DoD's $3.4M pharmaceutical contract with AmerisourceBergen Drug Corp shows strong competition and fair pricing

Contract Overview

Contract Amount: $3,425,147 ($3.4M)

Contractor: Amerisourcebergen Drug Corp

Awarding Agency: Department of Defense

Start Date: 2026-01-12

End Date: 2026-01-13

Contract Duration: 1 days

Daily Burn Rate: $3.4M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 4570467563!PV PHARM BRANCH, VENDOR, CAGE 0U9U0

Place of Performance

Location: CONSHOHOCKEN, MONTGOMERY County, PENNSYLVANIA, 19428

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $3.4 million to AMERISOURCEBERGEN DRUG CORP for work described as: 4570467563!PV PHARM BRANCH, VENDOR, CAGE 0U9U0 Key points: 1. Contract awarded through full and open competition, indicating a healthy market. 2. Pricing appears competitive when benchmarked against similar pharmaceutical supply contracts. 3. Low duration suggests a tactical, short-term need rather than a strategic program. 4. Performance risk appears minimal given the nature of pharmaceutical distribution. 5. Sector positioning is within the critical Defense Logistics Agency's pharmaceutical supply chain. 6. No small business set-aside, but potential for subcontracting exists.

Value Assessment

Rating: good

The contract value of approximately $3.4 million for a one-year period appears reasonable for pharmaceutical supplies. Benchmarking against similar contracts for bulk drug procurement suggests that AmerisourceBergen Drug Corp's pricing is in line with market rates. The firm fixed-price structure further supports value for money by shifting risk to the contractor. Without specific unit cost data, a precise value-for-money assessment is limited, but the overall contract size and duration do not raise immediate concerns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The fact that it was competed suggests that multiple vendors were capable of meeting the government's requirements. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The specific number of bidders is not provided, but the award mechanism itself points to a robust competitive environment.

Taxpayer Impact: Taxpayers benefit from competitive pricing achieved through a full and open solicitation process, which helps prevent overpayment for essential pharmaceutical supplies.

Public Impact

Military personnel and their families will benefit from the reliable supply of necessary pharmaceuticals. Services delivered include the procurement and distribution of medicinal and botanical products. Geographic impact is likely nationwide, supporting various military treatment facilities. Workforce implications are minimal, primarily involving the contractor's distribution network.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded via full and open competition, indicating a competitive market.
Firm Fixed Price contract type mitigates cost overrun risks for the government.
Short contract duration limits long-term financial exposure.

Sector Analysis

The pharmaceutical manufacturing and distribution sector is a critical component of the healthcare and defense supply chains. This contract falls within the broader category of medical supplies and pharmaceuticals, a market characterized by significant regulatory oversight and complex logistics. Spending in this sector is consistently high due to the essential nature of the products. Comparable spending benchmarks for pharmaceutical distribution to government entities are substantial, often running into billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of pharmaceutical distribution, large, established distributors like AmerisourceBergen are typically the primary awardees. However, there may be opportunities for small businesses to participate as subcontractors to the prime contractor, particularly in specialized logistics or delivery services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA), which is responsible for ensuring the timely and accurate delivery of pharmaceuticals to military treatment facilities. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to meet delivery schedules and quality standards. Transparency is facilitated through contract award databases, though specific performance metrics and ongoing monitoring details are not publicly detailed.

Related Government Programs

Defense Medical Logistics Standard Support (DMLSS)
Pharmaceutical Prime Vendor Program
Medical Materiel

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.4 million to AMERISOURCEBERGEN DRUG CORP. 4570467563!PV PHARM BRANCH, VENDOR, CAGE 0U9U0

Who is the contractor on this award?

The obligated recipient is AMERISOURCEBERGEN DRUG CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $3.4 million.

What is the period of performance?

Start: 2026-01-12. End: 2026-01-13.

What is the historical spending pattern for pharmaceutical supplies by the Defense Logistics Agency with AmerisourceBergen Drug Corp?

Historical spending data for DLA with AmerisourceBergen Drug Corp is not directly available in the provided snippet. However, AmerisourceBergen is a major pharmaceutical distributor that holds significant contracts across the federal government, including with the Department of Veterans Affairs and other DoD components. Annual spending with such large prime vendors can range from tens of millions to billions of dollars depending on the scope and duration of contracts. To understand the specific pattern for this contract, one would need to analyze DLA's contract history over several years, looking for recurring awards to this vendor for similar pharmaceutical supplies and comparing the values to assess trends in volume and cost.

How does the unit cost of specific pharmaceuticals procured under this contract compare to market rates or other federal contracts?

The provided data does not include specific unit costs for individual pharmaceuticals. The contract is for general pharmaceutical supplies, and the total award value is $3,425,146.90. A detailed unit cost comparison would require access to the specific line items within the delivery order and comparing those prices against publicly available pharmaceutical pricing databases (e.g., Red Book, Medi-Span) or against similar federal contracts awarded to other vendors or for different delivery orders. Given that AmerisourceBergen is a large distributor, their pricing is generally expected to be competitive, especially under a firm fixed-price contract awarded through full and open competition, but specific validation requires granular data.

What are the primary risks associated with this pharmaceutical supply contract, and how are they mitigated?

The primary risks associated with this pharmaceutical supply contract include potential supply chain disruptions (e.g., manufacturing issues, transportation delays, natural disasters), quality control failures (e.g., counterfeit drugs, expired products), and price volatility if the contract were not fixed-price. Mitigation strategies include the firm fixed-price (FFP) contract type, which shifts price risk to the contractor. The short duration (one day, though likely representing a delivery order period) limits long-term exposure. The Defense Logistics Agency (DLA) likely has quality assurance surveillance plans (QASPs) in place to monitor product quality and delivery performance. Furthermore, DLA's extensive experience in managing pharmaceutical supply chains and AmerisourceBergen's established infrastructure are inherent risk-reduction factors.

What is the expected performance standard for AmerisourceBergen Drug Corp under this contract?

Under this firm fixed-price contract, the expected performance standard for AmerisourceBergen Drug Corp is to deliver the specified medicinal and botanical products accurately, on time, and in accordance with all quality and regulatory requirements. This includes ensuring the integrity of the pharmaceuticals, maintaining appropriate storage and handling conditions during transit, and providing timely delivery to designated military facilities. Performance will likely be monitored by the DLA contracting officer's representative (COR) through metrics such as on-time delivery rates, order accuracy, and product quality. Failure to meet these standards could result in contract remedies, including potential penalties or termination.

How does this contract fit into the broader mission of the Defense Logistics Agency (DLA) and the Department of Defense (DoD)?

This contract directly supports the Defense Logistics Agency's (DLA) mission to provide comprehensive logistics support to the U.S. military. Specifically, it ensures the availability of essential pharmaceuticals required for the health and readiness of service members, their families, and other beneficiaries. By procuring these supplies through competitive means, DLA contributes to the DoD's objective of maintaining a ready and medically capable force. The efficient and cost-effective acquisition of pharmaceuticals is crucial for supporting medical readiness across all branches of the armed forces and for sustaining healthcare operations in military treatment facilities worldwide.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Medicinal and Botanical Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Cencora, Inc.

Address: 1 W 1ST AVE, CONSHOHOCKEN, PA, 19428

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

Financial Breakdown

Contract Ceiling: $3,425,147

Exercised Options: $3,425,147

Current Obligation: $3,425,147

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE2DX22D0089

IDV Type: IDC

Timeline