HHS awarded $41.1M for ventilator maintenance, a sole-source contract to Vyaire Medical

Contract Overview

Contract Amount: $41,156,640 ($41.2M)

Contractor: Vyaire Medical 203 Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2014-06-14

End Date: 2018-06-13

Contract Duration: 1,460 days

Daily Burn Rate: $28.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF ; VENTILATOR PREVENTIVE MAINTENANCE

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55447

State: Minnesota Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $41.2 million to VYAIRE MEDICAL 203 INC for work described as: IGF::OT::IGF ; VENTILATOR PREVENTIVE MAINTENANCE Key points: 1. The contract's value of $41.1 million over four years represents a significant investment in maintaining critical medical equipment. 2. As a sole-source award, the absence of competition raises questions about potential price inflation and the lack of alternative vendor exploration. 3. The fixed-price contract structure aims to control costs, but the lack of competition limits the government's ability to negotiate better terms. 4. The contract duration of four years provides stability for maintenance services but also locks the government into a single provider. 5. The award falls under Surgical and Medical Instrument Manufacturing, a sector vital for healthcare infrastructure. 6. The absence of small business set-aside or subcontracting requirements means opportunities for smaller firms were not explicitly pursued.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the $41.1 million price reflects fair market value for ventilator preventive maintenance. The fixed-price structure provides cost certainty but may not be the most economical approach when competition is absent. Comparing this to similar sole-source maintenance contracts for critical medical equipment would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Vyaire Medical, was solicited. The justification for this approach is not provided in the data, but it typically implies that only one responsible source is capable of meeting the government's needs. The lack of competition means the government did not benefit from a bidding process that could drive down prices or encourage innovation from multiple suppliers.

Taxpayer Impact: Taxpayers may have paid a premium for this equipment maintenance due to the absence of competitive bidding. Without alternative offers, the government had limited leverage to negotiate the best possible price.

Public Impact

The primary beneficiaries are healthcare facilities and patients relying on functional ventilators, ensuring continuity of care. The services delivered include preventive maintenance for ventilators, crucial for their reliable operation. The geographic impact is likely national, supporting federal healthcare facilities or critical medical equipment stockpiles. Workforce implications include the need for skilled technicians to perform maintenance, potentially supporting specialized jobs within Vyaire Medical.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Lack of competition may reduce incentives for vendor performance improvements.
Contract duration of four years without re-competition could lead to complacency.
No explicit small business subcontracting requirements limit opportunities for smaller firms.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Award ensures continued maintenance of critical medical equipment.
Single vendor provides specialized expertise for Vyaire Medical ventilators.

Sector Analysis

This contract falls within the Surgical and Medical Instrument Manufacturing sector, which is a critical component of the healthcare industry. The market for medical equipment maintenance is substantial, driven by the increasing reliance on advanced medical technology. Benchmarking this spending against other federal contracts for similar maintenance services would provide context, but sole-source awards often obscure direct comparisons. The $41.1 million awarded indicates a significant commitment to ensuring the operational readiness of essential medical devices.

Small Business Impact

This contract did not include any small business set-aside provisions, nor does the data indicate any subcontracting requirements. This means that opportunities for small businesses to participate in providing these essential maintenance services were not actively pursued through this specific award. The entire value of the contract was awarded directly to Vyaire Medical, a larger entity, potentially limiting the broader impact on the small business ecosystem within this sector.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC). 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 metrics would be key areas for scrutiny. The Inspector General's office within HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Medical Equipment Maintenance Contracts
Strategic National Stockpile Maintenance
Federal Healthcare Procurement
Surgical Instrument Manufacturing Contracts

Risk Flags

Sole-source award without clear justification
Potential for inflated pricing due to lack of competition
Limited transparency on performance metrics and oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $41.2 million to VYAIRE MEDICAL 203 INC. IGF::OT::IGF ; VENTILATOR PREVENTIVE MAINTENANCE

Who is the contractor on this award?

The obligated recipient is VYAIRE MEDICAL 203 INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Disease Control and Prevention).

What is the total obligated amount?

The obligated amount is $41.2 million.

What is the period of performance?

Start: 2014-06-14. End: 2018-06-13.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available to meet the government's requirements. This could be due to unique capabilities, proprietary technology, or urgent and compelling circumstances. Without the official justification document, it is impossible to definitively state why Vyaire Medical was the only vendor considered. Further investigation into HHS or CDC procurement records would be necessary to uncover the rationale behind this decision.

How does the $41.1 million contract value compare to market rates for similar ventilator maintenance services?

Direct comparison to market rates is difficult due to the sole-source nature of this contract. Competitive bidding typically drives prices down, and without it, the $41.1 million figure may not reflect the most economical price. To assess value, one would need to benchmark against similar sole-source contracts for specialized medical equipment maintenance, if available, or analyze the cost breakdown provided by Vyaire Medical. The absence of competitive bids limits the ability to determine if this represents a fair market price or a potential premium.

What are the key performance indicators (KPIs) for this contract, and how is Vyaire Medical's performance being monitored?

The provided data does not specify the key performance indicators (KPIs) or the detailed monitoring mechanisms for this contract. However, for a definitive contract of this nature, performance is typically assessed against established service level agreements (SLAs) outlined in the contract. These might include response times for maintenance requests, successful repair rates, and adherence to maintenance schedules. The contracting officer and relevant program managers within the CDC would be responsible for overseeing Vyaire Medical's performance and ensuring compliance with contractual obligations.

What is Vyaire Medical's track record with federal contracts, particularly with HHS or CDC?

The data indicates Vyaire Medical 203 Inc. as the contractor. While this specific award is for $41.1 million, information on Vyaire Medical's broader track record with federal agencies, including HHS and CDC, is not detailed here. A comprehensive assessment would require reviewing their past performance on other contracts, including any history of performance issues, contract modifications, or successful delivery of services. Understanding their history with similar medical equipment maintenance contracts would provide valuable insight into their reliability and capability.

What is the historical spending pattern for ventilator preventive maintenance by the CDC or HHS?

The provided data only pertains to this single $41.1 million contract awarded in 2014 with an end date in 2018. It does not offer historical spending patterns for ventilator preventive maintenance by the CDC or HHS. To understand historical spending, one would need to analyze procurement data over multiple fiscal years, looking for similar contracts, their values, durations, and the contractors involved. This would reveal trends in investment, potential increases or decreases in spending, and the prevalence of sole-source versus competitive awards in this category.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 2014N16450

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Becton, Dickinson and CO (UEI: 001292192)

Address: 17400 MEDINA RD STE 100, MINNEAPOLIS, MN, 55447

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

Financial Breakdown

Contract Ceiling: $51,445,800

Exercised Options: $41,156,640

Current Obligation: $41,156,640

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline