Advancemed Corporation's $170.5M contract for medical supplies shows a high number of orders over its lifespan

Contract Overview

Contract Amount: $170,559,960 ($170.6M)

Contractor: Advancemed Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2000-05-17

End Date: 2016-07-01

Contract Duration: 5,889 days

Daily Burn Rate: $29.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 21

Pricing Type: TIME AND MATERIALS

Sector: Healthcare

Official Description: MED & SURGICAL INSTRUMENTS,EQ & SUP

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $170.6 million to ADVANCEMED CORPORATION for work described as: MED & SURGICAL INSTRUMENTS,EQ & SUP Key points: 1. The contract's value was realized through numerous individual orders, suggesting a high volume of demand for the supplied goods. 2. The extensive duration of the contract (over 16 years) indicates a long-term need for these medical and surgical instruments. 3. The contract was awarded under full and open competition, implying a potentially competitive pricing environment. 4. The use of Time and Materials pricing could lead to cost variability depending on actual labor and material usage. 5. The significant number of delivery orders (21) points to a consistent requirement for these supplies. 6. The contract's performance spanned a considerable period, allowing for potential adjustments and learning curves for both parties.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the types and quantities of medical and surgical instruments provided. The total value of over $170 million spread across more than 16 years suggests a moderate annual spend. However, the pricing mechanism (Time and Materials) introduces a degree of uncertainty regarding cost efficiency compared to fixed-price contracts. Without comparable contract data for similar instrument categories and volumes, a definitive value-for-money assessment is difficult.

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 competitive process is generally expected to drive down prices and ensure fair market value. The presence of 21 delivery orders suggests that the initial competition was sufficient to meet the ongoing needs of the agency over an extended period. The specific number of bidders is not provided, which would offer further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition typically benefits taxpayers by fostering a market where providers compete on price and quality, potentially leading to lower overall costs for government procurement.

Public Impact

Beneficiaries include healthcare providers within the Centers for Medicare and Medicaid Services (CMS) network, who receive essential medical and surgical instruments. The services delivered encompass the provision of a wide range of medical and surgical instruments and equipment. The geographic impact is primarily within the United States, supporting federal healthcare operations and potentially impacting patient care. Workforce implications are indirect, supporting the operational capacity of healthcare facilities that rely on these supplies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to Time and Materials pricing structure.
Lack of specific details on the types and quantities of instruments makes value assessment difficult.
Long contract duration could mask inefficiencies if not actively managed.
Limited insight into the number of competitors in the initial bidding process.

Positive Signals

Awarded through full and open competition, suggesting a competitive market.
Consistent delivery orders indicate reliable supply chain fulfillment.
Long-term contract suggests a stable and predictable supply for critical needs.
Contractor has a long history of performance under this award.

Sector Analysis

The market for medical and surgical instruments is a significant segment of the broader healthcare industry. This contract falls within the supply chain for medical equipment and consumables, a sector characterized by innovation, regulatory oversight, and a diverse range of suppliers from large manufacturers to specialized distributors. Spending in this area is critical for the functioning of healthcare systems, including those supported by federal agencies like CMS. Comparable spending benchmarks would typically be assessed against the total federal expenditure on medical supplies or specific categories of instruments.

Small Business Impact

Information regarding small business set-asides or subcontracting is not available for this contract. The absence of specific small business participation metrics means its direct impact on the small business ecosystem cannot be determined from the provided data. Further analysis would be needed to ascertain if small businesses were involved either as prime contractors or subcontractors.

Oversight & Accountability

Oversight for this contract would fall under the purview of the Department of Health and Human Services, specifically the Centers for Medicare and Medicaid Services. Accountability measures would be tied to the terms and conditions of the delivery orders, including specifications, delivery schedules, and quality standards. Transparency is facilitated by the contract's public availability, but detailed performance metrics and cost breakdowns per order are not readily accessible without further inquiry.

Related Government Programs

Medical Supplies Procurement
Surgical Instruments
Healthcare Equipment
Federal Supply Schedule (FSS) Contracts
Centers for Medicare and Medicaid Services (CMS) Spending

Risk Flags

Potential for cost overruns due to T&M pricing
Lack of detailed itemization for value comparison
Long contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $170.6 million to ADVANCEMED CORPORATION. MED & SURGICAL INSTRUMENTS,EQ & SUP

Who is the contractor on this award?

The obligated recipient is ADVANCEMED CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $170.6 million.

What is the period of performance?

Start: 2000-05-17. End: 2016-07-01.

What specific types of medical and surgical instruments were procured under this contract?

The provided data indicates the contract was for 'MED & SURGICAL INSTRUMENTS, EQ & SUP', which is a broad category. It likely encompasses a wide array of items, potentially including diagnostic tools, surgical implements, implants, and related equipment. Without access to the specific line items within the delivery orders or the contract's statement of work, a precise list of instruments cannot be determined. This lack of specificity makes it difficult to benchmark pricing or assess the full scope of the procurement.

How does the Time and Materials (T&M) pricing structure compare to fixed-price contracts for similar medical supplies?

Time and Materials contracts, like the one used here, offer flexibility but can lead to higher costs if not managed carefully, as the government pays for the time and materials used plus a markup. Fixed-price contracts provide cost certainty for the government, as the price is agreed upon upfront. For standardized, high-volume medical supplies, fixed-price contracts are often preferred for better cost control. T&M might be suitable for services or supplies where the scope is uncertain or evolves, but it requires robust oversight to prevent cost creep and ensure fair pricing compared to market rates for comparable items.

What was the average value per delivery order for this contract?

With a total contract value of approximately $170.5 million and 21 delivery orders over its lifespan, the average value per delivery order can be estimated. $170,559,960.47 / 21 orders ≈ $8,121,902.88 per order. This average suggests that each order represented a substantial procurement, likely involving significant quantities or high-value items. However, this is an average, and individual order values could have varied considerably.

What is the track record of Advancemed Corporation with federal contracts, particularly in medical supplies?

Advancemed Corporation has a significant history with this specific contract, spanning over 16 years and totaling over $170 million. This long tenure suggests a sustained ability to meet the requirements of the Centers for Medicare and Medicaid Services for medical and surgical instruments. While this data point indicates a long-standing relationship, a comprehensive assessment of their track record would require examining other contracts they may hold or have held, including performance reviews, past performance evaluations, and any history of disputes or contract terminations.

How does the contract's duration and total value compare to similar federal procurements for medical supplies?

A contract duration of over 16 years is relatively long, indicating a sustained need for the procured items. The total value of $170.5 million is substantial, placing it among significant federal procurements for medical supplies. However, without knowing the specific items and quantities, direct comparison is difficult. Federal spending on medical supplies can range from millions to billions annually, depending on the agency and the scope of needs. Contracts for commodity items might be shorter and smaller, while those for specialized equipment or long-term supply chains could be extensive like this one.

What are the potential risks associated with a Time and Materials contract of this magnitude and duration?

The primary risk with a T&M contract of this scale and duration is the potential for uncontrolled cost growth. Without strict oversight and well-defined labor categories and material cost ceilings, the contractor could incur costs that significantly exceed initial expectations or market benchmarks. There's also a risk of 'scope creep' where the services or supplies provided expand beyond the original intent without a corresponding adjustment in oversight or pricing controls. Ensuring fair pricing and preventing overcharging requires diligent monitoring of labor hours, material costs, and profit margins throughout the contract's life.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 21

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: NCI, Inc.

Address: 15245 SHADY GROVE ROAD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $170,559,960

Exercised Options: $170,559,960

Current Obligation: $170,559,960

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 500990009

IDV Type: IDC

Timeline