Justice Department awards $671K for pharmaceutical preparations, with McKesson Corporation as the sole awardee

Contract Overview

Contract Amount: $671,278 ($671.3K)

Contractor: Mckesson Corporation

Awarding Agency: Department of Justice

Start Date: 2025-10-01

End Date: 2026-08-09

Contract Duration: 312 days

Daily Burn Rate: $2.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: FY26 MCKESSON GENERAL MEDICATIONS 10.01.25 - 01.31.26 CONTRACT #36W79720D0001 (VA IAA)

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75039

State: Texas Government Spending

Plain-Language Summary

Department of Justice obligated $671,278.32 to MCKESSON CORPORATION for work described as: FY26 MCKESSON GENERAL MEDICATIONS 10.01.25 - 01.31.26 CONTRACT #36W79720D0001 (VA IAA) Key points: 1. The contract value of $671,278.32 appears to be for a specific delivery order, suggesting potential for larger overarching contracts. 2. The award was made under full and open competition, indicating a broad solicitation process. 3. The primary contractor, McKesson Corporation, is a major player in the pharmaceutical distribution industry. 4. The contract is for pharmaceutical preparation manufacturing, a critical service for correctional facilities. 5. The duration of the contract is 312 days, indicating a short-term need or a specific project phase. 6. The contract is a firm-fixed-price type, which shifts cost risk to the contractor.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order against broader pharmaceutical supply contracts is challenging without more context on the quantity and type of preparations. However, given McKesson's scale, the pricing is likely competitive for the services rendered. The firm-fixed-price structure provides cost certainty for the government, but the overall value for money depends on the efficiency of McKesson's supply chain and the specific needs of the Federal Prison System.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The specific number of bidders is not provided, but this method generally fosters price discovery and allows the government to select the most advantageous offer. The fact that McKesson was awarded the contract implies they offered the best value proposition among the competing entities.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages a competitive bidding environment, which typically leads to more favorable pricing and better quality services.

Public Impact

Inmates within the Federal Prison System will benefit from the consistent availability of necessary pharmaceutical preparations. The contract ensures the supply of pharmaceutical preparations, crucial for maintaining the health and well-being of the incarcerated population. The geographic impact is primarily within the Federal Prison System facilities served by this contract, likely across various locations in Texas. Workforce implications include the employment of personnel involved in the manufacturing and distribution of these pharmaceutical preparations by McKesson Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single large supplier for critical pharmaceutical needs.
Risk of supply chain disruptions affecting the availability of essential medications.

Positive Signals

Award to a well-established and experienced pharmaceutical supplier.
Firm-fixed-price contract provides budget certainty.
Awarded through full and open competition, indicating a competitive process.

Sector Analysis

The pharmaceutical preparation manufacturing sector is a vital component of the broader healthcare and life sciences industry. This contract falls within the niche of supplying essential medications to government institutions, specifically correctional facilities. The market is characterized by large, established players like McKesson, alongside specialized manufacturers. Spending in this area is driven by the ongoing need for pharmaceuticals within federal agencies, with significant government contracts awarded annually for drug procurement and preparation.

Small Business Impact

There is no indication that this contract was set aside for small businesses, nor is there information on subcontracting plans. As McKesson Corporation is a large entity, the focus is likely on direct fulfillment rather than engaging small business subcontractors for this specific delivery order. The impact on the small business ecosystem is minimal for this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Justice's Federal Prison System. Accountability measures are inherent in the firm-fixed-price contract, requiring McKesson to deliver specified pharmaceutical preparations at the agreed-upon price. Transparency is facilitated by the contract award process itself, which was conducted under full and open competition. Further oversight might be provided by the DOJ's Office of the Inspector General if specific concerns arise.

Related Government Programs

Federal Prison System Medical Services
Bureau of Prisons Pharmaceutical Procurement
Department of Justice Healthcare Contracts
General Services Administration (GSA) Schedules for Pharmaceuticals

Risk Flags

Potential for supply chain disruption
Dependence on a single large supplier
Price volatility in pharmaceutical markets

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $671,278.32 to MCKESSON CORPORATION. FY26 MCKESSON GENERAL MEDICATIONS 10.01.25 - 01.31.26 CONTRACT #36W79720D0001 (VA IAA)

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Justice (Federal Prison System / Bureau of Prisons).

