VA awards $162.6M contract for pharmaceuticals to McKesson Corporation under full and open competition

Contract Overview

Contract Amount: $162,666,304 ($162.7M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2013-12-01

End Date: 2013-12-31

Contract Duration: 30 days

Daily Burn Rate: $5.4M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT PRIME VENDOR PHARMACEUTICALS VA760PPVFY2014DEC

Place of Performance

Location: MURFREESBORO, RUTHERFORD County, TENNESSEE, 37130

State: Tennessee Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $162.7 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT PRIME VENDOR PHARMACEUTICALS VA760PPVFY2014DEC Key points: 1. The contract value of $162.6 million represents a significant investment in pharmaceutical supplies for the VA. 2. McKesson Corporation, a major player in pharmaceutical distribution, secured this award. 3. The use of full and open competition suggests a robust price discovery process. 4. The sector is critical for healthcare delivery, with consistent demand for pharmaceutical products.

Value Assessment

Rating: good

The contract was awarded using a firm fixed price, which provides cost certainty. Benchmarking against similar VA pharmaceutical contracts would be necessary for a definitive value assessment, but the scale suggests competitive pricing was sought.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The award was made under full and open competition, indicating multiple vendors had the opportunity to bid. This method generally promotes competitive pricing and ensures the government receives fair market value.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which aims to secure the best possible prices for essential pharmaceutical supplies.

Public Impact

Ensures a steady supply of necessary medications for veterans. Supports the operational needs of VA healthcare facilities nationwide. Impacts the pharmaceutical supply chain and distribution networks. Contributes to the overall health and well-being of the veteran population.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration is short (30 days), potentially leading to frequent re-competition and administrative overhead.
Lack of specific performance metrics or quality indicators in the provided data.
Reliance on a single vendor for a critical supply chain item.

Positive Signals

Awarded under full and open competition.
Firm fixed price contract type offers cost predictability.
Significant value indicates substantial need and potential for economies of scale.

Sector Analysis

The pharmaceutical sector is a vital component of the healthcare industry, characterized by high demand and complex supply chains. Government spending in this area is substantial, driven by the need to provide medical care to beneficiaries.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. Large prime vendors like McKesson often dominate these types of contracts, potentially limiting opportunities for smaller, specialized pharmaceutical suppliers.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Standard procurement regulations and contract management practices would apply to ensure performance and accountability.

Related Government Programs

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

Risk Flags

Short contract duration may lead to frequent re-competition.
Potential for supply chain disruption if the prime vendor faces issues.
Limited visibility into specific performance metrics.
Dependence on a single large vendor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $162.7 million to MCKESSON CORPORATION. EXPRESS REPORT PRIME VENDOR PHARMACEUTICALS VA760PPVFY2014DEC

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 $162.7 million.

What is the period of performance?

Start: 2013-12-01. End: 2013-12-31.

What is the historical pricing trend for similar pharmaceutical contracts awarded by the VA?

Analyzing historical pricing data for comparable pharmaceutical contracts is crucial. This involves comparing unit costs, overall contract values, and any price escalations over time. Understanding these trends helps determine if the current $162.6 million award represents a fair market price and if efficiencies have been achieved or if costs have increased.

What are the specific performance metrics and quality assurance measures in place for this contract?

The provided data lacks details on specific performance metrics and quality assurance measures. It is essential to understand how the VA will monitor McKesson Corporation's delivery timeliness, product quality, and adherence to regulatory standards to ensure the effective provision of pharmaceuticals and mitigate risks associated with supply chain disruptions.

How does the VA ensure the long-term availability and cost-effectiveness of pharmaceuticals beyond this single delivery order?

This contract appears to be a single delivery order with a short duration. The VA's long-term strategy for ensuring pharmaceutical availability and cost-effectiveness likely involves a portfolio of contracts, including longer-term agreements and potentially multiple award schedules, to diversify supply and leverage competition over time.

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: $162,666,304

Exercised Options: $162,666,304

Current Obligation: $162,666,304

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline