggests a strategic approach to equipment acquisition and maintenance. 2. The firm fixed-price contract structure provides cost certainty for the Department of Veterans Affairs. 3. Full and open competition indicates a potentially competitive bidding process for this medical equipment. 4. The contract duration of five years allows for consistent access to necessary surgical tools. 5. This spending aligns with broader healthcare sector trends in specialized medical device procurement.

Value Assessment

Rating: good

Benchmarking the per-unit cost for this specific Olympus scope lease is challenging without detailed specifications and market comparisons. However, the total award of $2.17 million over five years for a single delivery order suggests a moderate annual expenditure. The firm fixed-price nature of the contract is a positive indicator for cost control. Further analysis would require comparing this lease rate against similar equipment leases from other manufacturers or for different models within the Olympus line to ascertain optimal value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. This approach is generally favorable for price discovery and ensuring the government receives competitive pricing. The specific number of bidders is not provided, but the competition type implies a robust process was intended. The outcome of this competition, a single delivery order, indicates that a vendor was selected based on the best value proposition.

Taxpayer Impact: Full and open competition aims to leverage market forces to secure the best possible prices for taxpayers, potentially leading to cost savings compared to less competitive procurement methods.

Public Impact

Veterans receiving care at VA facilities will benefit from access to modern surgical equipment. The contract supports the delivery of surgical services within the VA healthcare system. The primary geographic impact is within the facilities served by the Department of Veterans Affairs. This contract indirectly supports the medical technology sector and associated maintenance services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the scope model and features makes it difficult to assess if the leased equipment is the most cost-effective solution.
The five-year duration might lock the VA into a specific technology, potentially missing out on newer, more advanced, or cost-efficient alternatives that emerge during the lease term.
Reliance on a single vendor for lease and potential maintenance could lead to vendor lock-in and limit future negotiation leverage.

Positive Signals

The firm fixed-price contract provides budget certainty for the VA, mitigating risks of cost overruns.
Awarding under full and open competition suggests an effort to obtain competitive pricing and value.
A five-year lease ensures consistent availability of critical surgical equipment, supporting ongoing patient care.

Sector Analysis

This contract falls within the broader healthcare equipment and medical supplies sector. The market for surgical instruments and devices is characterized by innovation and specialized manufacturers like Olympus. Spending in this area is driven by the need for advanced diagnostic and therapeutic tools. Comparable spending benchmarks would involve analyzing other federal and commercial leases or purchases of similar high-value medical equipment, considering factors like technology generation and service agreements.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a lease for specialized medical equipment from a large manufacturer, it is unlikely that small businesses would be primary bidders or subcontractors in this specific instance. The focus appears to be on securing the equipment directly from the original equipment manufacturer or its authorized representative.

Oversight & Accountability

The contract is a delivery order under a larger framework, likely subject to the standard oversight mechanisms of the Department of Veterans Affairs procurement process. Accountability is managed through the firm fixed-price terms and delivery schedules. Transparency is generally maintained through federal procurement databases where contract awards are published. Inspector General oversight would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Medical Equipment Procurement
Surgical Instruments
Department of Veterans Affairs Healthcare Services
Medical Device Leasing

Risk Flags

Potential for technological obsolescence within the lease term.
Lack of detailed information on specific scope model and features.
Uncertainty regarding the number of competing bids and the award basis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.2 million to OLYMPUS AMERICA INC. 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 $2.2 million.

What is the period of performance?

Start: 2021-09-21. End: 2026-09-20.

What specific model of Olympus scope is being leased, and what are its key features and intended uses?

The provided data does not specify the exact model of the Olympus scope being leased. The North American Industry Classification System (NAICS) code 339113, 'Surgical Appliance and Supplies Manufacturing,' indicates the general category of the product. To understand the scope's capabilities, one would need to consult the detailed contract line item descriptions or product specifications. These details are crucial for assessing the appropriateness of the equipment for the intended surgical procedures and for comparing its features against market alternatives. Without this information, it's difficult to determine if the leased equipment meets the specific clinical needs of the VA facilities.

How does the annual cost of this lease compare to purchasing a similar Olympus scope outright, considering depreciation and maintenance?

Directly comparing the lease cost to a purchase price requires more data. The annual cost for this lease is approximately $433,745 ($2,168,725.46 / 5 years). Purchasing a similar scope might involve a significant upfront capital expenditure, followed by ongoing costs for maintenance, calibration, and potential repairs. Leases often include some level of service or maintenance, which is factored into the lease payment. To assess value, one would need to compare the total cost of ownership over a five-year period for both leasing and purchasing scenarios, including financing costs for a purchase, service contracts, and the residual value of the equipment if purchased. Without specific purchase prices and service contract details, a definitive comparison is not possible.

What is the typical lifespan and technological obsolescence risk for the type of surgical scope being leased?

The typical lifespan and obsolescence risk for surgical scopes vary significantly by model and technological advancements. High-end diagnostic and surgical scopes can remain functional for many years, but the pace of innovation in medical technology means that newer models with enhanced imaging, functionality, or minimally invasive capabilities are frequently introduced. A five-year lease term is a moderate duration that balances the need for current technology with the risk of obsolescence. If the leased scope is a high-volume, workhorse instrument, it might remain relevant for its entire lease term. However, if it's a cutting-edge device, there's a higher chance that more advanced alternatives will emerge, potentially making the leased equipment less competitive or desirable towards the end of the lease.

How many bids were received for this contract, and what was the basis for award (e.g., lowest price technically acceptable vs. best value)?

The provided data indicates the contract was awarded under 'FULL AND OPEN COMPETITION,' which implies that multiple vendors were eligible to bid. However, the specific number of bids received is not detailed in the summary data. The contract type is 'FIRM FIXED PRICE,' and the award mechanism is a 'DELIVERY ORDER.' While not explicitly stated, firm fixed-price contracts, especially under full and open competition, often lean towards selecting the lowest-priced offer that meets all technical requirements (Lowest Price Technically Acceptable - LPTA). However, it could also be a best-value tradeoff where other factors beyond price are considered. Further investigation into the award justification documentation would be needed to confirm the precise basis for the award and the number of competing offers.

Are there any performance metrics or service level agreements (SLAs) associated with this lease to ensure equipment uptime and quality?

The provided summary data does not explicitly detail performance metrics or Service Level Agreements (SLAs) tied to this specific Olympus scope lease. However, in federal contracting, particularly for critical medical equipment, such agreements are often included within the broader contract terms or statement of work. These SLAs typically define requirements for response times for maintenance and repair, equipment uptime guarantees, and potentially penalties for non-compliance. The firm fixed-price nature of the contract suggests that the cost is set, but it doesn't inherently guarantee performance standards. To ascertain the presence and specifics of SLAs, one would need to review the full contract documentation, including any attached statements of work or performance work statements.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,169,025

Exercised Options: $2,168,725

Current Obligation: $2,168,725

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: V797P2065D

IDV Type: FSS

Timeline