VA's Pharmacy Prime Vendor Contract: $32.7M Spent in Sep 2015 on Pharmaceuticals

Contract Overview

Contract Amount: $32,666,782 ($32.7M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2015-09-01

End Date: 2015-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.1M/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) FY2015 SEP

Place of Performance

Location: PITTSBURGH, ALLEGHENY County, PENNSYLVANIA, 15212

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $32.7 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT PHARMACY PRIME VENDOR (PPV) FY2015 SEP Key points: 1. McKesson Corporation secured a significant portion of VA's pharmaceutical spending in September 2015. 2. The contract utilized full and open competition, suggesting a competitive bidding process. 3. The spending represents a snapshot of the VA's ongoing pharmaceutical procurement needs. 4. Pharmaceutical preparation manufacturing is a critical sector for healthcare delivery.

Value Assessment

Rating: good

The contract's firm fixed price structure provides cost certainty. Benchmarking against similar pharmaceutical contracts would offer further insight into value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Full and open competition was employed, which typically drives competitive pricing and ensures fair market value. The delivery order structure allows for flexibility in meeting demand.

Taxpayer Impact: The competitive nature of the award is intended to maximize taxpayer value by securing pharmaceuticals at favorable prices.

Public Impact

Ensures timely access to essential medications for veterans. Supports the operational readiness of VA healthcare facilities. Contributes to the stability of the pharmaceutical supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract periods.
Reliance on a single vendor for a large volume of pharmaceuticals.

Positive Signals

Competitive award process.
Firm fixed price contract type.

Sector Analysis

The Department of Veterans Affairs relies heavily on pharmaceutical procurement to serve its patient population. Spending benchmarks in this sector are highly variable based on drug types and patient volume.

Small Business Impact

This data does not provide specific information on small business participation. Large prime vendor contracts often involve complex supply chains where subcontracting opportunities may exist.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract to ensure compliance with terms and conditions and to verify the quality and timely delivery of pharmaceuticals.

Related Government Programs

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

Risk Flags

Single vendor reliance
Potential for price escalation
Supply chain vulnerability

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $32.7 million to MCKESSON CORPORATION. EXPRESS REPORT PHARMACY PRIME VENDOR (PPV) FY2015 SEP

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 $32.7 million.

What is the period of performance?

Start: 2015-09-01. End: 2015-09-30.

What was the average per-unit cost of pharmaceuticals under this contract compared to market rates?

Without detailed line-item data, determining the average per-unit cost is not possible. However, the 'full and open competition' method suggests an effort to achieve market-competitive pricing. Further analysis would require access to the specific drugs procured and their quantities, allowing for comparison against industry benchmarks or other government contracts.

What are the primary risks associated with relying on a single prime vendor for a significant portion of pharmaceutical needs?

Key risks include potential supply chain disruptions if the vendor faces issues, limited negotiating leverage for future price adjustments, and the possibility of vendor lock-in. While competition was used for this award, ongoing reliance on one entity can reduce future competitive pressure and potentially lead to higher costs over time if not managed proactively.

How effectively does this contract mechanism ensure the VA receives high-quality pharmaceuticals at the best possible prices?

The 'full and open competition' method is designed to foster price discovery and secure favorable terms. The 'firm fixed price' contract type provides cost predictability. However, effectiveness in achieving the 'best possible prices' is contingent on the thoroughness of the competition and ongoing market surveillance to ensure prices remain competitive throughout the contract's life.

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: $32,666,782

Exercised Options: $32,666,782

Current Obligation: $32,666,782

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline