HHS awards $28.6M for warehousing and storage of critical supplies, with no competition

Contract Overview

Contract Amount: $28,642,211 ($28.6M)

Contractor: Henry Schein, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2021-04-18

End Date: 2022-04-16

Contract Duration: 363 days

Daily Burn Rate: $78.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: INCLUDES ALL SERVICES AS NECESSARY FOR THE CONTINUOUS VMI OF UP TO 80,000 PALLETS OF GFP, SUBJECT TO AND IN ACCORDANCE WITH SOW IN SECTION C. PRODUCT RECEIPT SERVICES, FREIGHT AND TRANSPORTATION SERVICES, SURGE OPTION FOR PRODUCT RECEIPT SERVIC

Place of Performance

Location: MELVILLE, SUFFOLK County, NEW YORK, 11747

State: New York Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $28.6 million to HENRY SCHEIN, INC. for work described as: INCLUDES ALL SERVICES AS NECESSARY FOR THE CONTINUOUS VMI OF UP TO 80,000 PALLETS OF GFP, SUBJECT TO AND IN ACCORDANCE WITH SOW IN SECTION C. PRODUCT RECEIPT SERVICES, FREIGHT AND TRANSPORTATION SERVICES, SURGE OPTION FOR PRODUCT RECEIPT SERVIC Key points: 1. The contract focuses on the continuous inventory management of up to 80,000 pallets of government-furnished property. 2. Services include product receipt, freight, transportation, and surge options, indicating a broad scope of logistics support. 3. The award was made on a firm-fixed-price basis, which shifts cost risk to the contractor. 4. The contract duration is 363 days, suggesting a short-term need or a bridge to a longer-term solution. 5. The lack of competition raises questions about potential overpayment and the absence of market-driven pricing. 6. The primary service area is New York, indicating a specific geographic focus for these logistics operations.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more detailed service breakdowns and comparable contract data. However, the absence of competition for a significant dollar amount ($28.6 million) suggests that the government may not have secured the most favorable pricing. The firm-fixed-price structure is appropriate for defined services, but the lack of competitive bidding prevents a robust assessment of whether the price reflects market rates or offers good value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The specific justification for this approach is not provided in the data. Sole-source awards can be necessary in certain situations, but they limit the government's ability to leverage market competition to drive down costs and ensure the best possible value. Without a competitive process, it's difficult to ascertain the number of potential bidders or the range of pricing that might have been available.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. The absence of multiple bids means the government could not benefit from price discovery mechanisms inherent in a competitive solicitation.

Public Impact

The primary beneficiaries are likely the Department of Health and Human Services (HHS) and its various operating divisions, which rely on efficient logistics for critical supplies. The services delivered ensure the continuous inventory management and movement of government-furnished property, crucial for maintaining operational readiness. The geographic impact is concentrated in New York, where the warehousing and storage operations are physically located. While not directly creating new jobs, the contract supports existing logistics and warehousing roles within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Limited transparency into the justification for a sole-source award.
Potential for reduced innovation or service improvements without competitive pressure.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Contract addresses a critical need for continuous inventory management.
Defined scope of services (product receipt, freight, transportation) provides clarity.

Sector Analysis

The contract falls within the General Warehousing and Storage sector (NAICS 493110), a critical component of the broader logistics and supply chain industry. This sector is essential for government operations, particularly for agencies managing large inventories of sensitive or critical materials like HHS. The market size for government logistics services is substantial, encompassing warehousing, transportation, and inventory management. This specific contract, focusing on government-furnished property, highlights the government's reliance on specialized third-party logistics providers to manage its assets efficiently.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no information regarding small business subcontracting plans. Given the sole-source nature of the award and the absence of specific set-aside provisions, it is unlikely that small businesses were directly involved in fulfilling the primary contract requirements. This contract does not appear to contribute to the small business ecosystem through direct award or mandated subcontracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency regarding the justification for the sole-source award and performance monitoring would be key areas for accountability. The extent of Inspector General (IG) involvement would depend on any reported issues or performance concerns.

Related Government Programs

HHS Supply Chain Management
Federal Logistics and Warehousing
Government Property Management
Emergency Preparedness Logistics
Strategic National Stockpile Support

Risk Flags

Sole-source award lacks competition.
Limited transparency on award justification.
Potential for non-competitive pricing.
No small business set-aside identified.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $28.6 million to HENRY SCHEIN, INC.. INCLUDES ALL SERVICES AS NECESSARY FOR THE CONTINUOUS VMI OF UP TO 80,000 PALLETS OF GFP, SUBJECT TO AND IN ACCORDANCE WITH SOW IN SECTION C. PRODUCT RECEIPT SERVICES, FREIGHT AND TRANSPORTATION SERVICES, SURGE OPTION FOR PRODUCT RECEIPT SERVIC

Who is the contractor on this award?

