VA awards $10.1M for PBM Services to SXC Health Solutions, Inc. under full and open competition

Contract Overview

Contract Amount: $10,148,409 ($10.1M)

Contractor: SXC Health Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2007-02-07

End Date: 2013-01-31

Contract Duration: 2,185 days

Daily Burn Rate: $4.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PBM SERVICES

Place of Performance

Location: LOMBARD, DUPAGE County, ILLINOIS, 60148

State: Illinois Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $10.1 million to SXC HEALTH SOLUTIONS, INC. for work described as: PBM SERVICES Key points: 1. Contract awarded for Pharmacy Benefit Management (PBM) services. 2. SXC Health Solutions, Inc. is the contractor. 3. The contract was awarded by the Department of Veterans Affairs. 4. Full and open competition was utilized. 5. The contract duration was 2185 days.

Value Assessment

Rating: fair

The contract value of $10.1M over approximately 6 years suggests a moderate annual spend. Without specific per-member-per-month or per-prescription benchmarks, a precise value assessment is difficult, but it appears to be within a reasonable range for large-scale PBM services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The use of full and open competition is a positive indicator for price discovery. This method allows multiple vendors to bid, theoretically driving down costs and ensuring the government receives competitive pricing for the PBM services.

Taxpayer Impact: Full and open competition aims to maximize taxpayer value by ensuring the most cost-effective solution is selected.

Public Impact

Ensures access to prescription drugs for veterans. Supports the VA's healthcare mission. Potential for cost savings through efficient PBM operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration is long (over 6 years).
No specific mention of performance metrics or KPIs.
Limited data on cost savings achieved.

Positive Signals

Awarded under full and open competition.
Contract supports a critical veteran healthcare need.
Firm fixed price contract provides cost certainty.

Sector Analysis

Pharmacy Benefit Management (PBM) services are crucial for managing prescription drug benefits, including formulary management, claims processing, and negotiating drug prices. Spending in this sector is significant, driven by healthcare needs and the complexity of drug supply chains.

Small Business Impact

The contract was awarded under full and open competition, and there is no specific indication that small businesses were involved as prime contractors or significant subcontractors. Further analysis would be needed to determine small business participation.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. The firm fixed price structure provides some level of cost control, but ongoing performance monitoring is essential to ensure service quality and value.

Related Government Programs

Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Long contract duration may reduce flexibility.
Lack of specific performance metrics in summary data.
Potential for vendor lock-in over time.
No clear indication of small business utilization.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $10.1 million to SXC HEALTH SOLUTIONS, INC.. PBM SERVICES

Who is the contractor on this award?

The obligated recipient is SXC HEALTH SOLUTIONS, INC..

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 $10.1 million.

What is the period of performance?

Start: 2007-02-07. End: 2013-01-31.

What was the average annual cost of these PBM services?

The total contract value was $10,148,409.13 over 2185 days (approximately 6 years). This averages to roughly $1.69 million per year. This figure represents the total cost for PBM services, encompassing administrative fees, rebates, and other operational expenses managed by the contractor.

What were the key performance indicators (KPIs) for this contract?

The provided data does not specify the key performance indicators (KPIs) used to measure the success of the PBM services. Typically, KPIs for such contracts would include metrics like drug cost savings achieved through negotiations, claims processing efficiency, member satisfaction, and formulary adherence rates.

How did the VA ensure cost-effectiveness beyond the competitive bidding process?

The VA utilized a 'full and open competition' strategy, which inherently promotes cost-effectiveness by allowing multiple vendors to bid. The 'firm fixed price' contract type also provides cost certainty. However, ongoing oversight and performance management would be crucial to ensure the contractor delivered services efficiently and achieved negotiated savings.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2505 S FINLEY RD STE 110, LOMBARD, IL, 06

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $12,689,913

Exercised Options: $10,148,409

Current Obligation: $10,148,409

Timeline