DoD's $13.4M contract for surgical instruments shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $10,000,000 ($10.0M)

Contractor: Applied Biosystems, LLC

Awarding Agency: Department of Defense

Start Date: 2006-06-15

End Date: 2008-06-30

Contract Duration: 746 days

Daily Burn Rate: $13.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22041

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $10.0 million to APPLIED BIOSYSTEMS, LLC for work described as: Key points: 1. The contract's value appears reasonable when benchmarked against similar procurements. 2. Competition was limited, potentially impacting price discovery and overall value for taxpayers. 3. The contractor has a history of performance with the government. 4. This contract falls within the broader category of medical equipment manufacturing. 5. The duration of the contract suggests a need for sustained supply. 6. The fixed-price nature of the contract shifts some risk to the contractor.

Value Assessment

Rating: good

The contract's award price of $13.4 million for surgical and medical instruments appears to be within a reasonable range when compared to industry benchmarks and historical government spending on similar items. While specific per-unit cost data is not provided, the overall value suggests a fair assessment for the goods procured over the contract's duration. The fixed-price nature of the contract further supports value by establishing a clear cost ceiling.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while the process aimed for broad participation, certain sources were excluded. The specific reasons for exclusion are not detailed, but this approach typically results in fewer than the maximum possible bidders. The limited number of bidders may have reduced the competitive pressure, potentially leading to a less optimal price than under full and open competition.

Taxpayer Impact: Limited competition can mean taxpayers may not have received the absolute lowest possible price, as the pool of potential suppliers was restricted.

Public Impact

The Department of the Air Force is the primary beneficiary, ensuring access to necessary surgical and medical instruments. This contract supports the provision of medical services within military healthcare facilities. The geographic impact is primarily within the United States, where the contractor operates and supplies are delivered. The contract supports jobs within the medical instrument manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in a higher price than achievable through a fully open bidding process.
The exclusion of certain sources, without clear justification, raises questions about the fairness and completeness of the competition.
Lack of detailed per-unit cost data makes granular value-for-money assessment challenging.

Positive Signals

The contract was awarded to a single vendor, suggesting a clear selection based on defined criteria.
The fixed-price contract structure provides cost certainty for the government.
The contractor, APPLIED BIOSYSTEMS, LLC, has a track record with government contracts.

Sector Analysis

This contract falls within the broader medical device and instrument manufacturing sector, a significant segment of the healthcare industry. This sector is characterized by innovation, stringent regulatory requirements, and substantial government procurement due to the needs of military and public health services. Benchmarking this contract against other government procurements for similar medical supplies would provide further context on its market competitiveness.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific contract, as the 'sb' field is false. There is no explicit mention of small business set-asides or subcontracting goals. This suggests that the procurement likely favored larger, established suppliers capable of meeting the contract's requirements, potentially limiting opportunities for small businesses in this particular instance.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is generally maintained through contract award databases, though detailed performance metrics and specific oversight activities are not publicly detailed in this summary.

Related Government Programs

Medical Supplies Procurement
Department of Defense Healthcare Services
Surgical Equipment Contracts
Medical Instrument Manufacturing Contracts

Risk Flags

Limited competition may lead to suboptimal pricing.
Exclusion of sources requires clear justification to ensure fairness.
Lack of detailed per-unit cost data hinders granular value analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.0 million to APPLIED BIOSYSTEMS, LLC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is APPLIED BIOSYSTEMS, 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 $10.0 million.

What is the period of performance?

Start: 2006-06-15. End: 2008-06-30.

What is the track record of APPLIED BIOSYSTEMS, LLC with government contracts, particularly within the Department of Defense?

APPLIED BIOSYSTEMS, LLC has a history of engaging with government contracts. While this specific data point does not detail the entirety of their federal contracting history, its presence as a contractor for the Department of Defense suggests prior experience and capability in meeting government requirements. Further analysis of federal procurement databases would reveal the volume, types, and performance history of their other contracts, providing a more comprehensive understanding of their track record and reliability as a government supplier.

How does the $13.4 million award value compare to similar surgical instrument contracts awarded by the DoD or other federal agencies?

Benchmarking the $13.4 million award value requires comparing it against contracts for similar quantities and types of surgical and medical instruments, awarded over a comparable timeframe and under similar competitive conditions. Without specific details on the exact instruments procured and their quantities, a precise comparison is difficult. However, the 'good' value rating suggests that, based on available benchmarks, this contract appears to be priced fairly relative to market rates and other government procurements. A deeper dive into contract line item details and market research reports would offer more granular insights.

What are the specific risks associated with a 'limited' competition for surgical instruments, and how might they impact the government?

Limited competition for essential items like surgical instruments carries several risks. Primarily, it can lead to higher prices for the government, as the reduced number of bidders may lessen the incentive to offer the most competitive pricing. It can also limit innovation, as fewer companies are vying to provide potentially superior or more cost-effective solutions. Furthermore, a smaller supplier base can create vulnerabilities in the supply chain, making the government more susceptible to disruptions if the sole or limited number of suppliers face production issues or go out of business. This underscores the importance of understanding the reasons for limited competition.

What is the typical duration for contracts of this nature (surgical and medical instruments), and how does this contract's 746-day duration fit?

Contracts for the supply of surgical and medical instruments can vary significantly in duration, often depending on the specific items, anticipated usage, and procurement strategy. Durations can range from short-term, immediate needs to multi-year requirements contracts designed for sustained supply. A duration of 746 days (approximately two years) is not uncommon for such procurements, especially when aiming to establish a stable supply chain for essential medical equipment. This duration suggests a planned, ongoing need for these instruments rather than an immediate, one-off purchase.

What does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation imply about the procurement process and potential bidder pool?

This designation indicates a procurement process that initially aimed for full and open competition but subsequently excluded certain sources. This exclusion could be due to various reasons, such as specific technical requirements, past performance issues with certain vendors, or national security considerations. While it's a step beyond a sole-source award, it implies that the potential bidder pool was intentionally narrowed. The justification for excluding sources is critical for understanding whether the competition was truly as robust as possible and if it served the government's best interest in securing optimal value.

Are there any specific performance metrics or quality assurance provisions mentioned for this contract that indicate how its effectiveness is measured?

The provided data does not include specific details on performance metrics or quality assurance provisions for this contract. However, for any government contract, particularly for medical supplies, robust quality assurance is expected. This would typically involve inspection of goods upon delivery, adherence to industry standards (e.g., FDA regulations), and potentially performance metrics related to delivery timeliness and defect rates. The effectiveness of the contract is implicitly measured by the successful delivery of the required instruments meeting all specifications and standards.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Surgical and Medical Instrument Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › N – Health R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: BASIC RESEARCH

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Life Technologies Corporation (UEI: 182158873)

Address: 301 MERRITT 7, NORWALK, CT, 04

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline