VA Spends $232.8M on Pharmaceuticals from McKesson Corporation

Contract Overview

Contract Amount: $232,789,594 ($232.8M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2011-03-01

End Date: 2011-03-31

Contract Duration: 30 days

Daily Burn Rate: $7.8M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMACEUTICALS

Place of Performance

Location: MURFREESBORO, RUTHERFORD County, TENNESSEE, 37130

State: Tennessee Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $232.8 million to MCKESSON CORPORATION for work described as: PHARMACEUTICALS Key points: 1. Significant spending on pharmaceuticals highlights reliance on key suppliers. 2. Competition method indicates potential for price discovery and value. 3. Risk of supply chain disruption exists for critical pharmaceutical needs. 4. Healthcare sector spending is substantial and requires ongoing scrutiny.

Value Assessment

Rating: good

The contract value of $232.8 million over 30 days is substantial. Benchmarking against similar pharmaceutical supply contracts would be necessary to fully assess pricing effectiveness, but the firm fixed price structure suggests some level of cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Full and open competition was utilized, which is generally positive for price discovery. This method allows multiple vendors to bid, potentially driving down costs and ensuring fair market pricing.

Taxpayer Impact: The use of full and open competition suggests taxpayers are likely receiving fair value for the pharmaceuticals procured.

Public Impact

Ensures access to essential medications for veterans. Supports the pharmaceutical supply chain and related industries. Potential for price fluctuations based on market dynamics.

Waste & Efficiency Indicators

Waste Risk Score: 77 / 10

Warning Flags

Contract duration is short (30 days), potentially leading to frequent re-competition costs.
Reliance on a single awardee (McKesson) for this large sum.
Lack of specific product details makes per-unit cost analysis difficult.

Positive Signals

Full and open competition was employed.
Firm fixed price contract provides cost predictability.

Sector Analysis

The Department of Veterans Affairs procures a vast array of pharmaceuticals to serve its patient population. Spending in this sector is critical for healthcare delivery and is subject to significant market forces and regulatory oversight.

Small Business Impact

No specific information is provided regarding small business participation in this contract. Further analysis would be needed to determine if small businesses had opportunities to compete or subcontract.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Standard procurement regulations and oversight mechanisms should be in place to ensure compliance and value.

Related Government Programs

Drugs and Druggists' Sundries Merchant Wholesalers
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

High contract value.
Short contract duration.
Reliance on a single awardee.
Lack of detailed product/unit cost data.
Potential for market price fluctuations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $232.8 million to MCKESSON CORPORATION. PHARMACEUTICALS

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 $232.8 million.

What is the period of performance?

Start: 2011-03-01. End: 2011-03-31.

What was the competitive landscape during the bidding process for this contract?

The data indicates 'FULL AND OPEN COMPETITION' was utilized, suggesting that multiple vendors were eligible to bid. However, the specific number of bids received and the details of the competitive dynamics are not provided. Understanding the number of responsive bids and the pricing strategies of competing firms would offer deeper insight into the effectiveness of the competition.

What are the primary risks associated with this large pharmaceutical expenditure?

Key risks include potential supply chain disruptions affecting the availability of critical drugs, price volatility in the pharmaceutical market, and the possibility of overpaying if competition was not robust enough despite being full and open. Ensuring contract terms adequately mitigate these risks is crucial for consistent healthcare delivery to veterans.

How effectively does this contract ensure value for taxpayer money in pharmaceutical procurement?

The use of full and open competition and a firm fixed price contract are positive indicators for value. However, without detailed price benchmarks and analysis of the specific drugs procured, a definitive assessment of value is challenging. The large contract value necessitates rigorous post-award monitoring to ensure ongoing cost-effectiveness.

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: $232,789,594

Exercised Options: $232,789,594

Current Obligation: $232,789,594

Parent Contract

Parent Award PIID: V797P1020

IDV Type: IDC

Timeline