VA awards McKesson Corp $159M for pharmaceutical prep manufacturing over 30 days

Contract Overview

Contract Amount: $158,951,157 ($159.0M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2013-03-01

End Date: 2013-03-31

Contract Duration: 30 days

Daily Burn Rate: $5.3M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT + PHARMACEUTICALS

Place of Performance

Location: MURFREESBORO, RUTHERFORD County, TENNESSEE, 37130

State: Tennessee Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $159.0 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT + PHARMACEUTICALS Key points: 1. Significant contract value of $159 million for a short 30-day period. 2. McKesson Corporation is a major player in the pharmaceutical distribution market. 3. Full and open competition was utilized, suggesting a competitive bidding process. 4. The contract is for pharmaceutical preparation manufacturing, a critical healthcare sector.

Value Assessment

Rating: good

The contract value of $159 million for a 30-day delivery order is substantial. Benchmarking against similar pharmaceutical preparation contracts would be necessary to fully assess pricing, but the firm fixed price suggests a defined cost structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating multiple vendors had the opportunity to bid. This method generally promotes competitive pricing and ensures the government receives fair market value.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it drives down costs through market forces.

Public Impact

Ensures availability of essential pharmaceuticals for veterans. Supports a major corporation in the healthcare supply chain. Highlights the government's reliance on large contractors for critical supplies. Potential for price fluctuations in future contract renewals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Short contract duration (30 days) for a large value may indicate urgency or a specific, immediate need.
Lack of specific product details makes it hard to assess true value.
Reliance on a single large awardee for a critical need.

Positive Signals

Full and open competition utilized.
Firm fixed price contract type.
Awarded to a well-established company in the sector.

Sector Analysis

The pharmaceutical preparation manufacturing sector is vital for healthcare delivery. Spending in this area is consistently high due to the essential nature of the products. This contract represents a significant, albeit short-term, investment.

Small Business Impact

The data indicates this contract was awarded to McKesson Corporation, a large business. There is no explicit information suggesting opportunities for small businesses within this specific award, though they may participate in subcontracting.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Standard procurement regulations and oversight mechanisms would apply to ensure performance and compliance.

Related Government Programs

Pharmaceutical Preparation Manufacturing
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

High contract value for a very short duration.
Lack of specific product details.
Potential for supply chain vulnerabilities.
Dependence on a single large contractor for critical supplies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $159.0 million to MCKESSON CORPORATION. EXPRESS REPORT + 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 $159.0 million.

What is the period of performance?

Start: 2013-03-01. End: 2013-03-31.

What is the specific nature of the pharmaceutical preparations being procured, and how does this impact the overall value assessment?

The provided data lacks specificity regarding the exact pharmaceutical preparations. Understanding the nature of these items (e.g., generic vs. specialized, volume required) is crucial for a precise value assessment. Without this detail, it's difficult to determine if the $159 million for 30 days represents a fair price for the specific goods or services rendered, beyond the general competitiveness of the award.

Given the short duration and high value, what are the potential risks associated with McKesson Corporation's performance and supply chain reliability?

The high value ($159M) for a short 30-day period could indicate an urgent, critical need, increasing the risk if McKesson fails to deliver. Potential risks include supply chain disruptions, quality control issues with pharmaceutical preparations, or McKesson prioritizing this order over other commitments. The VA must have robust contingency plans in place.

How effective was the full and open competition in achieving optimal pricing and ensuring the best value for the taxpayer in this instance?

While full and open competition is generally effective, the specific outcome here is hard to gauge without knowing the number of bids received and the price spread. The firm fixed price suggests a degree of price certainty. However, the large value and short term might have limited the pool of truly competitive bidders, potentially impacting the ultimate cost-effectiveness for taxpayers.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ONE POST ST, SAN FRANCISCO, CA, 94104

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

Financial Breakdown

Contract Ceiling: $158,951,157

Exercised Options: $158,951,157

Current Obligation: $158,951,157

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline