VA awards $200M+ contract for outpatient care in South Dakota, raising questions about competition

Contract Overview

Contract Amount: $200,421 ($200.4K)

Contractor: Avera Mckennan

Awarding Agency: Department of Veterans Affairs

Start Date: 2026-06-01

End Date: 2026-11-30

Contract Duration: 182 days

Daily Burn Rate: $1.1K/day

Competition Type: NOT COMPETED UNDER SAP

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: BHHCS WINNER SD CONTRACTED CBOC

Place of Performance

Location: FORT MEADE, MEADE County, SOUTH DAKOTA, 57741

State: South Dakota Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $200,421 to AVERA MCKENNAN for work described as: BHHCS WINNER SD CONTRACTED CBOC Key points: 1. Contract awarded to Avera McKennan for outpatient care services. 2. Significant contract value suggests a substantial need for these services in the region. 3. The contract was not competed under simplified acquisition procedures, indicating a potential lack of broad market engagement. 4. The duration of the contract is relatively short, suggesting potential for future re-competition or adjustments. 5. The firm-fixed-price structure aims to provide cost certainty for the government. 6. Focus on outpatient care aligns with VA's strategy to expand community-based healthcare access.

Value Assessment

Rating: fair

The contract value of over $200 million for outpatient care is substantial. Without specific benchmarks for similar VA CBOC contracts in comparable regions, a precise value-for-money assessment is challenging. However, the lack of competition raises concerns about whether the government secured the most advantageous pricing. The firm-fixed-price structure provides some cost predictability, but the absence of competitive bidding limits the ability to benchmark against market rates or other potential providers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED UNDER SAP,' which typically implies a sole-source or limited competition scenario, especially given the contract value. The data does not indicate that the contract was broadly advertised or competed among multiple potential offerors. This lack of open competition means that the VA did not benefit from a wide range of proposals and potentially missed opportunities for innovative solutions or more competitive pricing.

Taxpayer Impact: The absence of full and open competition means taxpayers may not have received the lowest possible price for these essential healthcare services. Without a competitive process, there is less pressure on the contractor to offer the most cost-effective solutions.

Public Impact

Veterans in South Dakota will benefit from continued access to outpatient healthcare services. The contract ensures the provision of 'All Other Outpatient Care Centers' services. The geographic impact is focused on South Dakota, serving the healthcare needs of local veterans. The contract supports the healthcare workforce employed by Avera McKennan.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Limited transparency into the selection process due to sole-source award.
Potential for vendor lock-in if future needs are met by the same contractor without re-competition.

Positive Signals

Ensures continuity of care for veterans in South Dakota.
Firm-fixed-price contract provides budget certainty.
Award to an established provider (Avera McKennan) may indicate reliability.

Sector Analysis

The healthcare sector, particularly outpatient care, is a significant area of federal spending. The Department of Veterans Affairs (VA) is a major player, contracting for a wide range of medical services to serve the veteran population. This contract falls within the broader category of healthcare services, specifically focusing on community-based outpatient clinics (CBOCs). Benchmarking this contract's value would require comparing it to other VA CBOC contracts or similar healthcare service agreements, considering regional cost variations and service scope.

Small Business Impact

The provided data indicates that small business participation (sb) is false, and there is no indication of a small business set-aside. This suggests that the contract was not specifically targeted towards small businesses. Consequently, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. The impact on the small business ecosystem is neutral in terms of direct contract allocation, but large prime contractors may still engage small businesses for support services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract terms, requiring the contractor to deliver specified services. Transparency is limited due to the sole-source nature of the award, as detailed justifications for the non-competitive award are not publicly available through this data. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

VA Community Care Network (CCN)
VA Medical Services Contracts
Outpatient Healthcare Services
Federal Healthcare Procurement

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $200,421 to AVERA MCKENNAN. BHHCS WINNER SD CONTRACTED CBOC

Who is the contractor on this award?

The obligated recipient is AVERA MCKENNAN.

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 $200,421.

What is the period of performance?

Start: 2026-06-01. End: 2026-11-30.

What is the historical spending pattern for outpatient care services by the VA in South Dakota?

Analyzing historical spending for outpatient care by the VA in South Dakota requires access to detailed procurement data over several fiscal years. Without specific historical data for this region and service type, it's difficult to establish a precise pattern. However, the VA generally aims to increase community-based care to supplement its internal network. Spending patterns are influenced by veteran population growth, healthcare utilization rates, and strategic shifts towards outsourcing certain services. A significant contract like this suggests either a substantial increase in demand, a consolidation of previously fragmented services, or a new initiative to expand care access in the region. Further analysis would involve comparing this award to previous contracts awarded to Avera McKennan or other providers for similar services in South Dakota to identify trends in contract value, duration, and scope.

What specific services are included under 'All Other Outpatient Care Centers' for this contract?

The classification 'All Other Outpatient Care Centers' (NAICS code 621498) is broad and encompasses a wide range of outpatient healthcare services not specifically categorized under other NAICS codes. For this specific VA contract, the exact service details would be outlined in the Performance Work Statement (PWS) or Statement of Work (SOW). Typically, this could include general medical examinations, diagnostic services, preventive care, minor procedures, specialist consultations, and potentially telehealth services. Given the context of a VA contract, these services are intended to meet the healthcare needs of enrolled veterans. The PWS would define the scope, quality standards, reporting requirements, and any specific medical specialties or ancillary services to be provided by Avera McKennan.

What are the potential risks associated with a sole-source award of this magnitude?

A sole-source award of this magnitude, exceeding $200 million, carries several potential risks. Firstly, the primary risk is the lack of price competition, which could result in the government paying a premium compared to what might have been achieved through a competitive bidding process. This reduces overall value for taxpayer money. Secondly, it limits the opportunity for innovative solutions or improved service delivery models that might be proposed by other qualified healthcare providers. Thirdly, it can create a perception of unfairness or a lack of transparency in the procurement process. Finally, it may lead to vendor lock-in, where the incumbent provider becomes difficult to replace in the future, potentially reducing leverage for future contract negotiations.

How does this contract align with the VA's broader strategy for healthcare delivery?

This contract aligns with the VA's ongoing strategy to expand healthcare access for veterans, particularly through community-based care. The VA has been actively working to leverage external healthcare providers to supplement its own facilities, aiming to reduce wait times, increase patient choice, and provide care closer to veterans' homes. Awarding a significant contract for outpatient services in South Dakota suggests a commitment to ensuring adequate coverage in regions where VA facilities may be limited or capacity is strained. This approach, often referred to as the VA Community Care Network (CCN) or similar initiatives, allows the VA to tap into the existing healthcare infrastructure of private providers like Avera McKennan, thereby extending its reach and improving the overall healthcare experience for veterans.

What is Avera McKennan's track record with the VA or other federal agencies?

Avera McKennan is a large healthcare system based in Sioux Falls, South Dakota, with a significant presence in the region. While this specific data point does not detail their entire federal contracting history, large healthcare providers like Avera often have existing relationships with the VA and other federal entities, such as Medicare and Medicaid. Their track record would typically involve providing a range of medical services, potentially including outpatient care, hospital services, and specialized treatments. To fully assess their track record for this specific contract, one would need to examine past performance evaluations, any past disputes or contract terminations, and their history of successfully managing large-scale healthcare service agreements, particularly with government agencies. Their established presence in South Dakota suggests familiarity with the local healthcare landscape and veteran population.

Industry Classification

NAICS: Health Care and Social Assistance › Outpatient Care Centers › All Other Outpatient Care Centers

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1325 S CLIFF AVE, SIOUX FALLS, SD, 57105

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

Financial Breakdown

Contract Ceiling: $200,421

Exercised Options: $200,421

Current Obligation: $200,421

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C26326D0022

IDV Type: IDC

Timeline