VA awards $5.56M for RT-LINAC system to Varian Medical Systems, Inc. for VAMC Los Angeles

Contract Overview

Contract Amount: $5,557,589 ($5.6M)

Contractor: Varian Medical Systems, Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-09-13

End Date: 2026-04-19

Contract Duration: 949 days

Daily Burn Rate: $5.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Healthcare

Official Description: MODALITY: RT-LINAC PURCHASE ORDER: 691B20028 STATION: VAMC LOS ANGELES, CA REQUIREMENT: SEP FY22 CONSOLIDATION EDGE BASE SYSTEM HD120 MLC

Place of Performance

Location: PALO ALTO, SANTA CLARA County, CALIFORNIA, 94304

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $5.6 million to VARIAN MEDICAL SYSTEMS, INC for work described as: MODALITY: RT-LINAC PURCHASE ORDER: 691B20028 STATION: VAMC LOS ANGELES, CA REQUIREMENT: SEP FY22 CONSOLIDATION EDGE BASE SYSTEM HD120 MLC Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract value of $5.56 million for an irradiation apparatus is within a typical range for such specialized medical equipment. 3. The fixed-price with economic price adjustment contract type aims to mitigate risks associated with fluctuating material costs. 4. Delivery is scheduled over a period of approximately 31 months, indicating a substantial implementation timeline. 5. The award to Varian Medical Systems, Inc. aligns with their established presence in the medical device manufacturing sector. 6. The North American Industry Classification System (NAICS) code 334517 points to the manufacturing of irradiation apparatus.

Value Assessment

Rating: good

The contract value of $5.56 million for an RT-LINAC system appears reasonable given the specialized nature of the equipment. Benchmarking against similar procurements for radiotherapy systems would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment (FPEPA) contract type is common for long-lead-time equipment, allowing for adjustments due to market fluctuations while maintaining a baseline cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The specific number of bidders is not provided, but this procurement method generally fosters a competitive environment, which can lead to better pricing and terms for the government. The VA's approach suggests a commitment to exploring the market for the best available solution.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for cost savings through a robust bidding process, ensuring that the government receives competitive pricing for essential medical equipment.

Public Impact

Veterans receiving care at the VAMC Los Angeles will benefit from access to advanced radiotherapy treatment. The RT-LINAC system will enhance the cancer treatment capabilities of the VAMC Los Angeles. The contract supports the Department of Veterans Affairs' mission to provide comprehensive healthcare services to veterans. The procurement indirectly supports jobs in the medical device manufacturing and installation sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if economic price adjustment clauses are heavily utilized without strict oversight.
Dependence on a single manufacturer for specialized equipment could pose long-term supply chain risks.
Ensuring timely delivery and installation within the specified timeframe is critical for patient care continuity.

Positive Signals

Award through full and open competition suggests a thorough market assessment and potential for competitive pricing.
The use of a fixed-price contract with economic price adjustment provides a balance between cost certainty and market volatility.
The contract specifies a clear delivery and installation period, allowing for project management and tracking.

Sector Analysis

The market for radiotherapy equipment, including RT-LINAC systems, is a specialized segment within the broader medical device industry. This sector is characterized by high research and development costs, stringent regulatory requirements, and a relatively small number of key manufacturers. Spending in this area is driven by the need for advanced cancer treatment technologies in healthcare facilities. Comparable spending benchmarks would typically involve analyzing procurements of similar LINAC systems by other federal agencies or large healthcare networks.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. As it is a specialized piece of medical equipment, it is likely that the primary manufacturers are large corporations. There is no explicit information on subcontracting plans with small businesses, but the nature of the product suggests that any subcontracting would likely be for support services rather than core manufacturing.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Department of Veterans Affairs (VA) contracting officers and program managers. The VA has established procurement regulations and oversight mechanisms to ensure compliance with contract terms and conditions. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Veterans Affairs Medical Equipment Procurement
Radiotherapy Equipment Purchases
Medical Imaging and Radiation Apparatus Manufacturing
Federal Healthcare IT and Equipment Contracts

Risk Flags

Potential for cost escalation due to economic price adjustment clauses.
Long lead time for delivery and installation could impact immediate patient needs.
Dependence on a single supplier for critical medical technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $5.6 million to VARIAN MEDICAL SYSTEMS, INC. MODALITY: RT-LINAC PURCHASE ORDER: 691B20028 STATION: VAMC LOS ANGELES, CA REQUIREMENT: SEP FY22 CONSOLIDATION EDGE BASE SYSTEM HD120 MLC

Who is the contractor on this award?

