VA awards $279.5M in FY21 for kidney dialysis centers, with Davita Inc. as primary contractor

Contract Overview

Contract Amount: $279,488,672 ($279.5M)

Contractor: Davita Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-10-01

End Date: 2021-09-30

Contract Duration: 364 days

Daily Burn Rate: $767.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: FY21 FSC TOTALS

Place of Performance

Location: DENVER, DENVER County, COLORADO, 80202

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $279.5 million to DAVITA INC. for work described as: EXPRESS REPORT: FY21 FSC TOTALS Key points: 1. Contract value represents a significant portion of federal spending on kidney dialysis services. 2. Full and open competition was utilized, suggesting a potentially competitive bidding process. 3. The contract's fixed-price nature provides cost certainty for the government. 4. Performance period aligns with the fiscal year, indicating timely service delivery. 5. The primary contractor, Davita Inc., is a major player in the dialysis market. 6. This award highlights the ongoing need for essential healthcare services within the VA system.

Value Assessment

Rating: good

The total award of $279.5 million for kidney dialysis centers in FY21 is substantial. Benchmarking against similar contracts for dialysis services is crucial to assess value for money. Given the fixed-price structure, the government has a degree of cost certainty, but the per-unit cost effectiveness would depend on the volume of services rendered and the negotiated rates. Without specific per-unit data or comparisons to other VA facilities or private sector benchmarks, a definitive value assessment is challenging, but the scale suggests a significant investment in patient care.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, which can lead to better pricing and service offerings for the government. The number of bidders is not specified, but the use of full and open competition suggests a deliberate effort to maximize market participation and identify the most advantageous offer.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of securing services at competitive prices, preventing potential overcharges that might arise from less competitive procurement methods.

Public Impact

Veterans requiring kidney dialysis services are the primary beneficiaries, receiving essential medical treatment. The contract ensures the availability of critical healthcare services for veterans nationwide. Geographic impact is likely widespread, covering areas where VA facilities require dialysis support. The contract supports a healthcare workforce, including medical professionals and support staff, involved in dialysis treatment. This spending contributes to the operational capacity of VA healthcare facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for contractor lock-in if Davita Inc. is the dominant provider in key regions.
Reliance on a single large contractor could limit future competition if market dynamics shift.
Ensuring consistent quality of care across all contracted facilities requires robust oversight.

Positive Signals

Full and open competition suggests a healthy initial bidding environment.
Fixed-price contract provides budget predictability.
The scale of the award indicates a commitment to meeting significant veteran healthcare needs.
Contract aligns with VA's mission to provide comprehensive healthcare to its beneficiaries.

Sector Analysis

The healthcare sector, specifically medical equipment and services, is characterized by significant federal spending, particularly within the Department of Veterans Affairs. Kidney dialysis centers are a critical component of healthcare infrastructure, addressing a growing need among patient populations. Federal spending in this area is influenced by veteran demographics, healthcare policy, and the availability of specialized medical services. Comparable spending benchmarks would involve analyzing other large-scale contracts for similar medical services across federal agencies or within the broader healthcare industry.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. As a large-scale award likely dominated by a major provider, the primary impact on small businesses would be through potential subcontracting opportunities. However, without explicit subcontracting goals or data, it's difficult to assess the extent of small business participation. The focus appears to be on securing comprehensive dialysis services, which may favor larger, established entities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures would be embedded in the contract terms, including performance standards, reporting requirements, and payment schedules tied to service delivery. Transparency is facilitated through contract award databases, but detailed operational oversight and quality assurance would be managed internally by the VA. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

VA Medical Care Programs
Federal Health Services
Medicare/Medicaid Services (for comparison)
Other Federal Healthcare Contracts

Risk Flags

Potential for contractor performance issues impacting patient care.
Risk of cost escalation in future contract renewals if competition diminishes.
Ensuring consistent quality of care across multiple facilities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $279.5 million to DAVITA INC.. EXPRESS REPORT: FY21 FSC TOTALS

Who is the contractor on this award?

The obligated recipient is DAVITA 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 $279.5 million.

What is the period of performance?

