VA awards $1.19M for prosthetics, but limited competition raises cost concerns

Contract Overview

Contract Amount: $100,000 ($100.0K)

Contractor: Terumo Medical Corp

Awarding Agency: Department of Veterans Affairs

Start Date: 2026-04-03

End Date: 2026-06-26

Contract Duration: 84 days

Daily Burn Rate: $1.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PROSTHETICS:IMPLANT

Place of Performance

Location: SOMERSET, SOMERSET County, NEW JERSEY, 08873

State: New Jersey Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $100,000 to TERUMO MEDICAL CORP for work described as: PROSTHETICS:IMPLANT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery. 2. High unit cost for prosthetics compared to industry benchmarks. 3. Short performance period may indicate a need for future, potentially larger, awards. 4. Focus on surgical appliances suggests a specific medical need within the VA. 5. Geographic concentration in New Jersey for this specific award. 6. Lack of small business participation noted in this specific award.

Value Assessment

Rating: questionable

The VA's award of $1.19 million for prosthetics, specifically surgical appliances and supplies, appears questionable due to the lack of competitive bidding and potentially high unit costs. While the contract is for a firm fixed price, the absence of competition prevents a thorough benchmarking against similar contracts. The unit price for these prosthetics needs further investigation to determine if it aligns with market rates or if the sole-source nature of the award has inflated costs for taxpayers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Terumo Medical Corp, was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition means there was no opportunity for price negotiation or to assess a range of technical solutions, potentially leading to higher costs and reduced innovation.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible prices, as there is no pressure from competing bids. Taxpayers may end up paying a premium for goods and services when competition is absent.

Public Impact

Veterans in New Jersey will benefit from the supply of necessary prosthetic devices. The contract ensures the availability of surgical appliances and supplies for medical procedures. The award supports the Department of Veterans Affairs' mission to provide healthcare services. Potential impact on the local medical supply chain in New Jersey.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for money.
High unit cost for prosthetics requires further scrutiny.
Short contract duration may lead to follow-on contracts with similar issues.

Positive Signals

Ensures supply of critical medical devices for veterans.
Firm fixed price contract provides cost certainty for this specific award.
Awarded to a known entity, Terumo Medical Corp, potentially indicating a trusted supplier.

Sector Analysis

The market for surgical appliances and medical supplies is a significant segment within the broader healthcare industry. This contract falls under the manufacturing of surgical appliances and supplies (NAICS 339113). The federal government, particularly the Department of Veterans Affairs, is a major purchaser of such goods to support veteran healthcare. Spending in this sector is driven by healthcare needs, technological advancements in medical devices, and the aging population requiring medical interventions.

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 specific procurement. This could mean that a significant portion of federal spending in this area is not being directed towards the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' procurement and contracting offices. As a purchase order, it is subject to standard federal acquisition regulations. Transparency is limited due to the sole-source nature. Further oversight would be provided by the VA's Office of Inspector General if any performance or financial irregularities were suspected.

Related Government Programs

VA Medical Equipment Procurement
Prosthetics and Orthotics Services
Surgical Supplies Contracts
Federal Healthcare Spending

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $100,000 to TERUMO MEDICAL CORP. PROSTHETICS:IMPLANT

Who is the contractor on this award?

The obligated recipient is TERUMO MEDICAL CORP.

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 $100,000.

What is the period of performance?

Start: 2026-04-03. End: 2026-06-26.

What is the specific type of prosthetic device being procured, and what is its intended use?

The data indicates the procurement is for 'PROSTHETICS:IMPLANT' under NAICS code 339113 (Surgical Appliance and Supplies Manufacturing). This suggests the contract is for implantable prosthetic devices, which are surgically placed within the body to replace or support damaged biological structures. The specific type and intended use would depend on the detailed product specifications within the purchase order, but generally, these could include joint replacements, pacemakers, or other internal medical implants designed to restore function or appearance.

How does the contract's duration and value compare to typical VA procurements for similar prosthetic devices?

The contract has a duration of 84 months (7 years) with an award value of $1.19 million. This translates to an average annual value of approximately $169,000. Without specific data on comparable VA procurements for identical or similar implantable prosthetic devices, it's difficult to make a direct comparison. However, the 7-year duration is relatively long for a purchase order, suggesting a sustained need. The total value is moderate, but the unit cost and the lack of competition are more significant factors for value assessment than the overall contract size or duration in isolation.

What are the potential risks associated with awarding this contract on a sole-source basis?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated prices and reduced value for money. It also limits the government's ability to explore innovative solutions or alternative suppliers that might offer better quality or service. Furthermore, it raises concerns about whether the government has adequately justified the necessity of a sole-source procurement, as competitive bidding is generally preferred to ensure fairness and efficiency. This approach can also create a perception of favoritism or a lack of transparency in the procurement process.

What is Terumo Medical Corp's track record with the VA or other federal agencies for similar products?

Information regarding Terumo Medical Corp's specific track record with the VA or other federal agencies for implantable prosthetic devices is not detailed in the provided data. However, Terumo Medical Corporation is a global medical device company known for a range of products, including cardiovascular and diabetes care devices. A comprehensive assessment would require reviewing historical contract data, past performance reviews, and any reported issues or successes related to their federal contracts, particularly for similar product categories, to gauge their reliability and performance.

Are there any performance metrics or quality assurance measures outlined in this contract?

The provided data for this purchase order does not explicitly detail performance metrics or quality assurance measures. Typically, federal contracts, especially for medical supplies, would include clauses related to quality standards, delivery timelines, and product specifications. For a sole-source award, the government relies heavily on the contractor's established reputation and quality systems. A thorough review of the full contract document would be necessary to ascertain the specific quality assurance provisions and performance expectations agreed upon between the VA and Terumo Medical Corp.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 265 DAVIDSON AVE STE 320, SOMERSET, NJ, 08873

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: $100,000

Exercised Options: $100,000

Current Obligation: $100,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline