HHS Awards $56.4M for VMI and Distribution of PPE & Testing Supplies to Cardinal Health

Contract Overview

Contract Amount: $56,446,895 ($56.4M)

Contractor: Cardinal Health 200, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2021-03-01

End Date: 2025-06-11

Contract Duration: 1,563 days

Daily Burn Rate: $36.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: THE UNITED STATES GOVERNMENT (USG) HAS A REQUIREMENT FOR VENDOR MANAGED INVENTORY (VMI) AND DISTRIBUTION SERVICES OF GOVERNMENT FURNISHED PRODUCT (GFP), PPE & TESTING SUPPLIES.

Place of Performance

Location: ATLANTA, DEKALB County, GEORGIA, 30341

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $56.4 million to CARDINAL HEALTH 200, LLC for work described as: THE UNITED STATES GOVERNMENT (USG) HAS A REQUIREMENT FOR VENDOR MANAGED INVENTORY (VMI) AND DISTRIBUTION SERVICES OF GOVERNMENT FURNISHED PRODUCT (GFP), PPE & TESTING SUPPLIES. Key points: 1. The contract focuses on Vendor Managed Inventory (VMI) and distribution of Government Furnished Product (GFP), PPE, and testing supplies. 2. Cardinal Health 200, LLC is the sole awardee, indicating a lack of competition for this specific contract. 3. The contract's value of $56.4 million over its period of performance presents a significant financial commitment. 4. The sector is primarily related to healthcare logistics and supply chain management for essential medical goods.

Value Assessment

Rating: fair

The contract value of $56.4 million for VMI and distribution services appears substantial. Benchmarking against similar government warehousing and storage contracts would be necessary to assess if this pricing is competitive, especially given the lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, suggesting a sole-source award. This limits price discovery and potentially leads to higher costs for the government compared to a fully competed scenario. The rationale for a sole-source award needs further investigation.

Taxpayer Impact: The lack of competition for a contract of this magnitude raises concerns about the optimal use of taxpayer funds. A sole-source award may result in a higher price than could be achieved through a competitive bidding process.

Public Impact

Ensures a steady supply of critical PPE and testing supplies, vital for public health preparedness. Supports the Department of Health and Human Services' mission in managing and distributing essential medical resources. Potential for increased costs to taxpayers due to the sole-source nature of the award. Reliability of supply chain for critical health items is maintained through this vendor-managed system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Potential for overpayment without competitive benchmarking.
Lack of transparency in the procurement process.

Positive Signals

Ensures availability of critical PPE and testing supplies.
Supports a key government function in health preparedness.
Established vendor relationship may ensure continuity of service.

Sector Analysis

This contract falls under the General Warehousing and Storage (NAICS 493110) sector, specifically for healthcare-related supplies. Government spending in this area is critical for national health security, and benchmarks for similar logistics and distribution services are essential for evaluating cost-effectiveness.

Small Business Impact

The data indicates this contract was not awarded to small businesses (SB is false). There is no indication of subcontracting opportunities for small businesses within this award, which could be a missed opportunity for economic inclusion.

Oversight & Accountability

The sole-source nature of this award warrants closer oversight to ensure fair pricing and effective service delivery. Accountability for performance and cost management should be rigorously monitored by the Office of Assistant Secretary for Preparedness and Response (ASPR).

Related Government Programs

General Warehousing and Storage
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Sole-source award limits competition.
Potential for inflated pricing due to lack of competition.
No small business participation indicated.
Significant contract value requires strong oversight.
Need for clear justification for sole-source procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $56.4 million to CARDINAL HEALTH 200, LLC. THE UNITED STATES GOVERNMENT (USG) HAS A REQUIREMENT FOR VENDOR MANAGED INVENTORY (VMI) AND DISTRIBUTION SERVICES OF GOVERNMENT FURNISHED PRODUCT (GFP), PPE & TESTING SUPPLIES.

Who is the contractor on this award?

The obligated recipient is CARDINAL HEALTH 200, 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 $56.4 million.

What is the period of performance?

Start: 2021-03-01. End: 2025-06-11.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award is critical for understanding the procurement process. Without competition, it's difficult to ascertain if the government secured the best possible price and terms. Exploring the specific circumstances that led to this decision, such as unique capabilities or urgent needs, is essential for evaluating the value for money and ensuring taxpayer funds are used efficiently.

How does the per-unit cost of the VMI and distribution services compare to industry benchmarks for similar government contracts?

Benchmarking the per-unit cost against similar government contracts and private sector logistics providers is crucial for assessing value. A sole-source award increases the risk of paying a premium. Analyzing the specific services included in the VMI and distribution, such as inventory management, warehousing, and delivery, will help determine if the $56.4 million price tag is justified and competitive.

What performance metrics and oversight mechanisms are in place to ensure the effectiveness and efficiency of Cardinal Health's VMI and distribution services?

Robust performance metrics and oversight are paramount, especially for a sole-source contract. The Department of Health and Human Services must have clear Key Performance Indicators (KPIs) related to inventory accuracy, delivery timeliness, and cost control. Regular performance reviews and audits are necessary to ensure Cardinal Health is meeting its contractual obligations and that the services provided are effective in supporting the government's needs.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › General Warehousing and Storage

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75A50121R00006

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3651 BIRCHWOOD DR, WAUKEGAN, IL, 60085

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

Financial Breakdown

Contract Ceiling: $90,246,895

Exercised Options: $56,446,895

Current Obligation: $56,446,895

Actual Outlays: $56,446,895

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline