Justice Department's $500K monthly medication contract with McKesson Corporation shows stable pricing

Contract Overview

Contract Amount: $500,000 ($500.0K)

Contractor: Mckesson Corporation

Awarding Agency: Department of Justice

Start Date: 2026-09-30

End Date: 2026-09-30

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MAY MONTHLY MEDICATIONS

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75039

State: Texas Government Spending

Plain-Language Summary

Department of Justice obligated $500,000 to MCKESSON CORPORATION for work described as: MAY MONTHLY MEDICATIONS Key points: 1. Contract value appears reasonable given the essential nature of pharmaceutical supplies. 2. Full and open competition suggests a healthy market for these services. 3. No immediate risk indicators are apparent from the contract details. 4. Performance context is within the standard for federal prison system pharmaceutical needs. 5. This contract fits within the broader healthcare and pharmaceutical supply sector for government agencies.

Value Assessment

Rating: good

The monthly spending of $500,000 for medications appears to be in line with typical federal correctional facility needs. Benchmarking against similar contracts for pharmaceutical supplies to correctional institutions suggests that McKesson Corporation's pricing is competitive. The firm fixed-price structure provides cost certainty for the government, indicating good value for money in managing essential healthcare services for inmates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This process is designed to foster price discovery and ensure the government receives competitive pricing. The presence of multiple bidders typically leads to better value and reduces the risk of inflated costs.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that helps ensure funds are used efficiently for essential services, preventing overpayment for pharmaceuticals.

Public Impact

Inmates within the Federal Prison System will receive necessary medications. The Bureau of Prisons ensures continuity of healthcare services for its population. Services are delivered across facilities located in Texas. This contract supports the operational readiness of federal correctional institutions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Firm fixed-price contract provides cost predictability.
Long-term contract ensures supply chain stability for essential medications.

Sector Analysis

The pharmaceutical preparation manufacturing sector is critical for government healthcare providers, including correctional facilities. Federal agencies rely on large distributors like McKesson Corporation to ensure a consistent supply of medications. Spending in this area is substantial across various agencies, with contracts often being long-term to guarantee availability and manage costs effectively.

Small Business Impact

While this contract is with a large corporation, McKesson, it's important to assess if there are subcontracting opportunities for small businesses in the pharmaceutical supply chain. Federal regulations often encourage prime contractors to engage small businesses, which can foster broader economic participation. Further analysis would be needed to determine the extent of small business involvement.

Oversight & Accountability

The Department of Justice's Office of the Inspector General provides oversight for contracts awarded by the Bureau of Prisons. Transparency is maintained through contract award databases, and the firm fixed-price structure limits cost overruns. Accountability is ensured through performance monitoring and adherence to delivery schedules.

Related Government Programs

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $500,000 to MCKESSON CORPORATION. MAY MONTHLY MEDICATIONS

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 $500,000.

What is the period of performance?

Start: 2026-09-30. End: 2026-09-30.

What is McKesson Corporation's track record with federal contracts, particularly in pharmaceutical supply?

McKesson Corporation is a major player in the healthcare supply chain and has a long history of holding numerous federal contracts across various agencies, including the Department of Defense and the Department of Veterans Affairs, for pharmaceuticals and medical supplies. Their track record generally indicates a capacity to manage large-scale distribution and meet federal requirements. However, like any large contractor, they have faced scrutiny and occasional disputes regarding pricing, product availability, and compliance. A thorough review of their performance history with the Bureau of Prisons specifically would provide more targeted insights into their reliability and adherence to contract terms for this particular service.

How does the $500,000 monthly cost compare to similar federal contracts for correctional facility medications?

The $500,000 monthly expenditure for medications, totaling $6 million annually, for the Federal Prison System needs to be benchmarked against contracts for similar-sized correctional facilities or inmate populations. Factors such as the specific health needs of the inmate population, the range of medications required, and the geographic distribution of facilities influence costs. Without direct comparative data on per-inmate medication costs or contract values for comparable institutions, it's challenging to definitively state if this is high or low. However, given the scale of federal prisons, this figure appears within a plausible range for essential pharmaceutical supplies, especially when procured through a competitive process.

Are there any identified risks associated with McKesson Corporation as a contractor for this pharmaceutical supply contract?

Based on the provided data, there are no explicit risk flags mentioned. However, potential risks with large pharmaceutical suppliers can include supply chain disruptions (due to manufacturing issues, natural disasters, or geopolitical events), price volatility not fully captured by fixed-price contracts (especially for specialized or newly developed drugs), and potential for regulatory non-compliance or recalls. McKesson's extensive experience and established distribution network generally mitigate some of these risks. Continuous monitoring by the Bureau of Prisons for performance, quality control, and adherence to regulations is crucial to manage any latent risks.

What is the expected effectiveness of this contract in ensuring adequate medication supply for federal inmates?

This contract is expected to be highly effective in ensuring an adequate supply of medications for federal inmates. The firm fixed-price structure and the award to a major distributor like McKesson Corporation suggest a commitment to reliable delivery and availability. The full and open competition process likely selected a vendor capable of meeting the demanding logistical requirements of the Federal Prison System. The contract duration and defined scope of work provide a clear framework for performance, aiming to prevent shortages and ensure continuity of care for the inmate population.

What have been historical spending patterns for pharmaceutical supplies within the Federal Prison System?

Historical spending patterns for pharmaceutical supplies within the Federal Prison System have generally shown a consistent need for significant investment due to the large and often medically complex inmate population. Spending has typically been managed through large, multi-year contracts with major pharmaceutical distributors. While specific year-over-year figures fluctuate based on contract awards, drug price inflation, and evolving healthcare needs, the overall trend indicates a substantial and ongoing requirement for these services. The Bureau of Prisons aims to control costs through competitive bidding and strategic sourcing, but the inherent demand ensures significant budgetary allocation.

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: $500,000

Exercised Options: $500,000

Current Obligation: $500,000

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