VA awards $7.2M sole-source contract for medical graphics maintenance, raising value-for-money questions

Contract Overview

Contract Amount: $7,225 ($7.2K)

Contractor: Medical Graphics Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2026-03-27

End Date: 2027-03-26

Contract Duration: 364 days

Daily Burn Rate: $20/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MAINTENANCE SUPPORT SERVICES FOR QUANTITY: 1 - MEDICAL GRAPHICS CORPORATION (MGC) PLATINUM ELITE DX RTD

Place of Performance

Location: GRAND JUNCTION, MESA County, COLORADO, 81501

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $7,224.76 to MEDICAL GRAPHICS CORPORATION for work described as: MAINTENANCE SUPPORT SERVICES FOR QUANTITY: 1 - MEDICAL GRAPHICS CORPORATION (MGC) PLATINUM ELITE DX RTD Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Maintenance services for specialized medical equipment represent a critical need. 3. The contract duration of one year with a fixed-price structure offers some cost predictability. 4. Lack of competition may lead to inflated pricing compared to a more open market. 5. Performance context is limited due to the single-vendor nature of the award. 6. Sector positioning is within the healthcare technology maintenance sub-sector.

Value Assessment

Rating: questionable

The contract value of $7.2 million for one year of maintenance for medical graphics equipment appears high, especially given the sole-source award. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The fixed-price nature provides some cost certainty, but the absence of competition raises concerns about whether the VA is achieving optimal value for its investment. Further analysis would be needed to compare this to industry standards for similar equipment maintenance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Medical Graphics Corporation (MGC). This means that the Department of Veterans Affairs did not solicit bids from multiple vendors. While sole-source awards can be justified in specific circumstances, such as when only one vendor can provide the required service or equipment, it significantly reduces the potential for price discovery and competition. The lack of competition means taxpayers may not be benefiting from the most cost-effective solution available.

Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the best possible price, potentially leading to higher costs for taxpayers. The absence of competition means that the government cannot leverage market forces to drive down prices.

Public Impact

Veterans will benefit from the continued availability of functional medical imaging equipment. Essential maintenance services for critical diagnostic tools will be provided. The contract supports healthcare delivery within facilities managed by the Department of Veterans Affairs. The contract ensures the operational readiness of medical technology used for patient care.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings.
Lack of transparency in pricing due to no competitive bidding process.
Potential for vendor lock-in with specialized maintenance services.

Positive Signals

Ensures continued operational capability of critical medical equipment.
Fixed-price contract provides budget certainty for the VA.
Contract is with a known entity, potentially reducing initial onboarding risks.

Sector Analysis

The healthcare technology sector is characterized by specialized equipment requiring ongoing maintenance to ensure functionality and patient safety. Contracts for maintenance services are crucial for healthcare providers, including the VA, to maintain their diagnostic and treatment capabilities. The market for such services can be competitive, but specialized equipment often leads to sole-source or limited competition scenarios. Benchmarking spending in this area requires comparing maintenance costs for similar high-value medical imaging systems.

Small Business Impact

This contract does not appear to involve a small business set-aside, as the award is sole-source to Medical Graphics Corporation. There is no explicit indication of subcontracting opportunities for small businesses within the provided data. The focus is on specialized maintenance, which may limit the scope for broad subcontracting unless MGC actively engages small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. As a purchase order, it is a less complex instrument than a large prime contract, but still requires monitoring for performance and adherence to terms. Transparency is limited by the sole-source nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Medical Equipment Maintenance Contracts
Department of Veterans Affairs Healthcare Procurement
Sole-Source IT and Medical Equipment Contracts
Diagnostic Imaging Equipment Support

Risk Flags

Sole-source award
Potential for inflated pricing
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $7,224.76 to MEDICAL GRAPHICS CORPORATION. MAINTENANCE SUPPORT SERVICES FOR QUANTITY: 1 - MEDICAL GRAPHICS CORPORATION (MGC) PLATINUM ELITE DX RTD

Who is the contractor on this award?

The obligated recipient is MEDICAL GRAPHICS CORPORATION.

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 $7,224.76.

What is the period of performance?

Start: 2026-03-27. End: 2027-03-26.

What is the historical spending by the VA on maintenance for Medical Graphics Corporation equipment?

To assess historical spending, one would need to query federal procurement databases for all contracts awarded to Medical Graphics Corporation by the Department of Veterans Affairs. This would include purchase orders, task orders under larger contracts, and any prime contracts. Analyzing this historical data would reveal trends in spending, contract types (competitive vs. sole-source), and average contract values over time. Without access to this specific historical data, it's challenging to determine if the current $7.2 million award represents an increase, decrease, or consistent level of spending for this type of service. Understanding past spending patterns is crucial for identifying potential cost efficiencies or escalating costs.

How does the per-unit cost of this maintenance contract compare to industry benchmarks for similar medical imaging equipment?

Determining the per-unit cost benchmark for this contract is difficult without knowing the exact number and type of 'MEDICAL GRAPHICS CORPORATION (MGC) PLATINUM ELITE DX RTD' units being maintained. The contract specifies a quantity of '1' for the overall service, but this likely refers to the service agreement itself, not the number of machines. If this contract covers maintenance for a single unit, $7.2 million annually would be exceptionally high. If it covers a fleet of units, the per-unit cost would need to be calculated by dividing the total contract value by the number of units. Benchmarking would then involve comparing this per-unit cost against industry data for maintenance of similar diagnostic imaging systems, considering factors like age of equipment, complexity, and service level agreements. Given the sole-source nature, obtaining precise comparative data is challenging.

What specific justification was provided for awarding this contract on a sole-source basis?

Sole-source contract awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For this contract, the justification would likely stem from Medical Graphics Corporation being the original equipment manufacturer (OEM) and possessing unique knowledge, proprietary data, or specialized tools required for the maintenance of their 'PLATINUM ELITE DX RTD' system. The VA would need to document that no other vendor could adequately perform the maintenance, or that seeking competition would be impractical or detrimental to the government's needs. This justification is critical for ensuring that sole-source awards are used appropriately and not simply as a convenience.

What are the potential risks associated with a sole-source maintenance contract for critical medical equipment?

The primary risk associated with a sole-source maintenance contract for critical medical equipment is the lack of price competition, which can lead to inflated costs for the government. Without competing bids, the vendor has significant leverage, potentially resulting in higher prices than if multiple vendors were vying for the contract. Another risk is vendor lock-in, where the government becomes dependent on a single provider, making it difficult and costly to switch vendors in the future. This dependency can also reduce the incentive for the sole-source provider to innovate or offer superior service levels. Furthermore, if the sole-source provider experiences financial difficulties or operational issues, it could disrupt the availability of essential maintenance services, impacting patient care.

What is the track record of Medical Graphics Corporation in fulfilling maintenance contracts with the federal government, particularly the VA?

To assess Medical Graphics Corporation's track record, one would need to examine their past performance on federal contracts, specifically those with the Department of Veterans Affairs. This involves reviewing contract databases for past awards, contract performance evaluations (like Contractor Performance Assessment Reporting System - CPARS), and any documented issues or disputes. A positive track record would indicate timely service, adherence to contract terms, and satisfactory performance. Conversely, a history of performance issues, missed deadlines, or cost overruns would raise concerns about their ability to fulfill the current $7.2 million contract effectively. Without specific performance data, it's assumed the VA has a basis for awarding this contract, but due diligence would require reviewing their history.

Industry Classification

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 350 OAK GROVE PKWY, SAINT PAUL, MN, 55127

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: $14,811

Exercised Options: $7,225

Current Obligation: $7,225

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline