VA awards $34.7M for surgical instruments, bypassing competition for a sole-source contract

Contract Overview

Contract Amount: $34,713,141 ($34.7M)

Contractor: Cognosante MVH LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2025-03-31

Contract Duration: 181 days

Daily Burn Rate: $191.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT OCTOBER 24 (FY25) TO MARCH 25

Place of Performance

Location: GOLDEN, JEFFERSON County, COLORADO, 80401

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $34.7 million to COGNOSANTE MVH LLC for work described as: EXPRESS REPORT OCTOBER 24 (FY25) TO MARCH 25 Key points: 1. Contract awarded without competition, raising questions about potential cost savings and market fairness. 2. The contract duration is relatively short at 181 days, suggesting a potential need for a more competitive process for longer-term requirements. 3. Focus on surgical and medical instrument manufacturing indicates a critical need within VA healthcare operations. 4. The award is a delivery order, implying it's part of a larger, potentially pre-existing contract vehicle. 5. Firm Fixed Price contract type offers cost certainty but relies heavily on the initial negotiation's fairness. 6. The contractor, COGNOSANTE MVH LLC, is based in Colorado, indicating a potential regional focus for this specific award.

Value Assessment

Rating: fair

Benchmarking the value of this $34.7 million delivery order is challenging without knowing the specific instruments and quantities. However, awarding a contract of this magnitude without competition warrants scrutiny. The firm fixed-price structure provides cost certainty, but the absence of competitive bidding means the VA may not have secured the most advantageous pricing available in the market. Further analysis would require comparing the unit prices to similar VA or DoD contracts for comparable medical instruments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The data indicates a 'NOT COMPETED' status. This approach bypasses the standard procurement process where multiple vendors would submit bids. While sole-source awards can be justified under specific circumstances (e.g., urgency, unique capabilities), the lack of competition typically leads to less price discovery and potentially higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure, which usually drives down prices and encourages innovation among suppliers.

Public Impact

Veterans receiving care at VA facilities will benefit from the availability of necessary surgical and medical instruments. The contract supports the operational readiness of VA healthcare services, ensuring medical professionals have the tools they need. The primary geographic impact is likely within VA medical centers that utilize these instruments, potentially nationwide depending on the scope. The contract supports the manufacturing sector for medical instruments, potentially sustaining jobs within that industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant award raises concerns about potential overpayment and missed opportunities for better value.
The sole-source nature of the award limits transparency into the pricing justification and market alternatives.
Short contract duration might indicate a stop-gap measure, potentially leading to future uncompetitive awards if not properly planned.
Reliance on a single vendor without competition could create future dependencies and reduce leverage in negotiations.

Positive Signals

The firm fixed-price contract type provides budget certainty for the VA, mitigating the risk of cost overruns.
The award ensures the timely availability of critical surgical and medical instruments for patient care.
The contractor is identified, providing a clear point of accountability for delivery and quality.

Sector Analysis

The surgical and medical instrument manufacturing sector is a vital component of the healthcare industry, encompassing a wide range of products from basic consumables to complex surgical devices. This sector is characterized by stringent regulatory requirements, technological innovation, and a mix of large established players and specialized small businesses. Federal spending in this area is substantial, driven by the needs of the Department of Defense, the Department of Veterans Affairs, and other health-related agencies. The VA's spending on such instruments is critical for maintaining the quality and accessibility of care for veterans.

Small Business Impact

This contract was not competed and there is no indication of a small business set-aside. Therefore, it is unlikely that small businesses will directly benefit from this specific award as a prime contractor. Subcontracting opportunities for small businesses are not explicitly detailed in the provided data. The absence of small business participation in this sole-source award does not directly impact the broader small business ecosystem, but it represents a missed opportunity for direct engagement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' procurement and program management offices. Accountability measures are inherent in the firm fixed-price contract type, requiring the contractor to deliver specified goods within the agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected in the procurement or execution of this contract.

Related Government Programs

VA Medical Supplies Procurement
Surgical Instrument Contracts
Medical Device Manufacturing Contracts
Federal Healthcare Spending

Risk Flags

Sole-source award
Lack of competition
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $34.7 million to COGNOSANTE MVH LLC. EXPRESS REPORT OCTOBER 24 (FY25) TO MARCH 25

Who is the contractor on this award?

The obligated recipient is COGNOSANTE MVH LLC.

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 $34.7 million.

What is the period of performance?

Start: 2024-10-01. End: 2025-03-31.

What specific surgical and medical instruments are being procured under this contract?

The provided data specifies the North American Industry Classification System (NAICS) code 339112, which corresponds to 'Surgical and Medical Instrument Manufacturing.' However, it does not detail the specific types of instruments. This category can encompass a broad range of products, including diagnostic instruments, surgical tools, medical disposables, and implantable devices. To understand the precise nature of the procurement, one would need to consult the detailed contract statement of work or associated documentation. This level of detail is crucial for assessing the necessity and value of the award.

Why was this contract awarded on a sole-source basis instead of being competed?

The data indicates the contract was 'NOT COMPETED' and awarded as 'sole-source.' Without further information from the awarding agency (Department of Veterans Affairs), the specific justification for this sole-source award remains unknown. Common reasons for sole-source awards include situations where only one responsible source can provide the required supplies or services, urgent and compelling needs that preclude competition, or when a follow-on contract is awarded to the original source under specific conditions. A thorough review of the Justification and Approval (J&A) document, if available, would be necessary to understand the agency's rationale and assess its validity.

How does the $34.7 million award compare to historical VA spending on similar surgical instruments?

Comparing this $34.7 million award to historical VA spending requires access to historical contract data for similar surgical and medical instruments. The provided data only covers the period from October 24 (FY25) to March 25. To establish a benchmark, one would need to analyze VA's spending patterns over multiple fiscal years for contracts under NAICS code 339112 or specific product categories within it. Without this historical context, it's difficult to determine if this award represents an increase, decrease, or consistent level of spending for these types of instruments. The short duration of this specific award (181 days) also suggests it might not be representative of long-term, large-scale procurement trends.

What is the track record of COGNOSANTE MVH LLC in fulfilling VA contracts, particularly for medical instruments?

Information regarding COGNOSANTE MVH LLC's track record with the VA, specifically for medical instruments, is not detailed in the provided data. To assess their performance, one would need to examine past contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or issues with the VA or other federal agencies. Given this is a sole-source award, understanding the company's prior performance and capabilities is even more critical to ensure the VA is receiving adequate value and reliable service. A deeper dive into federal procurement databases and performance records would be necessary.

What are the potential risks associated with awarding a contract of this value without competition?

The primary risks associated with awarding a contract of this value ($34.7 million) without competition include: 1. Inflated Pricing: The absence of competitive bidding can lead to the contractor charging higher prices than might be achievable in a competitive market. 2. Suboptimal Quality or Service: Without the pressure of competing for future business, the contractor might have less incentive to maintain high standards of quality or service. 3. Lack of Innovation: Competitions often drive innovation as companies vie to offer better solutions. A sole-source award bypasses this incentive. 4. Missed Opportunities: The VA may miss out on potentially better technologies, more efficient processes, or more cost-effective suppliers that could have emerged from a competitive bidding process. 5. Reduced Transparency: Sole-source awards can be perceived as less transparent, potentially leading to public or congressional scrutiny.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Surgical and Medical Instrument Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3110 FAIRVIEW PARK DR STE 800, FALLS CHURCH, VA, 22042

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $34,713,141

Exercised Options: $34,713,141

Current Obligation: $34,713,141

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79122D0007

IDV Type: IDC

Timeline