The obligated recipient is VARIAN MEDICAL SYSTEMS, INC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $5.6 million.

What is the period of performance?

Start: 2023-09-13. End: 2026-04-19.

What is the track record of Varian Medical Systems, Inc. in supplying similar RT-LINAC systems to the federal government?

Varian Medical Systems, Inc. is a well-established player in the radiation oncology market and has a history of supplying medical equipment, including linear accelerators, to various healthcare providers, including federal agencies. While specific details on past federal contracts for RT-LINAC systems are not provided in this data snippet, their market presence suggests experience with government procurement processes and compliance requirements. A deeper dive into federal procurement databases would reveal the extent and success of their previous federal awards, including performance history, delivery timeliness, and any reported issues. This information is crucial for assessing their reliability as a contractor for this significant award.

How does the awarded price of $5.56 million compare to market rates for similar RT-LINAC systems?

The awarded price of $5.56 million for an RT-LINAC system needs to be benchmarked against current market rates for comparable equipment. Factors influencing price include the specific model, included features (e.g., imaging capabilities, treatment planning software), warranty, installation, and training packages. Without detailed specifications of the 'EDGE BASE SYSTEM HD120 MLC' and current market data, a precise comparison is difficult. However, RT-LINAC systems are high-cost capital equipment, and prices can range significantly, often from several hundred thousand to over a million dollars, depending on sophistication. The VA's procurement process, especially under full and open competition, aims to secure competitive pricing, but a formal cost analysis or comparison with other recent federal or large institutional procurements would be necessary for a definitive value assessment.

What are the primary risks associated with a Fixed Price with Economic Price Adjustment (FPEPA) contract for this type of equipment?

The primary risks associated with an FPEPA contract for an RT-LINAC system revolve around potential cost increases due to economic factors. While the fixed-price component provides a baseline cost, the economic price adjustment (EPA) clause allows for modifications to the contract price based on fluctuations in specified economic indices, such as labor rates or material costs. The risk for the government lies in the potential for the EPA to significantly increase the total contract cost beyond initial projections, especially in periods of high inflation or supply chain disruptions. To mitigate this, the VA would need to carefully define the scope of the EPA, establish clear indices for adjustment, and implement robust oversight to ensure that any price increases are justified and directly linked to verifiable economic changes, rather than contractor inefficiencies.

What is the expected impact of this RT-LINAC system on the quality and availability of cancer treatment at VAMC Los Angeles?

The acquisition of a new RT-LINAC system is expected to significantly enhance the quality and availability of cancer treatment at the VAMC Los Angeles. RT-LINACs are the cornerstone of modern external beam radiation therapy, enabling precise targeting of tumors while minimizing damage to surrounding healthy tissues. This advanced technology can lead to improved treatment outcomes, reduced side effects, and potentially shorter treatment durations for veterans. By upgrading or expanding their radiotherapy capabilities, the VAMC can accommodate a larger patient load, reduce wait times for critical treatments, and offer more sophisticated treatment techniques, thereby improving the overall standard of care for cancer patients within the VA system.

How does this contract align with historical federal spending patterns for medical equipment, particularly radiotherapy devices?

This contract aligns with historical federal spending patterns, particularly within the Department of Veterans Affairs, which consistently invests in medical equipment to serve the veteran population. Spending on radiotherapy devices like RT-LINACs is a recurring necessity for healthcare providers aiming to offer comprehensive cancer care. Federal agencies, including the VA and Department of Defense, frequently procure such high-value medical technology. The approximate $5.56 million award is consistent with the substantial investment required for these sophisticated machines. Analyzing past VA budgets and procurement data for similar equipment would likely show a pattern of significant capital expenditures in this area to maintain and upgrade healthcare infrastructure, reflecting the ongoing need for advanced cancer treatment modalities.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Irradiation Apparatus Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 36A79723Q0001

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Altair Engineering Inc.

Address: 3100 HANSEN WAY, PALO ALTO, CA, 94304

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

Financial Breakdown

Contract Ceiling: $5,557,589

Exercised Options: $5,557,589

Current Obligation: $5,557,589

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36H79719D0014

IDV Type: IDC

Timeline