VA awards $178.8M contract for pharmaceutical preparations to McKesson Corporation under full and open competition

Contract Overview

Contract Amount: $178,849,485 ($178.8M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2013-09-01

End Date: 2013-09-30

Contract Duration: 29 days

Daily Burn Rate: $6.2M/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 $178.8 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT + PHARMACEUTICALS Key points: 1. Significant contract value of $178.8 million awarded. 2. McKesson Corporation, a major player, secured the contract. 3. Full and open competition was utilized, suggesting a competitive bidding process. 4. The contract is for pharmaceutical preparation manufacturing, a critical sector.

Value Assessment

Rating: good

The contract value of $178.8 million for pharmaceutical preparations appears reasonable given the scale and duration. Benchmarking against similar large-scale pharmaceutical supply contracts would provide a more precise assessment, but the competitive nature suggests fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were eligible to bid. This method generally promotes price discovery and competitive pricing, leading to potentially better value for the government.

Taxpayer Impact: The competitive bidding process likely resulted in a fair price, maximizing taxpayer value for essential pharmaceutical supplies.

Public Impact

Ensures a steady supply of essential pharmaceuticals for veterans. Supports a major corporation in the pharmaceutical manufacturing sector. Highlights the government's reliance on large, established suppliers for critical goods. Potential for price fluctuations based on market dynamics for pharmaceuticals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration of 29 days is unusually short for such a large value, raising questions about the scope or nature of the award.
The 'TN' status code requires further investigation to understand its implications.

Positive Signals

Awarded under full and open competition.
Contract value is substantial, indicating a significant need.

Sector Analysis

This contract falls within the Pharmaceuticals sector, a critical area for government health services. Spending benchmarks for pharmaceutical preparations can vary widely based on specific drug types and quantities, but $178.8 million represents a significant investment.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. The contract was awarded to McKesson Corporation, a large entity, suggesting that small businesses were likely not primary awardees for this specific procurement.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight. The use of full and open competition suggests a structured procurement process, but ongoing monitoring of performance and pricing is crucial for accountability.

Related Government Programs

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

Risk Flags

Unusually short contract duration (29 days) for a high value ($178.8M).
Lack of detail on the specific pharmaceutical preparations procured.
No information on bid range or comparison to estimated costs.
Ambiguity of the 'TN' status code.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $178.8 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 $178.8 million.

What is the period of performance?

Start: 2013-09-01. End: 2013-09-30.

What is the specific nature of the pharmaceutical preparations being procured, and how does this influence the contract's value and duration?

The specific pharmaceutical preparations are not detailed in the provided data. However, the substantial value of $178.8 million suggests a large quantity or high-cost specialized medications. The short 29-day duration for such a high value is atypical and warrants further investigation into whether this represents an emergency purchase, a specific phase of a larger project, or a delivery order against an existing contract.

Given the full and open competition, what was the range of bids received, and how did McKesson Corporation's bid compare to the baseline or estimated cost?

The provided data does not include the range of bids received or the government's cost estimate. While full and open competition implies multiple bids were solicited, the specific pricing details and McKesson's competitive standing relative to other offers are not available. Further analysis would require access to the bid tabulation and negotiation records.

What is the long-term strategy for pharmaceutical procurement by the VA, and how does this contract fit into that broader plan?

This contract appears to be a specific delivery order with a short duration, rather than a long-term strategic agreement. The VA likely has broader, multi-year contracts for ongoing pharmaceutical needs. Understanding how this $178.8 million award aligns with or supplements those larger strategies, and whether it indicates a shift in procurement approach or addresses a specific, immediate requirement, is key.

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: $178,849,485

Exercised Options: $178,849,485

Current Obligation: $178,849,485

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline