VA's Pharmacy Prime Vendor contract awarded to McKesson Corporation for $35.6M in FY2014

Contract Overview

Contract Amount: $35,618,638 ($35.6M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2014-09-01

End Date: 2014-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.2M/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) FY2014 SEP

Place of Performance

Location: BAY PINES, PINELLAS County, FLORIDA, 33744

State: Florida Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $35.6 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT PHARMACY PRIME VENDOR (PPV) FY2014 SEP Key points: 1. The contract value of $35.6M for a single month indicates significant pharmaceutical spending. 2. McKesson Corporation is a major player in the pharmaceutical distribution market. 3. The contract was awarded under full and open competition, suggesting a competitive bidding process. 4. The fixed-price contract type helps control costs for the VA.

Value Assessment

Rating: good

The contract's firm fixed price structure is standard for pharmaceutical procurement. Benchmarking against similar large-scale pharmaceutical contracts would be necessary for a precise value assessment, but the monthly value suggests substantial volume.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Awarded under full and open competition, this method typically drives competitive pricing. The VA likely received multiple bids, leading to a price discovery process that benefits taxpayers.

Taxpayer Impact: The competitive nature of the award is expected to yield favorable pricing for the VA, thus benefiting taxpayers through efficient use of funds.

Public Impact

Ensures timely access to essential pharmaceuticals for veterans. Supports the operational needs of VA healthcare facilities nationwide. Contributes to the stability of the pharmaceutical supply chain for a critical government agency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Short contract duration (29 days) may indicate a bridge contract or a specific short-term need.
Lack of specific product details makes it difficult to assess unit price efficiency.
Potential for price fluctuations if this is a recurring short-term award.

Positive Signals

Awarded under full and open competition.
Firm fixed price contract type.
Significant value suggests a critical need being met.

Sector Analysis

This contract falls within the healthcare sector, specifically pharmaceutical procurement. Benchmarks for similar large-scale pharmaceutical distribution contracts would typically be in the tens to hundreds of millions annually, depending on scope and duration.

Small Business Impact

This contract does not appear to have specific provisions for small business participation mentioned in the provided data. Large prime vendor contracts often involve complex supply chains where subcontracting opportunities for small businesses may exist but are not explicitly detailed here.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight. The firm fixed price contract type provides a degree of cost control. Further oversight would involve monitoring delivery performance and adherence to contract terms.

Related Government Programs

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

Risk Flags

Short contract duration.
Single vendor reliance.
Lack of detailed performance metrics.
Potential for price escalation in subsequent awards.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $35.6 million to MCKESSON CORPORATION. EXPRESS REPORT PHARMACY PRIME VENDOR (PPV) FY2014 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 $35.6 million.

What is the period of performance?

Start: 2014-09-01. End: 2014-09-30.

What is the typical duration and value of the Pharmacy Prime Vendor contract, and how does this specific award compare?

The provided data indicates a contract duration of 29 days and a value of $35.6 million for September 2014. Without historical data or information on the standard PPV contract structure, it's difficult to definitively compare. However, a $35.6 million monthly spend suggests a substantial, potentially recurring, requirement for pharmaceutical supplies.

What are the key performance indicators (KPIs) used to measure the success of this contract, and how was McKesson Corporation evaluated?

The provided data does not detail specific Key Performance Indicators (KPIs) or the evaluation criteria used for McKesson Corporation. Typically, for pharmaceutical prime vendor contracts, KPIs would include on-time delivery rates, order accuracy, product availability, and potentially price competitiveness over time. The VA would monitor these metrics to ensure contract compliance and effectiveness.

Are there any identified risks associated with relying on a single vendor like McKesson Corporation for such a critical supply chain function?

While awarded under full and open competition, reliance on a single vendor, even for a defined period, carries inherent risks. These include potential supply chain disruptions due to unforeseen events affecting McKesson, limited leverage for price renegotiation if the contract is extended, and the risk of vendor lock-in. The short duration mitigates some long-term risks.

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: $35,618,638

Exercised Options: $35,618,638

Current Obligation: $35,618,638

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline