VA Pharmacy Prime Vendor Contract Awarded to McKesson for $204.6M in FY2014

Contract Overview

Contract Amount: $204,639,852 ($204.6M)

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: $7.1M/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 VA760PPVFY2014SEP

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $204.6 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT PHARMACY PRIME VENDOR VA760PPVFY2014SEP Key points: 1. Contract value of $204.6 million awarded to McKesson Corporation. 2. Full and open competition was utilized for this contract. 3. The contract falls under Pharmaceutical Preparation Manufacturing sector. 4. Potential risk associated with a single vendor for prime pharmaceutical supply. 5. The contract duration is 29 days, suggesting a short-term or task-specific award.

Value Assessment

Rating: good

The contract value of $204.6 million for a 29-day period is substantial. Benchmarking against similar large-scale pharmaceutical supply contracts would be necessary to fully assess pricing effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, which generally promotes competitive pricing. The specific pricing discovery mechanisms within this competitive process are not detailed.

Taxpayer Impact: The use of full and open competition aims to ensure taxpayer funds are used efficiently by securing the best possible prices for pharmaceutical supplies.

Public Impact

Ensures a steady supply of pharmaceuticals for veterans. Impacts the pharmaceutical supply chain and pricing for VA facilities. Potential for cost savings through competitive bidding. Highlights the VA's reliance on large corporations for essential services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Short contract duration (29 days) may indicate a bridge contract or specific need.
Reliance on a single vendor (McKesson) for prime distribution.
Lack of detailed pricing information for per-unit cost analysis.

Positive Signals

Awarded through full and open competition.
Significant contract value suggests potential for economies of scale.
Supports the healthcare needs of a large veteran population.

Sector Analysis

This contract falls within the Pharmaceutical Preparation Manufacturing sector, a critical area for healthcare services. Spending benchmarks in this sector are often high due to the nature of medical supplies and pharmaceuticals.

Small Business Impact

The data does not indicate any specific provisions or awards made to small businesses under this contract. Further analysis would be needed to determine small business participation.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight of this contract. The award process through full and open competition suggests a degree of accountability in vendor selection.

Related Government Programs

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

Risk Flags

Short contract duration.
Potential for single-source dependency if not managed carefully.
Lack of detailed cost breakdown.
High value for a short period warrants scrutiny.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $204.6 million to MCKESSON CORPORATION. EXPRESS REPORT PHARMACY PRIME VENDOR VA760PPVFY2014SEP

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 $204.6 million.

What is the period of performance?

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

What is the specific nature of the pharmaceutical supplies being procured under this contract?

The contract is for the Pharmacy Prime Vendor program, which typically involves the supply of a broad range of pharmaceuticals and related products to VA medical facilities. The exact list of drugs and supplies would be detailed in the contract's statement of work, but it generally covers routine and emergency pharmaceutical needs for patient care.

What are the potential risks associated with a 29-day contract duration for prime pharmaceutical supply?

A short duration like 29 days could indicate a bridge contract to cover a gap before a longer-term award, or it might be for a very specific, short-term need. Risks include potential disruption if a follow-on contract is delayed, and it may not allow for the full benefits of long-term price stability or vendor investment in the VA's specific needs.

How does the $204.6 million value for a 29-day period compare to typical pharmaceutical spending benchmarks?

This value represents an exceptionally high daily spending rate, suggesting either a very large volume of pharmaceuticals being procured or a contract covering a wide array of high-cost medications. Without specific details on the quantity and type of drugs, it's difficult to benchmark precisely, but it points to a significant expenditure for a short period.

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: $204,639,852

Exercised Options: $204,639,852

Current Obligation: $204,639,852

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline