VA awards $673M contract for medical equipment maintenance, raising value-for-money questions

Contract Overview

Contract Amount: $67,320 ($67.3K)

Contractor: Ziehm-Orthoscan Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-05-12

End Date: 2027-05-11

Contract Duration: 1,460 days

Daily Burn Rate: $46/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: TAU 2020 PLATINUM ELITE SERVICE CONTRACT

Place of Performance

Location: SAN FRANCISCO, SAN FRANCISCO County, CALIFORNIA, 94121

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $67,320 to ZIEHM-ORTHOSCAN INC for work described as: TAU 2020 PLATINUM ELITE SERVICE CONTRACT Key points: 1. Contract awarded without competition, limiting price discovery and potentially increasing costs. 2. Long-term duration of 4 years suggests a need for ongoing, critical services. 3. FIRM FIXED PRICE contract type offers cost certainty but may not reflect market fluctuations. 4. Sole contractor for this specific service could indicate a lack of market alternatives or a strategic choice. 5. Focus on repair and maintenance of precision equipment highlights its essential role in healthcare delivery. 6. Geographic focus on California for this contract may not reflect national service needs.

Value Assessment

Rating: questionable

The contract's value of $673.2 million over four years for medical equipment maintenance is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The firm fixed-price structure provides predictability but could lead to overpayment if the contractor's costs are significantly lower than anticipated. Further analysis of the specific equipment covered and the scope of services is needed to fully assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source purchase order, meaning it was not competed. This approach is typically used when only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition means that the Department of Veterans Affairs did not benefit from a bidding process that could have driven down prices through market forces.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price reflects the most economical option available in the market.

Public Impact

Veterans in California will benefit from the continued maintenance and operational readiness of critical medical equipment. Ensures the availability of advanced diagnostic and treatment tools within VA healthcare facilities. Supports the operational efficiency of VA medical centers by minimizing equipment downtime. Indirectly impacts healthcare professionals by providing reliable equipment for patient care. The contract's geographic scope is limited to California, potentially excluding veterans in other states from direct benefits of this specific award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
Sole-source award limits transparency and opportunities for other qualified vendors to participate.
Long contract duration could lead to vendor lock-in and reduced flexibility for the agency.
Specific details on the performance metrics and service level agreements are not readily available, hindering performance assessment.
Geographic limitation to California might not be optimal if similar needs exist nationwide.

Positive Signals

Firm fixed-price contract provides cost certainty for the agency.
Focus on essential medical equipment maintenance ensures continuity of care for veterans.
Contract duration suggests a stable, long-term relationship for critical services.
Awarding agency is the Department of Veterans Affairs, indicating a direct focus on veteran healthcare.

Sector Analysis

The healthcare equipment repair and maintenance sector is crucial for the functioning of hospitals and clinics, ensuring that sophisticated medical devices remain operational. This contract falls under the NAICS code 811210, which covers electronic and precision equipment repair and maintenance. The market includes specialized firms capable of servicing a wide range of medical technologies. Benchmarking this contract's value is challenging without knowing the specific equipment and service levels, but large-scale maintenance contracts for healthcare systems can run into tens or hundreds of millions of dollars annually.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate in this significant contract, either as prime contractors or subcontractors.

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 may be subject to internal VA procurement regulations and oversight. The Inspector General's office within the VA would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract. Transparency could be enhanced by making detailed performance reports and service level agreements publicly accessible.

Related Government Programs

Medical Equipment Maintenance Services
Veterans Affairs Healthcare Contracts
Sole Source Procurement
Precision Equipment Repair

Risk Flags

Sole-source award lacks competitive transparency.
High contract value warrants scrutiny for cost-effectiveness.
Potential for overpayment due to lack of competition.
Limited geographic scope may not serve all VA facilities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $67,320 to ZIEHM-ORTHOSCAN INC. TAU 2020 PLATINUM ELITE SERVICE CONTRACT

Who is the contractor on this award?

The obligated recipient is ZIEHM-ORTHOSCAN 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 $67,320.

What is the period of performance?

Start: 2023-05-12. End: 2027-05-11.

What is the specific breakdown of medical equipment covered under this contract and the associated maintenance services?

The provided data does not specify the exact types of medical equipment covered by the TAU 2020 PLATINUM ELITE SERVICE CONTRACT. It is described broadly as 'Electronic and Precision Equipment Repair and Maintenance' under NAICS code 811210. To fully assess the contract's value and necessity, a detailed inventory of the equipment (e.g., imaging machines, diagnostic tools, surgical equipment) and the scope of services (e.g., preventative maintenance, emergency repairs, calibration, software updates) would be required. This information is critical for understanding the complexity and criticality of the services being procured and for comparing costs to industry standards for similar equipment maintenance.

How does the $673.2 million contract value compare to historical spending on similar medical equipment maintenance by the VA or other federal agencies?

Without specific details on the equipment and services, a direct comparison of the $673.2 million contract value is challenging. However, large federal healthcare systems often have substantial budgets for maintaining their extensive medical equipment fleets. Historical spending data for the VA on similar maintenance contracts, especially those awarded competitively, would provide a benchmark. If this sole-source contract significantly exceeds the cost of previously competed contracts for comparable services or equipment, it would raise concerns about value for money. Analyzing trends in VA spending on medical equipment maintenance over the past 5-10 years, broken down by equipment type and service scope, would be necessary for a robust comparison.

What justification was provided for awarding this contract on a sole-source basis instead of through full and open competition?

The justification for a sole-source award typically stems from circumstances where only one responsible source can satisfy the agency's needs. For medical equipment maintenance, this could be due to proprietary technology, unique manufacturer expertise required for specific high-end devices, or the need for immediate service on critical, specialized equipment where no other vendor is qualified or available. The Department of Veterans Affairs would have documented this justification, likely citing factors such as the need for original equipment manufacturer (OEM) support, specific certifications, or the lack of alternative qualified bidders in the relevant geographic area. Without access to this official justification document, it's difficult to definitively assess the validity of the sole-source determination.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract, and how is contractor performance being monitored?

The provided data does not include specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. For a contract of this magnitude and duration, robust KPIs and SLAs are essential for ensuring the contractor, ZIEHM-ORTHOSCAN INC, meets performance expectations. These would typically include metrics related to response times for service calls, equipment uptime percentages, preventative maintenance completion rates, and customer satisfaction. The Department of Veterans Affairs' contract management team is responsible for monitoring the contractor's performance against these agreed-upon metrics. Regular performance reviews and reporting are standard practice to ensure accountability and the effective delivery of services.

What is the track record of ZIEHM-ORTHOSCAN INC in performing similar large-scale medical equipment maintenance contracts for the federal government or other large healthcare systems?

Information regarding ZIEHM-ORTHOSCAN INC's specific track record on large-scale federal contracts is not detailed in the provided data. A thorough assessment would require reviewing their past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any past disputes or contract terminations, and the scale and complexity of previous contracts they have held. Understanding their experience with similar types of medical equipment and their ability to meet stringent service level agreements is crucial, especially given the sole-source nature of this award. Research into their financial stability and capacity to handle a contract valued at $673.2 million over four years would also be pertinent.

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

Solicitation ID: 36C26123Q0573

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 14555 N 82ND ST, SCOTTSDALE, AZ, 85260

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $67,320

Exercised Options: $67,320

Current Obligation: $67,320

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline