DOJ's $921K pharmaceutical contract awarded to McKesson Corporation for Bureau of Prisons

Contract Overview

Contract Amount: $921,095 ($921.1K)

Contractor: Mckesson Corporation

Awarding Agency: Department of Justice

Start Date: 2025-10-01

End Date: 2026-09-30

Contract Duration: 364 days

Daily Burn Rate: $2.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: FY 2026 NON-CONTROLLED PHARMACEUTICALS OCT. 2025 - JANUARY 30, 2026

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75039

State: Texas Government Spending

Plain-Language Summary

Department of Justice obligated $921,094.63 to MCKESSON CORPORATION for work described as: FY 2026 NON-CONTROLLED PHARMACEUTICALS OCT. 2025 - JANUARY 30, 2026 Key points: 1. Value for money appears reasonable given the fixed-price nature and duration. 2. Full and open competition suggests a competitive market for pharmaceutical supplies. 3. Risk indicators are low, with a fixed-price contract and established vendor. 4. Performance context is within the standard for federal prison system pharmaceutical needs. 5. Sector positioning is within the healthcare and pharmaceutical manufacturing domain.

Value Assessment

Rating: good

The contract value of $921,094.63 for a 12-month period appears to be in line with market rates for pharmaceutical supplies to federal institutions. McKesson Corporation is a major distributor, and the firm-fixed-price structure helps control costs. Benchmarking against similar contracts for correctional facilities would provide a more precise value assessment, but initial indicators suggest fair pricing.

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 specific number of bidders is not provided, but the method suggests a healthy competitive environment for pharmaceutical preparations. This approach generally leads to better price discovery and ensures the government receives competitive offers.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which aims to secure the most cost-effective pharmaceutical supplies for federal prisons, preventing overpayment and ensuring efficient use of public funds.

Public Impact

Inmates within the Federal Bureau of Prisons will receive necessary pharmaceutical supplies. The contract ensures the continuity of healthcare services for the federal prison population. Geographic impact is nationwide, covering facilities managed by the Bureau of Prisons. Workforce implications are primarily within McKesson's distribution and logistics network.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in the pharmaceutical market not fully mitigated by fixed price.
Dependence on a single large supplier could pose a risk if supply chain issues arise.

Positive Signals

Award to a large, established supplier like McKesson suggests reliability in delivery.
Firm-fixed-price contract provides cost certainty for the duration of the order.
Full and open competition indicates a robust market and potential for future competitive pricing.

Sector Analysis

The pharmaceutical preparation manufacturing sector is a critical component of the healthcare industry, characterized by high regulatory standards and complex supply chains. Federal agencies, particularly those managing large populations like the Bureau of Prisons, are significant consumers of these products. Spending in this area is driven by healthcare needs and public health initiatives. Comparable spending benchmarks would involve analyzing other large federal contracts for pharmaceutical distribution to correctional facilities or similar institutions.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of pharmaceutical distribution, large prime contractors like McKesson typically handle these orders. There is no explicit information on subcontracting plans for small businesses within this specific delivery order, but McKesson's broader operations may involve small business suppliers.

Oversight & Accountability

Oversight for this contract would fall under the Department of Justice's Bureau of Prisons procurement and quality assurance divisions. Accountability is maintained through contract terms, performance monitoring, and the firm-fixed-price structure. Transparency is facilitated by the contract award notice, though detailed performance metrics are not publicly available.

Related Government Programs

Federal Prison System Pharmaceutical Contracts
Bureau of Prisons Medical Supplies
Department of Justice Healthcare Procurement
Pharmaceutical Distribution Services

Risk Flags

Supply Chain Vulnerability
Price Volatility Risk
Dependence on Single Supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $921,094.63 to MCKESSON CORPORATION. FY 2026 NON-CONTROLLED PHARMACEUTICALS OCT. 2025 - JANUARY 30, 2026

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 $921,094.63.

What is the period of performance?

Start: 2025-10-01. End: 2026-09-30.

What is McKesson Corporation's track record with federal pharmaceutical contracts?

McKesson Corporation is a major pharmaceutical distributor and has a long history of contracting with federal agencies, including the Department of Defense, Department of Veterans Affairs, and the Department of Justice. They are a frequent awardee of large-scale contracts for pharmaceuticals and medical supplies due to their extensive distribution network and established supply chain. Their track record generally indicates reliability in fulfilling large orders, though like any large contractor, they may have faced specific performance issues or pricing disputes on individual contracts over time. Reviewing specific past performance evaluations and contract histories would provide a more granular understanding of their performance trends relevant to federal healthcare procurement.

How does the value of this contract compare to similar federal pharmaceutical contracts?

The value of this specific delivery order, approximately $921,000 for a 12-month period, is relatively modest when compared to the total annual pharmaceutical spending for the Federal Bureau of Prisons or other large federal healthcare systems like the VA. For instance, the VA's annual pharmaceutical budget runs into billions of dollars. However, for a single delivery order to a specific region or set of facilities, this amount is substantial. To provide a precise comparison, one would need to identify similar contracts for pharmaceutical preparations awarded to correctional facilities or institutions of comparable size and patient population, looking at both the total value and the per-unit costs for common medications.

What are the primary risks associated with this contract?

The primary risks associated with this contract are related to supply chain disruptions and potential price volatility. Although McKesson is a large and established supplier, unforeseen events such as natural disasters, manufacturing issues, or global health crises can impact the availability and cost of pharmaceuticals. The firm-fixed-price nature of the contract offers cost certainty for the government, but it means that McKesson absorbs any cost increases, which could incentivize them to seek efficiencies that might indirectly affect service levels if not carefully monitored. Additionally, while competition was full and open, reliance on a single awardee for this specific order means the Bureau of Prisons is dependent on McKesson's performance and ability to deliver.

How effective is full and open competition in ensuring value for pharmaceutical contracts?

Full and open competition is generally considered the most effective method for ensuring value in federal contracting, including for pharmaceuticals. It allows a wide range of qualified vendors to submit bids, fostering a competitive environment that drives down prices and encourages innovation. For pharmaceutical contracts, this means the government can solicit bids from multiple distributors and manufacturers, potentially securing better pricing and terms. The effectiveness is maximized when the solicitation clearly defines requirements and evaluation criteria, and when the government has robust market research capabilities to understand pricing benchmarks. However, the complexity of pharmaceutical sourcing and the consolidation within the distribution market can sometimes limit the number of truly competitive bids received.

What is the historical spending trend for pharmaceuticals by the Federal Prison System?

Historical spending on pharmaceuticals by the Federal Prison System (FPS) has generally trended upwards over the past decade, mirroring broader trends in healthcare costs and an aging inmate population requiring more complex medical care. While specific figures fluctuate year-to-year based on appropriations, contract awards, and formulary changes, the overall demand for medications within correctional facilities remains consistently high. Factors influencing spending include the prevalence of chronic diseases among inmates, the cost of new and existing medications, and the efficiency of procurement processes. Analyzing detailed historical data from the FPS and the Department of Justice would reveal specific spending patterns, major contract vehicles, and the impact of policy changes on overall pharmaceutical expenditures.

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: $921,095

Exercised Options: $921,095

Current Obligation: $921,095

Actual Outlays: $240,467

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