VA awards $223M contract to McKesson Corporation for Pharmaceuticals, highlighting firm fixed price and full and open competition

Contract Overview

Contract Amount: $223,132,522 ($223.1M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2011-06-01

End Date: 2011-06-30

Contract Duration: 29 days

Daily Burn Rate: $7.7M/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 $223.1 million to MCKESSON CORPORATION for work described as: PHARMACEUTICALS Key points: 1. Contract Value: $223.13 million awarded to McKesson Corporation. 2. Competition: Full and open competition was utilized. 3. Risk: Low risk indicated by firm fixed price contract type. 4. Sector: Pharmaceuticals and healthcare services.

Value Assessment

Rating: good

The contract value of $223.13 million appears reasonable given the scope of pharmaceuticals and druggists' sundries. Benchmarking against similar large-scale pharmaceutical supply contracts would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The use of full and open competition suggests a robust price discovery process, likely leading to competitive pricing. McKesson Corporation's award indicates they offered the best value under these conditions.

Taxpayer Impact: The competitive bidding process for this substantial contract aims to ensure taxpayer funds are used efficiently for essential pharmaceutical supplies.

Public Impact

Ensures availability of critical pharmaceuticals for veterans. Supports the Department of Veterans Affairs' healthcare mission. Impacts the pharmaceutical supply chain and distribution networks.

Waste & Efficiency Indicators

Waste Risk Score: 70 / 10

Warning Flags

Potential for price fluctuations in pharmaceutical markets.
Dependence on a single large supplier for a broad range of drugs.

Positive Signals

Firm fixed price contract mitigates cost overrun risk.
Full and open competition promotes market efficiency.

Sector Analysis

The pharmaceutical sector is characterized by high R&D costs, complex supply chains, and significant regulatory oversight. Spending in this area is crucial for public health and national security, with benchmarks varying widely based on drug type and volume.

Small Business Impact

While this specific contract was awarded to a large corporation, the broader pharmaceutical market involves numerous small and medium-sized businesses in manufacturing, research, and distribution. Their participation is vital for innovation and supply chain resilience.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract to ensure timely delivery and quality of pharmaceuticals. Regular performance reviews and audits are standard procedures to maintain accountability.

Related Government Programs

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

Risk Flags

Potential for supply chain disruptions.
Price volatility in the pharmaceutical market.
Dependence on a single large supplier.
Ensuring consistent quality across diverse pharmaceutical products.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $223.1 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 $223.1 million.

What is the period of performance?

Start: 2011-06-01. End: 2011-06-30.

What is the specific breakdown of pharmaceutical categories covered under this contract?

The provided data indicates the contract covers 'Drugs and Druggists' Sundries Merchant Wholesalers' (NAICS 424210). A detailed breakdown would require access to the contract's statement of work, which typically itemizes specific drug classes, therapeutic areas, and related sundries to be supplied, ensuring comprehensive coverage for VA healthcare needs.

How does McKesson Corporation's pricing compare to other major pharmaceutical distributors for similar VA contracts?

Benchmarking McKesson's pricing against competitors like Cardinal Health or AmerisourceBergen for comparable VA contracts requires access to historical pricing data and contract awards. Full and open competition suggests McKesson's bid was competitive, but a detailed analysis would involve comparing unit prices for specific drugs and overall contract value relative to market rates.

What mechanisms are in place to ensure the quality and efficacy of pharmaceuticals supplied under this contract?

The VA likely employs stringent quality assurance protocols, including supplier vetting, adherence to FDA regulations, and potentially random testing of supplied pharmaceuticals. The contract itself would specify quality standards, packaging requirements, and procedures for handling discrepancies or issues related to drug efficacy and safety.

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: $223,132,522

Exercised Options: $223,132,522

Current Obligation: $223,132,522

Parent Contract

Parent Award PIID: V797P1020

IDV Type: IDC

Timeline