VA Pharmacy Prime Vendor Contract Exceeds $235M in March 2016, Awarded to McKesson

Contract Overview

Contract Amount: $235,832,838 ($235.8M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2016-03-01

End Date: 2016-03-31

Contract Duration: 30 days

Daily Burn Rate: $7.9M/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 MAR 1, 2016 TO MAR 31, 2016 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 $235.8 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACY PRIME VENDOR CMOP FY16 MAR 1, 2016 TO MAR 31, 2016 CONTRACT VA797P-12-D-0001 Key points: 1. The Department of Veterans Affairs (VA) awarded a significant contract for pharmacy prime vendor services. 2. McKesson Corporation is the sole awardee for this period, indicating a strong market position. 3. The contract's value suggests substantial demand for pharmaceutical preparations within the VA system. 4. This spending falls within the broader healthcare sector, specifically pharmaceutical supply chain management.

Value Assessment

Rating: good

The contract value of $235.8M for a single month is substantial. Benchmarking against similar large-scale pharmaceutical distribution contracts is necessary to fully assess pricing efficiency, but it appears to be within expected ranges for a prime vendor managing a vast formulary.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust price discovery process. However, the data reflects a single delivery order within a larger IDIQ, so the competition for this specific order's pricing is not detailed.

Taxpayer Impact: The significant expenditure represents a major investment in ensuring veterans have access to necessary medications, directly impacting taxpayer funds allocated to healthcare.

Public Impact

Ensures timely access to a wide range of pharmaceuticals for veterans nationwide. Supports the VA's mission to provide comprehensive healthcare services. Contributes to the stability of the pharmaceutical supply chain for a critical government agency. Potential for cost savings through bulk purchasing and efficient distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Single month's spending is high, requiring ongoing monitoring.
Dependence on a single vendor for critical supplies.
Potential for price fluctuations in pharmaceutical markets.

Positive Signals

Awarded through full and open competition.
Supports a vital government healthcare program.
Managed by a large, experienced pharmaceutical distributor.

Sector Analysis

This contract falls under the healthcare sector, specifically pharmaceutical distribution and supply chain management. Spending benchmarks for similar large-scale federal pharmacy contracts are typically in the hundreds of millions annually, making this monthly figure significant but potentially aligned with operational needs.

Small Business Impact

The data does not indicate any specific subcontracting to small businesses for this particular delivery order. Large prime vendor contracts often involve complex supply chains where small business participation may be limited or occur at lower tiers.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight of this contract. Regular performance reviews and audits would be expected to ensure compliance with terms, pricing, and delivery schedules.

Related Government Programs

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

Risk Flags

High monthly expenditure requires close monitoring.
Potential for supply chain vulnerabilities.
Dependence on a single large vendor.
Need for ongoing price competitiveness analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $235.8 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACY PRIME VENDOR CMOP FY16 MAR 1, 2016 TO MAR 31, 2016 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 $235.8 million.

What is the period of performance?

Start: 2016-03-01. End: 2016-03-31.

What is the projected annual spending for this Pharmacy Prime Vendor contract, and how does it compare to previous years?

The provided data only covers one month (March 2016) with a spending of $235.8 million. To project annual spending, this figure would need to be extrapolated, assuming consistent monthly expenditure, leading to an estimated annual spend of approximately $2.8 billion. A comparison to previous years' annual spending is crucial for identifying trends, potential cost increases, or efficiency gains.

What are the key performance indicators (KPIs) used to evaluate McKesson's performance under this contract, and what were the results for the reporting period?

Specific KPIs for this contract are not detailed in the provided data. Typically, for pharmacy prime vendor contracts, KPIs would include on-time delivery rates, order accuracy, formulary compliance, temperature control adherence for sensitive medications, and customer satisfaction. Evaluating these metrics is essential to ensure the VA is receiving high-quality service and that taxpayer funds are being used effectively.

Are there any identified risks associated with McKesson's ability to meet the demand for pharmaceuticals, considering the scale of the VA's needs?

While McKesson is a major pharmaceutical distributor, the scale of the VA's demand presents inherent risks. These could include supply chain disruptions (e.g., drug shortages, manufacturing issues), logistical challenges in distribution, or potential price volatility. The VA likely has contingency plans and performance clauses in the contract to mitigate these risks and ensure continuity of care for veterans.

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: $235,832,838

Exercised Options: $235,832,838

Current Obligation: $235,832,838

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline