VA's Pharmacy Prime Vendor Contract with McKesson Corporation for $66.5M in FY2017

Contract Overview

Contract Amount: $66,552,784 ($66.6M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-06-01

End Date: 2017-08-31

Contract Duration: 91 days

Daily Burn Rate: $731.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV) FY2017 JUN-AUG

Place of Performance

Location: BAY PINES, PINELLAS County, FLORIDA, 33744

State: Florida Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $66.6 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV) FY2017 JUN-AUG Key points: 1. The contract awarded to McKesson Corporation for $66.5M covers pharmaceutical preparations. 2. This contract was awarded under full and open competition, indicating a competitive market. 3. The contract duration was 91 days, suggesting a short-term or interim need. 4. The spending is categorized under Pharmaceutical Preparation Manufacturing. 5. The award was a delivery order, implying it's part of a larger contract vehicle.

Value Assessment

Rating: good

The contract value of $66.5M over 91 days is substantial. Benchmarking against similar large-scale pharmaceutical contracts would be necessary for a precise value assessment, but the full and open competition suggests a competitive pricing environment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, which typically drives competitive pricing and ensures fair market value. The existence of multiple bidders likely contributed to a favorable price discovery process.

Taxpayer Impact: The competitive nature of the award suggests that taxpayers likely received a fair price for the pharmaceutical preparations procured.

Public Impact

Ensures access to essential pharmaceuticals for veterans. Supports the Department of Veterans Affairs' healthcare mission. Impacts the pharmaceutical supply chain and distribution networks. Contributes to the overall health and well-being of beneficiaries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Short contract duration (91 days) may indicate a temporary solution or gap filling.
Lack of specific PSC code makes it difficult to compare with similar specialized procurements.

Positive Signals

Awarded under full and open competition.
Significant value indicates a critical need being met.
Part of the VA's established Pharmacy Prime Vendor program.

Sector Analysis

The pharmaceutical sector is a critical component of healthcare spending. Large contracts like this are common for major healthcare providers to ensure a steady supply of medications. Benchmarks for pharmaceutical preparation manufacturing vary widely based on specific drug types and volumes.

Small Business Impact

This contract was awarded to McKesson Corporation, a large prime vendor. Analysis of subcontracting opportunities for small businesses within this large award is not provided in the data.

Oversight & Accountability

The Department of Veterans Affairs manages this contract. Oversight would involve monitoring delivery, quality, and pricing against contract terms. The 'Delivery Order' nature suggests it's part of a broader framework with existing oversight mechanisms.

Related Government Programs

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

Risk Flags

Short contract duration.
Lack of detailed pricing data for unit cost analysis.
No information on small business subcontracting.
Potential for price fluctuations in pharmaceutical markets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $66.6 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV) FY2017 JUN-AUG

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 $66.6 million.

What is the period of performance?

Start: 2017-06-01. End: 2017-08-31.

What is the typical duration for Pharmacy Prime Vendor contracts, and does this 91-day period represent a standard renewal or a gap-filling measure?

The typical duration for Pharmacy Prime Vendor (PPV) contracts can vary, often being longer-term Indefinite Delivery/Indefinite Quantity (IDIQ) contracts with multiple delivery orders. A 91-day duration for a specific delivery order might represent a short-term need, a transition period between larger contracts, or a specific operational requirement. Without more context on the PPV program's structure, it's difficult to definitively classify this duration.

Given the full and open competition, what was the range of bids received, and how did McKesson's bid compare to the average and lowest bids?

The provided data indicates 'FULL AND OPEN COMPETITION' but does not include the bid range or specific details of other offers. To assess the effectiveness of the competition and McKesson's pricing advantage, access to the bid tabulation and source selection decision document would be required. This would reveal if the lowest price technically acceptable or best value criteria were used and how McKesson's offer performed against these.

How does the per-unit cost of pharmaceuticals procured under this delivery order compare to market benchmarks or previous VA contracts for similar items?

The data does not provide per-unit cost details or specific pharmaceutical items procured, making a direct comparison to market benchmarks or previous contracts impossible. The total award amount of $66.5M over 91 days is a high-level figure. A detailed analysis would require itemized lists of drugs, quantities, and their corresponding unit prices to assess cost-effectiveness accurately.

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: $66,552,784

Exercised Options: $66,552,784

Current Obligation: $66,552,784

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline