VA's Pharmacy Prime Vendor Contract for CMOP Exceeds $217M in December 2015

Contract Overview

Contract Amount: $217,509,765 ($217.5M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2015-12-01

End Date: 2015-12-31

Contract Duration: 30 days

Daily Burn Rate: $7.3M/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 CMOP FY16 DEC 1, 2015 TO DEC 31, 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 $217.5 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACY PRIME VENDOR CMOP FY16 DEC 1, 2015 TO DEC 31, 2015 CONTRACT VA797P-12-D-0001 Key points: 1. The contract awarded to McKesson Corporation represents a significant portion of the VA's pharmaceutical spending. 2. Competition for this contract was full and open, suggesting a competitive bidding process. 3. The contract's fixed-price nature aims to control costs, but the high value warrants close monitoring. 4. This spending falls within the Pharmaceutical Preparation Manufacturing sector, crucial for healthcare delivery.

Value Assessment

Rating: good

The contract value of $217.5M for a single month is substantial. Benchmarking against similar large-scale pharmaceutical distribution contracts is necessary to fully assess pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, which typically drives competitive pricing. The firm fixed-price structure further supports price predictability.

Taxpayer Impact: The significant expenditure on pharmaceuticals directly impacts taxpayer funds allocated to veteran healthcare.

Public Impact

Ensures timely access to essential medications for veterans nationwide. Supports the VA's mission to provide comprehensive healthcare services. Contributes to the stability of the pharmaceutical supply chain for government agencies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High monthly expenditure requires ongoing cost-effectiveness review.
Potential for price fluctuations in the pharmaceutical market.
Dependence on a single vendor for a critical supply chain.

Positive Signals

Awarded through full and open competition.
Firm fixed-price contract provides cost certainty.
Supports a vital government healthcare program.

Sector Analysis

This contract is within the Pharmaceutical Preparation Manufacturing sector, a critical area for healthcare. Spending benchmarks for similar large-scale pharmaceutical distribution contracts are typically in the hundreds of millions annually.

Small Business Impact

Analysis of small business participation is not directly available from the provided data, but large prime vendor contracts often involve subcontracting opportunities.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight. Robust contract management and performance monitoring are essential to ensure value and accountability for this significant expenditure.

Related Government Programs

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

Risk Flags

High monthly expenditure.
Dependence on a single large vendor.
Potential for market price volatility.
Critical nature of pharmaceutical supply.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $217.5 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACY PRIME VENDOR CMOP FY16 DEC 1, 2015 TO DEC 31, 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 $217.5 million.

What is the period of performance?

Start: 2015-12-01. End: 2015-12-31.

What is the historical cost trend for this contract over multiple years?

Historical cost trend data is not provided in this specific report. A comprehensive analysis would require examining contract performance over several fiscal years to identify any escalation or de-escalation in pricing and to assess the long-term value proposition of the McKesson Corporation's services.

Are there any identified risks related to McKesson Corporation's performance or the pharmaceutical supply chain?

The provided data does not detail specific performance risks. However, general risks in pharmaceutical supply chains include drug shortages, regulatory changes, and vendor financial stability. Continuous monitoring by the VA is crucial to mitigate these potential issues and ensure uninterrupted service delivery.

How does the VA ensure the effectiveness of pharmaceutical distribution through this contract?

The VA likely employs performance metrics and quality assurance processes to ensure effectiveness. This includes tracking delivery times, order accuracy, and medication integrity. Regular audits and vendor performance reviews are standard practices to maintain high standards in pharmaceutical distribution.

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: $217,509,765

Exercised Options: $217,509,765

Current Obligation: $217,509,765

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline