VA awards $217.7M for kidney dialysis centers, with Fresenius Medical Care Holdings Inc. as the sole provider

Contract Overview

Contract Amount: $217,668,253 ($217.7M)

Contractor: Fresenius Medical Care Holdings Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2024-12-31

Contract Duration: 91 days

Daily Burn Rate: $2.4M/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: FY 25 1ST QUARTER NDSC - FRESENIUS

Place of Performance

Location: WALTHAM, MIDDLESEX County, MASSACHUSETTS, 02451

State: Massachusetts Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $217.7 million to FRESENIUS MEDICAL CARE HOLDINGS INC for work described as: EXPRESS REPORT: FY 25 1ST QUARTER NDSC - FRESENIUS Key points: 1. Contract awarded on a firm-fixed-price basis, indicating predictable costs for the government. 2. The contract was not competed, raising questions about potential price efficiencies and market exploration. 3. Performance period is short (91 days), suggesting this may be a bridge or task order against a larger vehicle. 4. The award is a delivery order under a Multiple Award Schedule (MAS), which typically involves pre-negotiated pricing. 5. The specific NAICS code (621492) points to a specialized healthcare service, limiting the pool of potential providers. 6. No small business set-aside was utilized, which is common for highly specialized services.

Value Assessment

Rating: fair

The contract value of $217.7 million for a 91-day period is substantial, averaging over $2.3 million per day. Without a competitive process, it is difficult to benchmark the value for money. As a delivery order under a MAS, pricing is expected to be pre-negotiated, but the lack of competition for this specific order means there's no current market validation. Further analysis would require understanding the underlying MAS contract's pricing structure and comparing it to other federal or commercial dialysis contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a delivery order under a Multiple Award Schedule (MAS) without further competition. While MAS contracts themselves are competed, individual delivery orders can be sole-sourced if they meet specific criteria, such as being issued to the incumbent or if only one vendor can fulfill the requirement. The lack of competition for this specific order means the VA did not solicit bids from other qualified kidney dialysis centers.

Taxpayer Impact: The absence of competition for this significant award means taxpayers may not be benefiting from the lowest possible price that could have been achieved through a competitive bidding process.

Public Impact

Veterans requiring kidney dialysis services will continue to receive essential medical care. The services are delivered in Massachusetts, directly impacting veterans in that geographic region. The contract supports the operation of kidney dialysis centers, ensuring continuity of care for patients. This award sustains employment within the healthcare sector, particularly for staff at Fresenius Medical Care facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a large dollar award raises concerns about potential overpayment and missed opportunities for cost savings.
The short performance period could indicate a stop-gap measure, potentially leading to future uncompeted renewals or higher costs if a permanent solution isn't secured competitively.

Positive Signals

Awarded under a pre-competed MAS vehicle, suggesting some level of initial vetting and pricing negotiation.
Firm-fixed-price contract type provides cost certainty for the government over the performance period.

Sector Analysis

The healthcare services sector, particularly specialized medical facilities like kidney dialysis centers, represents a significant area of federal spending. The NAICS code 621492 specifically targets these outpatient care facilities. Federal agencies, especially the Department of Veterans Affairs, rely on such services to provide comprehensive care to beneficiaries. Benchmarking this contract would involve comparing its per-diem or per-treatment costs against similar contracts awarded by the VA or other agencies, as well as against commercial rates for dialysis services.

Small Business Impact

The contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses. Given the specialized nature of kidney dialysis services and the large scale of the award, it is likely that larger, established healthcare providers are best positioned to meet the requirements. This suggests limited direct impact on the small business ecosystem for this particular contract, though the prime contractor may engage small businesses in other capacities not detailed here.

Oversight & Accountability

As a delivery order under a MAS, oversight is likely managed through the contracting officer's representative (COR) responsible for monitoring performance and ensuring compliance with the contract terms. The Department of Veterans Affairs has an Office of Inspector General that could investigate any potential fraud, waste, or abuse related to this contract. Transparency is generally facilitated through contract databases like FPDS, though detailed performance metrics are often not publicly disclosed.

Related Government Programs

Department of Veterans Affairs Medical Care Programs
Federal Supply Schedule (FSS) Contracts
Outpatient Dialysis Services

Risk Flags

Non-competitive award
High dollar value for short duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $217.7 million to FRESENIUS MEDICAL CARE HOLDINGS INC. EXPRESS REPORT: FY 25 1ST QUARTER NDSC - FRESENIUS

Who is the contractor on this award?

The obligated recipient is FRESENIUS MEDICAL CARE HOLDINGS 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 $217.7 million.

What is the period of performance?

Start: 2024-10-01. End: 2024-12-31.

What is the historical spending with Fresenius Medical Care Holdings Inc. by the Department of Veterans Affairs?

Analyzing historical spending data for Fresenius Medical Care Holdings Inc. with the Department of Veterans Affairs (VA) is crucial for understanding the long-term relationship and potential reliance. While specific aggregate data for this vendor across all VA contracts isn't provided in this express report, a deeper dive into contract databases would reveal the total value and duration of previous awards. This includes examining if similar large, non-competed awards have been made in the past, and whether these were for dialysis services or other healthcare provisions. Understanding this history can shed light on the VA's procurement patterns with this contractor and identify any trends in sole-source awards or contract renewals, which could indicate a strategic partnership or a lack of market exploration over time.

How does the per-day cost of this contract compare to other VA dialysis contracts?

To assess the value for money, a comparison of the per-day cost of this contract against similar Department of Veterans Affairs (VA) dialysis contracts is essential. This contract's value is approximately $217.7 million over 91 days, equating to roughly $2.39 million per day. A thorough analysis would involve identifying other VA contracts for kidney dialysis centers, particularly those awarded competitively or to different providers, within a similar timeframe and geographic region. Benchmarking would focus on the daily operational cost or per-patient cost, if available. If this contract's per-day rate is significantly higher than comparable contracts, it would suggest potential overpricing due to the lack of competition. Conversely, if it aligns with or is lower than benchmarks, it might indicate that the pre-negotiated MAS pricing is competitive, despite the absence of a specific bidding process for this delivery order.

What are the risks associated with awarding a large contract like this without competition?

Awarding a contract valued at $217.7 million without competition presents several significant risks. Primarily, there is a heightened risk of the government paying a non-competitive price, potentially exceeding fair market value, as there is no direct comparison from other bidders to ensure cost-effectiveness. This lack of competition can also stifle innovation and reduce the incentive for the contractor to offer the most efficient or cost-saving solutions. Furthermore, it limits the government's ability to explore alternative service providers or delivery models that might offer better value or specialized capabilities. Over time, a pattern of non-competed awards can lead to vendor lock-in and reduce overall market dynamism, potentially impacting the government's long-term procurement strategy and budget.

What is the expected effectiveness of Fresenius Medical Care Holdings Inc. in delivering kidney dialysis services?

The expected effectiveness of Fresenius Medical Care Holdings Inc. in delivering kidney dialysis services is generally inferred from their established presence in the healthcare market and their role as a provider under federal contracts. As a large, specialized healthcare company, Fresenius typically possesses the infrastructure, trained personnel, and operational protocols necessary to provide these critical services. The Department of Veterans Affairs' decision to award this contract, even without competition, suggests a level of confidence in Fresenius's capability to meet the service requirements. However, without specific performance metrics from this contract or historical data on their performance with the VA, a definitive assessment of effectiveness is limited. Ongoing monitoring by the COR and patient feedback would be key indicators of actual service delivery quality.

How does this contract fit into the VA's overall strategy for providing dialysis care to veterans?

This contract likely represents a component of the VA's broader strategy to ensure that veterans have access to necessary kidney dialysis services, particularly in specific geographic regions like Massachusetts. The VA often utilizes a mix of in-house facilities and contracted services to meet demand. Awarding a significant delivery order to a known provider like Fresenius Medical Care Holdings Inc. suggests a need for immediate or continued service provision that may not be fully met by existing VA-operated centers or other contracted options. The short duration (91 days) might indicate this is a bridge to a more permanent solution, a task order against a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, or a way to fulfill immediate capacity needs. Understanding its place requires examining the VA's network of dialysis providers and their long-term capacity planning.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Bio-Medical Applications of Missouri, Inc.

Address: 920 WINTER ST, WALTHAM, MA, 02451

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

Financial Breakdown

Contract Ceiling: $217,668,253

Exercised Options: $217,668,253

Current Obligation: $217,668,253

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10G24D0088

IDV Type: IDC

Timeline