VA awards $4.5M for Philips HTME service maintenance, highlighting a 3-year contract for critical healthcare equipment

Contract Overview

Contract Amount: $4,506,713 ($4.5M)

Contractor: Philips North America LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-01-01

End Date: 2026-11-30

Contract Duration: 1,429 days

Daily Burn Rate: $3.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: SERVICE MAINTENANCE FOR PHILIPS HTME LOCATED WITHIN THE SOUTH TEXAS VETERANS HEALTH CARE SYSTEM.

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78229

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $4.5 million to PHILIPS NORTH AMERICA LLC for work described as: SERVICE MAINTENANCE FOR PHILIPS HTME LOCATED WITHIN THE SOUTH TEXAS VETERANS HEALTH CARE SYSTEM. Key points: 1. Contract focuses on essential maintenance for specialized medical equipment, ensuring operational readiness. 2. Philips North America LLC, the incumbent, secured this award, suggesting a strong existing relationship and performance. 3. The contract's duration of nearly four years indicates a long-term need for these services. 4. Awarded under full and open competition, this contract suggests a competitive bidding process. 5. The firm-fixed-price structure aims to control costs and provide budget certainty for the VA. 6. Geographic focus on the South Texas Veterans Health Care System ensures localized support for veterans.

Value Assessment

Rating: good

The contract value of $4.5 million over approximately 3.7 years (1429 days) for specialized medical equipment maintenance appears reasonable. Benchmarking against similar service contracts for high-value medical devices is crucial, but the firm-fixed-price nature suggests cost predictability. The award to the original equipment manufacturer (OEM) often reflects specialized knowledge and warranty requirements, which can justify pricing compared to third-party servicers. Without specific per-unit maintenance costs or detailed service level agreements, a precise value-for-money assessment is challenging, but the duration and scope suggest a necessary investment for critical healthcare infrastructure.

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 eligible to bid. The fact that it resulted in a single award suggests that Philips North America LLC was the most advantageous offer to the government, likely based on a combination of technical capability, past performance, and price. The level of competition, while open, may have been limited by the specialized nature of the equipment requiring OEM servicing.

Taxpayer Impact: Taxpayers benefit from the competitive process, which is intended to drive down costs and ensure the government receives the best value. Open competition, even if resulting in a single awardee, provides a baseline for pricing and encourages market responsiveness.

Public Impact

Veterans receiving care at the South Texas Veterans Health Care System will benefit from the reliable operation of Philips HTME equipment. Essential diagnostic and treatment services supported by this equipment will remain uninterrupted. The contract ensures the availability of specialized medical technology crucial for patient care. The South Texas region directly benefits from the maintenance of advanced healthcare infrastructure. Local VA facilities will have access to timely and expert technical support for critical medical devices.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs if Philips' pricing is not aggressively managed through competition.
Reliance on a single OEM for maintenance could limit flexibility in future service options.
Ensuring consistent service quality across all maintenance events requires robust oversight.

Positive Signals

Award to an established OEM suggests high technical competence and product knowledge.
Firm-fixed-price contract provides cost certainty for the duration of the agreement.
Long-term contract indicates a stable and predictable need for these services, supporting planning.
Full and open competition, even with a single awardee, implies a structured procurement process.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on the maintenance of High-Technology Medical Equipment (HTME). The market for medical equipment maintenance is often dominated by original equipment manufacturers (OEMs) due to proprietary technology and specialized knowledge. Spending in this area is critical for healthcare providers, especially within the federal system, to ensure patient safety and continuity of care. Comparable spending benchmarks would typically look at the total cost of ownership for such equipment, including maintenance contracts, relative to the equipment's lifespan and utilization.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of maintaining Original Equipment Manufacturer (OEM) medical equipment, it is common for such contracts to be awarded to the OEM or authorized service providers, which may not always be small businesses. There is no explicit indication of subcontracting requirements for small businesses within the provided data, though the prime contractor may engage small businesses for ancillary services.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs (VA) contracting officers and technical monitors. They are responsible for ensuring that the contractor meets the terms and conditions of the contract, including service level agreements and performance standards. The firm-fixed-price nature of the contract provides a degree of accountability by linking payment to deliverables. Transparency is facilitated through contract award databases, and the VA's Office of Inspector General (OIG) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this spending.

Related Government Programs

Medical Equipment Maintenance Contracts
Veterans Health Administration IT and Medical Equipment
Philips Healthcare Service Agreements
Federal Healthcare Technology Procurement

Risk Flags

Potential for vendor lock-in
Reliance on single OEM for critical equipment maintenance
Ensuring consistent service quality requires robust oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $4.5 million to PHILIPS NORTH AMERICA LLC. SERVICE MAINTENANCE FOR PHILIPS HTME LOCATED WITHIN THE SOUTH TEXAS VETERANS HEALTH CARE 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 $4.5 million.

What is the period of performance?

Start: 2023-01-01. End: 2026-11-30.

What is the historical spending pattern for Philips HTME service maintenance at the South Texas Veterans Health Care System?

Analyzing historical spending requires access to past contract awards for similar services at this specific VA facility. Without that data, it's difficult to establish a precise trend. However, the current award of approximately $4.5 million over nearly four years suggests a consistent need for maintenance. If previous contracts were for similar durations and values, it indicates stable demand. Conversely, significant fluctuations in spending could signal changes in equipment utilization, new acquisitions, or shifts in maintenance strategies. A review of prior awards would reveal if this contract represents an increase, decrease, or continuation of previous investment levels in maintaining this critical medical technology.

How does the per-unit maintenance cost compare to industry benchmarks for similar Philips HTME equipment?

Determining the precise per-unit maintenance cost requires breaking down the total contract value by the number of individual pieces of equipment being serviced and the duration of service. The provided data does not offer this granular detail. However, contracts awarded to OEMs for specialized medical equipment maintenance often reflect higher costs due to the need for certified technicians, genuine parts, and adherence to strict quality and safety standards. To benchmark effectively, one would need to compare the average annual maintenance cost per unit against data from other healthcare systems (both federal and commercial) servicing identical or comparable Philips HTME models. Factors like service level agreements (e.g., response times, uptime guarantees) also influence cost and must be considered in any comparison.

What is Philips North America LLC's track record with the VA for similar service contracts?

Philips North America LLC has a significant track record of providing medical equipment and services to the Department of Veterans Affairs. As the original equipment manufacturer (OEM) for Philips HTME, they are often the sole or primary provider for maintenance and support of their own technology. Past performance evaluations within the VA system would detail their reliability, responsiveness, and quality of service on previous contracts. Awards like this one, especially if they are sole-source or follow-on to previous successful contracts, suggest a positive performance history. A thorough review would involve examining contract close-out reports and performance metrics from prior engagements to ensure continued satisfactory service delivery.

What are the key performance indicators (KPIs) used to measure the success of this service contract?

Key performance indicators (KPIs) for this type of service contract typically focus on ensuring the operational readiness and reliability of the medical equipment. Common KPIs include equipment uptime percentages (e.g., aiming for 98% or higher availability), response times for service calls (e.g., within 4 or 8 business hours for critical issues), and repair completion times. Adherence to preventative maintenance schedules is also crucial. The contract likely specifies these metrics, and performance is measured through service reports submitted by the contractor and validated by VA technical monitors. Failure to meet these KPIs could result in financial penalties or impact future contract awards.

Are there any identified risks associated with relying on Philips North America LLC for this critical maintenance?

A primary risk associated with relying on an OEM like Philips North America LLC is the potential for vendor lock-in and potentially higher costs compared to third-party maintenance providers, although OEM service often guarantees specialized expertise. Another risk is the dependency on a single supplier for critical equipment uptime; any disruption in Philips' operations or supply chain could impact service delivery. Furthermore, ensuring that the contracted service levels are consistently met requires diligent oversight from the VA. The firm-fixed-price structure mitigates cost overrun risks for the VA, but performance risks remain if the contractor fails to meet service obligations.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Irradiation Apparatus Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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: 22100 BOTHELL EVERETT HWY, BOTHELL, WA, 98021

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

Financial Breakdown

Contract Ceiling: $5,466,080

Exercised Options: $4,506,713

Current Obligation: $4,506,713

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797H17D0022

IDV Type: IDC

Timeline