VA Pharmacy Prime Vendor Contract Exceeds $183M, McKesson Corporation Awarded

Contract Overview

Contract Amount: $183,754,817 ($183.8M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2014-03-01

End Date: 2014-03-30

Contract Duration: 29 days

Daily Burn Rate: $6.3M/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 VA760PPVFY14MAR

Place of Performance

Location: SAN FRANCISCO, SAN FRANCISCO County, CALIFORNIA, 94104

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $183.8 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT PHARMACY PRIME VENDOR VA760PPVFY14MAR Key points: 1. Significant contract value of $183.75M for pharmaceutical supplies. 2. McKesson Corporation is a major player in the pharmaceutical distribution market. 3. Potential risk associated with reliance on a single large vendor for critical supplies. 4. Spending falls within the broad 'Healthcare' sector, specifically pharmaceutical manufacturing.

Value Assessment

Rating: good

The contract's pricing is based on a Firm Fixed Price (FFP) award, which provides cost certainty. Benchmarking against similar large-scale pharmaceutical distribution contracts would be necessary for a definitive assessment, but the scale suggests competitive pricing was sought.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating a robust price discovery process. This method aims to ensure the government receives the best value by allowing all eligible sources to compete.

Taxpayer Impact: The full and open competition likely resulted in favorable pricing for taxpayers by leveraging market competition for essential pharmaceutical supplies.

Public Impact

Ensures a consistent supply of pharmaceuticals to Veterans Affairs facilities. Supports the healthcare needs of a significant veteran population. Impacts the pharmaceutical supply chain and distribution network. Potential for cost savings through competitive bidding.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration is short (29 days), suggesting it might be a bridge or specific delivery order.
Lack of detailed performance metrics in the provided data.
Potential for price fluctuations if not managed tightly post-award.

Positive Signals

Awarded under full and open competition.
Firm Fixed Price contract type offers cost predictability.
Significant contract value indicates a large-scale, important procurement.

Sector Analysis

This contract falls under the Healthcare sector, specifically focusing on pharmaceutical preparation manufacturing and distribution. Spending benchmarks in this area are typically high due to the critical nature and cost of medical supplies.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. Given the scale and nature of the contract, it is likely awarded to a large prime vendor, with subcontracting opportunities for small businesses potentially existing but not explicitly detailed here.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight. The 'Delivery Order' nature suggests it's part of a larger contract vehicle, implying existing oversight mechanisms are in place. Further review of performance reports would be needed.

Related Government Programs

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

Risk Flags

Vendor Lock-in Potential
Supply Chain Vulnerability
Price Escalation Risk
Dependence on a Single Large Supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $183.8 million to MCKESSON CORPORATION. EXPRESS REPORT PHARMACY PRIME VENDOR VA760PPVFY14MAR

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 $183.8 million.

What is the period of performance?

Start: 2014-03-01. End: 2014-03-30.

What is the historical pricing trend for this vendor under similar contracts?

Analyzing historical pricing data for McKesson Corporation under comparable Pharmacy Prime Vendor contracts would reveal if the current award reflects competitive trends or potential escalations. This historical context is crucial for assessing long-term value and identifying any deviations from expected price points over time.

What are the specific performance metrics and service level agreements tied to this contract?

Understanding the contract's performance metrics, such as delivery timeliness, fill rates, and product quality standards, is essential for evaluating its effectiveness. Robust SLAs ensure that the VA receives not only competitively priced pharmaceuticals but also reliable and high-quality services critical for patient care.

How does the VA manage potential supply chain disruptions with a single large vendor?

The VA likely employs risk mitigation strategies, such as contingency planning, maintaining safety stock levels, and potentially diversifying suppliers for critical items, to address risks associated with relying on a single large vendor like McKesson. Continuous monitoring of the supply chain is key.

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: $183,754,817

Exercised Options: $183,754,817

Current Obligation: $183,754,817

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline