VA awards $17M contract for drugs and druggists' sundries to McKesson Corporation

Contract Overview

Contract Amount: $17,066,072 ($17.1M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2010-03-01

End Date: 2010-03-31

Contract Duration: 30 days

Daily Burn Rate: $568.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: TAS::36 0160::TAS

Place of Performance

Location: LOS ANGELES, LOS ANGELES County, CALIFORNIA, 90073

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $17.1 million to MCKESSON CORPORATION for work described as: TAS::36 0160::TAS Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract value of $17.07 million over 30 days indicates a significant volume of pharmaceutical and medical supply procurement. 3. The fixed-price contract type aims to control costs and provide predictability for the agency. 4. The award to McKesson Corporation, a major distributor, suggests reliance on established supply chains. 5. The contract's duration of 30 days points to a short-term need or a bridge contract. 6. The North American Industry Classification System (NAICS) code 424210 identifies the sector as wholesale trade of drugs and druggists' sundries.

Value Assessment

Rating: fair

The contract value of $17.07 million for a 30-day period is substantial, averaging over $569,000 per day. Without specific details on the quantity and type of drugs and sundries procured, a direct value-for-money assessment is challenging. However, the fixed-price nature of the contract provides cost certainty for the Department of Veterans Affairs. Benchmarking against similar short-term, high-volume pharmaceutical procurements would be necessary for a more precise evaluation of pricing and value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 8 bidders suggests a robust competitive environment for this procurement. A higher number of bidders generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: The full and open competition with multiple bidders is beneficial for taxpayers as it likely drove down prices through competitive pressure, ensuring the government received the best possible value for the procured pharmaceuticals and sundries.

Public Impact

Veterans will benefit from the timely availability of necessary pharmaceuticals and medical supplies. The contract ensures the supply of drugs and druggists' sundries, crucial for healthcare services. The geographic impact is likely nationwide, supporting VA facilities across the country. The contract supports the pharmaceutical and medical supply distribution workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Short contract duration (30 days) may indicate a need for rapid fulfillment or a temporary solution, potentially leading to higher per-unit costs if not managed efficiently.
Reliance on a single large distributor could pose supply chain risks if McKesson faces disruptions.
Lack of detailed performance metrics in the provided data makes it difficult to assess the contractor's performance history beyond the award itself.

Positive Signals

Awarded through full and open competition with 8 bidders, indicating a competitive process that should yield favorable pricing.
The fixed-price contract type helps control costs and provides budget certainty for the VA.
McKesson Corporation is a well-established entity in the pharmaceutical distribution market, suggesting reliability in fulfilling the contract.

Sector Analysis

The pharmaceutical and medical supply wholesale industry is a critical component of the healthcare sector, characterized by large distributors managing complex supply chains. The market is highly regulated and competitive, with major players like McKesson, Cardinal Health, and AmerisourceBergen dominating. This contract fits within the broader federal spending on pharmaceuticals and medical supplies, which is substantial and essential for government healthcare providers like the VA.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. Given the nature of pharmaceutical wholesale and the size of the award, it is unlikely that small businesses were the primary target for this specific contract. However, McKesson, as a large prime contractor, may engage small businesses for subcontracting opportunities related to logistics or support services, though this is not explicitly detailed.

Oversight & Accountability

The Department of Veterans Affairs (VA) has established oversight mechanisms for its contracts, including performance monitoring and financial accountability. Inspector General reports and audits are typically employed to ensure compliance and identify any irregularities. Transparency is generally maintained through contract databases like FPDS, where award details are published, allowing for public scrutiny.

Related Government Programs

Pharmaceuticals
Medical Supplies
Healthcare Services
Wholesale Trade

Risk Flags

Potential for supply chain disruption
Price volatility risk
Contract duration is short

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $17.1 million to MCKESSON CORPORATION. TAS::36 0160::TAS

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $17.1 million.

What is the period of performance?

Start: 2010-03-01. End: 2010-03-31.

What is McKesson Corporation's track record with the Department of Veterans Affairs?

McKesson Corporation has a long-standing relationship with the Department of Veterans Affairs, frequently securing contracts for the supply of pharmaceuticals and medical equipment. Historical data indicates numerous awards across various VA facilities and programs. While specific performance metrics for each contract are not publicly detailed in summary data, McKesson's continued success in winning VA contracts suggests a generally satisfactory performance history and an ability to meet the agency's requirements. However, like any large contractor, there may have been instances of performance issues or disputes on specific contracts, which would typically be managed through contract close-out procedures or performance improvement plans.

How does the $17.07 million value compare to similar VA pharmaceutical contracts?

The $17.07 million contract value for a 30-day period is substantial, averaging over $569,000 per day. To benchmark this effectively, one would need to compare it against other VA contracts for similar drug and sundries wholesale procurements, ideally with comparable durations and scope. Short-term contracts of this magnitude can sometimes reflect emergency needs or bridge funding, which might command different pricing than longer-term, more predictable contracts. Without access to a detailed catalog of items and quantities, a precise comparison is difficult, but the value suggests a significant volume of essential medical supplies being procured.

What are the primary risks associated with this contract for the VA?

The primary risks associated with this contract include potential supply chain disruptions, as the VA is relying on a single large distributor, McKesson Corporation. If McKesson experiences issues with its own suppliers, logistics, or internal operations, it could impact the timely delivery of critical pharmaceuticals and sundries to VA facilities. Another risk is price volatility; while it's a fixed-price contract, the initial pricing might not reflect the absolute lowest possible cost if competition was less robust than anticipated or if market conditions changed rapidly during the bidding period. Finally, ensuring consistent quality and compliance with all regulatory requirements for pharmaceuticals is an ongoing risk that requires diligent oversight.

How effective is full and open competition in ensuring value for this type of pharmaceutical procurement?

Full and open competition is generally considered the most effective method for ensuring value in federal procurements, including pharmaceuticals. By allowing all responsible sources to bid, the government can leverage market forces to drive down prices and encourage innovation. In this case, with 8 bidders, the competition likely pressured McKesson to offer competitive terms. However, the effectiveness can be influenced by factors such as the complexity of the items being procured, the number of qualified bidders in the market, and the specific evaluation criteria used. For pharmaceuticals, where specialized distribution networks and regulatory compliance are key, the number of truly competitive bidders might be limited, but the principle of open competition remains a strong safeguard for taxpayer value.

What are historical spending patterns for drugs and druggists' sundries by the VA?

Historical spending patterns for drugs and druggists' sundries by the Department of Veterans Affairs (VA) show a consistent and significant investment in these categories to support its healthcare mission. The VA is one of the largest healthcare providers in the U.S., and its annual expenditure on pharmaceuticals and medical supplies runs into billions of dollars. Spending is often distributed across numerous contracts, varying in size and duration, and awarded to a range of suppliers, including major distributors like McKesson, Cardinal Health, and AmerisourceBergen, as well as numerous smaller specialized vendors. The trend generally reflects the growing demand for healthcare services and the increasing cost of pharmaceuticals.

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: FULL AND OPEN COMPETITION

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 1 POST ST, SAN FRANCISCO, CA, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $17,066,072

Exercised Options: $17,066,072

Current Obligation: $17,066,072

Parent Contract

Parent Award PIID: V797P1020

IDV Type: IDC

Timeline