VA awards $3.86M sole-source contract for Olympus scope repair and maintenance

Contract Overview

Contract Amount: $3,856,072 ($3.9M)

Contractor: Olympus America Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2021-04-15

End Date: 2026-09-30

Contract Duration: 1,994 days

Daily Burn Rate: $1.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: OLYMPUS SCOPE PM AND REPAIR

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85012

State: Arizona Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $3.9 million to OLYMPUS AMERICA INC for work described as: OLYMPUS SCOPE PM AND REPAIR Key points: 1. Contract awarded on a sole-source basis, limiting competitive opportunities. 2. The contract duration extends over five years, indicating a long-term need. 3. Pricing appears to be a firm fixed price, offering cost certainty. 4. The contract is for repair and maintenance services, crucial for medical equipment. 5. The vendor, Olympus America Inc., is the likely original equipment manufacturer. 6. The contract value is substantial for specialized medical equipment services.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific service details or comparable sole-source agreements. However, the $3.86 million over nearly five years suggests a significant investment in maintaining critical medical equipment. The firm fixed-price structure provides cost predictability, but the lack of competition raises questions about whether the VA secured the best possible price. Without competitive bids, it's difficult to definitively assess value-for-money compared to market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Olympus America Inc., was solicited. This approach is typically justified when a product or service is unique and only available from a single source, often the original equipment manufacturer (OEM). The lack of competition means the VA did not benefit from price discovery through multiple bids, potentially leading to higher costs than if the contract had been competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The sole-source nature prevents the VA from leveraging market competition to drive down prices for essential repair and maintenance services.

Public Impact

Veterans Affairs medical facilities benefit from the continued operational readiness of Olympus scopes. Ensures the availability of critical diagnostic and surgical equipment for patient care. The contract supports specialized repair and maintenance services, maintaining equipment integrity. Geographic impact is likely nationwide, covering VA facilities requiring these services. Workforce implications include the need for specialized technicians, potentially provided by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source award.
Long contract duration without competitive re-evaluation could lead to price escalation.
Dependence on a single vendor for critical equipment maintenance.

Positive Signals

Ensures continued availability of specialized repair services for critical medical equipment.
Firm fixed-price contract provides cost certainty for the VA.
Vendor is likely the OEM, ensuring expertise and availability of parts.
Supports the operational readiness of VA healthcare facilities.

Sector Analysis

The medical device repair and maintenance sector is critical for healthcare providers, ensuring the functionality of complex equipment. This contract falls within the broader category of healthcare services and equipment support. The market for specialized medical equipment repair is often dominated by OEMs due to proprietary knowledge and parts. Comparable spending benchmarks are difficult to establish without knowing the specific scope models and service levels, but contracts for OEM-based maintenance can be substantial.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the likely requirement for specialized OEM knowledge and parts, it is improbable that small businesses would be primary subcontractors unless they possess specific, certified expertise directly related to Olympus equipment. The impact on the small business ecosystem is likely minimal for this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures would be tied to the performance work statement and delivery schedules. Transparency is limited by the sole-source award, but contract details should be publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Medical Equipment Maintenance Contracts
Veterans Affairs Healthcare Services
Sole-Source Medical Device Procurement
Olympus Medical Systems Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Vendor lock-in

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $3.9 million to OLYMPUS AMERICA INC. OLYMPUS SCOPE PM AND REPAIR

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 $3.9 million.

What is the period of performance?

Start: 2021-04-15. End: 2026-09-30.

What is the specific justification provided by the VA for awarding this contract on a sole-source basis to Olympus America Inc.?

The justification for a sole-source award typically centers on the unique capabilities or proprietary nature of the product or service. For Olympus medical scopes, this often relates to the need for specialized knowledge, proprietary tools, and access to genuine replacement parts that only the original equipment manufacturer (OEM), Olympus America Inc., can provide. Without this specialized expertise, attempting repairs through a third party could void warranties, compromise equipment performance, and potentially pose risks to patient safety. The VA likely cited these factors, along with the critical nature of the equipment for patient care, to justify bypassing the standard competitive bidding process.

How does the firm fixed-price (FFP) structure impact the value and risk for both the VA and Olympus America Inc.?

A Firm Fixed Price (FFP) contract establishes a set price for the defined scope of work, regardless of the contractor's actual costs. For the VA, this provides cost certainty and predictability, making budgeting easier. The risk of cost overruns shifts primarily to Olympus America Inc.; if their repair costs exceed the fixed price, their profit margin decreases. Conversely, if they can perform the services more efficiently than anticipated, their profit increases. This structure incentivizes the contractor to manage costs effectively. However, in a sole-source scenario, the FFP might be set at a higher baseline than in a competitive environment, potentially reducing the overall value for the VA.

What are the potential risks associated with relying on a single vendor (Olympus America Inc.) for the maintenance of critical medical equipment?

Relying on a single vendor for critical medical equipment maintenance, especially through a sole-source contract, introduces several risks. Firstly, it creates vendor lock-in, making it difficult and potentially costly to switch providers even if service quality declines or prices increase significantly. Secondly, the lack of competition can reduce the incentive for the vendor to innovate or improve service offerings. Thirdly, the VA becomes highly dependent on the vendor's operational stability; any disruption to Olympus America Inc.'s business could directly impact the VA's ability to maintain its essential medical equipment. Lastly, as previously noted, the absence of competitive pressure may lead to suboptimal pricing.

Can the VA benchmark the pricing of this contract against other federal agencies or private healthcare providers for similar Olympus scope maintenance services?

Benchmarking the pricing of this contract is challenging without detailed service level agreements and specific scope models. While other federal agencies or private healthcare providers may use similar Olympus equipment, their maintenance contracts can vary significantly based on volume, service scope (e.g., preventative vs. on-demand, response times), geographic coverage, and negotiated terms. Sole-source contracts inherently lack direct market comparables. The VA might have internal historical data or access to industry reports, but a precise, apples-to-apples comparison is difficult, especially given the proprietary nature of OEM service agreements. This lack of clear benchmarks makes assessing true value-for-money more complex.

What are the potential implications for equipment obsolescence or technology upgrades under this long-term sole-source agreement?

Under a long-term sole-source agreement, the VA's ability to leverage new technologies or upgrade equipment might be influenced by the vendor's product roadmap and pricing strategies. Olympus America Inc. may have incentives to encourage upgrades to newer models, potentially through separate procurement actions or by phasing out support for older scopes. The VA needs to ensure that the contract includes provisions for addressing technology refreshes or that it has a strategy for managing equipment lifecycle beyond the current contract's duration. Without competitive pressure, the vendor might be less proactive in offering cost-effective upgrade paths, requiring the VA to actively manage this aspect of its medical technology portfolio.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C25821Q0002

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: $3,888,880

Exercised Options: $3,856,072

Current Obligation: $3,856,072

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline