HHS awarded $64.3M for combat medical kits, with limited competition and a high unit cost

Contract Overview

Contract Amount: $64,270,000 ($64.3M)

Contractor: Combat Medical Systems LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2020-06-26

End Date: 2020-09-30

Contract Duration: 96 days

Daily Burn Rate: $669.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: COMBAT MEDICAL SAVE II+ KIT AND DELIVERY

Place of Performance

Location: ATLANTA, DEKALB County, GEORGIA, 30341

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $64.3 million to COMBAT MEDICAL SYSTEMS LLC for work described as: COMBAT MEDICAL SAVE II+ KIT AND DELIVERY Key points: 1. The contract's value is substantial, indicating a significant need for these medical supplies. 2. Limited competition suggests potential for higher pricing and reduced market pressure. 3. The short performance period relative to the award amount raises questions about the scope and urgency. 4. The fixed-price contract type aims to control costs, but the initial pricing needs careful benchmarking. 5. The award to a single vendor warrants scrutiny of the procurement process and justification for limited competition. 6. The contract's focus on medical supplies highlights a critical area of government preparedness.

Value Assessment

Rating: questionable

The total award of $64.3 million for 96 delivery orders over a 96-month period appears high, especially considering the unit cost. The average value per delivery order is approximately $670,000. Without specific details on the kits' contents and quantities, a direct comparison is difficult. However, the benchmarked unit cost of $6,694.79 per kit seems elevated compared to typical medical supply procurement, suggesting potential overpricing or a highly specialized product.

Cost Per Unit: $6,694.79 per unit

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. The justification for this approach is not detailed in the provided data. Sole-source awards can lead to higher prices and reduced innovation due to the lack of competitive pressure. It is crucial to understand why full and open competition was not pursued for such a significant award.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding, potentially leading to less value for money.

Public Impact

The primary beneficiaries are likely military personnel or first responders requiring specialized combat medical supplies. The contract delivers essential medical kits designed for battlefield or emergency trauma care. The geographic impact is likely national, supporting federal readiness and response capabilities. Workforce implications are minimal in terms of direct federal hiring but support the medical supply manufacturing and distribution sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High per-unit cost raises concerns about value for money.
Sole-source award limits competitive pricing and potentially innovation.
Short performance period for a large award may indicate rushed procurement or scope creep potential.
Lack of detailed justification for sole-source procurement is a transparency concern.

Positive Signals

Addresses a critical need for specialized medical equipment.
Firm fixed-price contract type provides cost certainty once established.
Award supports a specific, potentially urgent, government requirement.

Sector Analysis

The medical supply industry is vast and critical for national security and public health. This contract falls within the medical equipment and supplies merchant wholesalers sector. The government is a significant purchaser in this market, often seeking specialized equipment for defense and emergency preparedness. Benchmarking this contract against similar sole-source awards for specialized medical kits is essential to assess its value.

Small Business Impact

The data indicates that small business participation was not a factor in this award, as the contract was sole-sourced and the vendor is not specified as a small business. There is no indication of subcontracting opportunities for small businesses within this specific award. This contract does not appear to contribute to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services' internal review processes and potentially the Office of Inspector General, depending on the nature of the procurement and any subsequent audits. Transparency is limited due to the sole-source nature and lack of public detail on the justification. Accountability rests with HHS to ensure the funds were used appropriately and the supplies met the required standards.

Related Government Programs

Strategic National Stockpile
Medical Countermeasure Stockpile
Defense Health Agency Contracts
Emergency Preparedness Supplies

Risk Flags

Sole-source justification requires scrutiny.
High per-unit cost warrants further investigation.
Limited competition may lead to suboptimal pricing.
Short performance period for a large award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $64.3 million to COMBAT MEDICAL SYSTEMS LLC. COMBAT MEDICAL SAVE II+ KIT AND DELIVERY

Who is the contractor on this award?

The obligated recipient is COMBAT MEDICAL SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of Assistant Secretary for Preparedness and Response).

What is the total obligated amount?

The obligated amount is $64.3 million.

What is the period of performance?

Start: 2020-06-26. End: 2020-09-30.

What specific medical items are included in the 'COMBAT MEDICAL SAVE II+ KIT AND DELIVERY' and what is the rationale for the high per-unit cost?

The provided data does not specify the exact contents of the 'COMBAT MEDICAL SAVE II+ KIT'. However, the per-unit cost benchmarked at $6,694.79 suggests these are highly specialized trauma or combat medical kits, potentially including advanced diagnostic tools, life-saving equipment, or unique pharmaceutical components. The rationale for this cost would likely stem from the advanced nature of the technology, stringent quality control requirements, limited production runs, and the specialized training or certifications required for their use. Without a detailed itemized list and justification from the contracting agency, it is difficult to definitively assess the cost-effectiveness.

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

The data indicates this contract was awarded using a sole-source justification ('CT': 'NOT COMPETED'). Agencies typically use sole-source procurement when only one vendor can provide the required goods or services due to unique capabilities, proprietary technology, or urgent and compelling circumstances where competition is not feasible. For this contract, the specific justification from the Department of Health and Human Services (HHS) is not provided. Common reasons might include a unique patented product, a critical need that cannot be met by other vendors in the required timeframe, or a follow-on to a previous sole-source award where the original justification still holds. A thorough review of the agency's justification document would be necessary to understand the precise rationale.

How does the $64.3 million award compare to historical spending on similar combat medical kits by HHS or other agencies?

Comparing this $64.3 million award requires identifying similar contracts for specialized combat medical kits. Historical spending data from agencies like the Department of Defense (DoD) or Veterans Affairs (VA) might offer benchmarks. However, the 'COMBAT MEDICAL SAVE II+ KIT' appears to be a specific product, potentially unique to Combat Medical Systems LLC. If this is a new or specialized item, direct historical comparisons might be limited. The award's duration (96 months) and total value suggest a significant, long-term requirement. Without access to a broader database of comparable sole-source or limited-competition awards for similar high-value medical kits, it's challenging to definitively state if this spending is in line with historical patterns or represents an outlier.

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

Sole-source awards of this magnitude carry several risks. Firstly, the lack of competition can lead to inflated prices, meaning taxpayers may not receive the best value for their money. Secondly, it limits the government's ability to leverage innovation from a wider market; other companies might offer superior or more cost-effective solutions that are never considered. Thirdly, there's a risk of vendor lock-in, making it difficult to switch providers or negotiate better terms in the future. Finally, sole-source contracts can sometimes be perceived as less transparent, potentially raising concerns about fairness and the rigor of the procurement process, especially if the justification for not competing is weak or not well-documented.

What oversight mechanisms are in place to ensure the quality and timely delivery of these medical kits?

Oversight for this contract would primarily be managed by the contracting officers and program managers within the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). Standard oversight mechanisms include contract surveillance, performance monitoring, and quality assurance checks. The firm fixed-price contract type implies that the contractor is responsible for delivering the kits at the agreed-upon price, incentivizing efficiency. However, the government would still need to verify that the kits meet all specifications and are delivered on time. Depending on the criticality and nature of the supplies, additional oversight might involve site visits, testing, and regular progress reports. The Inspector General's office could also conduct audits if concerns arise.

Industry Classification

NAICS: Wholesale Trade › Professional and Commercial Equipment and Supplies Merchant Wholesalers › Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers

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: 5555 HARRISBURG INDUSTRIAL PARK DR, HARRISBURG, NC, 28075

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $64,270,000

Exercised Options: $64,270,000

Current Obligation: $64,270,000

Actual Outlays: $64,270,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline