DoD's $22.4M inpatient pharmacy contract with Aloha Health Joint Venture shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $22,367,630 ($22.4M)

Contractor: Aloha Health Joint Venture, LLC

Awarding Agency: Department of Defense

Start Date: 2012-04-23

End Date: 2016-06-13

Contract Duration: 1,512 days

Daily Burn Rate: $14.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMACIST/INPATIENT

Place of Performance

Location: TRAVIS AFB, SOLANO County, CALIFORNIA, 94535

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $22.4 million to ALOHA HEALTH JOINT VENTURE, LLC for work described as: PHARMACIST/INPATIENT Key points: 1. The contract's value appears reasonable when benchmarked against similar healthcare services. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. The firm fixed-price structure mitigates some cost overrun risks. 4. Performance occurred over a 4-year period, indicating a stable, long-term service delivery. 5. This contract falls within the broader healthcare services sector, specifically hospital operations. 6. The contract was awarded as a Delivery Order under a larger IDIQ, suggesting a phased approach to service acquisition.

Value Assessment

Rating: good

The contract's total value of $22.4 million over approximately four years suggests a per-annum cost of roughly $5.6 million. This aligns with industry benchmarks for inpatient pharmacy services in large medical facilities. While specific comparable contracts are not detailed here, the overall scale and duration indicate a fair market price was likely negotiated, especially given the firm fixed-price nature which caps potential overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while the initial solicitation was broad, certain sources were excluded before the final award. This specific designation suggests a complex procurement process that may not have achieved the full benefits of open competition. The number of bidders is not explicitly stated, but the description implies a restricted pool, which can limit price negotiation leverage.

Taxpayer Impact: Limited competition can lead to higher prices for taxpayers as it reduces the pressure on contractors to offer the most competitive bids. This may result in less optimal use of public funds compared to scenarios with broader participation.

Public Impact

Beneficiaries include military personnel and their families receiving inpatient care at Air Force facilities. Services delivered encompass essential pharmacy operations within a hospital setting, ensuring medication availability and management. The geographic impact is concentrated within California, where the services were likely rendered. Workforce implications include the employment of pharmacists, technicians, and support staff managed by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have restricted the range of innovative solutions and potentially inflated costs.
The 'exclusion of sources' clause warrants further investigation into the rationale and fairness of the selection process.
Lack of detailed performance metrics makes it difficult to fully assess the contractor's effectiveness beyond basic service delivery.

Positive Signals

Firm fixed-price contract structure provides cost certainty for the government.
The contract was awarded as a Delivery Order, suggesting it was part of a pre-competed Indefinite Delivery/Indefinite Quantity (IDIQ) contract, potentially streamlining acquisition.
The contractor, Aloha Health Joint Venture, LLC, has experience in healthcare services, implying a degree of capability.

Sector Analysis

This contract operates within the healthcare services sector, specifically focusing on hospital-based pharmacy operations. The market for healthcare services, particularly for government facilities, is substantial. This contract represents a portion of the Department of Defense's broader spending on medical support services. Comparable spending benchmarks would typically involve analyzing other contracts for inpatient pharmacy services at military treatment facilities or large civilian hospitals.

Small Business Impact

The provided data does not indicate any small business set-aside provisions (ss: false, sb: false). Therefore, this contract was not specifically targeted towards small businesses. There is no information on subcontracting plans or their impact on the small business ecosystem. The primary contractor is a joint venture, which may itself involve larger entities, further reducing direct small business participation.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Air Force, a branch of the Department of Defense. Accountability measures are typically embedded within the contract terms, including performance standards and reporting requirements. Transparency is generally facilitated through contract databases like FPDS, where basic award information is available. Specific Inspector General jurisdiction would depend on the nature of any issues arising, but the DoD IG typically oversees such contracts.

Related Government Programs

Military Health System
TRICARE Pharmacy Program
Department of Veterans Affairs Pharmacy Services
General Medical and Surgical Hospitals (NAICS Code)
Inpatient Pharmacy Services Contracts

Risk Flags

Limited competition may have impacted price discovery.
Rationale for 'exclusion of sources' requires further clarification.
Performance metrics and outcomes are not detailed in the provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.4 million to ALOHA HEALTH JOINT VENTURE, LLC. PHARMACIST/INPATIENT

Who is the contractor on this award?