Start: 2020-10-01. End: 2021-09-30.

What is Davita Inc.'s track record with the VA and other federal agencies for providing dialysis services?

Davita Inc. is a major provider of dialysis services and has a significant history of contracting with the Department of Veterans Affairs (VA) and other federal entities. Their track record typically involves managing numerous dialysis centers and providing care to large patient populations. While specific performance metrics for this particular $279.5 million award are not detailed here, Davita's broader federal contracting history can be reviewed through public databases like USASpending.gov. This history often includes information on past performance, any disputes or contract modifications, and the scope of services previously rendered. Generally, large contractors like Davita have established processes for compliance and service delivery, but ongoing monitoring by the contracting agency is essential to ensure consistent quality and adherence to contract terms.

How does the per-unit cost of dialysis services under this contract compare to national averages or other VA facilities?

The provided data does not include specific per-unit cost information (e.g., cost per dialysis session) for this $279.5 million award, making a direct comparison difficult. To assess value for money, one would need to analyze the negotiated rates for various dialysis services against national averages for both private sector providers and other VA facilities. Factors influencing per-unit costs include the type of dialysis (hemodialysis, peritoneal dialysis), the duration of treatment, and the specific medical support required. Without these granular details, it's challenging to benchmark the cost-effectiveness. However, the fact that the contract was awarded under full and open competition suggests that the VA aimed to secure competitive pricing. Further analysis would require access to the contract's detailed pricing structure and relevant market data.

What are the primary risks associated with a large, single-contractor award for essential services like kidney dialysis?

A significant risk associated with awarding a large contract for essential services like kidney dialysis to a single primary contractor, such as Davita Inc. in this case, is the potential for over-reliance and reduced leverage. If Davita Inc. becomes the dominant provider, it could limit future competition and potentially lead to price increases or less favorable terms in subsequent contract renewals. Another risk is service disruption; any operational issues or quality control failures by the contractor could have a substantial impact on a large number of veterans requiring continuous care. Furthermore, ensuring consistent quality and adherence to VA standards across all contracted facilities requires robust oversight. Finally, dependence on one large entity might reduce the VA's flexibility in adapting to new technologies or treatment modalities if the contractor is slow to adopt them.

What is the historical spending trend for kidney dialysis centers within the VA over the past five fiscal years?

Historical spending data for kidney dialysis centers within the VA is crucial for understanding trends and the significance of the FY21 award. While the provided data focuses solely on the FY21 award to Davita Inc., a comprehensive analysis would involve examining contract awards for kidney dialysis services across multiple fiscal years (e.g., FY17-FY21). This would reveal whether spending has been increasing, decreasing, or remaining stable, and identify the primary contractors involved during those periods. Factors such as changes in veteran population demographics, advancements in dialysis technology, and shifts in healthcare policy could influence these spending patterns. Understanding this historical context helps in evaluating whether the $279.5 million FY21 award represents a typical investment, a significant increase, or a decrease in federal resources allocated to this critical service.

How does the contract's fixed-price structure influence the government's ability to manage costs and ensure value for money?

The firm fixed-price (FFP) contract structure for these kidney dialysis services provides the government with significant cost certainty. Under an FFP contract, the contractor, Davita Inc., assumes the risk of cost overruns, and the total price is not subject to adjustment based on the contractor's cost experience. This means the VA knows the exact amount it will pay for the services outlined in the contract, simplifying budget management and financial planning. For taxpayers, this structure is generally favorable as it prevents unexpected increases in expenditure. However, the value for money is determined by the initial negotiation of the fixed price; if the price was set too high during the competitive bidding process, the government might still overpay, even with cost certainty. Effective price negotiation and robust performance monitoring are therefore critical to ensure value under an FFP arrangement.

Industry Classification

NAICS: Health Care and Social Assistance › Outpatient Care Centers › Kidney Dialysis Centers

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

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: 2000 16TH ST, DENVER, CO, 80202

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

Financial Breakdown

Contract Ceiling: $279,488,672

Exercised Options: $279,488,672

Current Obligation: $279,488,672

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0018

IDV Type: IDC

Timeline