VA's Pharmacy Prime Vendor Contract Awarded $278M to McKesson Corporation for FY 2015

Contract Overview

Contract Amount: $278,459,176 ($278.5M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2015-09-01

End Date: 2015-09-30

Contract Duration: 29 days

Daily Burn Rate: $9.6M/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 CMOP FY 2015 SEP 1, 2015 TO SEP 30, 2015 CONTRACT VA797P-12-D-0001

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $278.5 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACY PRIME VENDOR CMOP FY 2015 SEP 1, 2015 TO SEP 30, 2015 CONTRACT VA797P-12-D-0001 Key points: 1. The Department of Veterans Affairs awarded a significant contract for pharmaceutical preparation manufacturing. 2. McKesson Corporation, a major player in the pharmaceutical distribution market, secured this award. 3. The contract was awarded under full and open competition, suggesting a competitive bidding process. 4. This spending falls within the broader healthcare sector, specifically pharmaceutical supply chain management.

Value Assessment

Rating: good

The contract value of $278.5 million for a one-month period (FY 2015) appears substantial. Benchmarking against similar large-scale pharmaceutical prime vendor contracts would be necessary for a precise assessment, but the scale suggests a significant volume of pharmaceutical goods procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple vendors had the opportunity to bid. This method is generally expected to yield competitive pricing as vendors vie for the award.

Taxpayer Impact: The competitive nature of the award suggests that taxpayers are likely receiving a fair price for the pharmaceutical services provided to veterans.

Public Impact

Ensures a consistent supply of pharmaceuticals for veterans. Supports the operational needs of the VA's healthcare system. Impacts the pharmaceutical distribution market and related industries. 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 (29 days), potentially leading to less favorable pricing or administrative overhead for a short-term renewal.
High contract value could indicate potential for significant cost savings or overspending depending on market conditions.

Positive Signals

Awarded under full and open competition.
Contract supports critical healthcare needs for veterans.

Sector Analysis

This contract falls within the healthcare sector, specifically focusing on pharmaceutical supply chain management. The VA's Pharmacy Prime Vendor program is crucial for ensuring veterans have access to necessary medications. Spending benchmarks in this area are typically high due to the essential nature and cost of pharmaceuticals.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. Large prime vendor contracts in this sector are often dominated by major corporations due to the scale and complexity of operations required.

Oversight & Accountability

The contract was awarded by the Department of Veterans Affairs, which has established oversight mechanisms for its procurement processes. Further review of specific oversight activities related to this contract would be needed to assess accountability.

Related Government Programs

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

Risk Flags

Short contract duration.
High dollar value.
Potential for market concentration by large vendors.
Dependence on a single vendor for critical supplies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $278.5 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACY PRIME VENDOR CMOP FY 2015 SEP 1, 2015 TO SEP 30, 2015 CONTRACT VA797P-12-D-0001

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 $278.5 million.

What is the period of performance?

Start: 2015-09-01. End: 2015-09-30.

What is the typical annual spending for the Pharmacy Prime Vendor program, and how does this $278M figure compare?

The provided data reflects a single month's award ($278M for FY 2015, Sep 1-30). To understand the typical annual spending, one would need to examine the contract's total value over a full fiscal year or analyze historical data for the Pharmacy Prime Vendor program. This figure represents a significant portion of monthly pharmaceutical procurement, suggesting annual spending could be in the billions.

What are the key performance indicators (KPIs) used to evaluate McKesson Corporation's performance under this contract?

Performance evaluation for a Pharmacy Prime Vendor contract typically includes metrics such as on-time delivery rates, order accuracy, drug availability, product quality, and adherence to pricing agreements. The VA would likely have specific KPIs outlined in the contract to ensure efficient and effective pharmaceutical supply to veterans.

How does the pricing structure of this contract compare to other federal or commercial pharmaceutical contracts?

Without access to the specific pricing details and negotiated rates within this contract, a direct comparison is difficult. However, given it was awarded under full and open competition, the pricing is expected to be competitive. Benchmarking against other large federal contracts (e.g., GSA schedules) or major commercial agreements would provide further insight into its cost-effectiveness.

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: $278,459,176

Exercised Options: $278,459,176

Current Obligation: $278,459,176

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline