HHS awarded $50M+ for medical instruments and equipment over 12 years, with 21 delivery orders

Contract Overview

Contract Amount: $50,021,936 ($50.0M)

Contractor: Advancemed Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2000-09-28

End Date: 2012-04-30

Contract Duration: 4,232 days

Daily Burn Rate: $11.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 21

Pricing Type: COST PLUS AWARD FEE

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 $50.0 million to ADVANCEMED CORPORATION for work described as: MED&SURGICAL INSTRUMENTS,EQ&SUP Key points: 1. Contract awarded through full and open competition, suggesting a competitive market for these supplies. 2. The contract spanned over a decade, indicating a long-term need for these medical supplies. 3. The use of Cost Plus Award Fee (CPA) pricing structure allows for performance incentives. 4. The contract was awarded to a single vendor, Advancemed Corporation, over its duration. 5. The significant duration and value suggest a critical role in supporting healthcare services. 6. The contract's performance period ended in 2012, implying current needs may be met by different contracts.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contract data from the period. The total award of over $50 million across 12 years suggests a substantial investment in medical and surgical instruments and equipment. However, the lack of detailed cost breakdowns or comparisons to similar contracts makes a definitive value-for-money assessment difficult. The Cost Plus Award Fee structure implies that the final cost could vary based on performance, making it essential to understand the award fee criteria and outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The fact that 21 delivery orders were issued suggests a sustained demand that was met through this single, competitively awarded vehicle. While the initial competition likely drove competitive pricing, the long duration and the issuance of multiple orders to a single contractor warrant a review of whether subsequent competitions were held or if modifications extended the scope significantly.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better quality services. The sustained use of this contract vehicle suggests that the initial competition was effective in establishing a baseline for cost and performance.

Public Impact

Beneficiaries include healthcare providers and patients who rely on the availability of medical and surgical instruments and equipment. Services delivered encompass the provision of essential medical and surgical supplies necessary for patient care. The geographic impact is likely national, supporting federal healthcare facilities or programs across the United States. Workforce implications may include roles in logistics, supply chain management, and potentially clinical support staff who utilize the equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 12 years) could lead to potential price increases over time if not regularly re-competed or adjusted for market rates.
Reliance on a single contractor for an extended period might limit opportunities for new vendors and potentially reduce future competition.
The Cost Plus Award Fee structure, while incentivizing performance, can sometimes lead to higher costs if award fees are consistently maximized without strict cost controls.

Positive Signals

Awarded through full and open competition, indicating a robust initial bidding process.
The contract successfully delivered medical and surgical instruments and equipment over a significant period, meeting agency needs.
The issuance of multiple delivery orders suggests consistent demand and successful fulfillment of requirements.

Sector Analysis

The market for medical and surgical instruments and equipment is a substantial segment of the broader healthcare industry. This contract falls within the 'Medical Equipment and Supplies' category, which is characterized by a wide range of products from basic consumables to complex diagnostic and surgical devices. Federal agencies, particularly those in healthcare like HHS, are significant purchasers in this market. Benchmarks for similar large-scale federal contracts in this sector often involve multi-year agreements with substantial dollar values, reflecting the ongoing need for these essential supplies.

Small Business Impact

Information regarding small business set-asides or subcontracting is not explicitly provided in the data. However, given the contract's duration and the nature of supplying medical and surgical instruments, it is possible that larger prime contractors may engage small businesses for specialized components or distribution services. Without specific data on subcontracting plans or set-aside goals, the direct impact on the small business ecosystem remains unclear.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Centers for Medicare and Medicaid Services (CMS) within HHS. Mechanisms likely included regular performance reviews, audits of cost-plus award fee components, and adherence to delivery schedules. Transparency would be facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse related to the contract.

Related Government Programs

Medical Supplies
Surgical Instruments
Healthcare Equipment
Federal Supply Schedule (FSS) Contracts
Department of Veterans Affairs Medical Contracts

Risk Flags

Long contract duration without clear evidence of re-competition.
Potential for cost creep in Cost Plus Award Fee contracts if not rigorously managed.
Lack of transparency on specific performance metrics and award fee allocations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $50.0 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 $50.0 million.

What is the period of performance?

Start: 2000-09-28. End: 2012-04-30.

What was the average annual spending under this contract?

The contract had a total award amount of $50,019,361.40 and a duration of approximately 4232 days (about 11.6 years). To calculate the average annual spending, we divide the total award amount by the number of years. $50,019,361.40 / 11.6 years ≈ $4,312,013.91 per year. This indicates a consistent level of spending on medical and surgical instruments and equipment throughout the contract's life.

How did the Cost Plus Award Fee (CPA) structure likely influence the final cost?

The Cost Plus Award Fee (CPA) structure allows the contractor to recover allowable costs plus an additional fee that is based on performance against pre-defined criteria. This means the final cost could be higher or lower than a fixed-price contract, depending on how well Advancemed Corporation met or exceeded performance expectations. The 'award' portion of the fee incentivizes the contractor to perform efficiently and effectively. Without knowing the specific award fee criteria and the awarded fees, it's difficult to quantify the exact impact, but it suggests a mechanism for aligning contractor performance with government objectives while potentially increasing the total cost compared to a scenario with no award fee.

What does the issuance of 21 delivery orders to a single contractor imply about the contract's execution?

The issuance of 21 delivery orders under this contract signifies a sustained and potentially evolving need for medical and surgical instruments and equipment over its 12-year lifespan. It suggests that the initial contract vehicle was flexible enough to accommodate multiple discrete procurements. For the contractor, it indicates a successful track record in fulfilling orders and likely maintaining a good relationship with the contracting agency. From a government perspective, it demonstrates the utility of a well-structured indefinite-delivery/indefinite-quantity (IDIQ) or similar contract type that allows for task-specific orders against a broader framework, provided the initial competition was sound and pricing remained competitive across the orders.

Were there opportunities for other vendors to compete for these delivery orders?

The data indicates the contract was awarded under 'FULL AND OPEN COMPETITION' and that Advancemed Corporation was the sole awardee for this specific contract vehicle. However, the issuance of multiple delivery orders (21 in total) implies that these orders were placed against this single, pre-competed contract. While the initial award was competitive, the subsequent delivery orders were likely placed directly with Advancemed Corporation as per the terms of the established contract. Opportunities for other vendors would have primarily existed during the initial solicitation period for the base contract. If the agency had a need for similar items after this contract expired or if the scope significantly changed, new competitive solicitations would have been required.

What is the significance of the contract ending in April 2012?

The contract's end date of April 30, 2012, is significant because it indicates that the federal government's procurement strategy for these specific medical and surgical instruments and equipment has evolved. It means that current needs are likely being met through different, potentially newer, contract vehicles. This could be due to changes in technology, market prices, agency requirements, or a deliberate effort to re-compete the requirement to ensure continued best value. Analyzing spending patterns before and after this date could reveal shifts in procurement approaches or vendor landscapes for these types of supplies.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 21

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: HIG Capital Management, Inc. (UEI: 824891477)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $49,677,893

Exercised Options: $49,677,893

Current Obligation: $50,021,936

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 500990009

IDV Type: IDC

Timeline