The obligated recipient is HENRY SCHEIN, INC..

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 $28.6 million.

What is the period of performance?

Start: 2021-04-18. End: 2022-04-16.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for awarding this contract on a sole-source basis. Typically, sole-source awards are made when only one responsible source is available or capable of meeting the government's needs. This could be due to unique capabilities, proprietary technology, urgent and compelling circumstances, or specific program requirements. Without further documentation, such as a Justification and Approval (J&A) document, the rationale remains unclear. This lack of transparency is a concern, as it prevents an independent assessment of whether competition was truly impossible or if it was simply not pursued.

How does the $28.6 million contract value compare to similar warehousing and storage contracts within HHS or other federal agencies?

Direct comparison of the $28.6 million contract value for warehousing and storage is difficult without knowing the exact scope, duration, and specific services included. However, for context, large-scale federal logistics and warehousing contracts can range from tens of millions to hundreds of millions of dollars annually, depending on the volume, complexity, and criticality of the items stored. For instance, contracts supporting the Strategic National Stockpile (SNS) or other large federal inventories often represent significant investments. The value of this contract appears substantial for a single year of operation (363 days), suggesting a significant volume of goods or specialized handling requirements. A lack of competition, however, makes it harder to determine if this value represents a competitive market price.

What are the key performance indicators (KPIs) used to measure the success of this contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. However, for a contract focused on continuous VMI (Vendor-Managed Inventory) of pallets, typical KPIs would likely include metrics such as: on-time receipt of goods, accuracy of inventory counts, order fulfillment rates, response times for surge requests, pallet utilization rates, and adherence to storage conditions (e.g., temperature, humidity). The Statement of Work (SOW) in Section C would detail these performance requirements and the associated metrics for evaluating the contractor's performance. Without access to the SOW, specific KPIs remain unknown.

What is the track record of Henry Schein, Inc. in performing similar federal logistics and warehousing contracts?

Henry Schein, Inc. is a major global provider of healthcare products and services. While primarily known for distribution in the healthcare sector, their capabilities can extend to complex logistics and supply chain management. Information on their specific track record with federal logistics and warehousing contracts, particularly those involving government-furnished property and extensive inventory management, would typically be available through federal procurement databases (like SAM.gov) and past performance reviews. Assessing their past performance would involve examining previous contract awards, performance evaluations, and any history of disputes or corrective actions related to similar services.

What are the potential risks associated with a sole-source award for critical supply warehousing?

The primary risks associated with a sole-source award for critical supply warehousing include: 1) Higher Costs: Without competition, the contractor may charge a premium, leading to less value for taxpayer money. 2) Reduced Innovation: The lack of competitive pressure can disincentivize the contractor from seeking more efficient or innovative solutions. 3) Performance Issues: If the contractor underperforms, the government has limited immediate alternatives, potentially disrupting the supply chain. 4) Lack of Transparency: The justification for sole-sourcing may not always be robust, raising concerns about fairness and necessity. 5) Dependency: The government becomes dependent on a single provider, which can be problematic if that provider faces financial or operational difficulties.

How does this contract align with HHS's broader mission for preparedness and response?

This contract directly supports HHS's mission for preparedness and response by ensuring the efficient management and availability of critical supplies. The continuous Vendor-Managed Inventory (VMI) of government-furnished property, including product receipt, freight, and transportation services, is fundamental to maintaining operational readiness. Effective logistics are crucial for ensuring that necessary medical supplies, equipment, and other resources are properly stored, tracked, and accessible when needed, particularly during public health emergencies or other crises. The surge option further enhances responsiveness. Therefore, this contract is a key enabler for HHS's ability to respond effectively to national health threats.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75A50120R00007

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 135 DURYEA RD, MELVILLE, NY, 11747

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

Financial Breakdown

Contract Ceiling: $28,642,211

Exercised Options: $28,642,211

Current Obligation: $28,642,211

Actual Outlays: $28,642,211

Contract Characteristics

Commercial Item: PRODUCTS OR SERVICES PURSUANT TO FAR 12.102(F)

Cost or Pricing Data: YES

Timeline