What is the total obligated amount?

The obligated amount is $671,278.32.

What is the period of performance?

Start: 2025-10-01. End: 2026-08-09.

What is McKesson Corporation's track record with federal contracts, particularly with the Department of Justice or Federal Prison System?

McKesson Corporation is a major government contractor with a long history of serving federal agencies, including the Department of Defense, Department of Veterans Affairs, and various civilian agencies. They frequently secure contracts for pharmaceutical distribution and related services. Their track record with the Federal Prison System (FPS) and the Department of Justice (DOJ) is extensive, often involving large-scale agreements for supplying medications and medical supplies to correctional facilities nationwide. While specific performance metrics for past contracts are not detailed here, McKesson's continued success in winning federal bids suggests a generally positive performance history and established relationships within these agencies. However, like any large contractor, they may have faced scrutiny or performance issues on specific contracts over time, which would typically be documented in contract performance reports or agency oversight records.

How does the $671,278.32 contract value compare to typical spending on pharmaceutical preparations for federal correctional facilities?

The $671,278.32 value represents a single delivery order for pharmaceutical preparations, not the total contract ceiling or annual spending for the Federal Prison System (FPS). The FPS, managing a large inmate population across numerous facilities, has substantial and ongoing needs for pharmaceuticals. Annual spending on medications and related services for the FPS can run into hundreds of millions of dollars. Therefore, this specific award is a relatively small component of the overall pharmaceutical budget. Benchmarking this value requires understanding the specific types and quantities of pharmaceutical preparations ordered. It is likely a component of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a specific task order designed to meet immediate or short-term needs for a particular facility or region within Texas.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks include potential supply chain disruptions affecting the timely delivery of critical medications, price volatility for pharmaceutical ingredients, and ensuring the quality and efficacy of the preparations. Mitigation strategies are embedded in the contract structure and the contractor's operational capabilities. The firm-fixed-price nature shifts some financial risk to McKesson. The contract's full and open competition aims to ensure multiple sourcing options and competitive pricing. McKesson, as a large, established distributor, likely has robust supply chain management and quality control processes in place. Furthermore, the Federal Prison System would have oversight mechanisms and contingency plans to address any significant disruptions or quality issues, potentially through alternative sourcing or invoking contract clauses.

What is the expected program effectiveness or outcome of this contract?

The primary outcome expected from this contract is the consistent and reliable supply of necessary pharmaceutical preparations to the Federal Prison System facilities, particularly those in Texas. Effective execution ensures that inmates receive appropriate medical treatment, contributing to public health within correctional settings and supporting the overall mission of the Bureau of Prisons. Program effectiveness will be measured by the timely delivery of quality pharmaceutical products, adherence to specifications, and the absence of significant supply chain failures that could impact inmate care. Successful fulfillment of this contract contributes to maintaining operational readiness and health standards within the facilities.

What are the historical spending patterns for pharmaceutical preparations by the Federal Prison System?

Historical spending patterns for pharmaceutical preparations by the Federal Prison System (FPS) indicate a consistent and significant demand driven by the healthcare needs of a large incarcerated population. The FPS, as part of the Department of Justice, has historically allocated substantial budgets towards medical services, with pharmaceuticals representing a major expenditure category. Spending has likely trended upwards over time due to factors such as an aging inmate population, increasing healthcare costs, and the expansion or maintenance of correctional facilities. Contracts are often awarded through large-scale IDIQ vehicles or multiple-award contracts to ensure a stable supply chain and competitive pricing. Analysis of past spending would reveal fluctuations based on specific needs, contract vehicles utilized, and overall budget allocations, often involving major pharmaceutical distributors like McKesson.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6555 STATE HIGHWAY 161, IRVING, TX, 75039

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $671,278

Exercised Options: $671,278

Current Obligation: $671,278

Actual Outlays: $121,227

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36W79720D0001

IDV Type: IDC

Timeline