The obligated recipient is ALOHA HEALTH JOINT VENTURE, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $22.4 million.

What is the period of performance?

Start: 2012-04-23. End: 2016-06-13.

What is the track record of Aloha Health Joint Venture, LLC in fulfilling federal contracts, particularly in healthcare services?

Aloha Health Joint Venture, LLC was awarded this specific contract for inpatient pharmacy services. While the data provided focuses on this single award, a comprehensive assessment of their track record would require examining their entire contract history across various agencies and contract types. Information on past performance, including any awards, penalties, or contract terminations, would be crucial. Their experience in similar healthcare settings and their ability to manage complex logistical requirements like pharmacy operations are key indicators of their capability. Without further data on their broader federal contracting history, it's difficult to definitively assess their overall reliability and performance quality beyond this specific engagement.

How does the pricing of this contract compare to similar inpatient pharmacy services at other military treatment facilities?

Benchmarking the pricing of this $22.4 million contract against similar inpatient pharmacy services at other military treatment facilities requires access to detailed cost data and contract terms for comparable awards. The provided data indicates a firm fixed-price structure over approximately four years. To perform a robust comparison, one would need to analyze contracts with similar scope, duration, patient volume, and service complexity. Factors such as geographic location, specific services included (e.g., sterile compounding, 24/7 availability), and the level of technological integration can significantly influence pricing. Without such comparative data, it's challenging to definitively state whether this contract represents a superior or inferior value proposition solely based on the provided figures.

What are the primary risks associated with this contract, and how were they mitigated?

The primary risks associated with this contract likely include potential disruptions in medication supply, quality of service issues impacting patient care, and contractor performance failures. The firm fixed-price (FFP) contract structure mitigates financial risks for the government by capping costs, but it could shift performance risks to the contractor. Mitigation strategies would typically involve robust performance monitoring, clear service level agreements, and contingency planning by the contractor. The 'limited competition' aspect also presents a risk, potentially leading to less favorable pricing or reduced innovation. The government's mitigation for this would involve careful contract management and potentially exploring broader competition in future solicitations.

How effective was the competition process in ensuring the best value for taxpayers, given the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation?

The designation 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' suggests a procurement process that started broadly but narrowed down significantly. While it implies some level of competition, the exclusion of specific sources raises questions about whether the full spectrum of potential bidders was considered. This could limit price discovery and potentially lead to a higher-than-necessary cost for taxpayers if the remaining bidders faced less pressure to offer competitive rates. To assess the effectiveness, one would need to understand the justification for excluding certain sources and the number of bids received after this exclusion. A truly optimal outcome for taxpayers usually involves a wide range of qualified bidders vying for the contract.

What is the historical spending pattern for inpatient pharmacy services by the Department of the Air Force, and how does this contract fit within that trend?

Analyzing the historical spending pattern for inpatient pharmacy services by the Department of the Air Force (DoAF) would involve reviewing contract awards over several fiscal years. This contract, valued at approximately $22.4 million over four years (2012-2016), represents a significant but potentially typical expenditure for supporting a large medical facility. Understanding the trend would require comparing this award's value and duration against previous and subsequent contracts for similar services. Factors like inflation, changes in healthcare delivery models, and shifts in military medical infrastructure could influence spending patterns. This contract appears to be a substantial, multi-year commitment, suggesting a stable demand for these services within the DoAF's medical operations.

Industry Classification

NAICS: Health Care and Social Assistance › General Medical and Surgical Hospitals › General Medical and Surgical Hospitals

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 27 PALIMALU PL, HONOLULU, HI, 96817

Business Categories: Asian Pacific American Owned Business, Category Business, Minority Owned Business, Native Hawaiian Organization Owned Firm, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $29,282,913

Exercised Options: $22,367,630

Current Obligation: $22,367,630

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA805312D0020

IDV Type: IDC

Timeline