VA's Pharmacy Prime Vendor Contract for June 2017 Reached $265.6M with McKesson Corporation

Contract Overview

Contract Amount: $265,637,385 ($265.6M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-06-01

End Date: 2017-06-30

Contract Duration: 29 days

Daily Burn Rate: $9.2M/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 FY17 JUN 1, 2017 TO JUN 30, 2017 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 $265.6 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACY PRIME VENDOR CMOP FY17 JUN 1, 2017 TO JUN 30, 2017 CONTRACT VA797P-12-D-0001 Key points: 1. The contract, valued at $265.6 million for June 2017, highlights significant spending in pharmaceutical procurement. 2. McKesson Corporation is a major player in the pharmaceutical distribution market, indicating a competitive landscape. 3. The primary risk lies in potential price fluctuations and supply chain disruptions for essential medications. 4. This spending falls within the Healthcare sector, specifically pharmaceutical preparation manufacturing.

Value Assessment

Rating: good

The contract's pricing is based on a Firm Fixed Price (FFP) structure, which provides cost certainty. Benchmarking against similar large-scale pharmaceutical contracts is difficult without specific product-level data, but the overall value suggests a significant volume of goods and services.

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. This method aims to secure the best value for the government by allowing all eligible sources to compete.

Taxpayer Impact: The competitive nature of this award is intended to ensure taxpayer funds are used efficiently for essential pharmaceutical supplies.

Public Impact

Ensures a steady supply of pharmaceuticals for veterans, impacting healthcare access and quality. Supports a critical component of the VA's healthcare delivery system. Reflects the government's significant investment in healthcare services for its veteran population.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Potential for price increases in future contract periods.
Dependence on a single vendor for a large volume of pharmaceuticals.

Positive Signals

Awarded through full and open competition.
Firm Fixed Price contract provides cost predictability.

Sector Analysis

The healthcare sector, particularly pharmaceutical preparation manufacturing, is a substantial area of government spending. Benchmarks for such large-scale contracts are often tied to market dynamics and the specific therapeutic areas covered.

Small Business Impact

This contract appears to be awarded to a large corporation (McKesson Corporation), with no explicit indication of small business participation in this specific delivery order. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Robust oversight is crucial to ensure timely delivery, quality of pharmaceuticals, and adherence to contract terms, safeguarding taxpayer investment.

Related Government Programs

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

Risk Flags

Vendor concentration risk
Potential for price volatility
Supply chain disruption risk
Dependence on a single contract for a critical service

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $265.6 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACY PRIME VENDOR CMOP FY17 JUN 1, 2017 TO JUN 30, 2017 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 $265.6 million.

What is the period of performance?

Start: 2017-06-01. End: 2017-06-30.

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

Analyzing historical pricing data for this Pharmacy Prime Vendor contract would reveal trends in cost escalation or reduction. Understanding these trends is crucial for forecasting future expenditures and identifying potential cost-saving opportunities or areas of concern regarding price inflation.

What is the risk associated with relying on a single vendor for such a critical supply chain?

Reliance on a single vendor, even one as established as McKesson, presents risks such as supply chain disruptions due to unforeseen events (natural disasters, geopolitical issues, or internal company problems). This could lead to medication shortages, impacting veteran care and potentially requiring emergency procurement at higher costs.

How effectively does the current pricing structure ensure value for money compared to alternative procurement methods?

The Firm Fixed Price (FFP) structure provides cost certainty, which is a form of value. However, assessing true value for money requires comparing the negotiated prices against market benchmarks and considering the total cost of ownership, including administrative overhead and potential for price adjustments.

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: $265,637,385

Exercised Options: $265,637,385

Current Obligation: $265,637,385

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline