VA's Pharmacy Prime Vendor Contract with McKesson Corporation Totals $46.25M for Drugs and Sundries

Contract Overview

Contract Amount: $46,250,696 ($46.3M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2009-09-01

End Date: 2009-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.6M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT PHARMACY PRIME VENDOR

Place of Performance

Location: HINES, COOK County, ILLINOIS, 60141

State: Illinois Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $46.3 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT PHARMACY PRIME VENDOR Key points: 1. The Department of Veterans Affairs (VA) awarded a significant contract for pharmaceutical supplies. 2. McKesson Corporation, a major player in healthcare distribution, is the sole awardee. 3. The contract utilized full and open competition, suggesting a robust price discovery process. 4. This spending falls within the broad category of healthcare and pharmaceutical distribution.

Value Assessment

Rating: good

The contract value of $46.25M over 29 days represents substantial but potentially variable monthly spending. Benchmarking against similar large-scale pharmaceutical distribution contracts would be necessary for a precise value assessment.

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 had the opportunity to bid. This competitive process is expected to drive favorable pricing for the government.

Taxpayer Impact: The competitive nature of this award should ensure taxpayers receive fair value for the pharmaceutical supplies procured by the VA.

Public Impact

Ensures access to essential medications for veterans. Supports the operational needs of VA healthcare facilities nationwide. Impacts the pharmaceutical supply chain and drug availability.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration is short (29 days), potentially indicating a bridge or task order.
Lack of specific product details makes it hard to assess unit price efficiency.
Potential for price fluctuations in pharmaceutical markets.

Positive Signals

Full and open competition promotes cost-effectiveness.
Awardee is a well-established industry leader.
Supports critical healthcare needs of veterans.

Sector Analysis

This contract falls under the healthcare sector, specifically pharmaceutical wholesale and distribution. Spending benchmarks for similar federal contracts in this area are typically high due to the nature of medical supplies and the scale of government procurement.

Small Business Impact

While the awardee is a large corporation, the nature of prime vendor contracts for pharmaceuticals often involves complex logistics and established supply chains that may limit direct small business participation as prime contractors. Subcontracting opportunities may exist.

Oversight & Accountability

The VA's procurement processes are subject to federal acquisition regulations and oversight. The use of full and open competition suggests adherence to standard oversight practices for this award.

Related Government Programs

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

Risk Flags

Potential for price escalation in future contract periods.
Dependence on a single supplier for critical medications.
Short contract duration raises questions about long-term strategy.
Limited visibility into specific drug pricing and margins.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $46.3 million to MCKESSON CORPORATION. EXPRESS REPORT PHARMACY PRIME VENDOR

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 $46.3 million.

What is the period of performance?

Start: 2009-09-01. End: 2009-09-30.

What is the typical monthly spending for the Pharmacy Prime Vendor program, and how does this $46.25M award compare?

The provided data shows $46.25M awarded over 29 days, equating to roughly $1.59M per day. Extrapolating this to a 30-day month suggests a monthly spend of approximately $47.8M. This figure needs to be compared against historical monthly averages for the Pharmacy Prime Vendor program to determine if it represents typical, increased, or decreased spending.

What are the primary risks associated with a sole awardee for a critical service like pharmaceutical supply?

The primary risks with a sole awardee include potential price increases due to lack of ongoing competition, supply chain disruptions if the awardee faces issues, and reduced leverage for the government in contract negotiations. However, the initial full and open competition mitigates some of these risks by ensuring a competitive award.

How effectively does this contract ensure the consistent availability of necessary pharmaceuticals for veterans?

The contract's effectiveness in ensuring pharmaceutical availability relies heavily on McKesson's robust supply chain and distribution network, which is generally considered reliable. The full and open competition process likely included performance metrics and service level agreements to ensure consistent delivery and availability.

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $46,250,696

Exercised Options: $46,250,696

Current Obligation: $46,250,696

Parent Contract

Parent Award PIID: V797P1020

IDV Type: IDC

Timeline