McKesson Corporation awarded $250K contract for pharmaceutical supplies to Indian Health Service

Contract Overview

Contract Amount: $250,000 ($250.0K)

Contractor: Mckesson Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2025-08-24

End Date: 2027-08-23

Contract Duration: 729 days

Daily Burn Rate: $343/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMACEUTICAL SUPPLIES. OPEN MARKET PURCHASES FOR NSSC FEDERAL CUSTOMERS.

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73114

State: Oklahoma Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $250,000 to MCKESSON CORPORATION for work described as: PHARMACEUTICAL SUPPLIES. OPEN MARKET PURCHASES FOR NSSC FEDERAL CUSTOMERS. Key points: 1. Contract awarded to a single, large vendor, suggesting potential for limited price negotiation. 2. Fixed-price contract type offers cost certainty for the government. 3. Contract duration of 729 days provides a stable supply chain. 4. Awarded under SAP (Simplified Acquisition Procedures) indicates a focus on efficiency for smaller procurements. 5. Geographic location in Oklahoma may indicate regional supply chain considerations. 6. No small business set-aside noted, potentially limiting opportunities for smaller enterprises.

Value Assessment

Rating: fair

The contract value of $250,000 is relatively small, making direct comparison to larger pharmaceutical contracts difficult. Given the firm fixed-price structure, the value is determined at the time of award. Without specific unit pricing or comparison to similar government-wide contracts for pharmaceutical supplies, assessing the precise value-for-money is challenging. However, the use of SAP suggests an effort to streamline procurement for this size of award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was competed under SAP (Simplified Acquisition Procedures), which typically allows for full and open competition but with streamlined processes. The data indicates one award, but does not specify the number of bids received. SAP is designed to encourage competition for procurements under the simplified acquisition threshold.

Taxpayer Impact: Competition under SAP aims to ensure fair pricing for taxpayers by allowing multiple vendors to bid, even within a simplified process.

Public Impact

Benefits Native American populations served by the Indian Health Service through access to essential pharmaceuticals. Ensures the availability of drugs and druggists' sundries for federal customers. Supports the operational readiness of healthcare facilities within the Indian Health Service. Impacts the pharmaceutical supply chain within the Oklahoma region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition is not actively managed.
Reliance on a single large vendor could create supply chain vulnerabilities if not mitigated.

Positive Signals

Firm fixed-price contract provides budget certainty.
Awarded under SAP suggests efficient procurement processes.
Contract duration ensures continuity of supply for a defined period.

Sector Analysis

The pharmaceutical supply industry is a critical component of the healthcare sector, characterized by large, established distributors and complex regulatory environments. This contract falls within the 'Drugs and Druggists' Sundries Merchant Wholesalers' category (NAICS 424210). Spending in this sector is substantial, driven by demand from federal agencies like the Indian Health Service, which requires a consistent and reliable supply of medications.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside requirement for this procurement. While McKesson Corporation is a large entity, the absence of a set-aside means that opportunities for small businesses to directly participate as prime contractors or through subcontracting were not explicitly mandated by this award. Future procurements may offer different opportunities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services and the Indian Health Service. As a competed award under SAP, standard procurement regulations and agency policies would apply. Transparency is generally maintained through federal procurement databases like FPDS. Specific Inspector General jurisdiction would depend on the nature of any potential issues arising from contract performance.

Related Government Programs

Federal Supply Schedule (FSS) for Medical Equipment and Pharmaceutical products
Department of Veterans Affairs Pharmaceutical Contracts
General Services Administration (GSA) Schedules

Risk Flags

Potential for price increases in future contract renewals.
Supply chain dependency on a single large vendor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $250,000 to MCKESSON CORPORATION. PHARMACEUTICAL SUPPLIES. OPEN MARKET PURCHASES FOR NSSC FEDERAL CUSTOMERS.

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Indian Health Service).

What is the total obligated amount?

The obligated amount is $250,000.

What is the period of performance?

Start: 2025-08-24. End: 2027-08-23.

What is McKesson Corporation's track record with federal contracts, particularly within the Department of Health and Human Services?

McKesson Corporation is a major pharmaceutical distributor and has a significant history of federal contracting across various agencies, including the Department of Health and Human Services (HHS). They are frequently awarded contracts for pharmaceutical supplies, medical devices, and related services. Their extensive experience suggests a deep understanding of federal procurement processes and regulatory requirements. However, like any large contractor, they have also been subject to scrutiny regarding pricing, product recalls, and past legal settlements related to their business practices. Analyzing their specific performance on similar HHS contracts, including on-time delivery rates, quality of goods, and adherence to contract terms, would provide a more granular view of their reliability for this specific award.

How does the $250,000 contract value compare to typical pharmaceutical supply contracts for the Indian Health Service?

The $250,000 contract value is relatively modest when compared to the overall pharmaceutical spending of the Indian Health Service (IHS) or the Department of Health and Human Services (HHS). IHS often procures pharmaceuticals through larger, multi-year Indefinite Delivery/Indefinite Quantity (IDIQ) contracts or Federal Supply Schedule (FSS) vehicles, which can run into millions or even billions of dollars annually. This specific contract, awarded under Simplified Acquisition Procedures (SAP), suggests it is for a smaller quantity of specific items or for a particular facility's needs, rather than a broad-based supply agreement. Therefore, while it represents a necessary procurement, it is not indicative of the total pharmaceutical spending managed by the IHS.

What are the primary risks associated with this contract, considering it's a firm fixed-price award to a single vendor?

The primary risks associated with this firm fixed-price contract to a single vendor, McKesson Corporation, revolve around potential price escalation in future procurements and supply chain dependency. While the current award locks in the price, if future contracts are awarded similarly without robust competition or market analysis, taxpayers could face higher costs over time. Furthermore, relying on a single large distributor, even for a specific regional need, introduces a risk of supply disruption due to unforeseen events such as natural disasters, logistical failures, or the vendor's own internal issues. The government's ability to negotiate favorable terms might also be limited if alternative suppliers are not readily available or if the procurement process does not actively encourage competitive bidding.

How effective is the Simplified Acquisition Procedures (SAP) in ensuring value for money for procurements of this size?

Simplified Acquisition Procedures (SAP) are designed to streamline the procurement process for purchases below the simplified acquisition threshold (currently $250,000, but this contract is at the threshold). SAP aims to increase efficiency and reduce administrative burden, thereby potentially lowering transaction costs. For procurements at or near this threshold, SAP typically allows for full and open competition, but with less stringent documentation and reporting requirements than larger contracts. The effectiveness in ensuring value for money depends heavily on how well the agency utilizes the competitive aspects of SAP, conducts market research, and negotiates terms. If multiple vendors participate and offer competitive pricing, SAP can be an effective tool. However, if competition is limited or the process is not managed diligently, value for money could be compromised.

What are the historical spending patterns for pharmaceutical supplies by the Indian Health Service, and how does this contract fit in?

The Indian Health Service (IHS) historically spends significant amounts on pharmaceutical supplies to serve its patient population. Their spending is often managed through a combination of large-scale contracts, Federal Supply Schedules (FSS), and direct procurements. This $250,000 contract, awarded under SAP, appears to be a smaller, targeted procurement, likely to fulfill specific needs for a particular facility or region in Oklahoma. It represents a fraction of the IHS's overall pharmaceutical budget, which is influenced by factors such as patient demographics, disease prevalence, and the availability of healthcare services. Understanding the broader IHS pharmaceutical strategy, including their use of GSA schedules and other contracting vehicles, would provide context for how this specific award fits into their larger supply chain management.

Industry Classification

NAICS: Wholesale Trade › Drugs and Druggists' Sundries Merchant Wholesalers › Drugs and Druggists' Sundries Merchant Wholesalers

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

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6535 STATE HIGHWAY 161, IRVING, TX, 75039

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

Financial Breakdown

Contract Ceiling: $250,000

Exercised Options: $250,000

Current Obligation: $250,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 75H71122A00161

IDV Type: BPA

Timeline