VA awards $206M for kidney dialysis centers to DaVita Inc. in a sole-source contract

Contract Overview

Contract Amount: $205,913,750 ($205.9M)

Contractor: Davita Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2024-12-31

Contract Duration: 91 days

Daily Burn Rate: $2.3M/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

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

Place of Performance

Location: DENVER, DENVER County, COLORADO, 80202

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $205.9 million to DAVITA INC. for work described as: EXPRESS REPORT: FY 25 1ST QUARTER NDSC - DAVITA Key points: 1. Contract awarded to a single provider, raising questions about price competitiveness. 2. Focus on essential healthcare services for veterans highlights critical program needs. 3. Short performance period suggests potential for re-competition or contract adjustments. 4. Geographic concentration in Colorado may indicate regional service delivery focus. 5. Firm fixed-price structure offers cost certainty but limits flexibility for scope changes.

Value Assessment

Rating: fair

The contract value of $206 million for a 3-month period is substantial, averaging over $68 million per month. Benchmarking this against similar kidney dialysis contracts is challenging without more specific service details and geographic scope. However, the lack of competition suggests that the VA may not have achieved the best possible pricing. The firm fixed-price nature provides predictability but could lead to overpayment if actual service utilization is lower than anticipated.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. The Department of Veterans Affairs likely justified this approach due to specific circumstances, such as the urgency of the need or the unique capabilities of DaVita Inc. The absence of a competitive bidding process means that taxpayers did not benefit from potential price reductions that could arise from market competition.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure lower prices, potentially resulting in higher costs for taxpayers.

Public Impact

Veterans requiring kidney dialysis services in the Colorado region will receive essential medical care. Ensures continuity of care for a vulnerable patient population. Supports the operational capacity of DaVita Inc. to provide these critical services. Maintains employment for healthcare professionals involved in dialysis treatment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Short contract duration may indicate a stop-gap measure or upcoming re-evaluation.
Concentration of award in a single geographic area might not reflect broader national needs.

Positive Signals

Ensures critical healthcare services are delivered to veterans.
Firm fixed-price contract provides budget certainty for the VA.
DaVita Inc. is an established provider in the dialysis sector.

Sector Analysis

The healthcare sector, specifically outpatient care centers (NAICS 621492), is a significant area of federal spending, particularly for agencies like the VA. Kidney dialysis is a vital, ongoing medical necessity for many individuals. Federal spending in this area is driven by the need to provide comprehensive healthcare to eligible beneficiaries. Benchmarking against other dialysis contracts would require detailed analysis of service levels, patient volumes, and geographic coverage.

Small Business Impact

This contract was awarded directly to DaVita Inc. and does not appear to include specific small business set-aside provisions. There is no indication of subcontracting requirements for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though DaVita itself may engage small businesses in its broader operations.

Oversight & Accountability

Oversight for this contract would fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, requiring DaVita to deliver services as agreed. Transparency is limited by the sole-source nature of the award, but contract details should be publicly available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Veterans Affairs Medical Services
Outpatient Kidney Dialysis Services
Federal Healthcare Contracts

Risk Flags

Sole-source award
High contract value for short duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $205.9 million to DAVITA INC.. EXPRESS REPORT: FY 25 1ST QUARTER NDSC - DAVITA

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 $205.9 million.

What is the period of performance?

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

What is DaVita Inc.'s track record with the Department of Veterans Affairs and other federal agencies?

DaVita Inc. has a significant history of contracting with the Department of Veterans Affairs (VA) and other federal entities for kidney dialysis services. Publicly available data indicates numerous past awards, suggesting a long-standing relationship and established capability. While specific performance metrics for all past contracts are not detailed here, the continued awards imply a generally satisfactory performance history. Analyzing past contract values, durations, and any reported performance issues or awards would provide a more comprehensive view of their track record. It's important to note that sole-source awards, like this one, do not necessarily reflect superior past performance but rather a specific contracting decision.

How does the per-patient cost of this contract compare to other VA dialysis contracts or Medicare rates?

Determining the precise per-patient cost for this $206 million contract is difficult without knowing the exact number of patients served and the duration of their treatment within the specified period. The contract is for kidney dialysis centers, implying a range of services. However, if we consider the contract value ($206,059,137.03) over its 91-day duration, it suggests a very high operational cost. To benchmark effectively, one would need to compare the average cost per dialysis session or per patient per month against similar VA contracts in other regions, as well as against national Medicare reimbursement rates for dialysis services. Given the sole-source nature, it is plausible that this rate may be higher than what could be achieved through a competitive process.

What are the specific risks associated with a sole-source award for essential healthcare services?

The primary risk associated with a sole-source award for essential healthcare services like kidney dialysis is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may not secure the most cost-effective solution. This can lead to inefficient use of taxpayer funds. Additionally, sole-source awards can sometimes indicate a lack of market readiness or a failure in the government's acquisition planning process to identify multiple capable vendors. For essential services, this also carries a risk of service disruption if the sole provider faces operational issues, as there are no immediate alternative providers secured through a competitive process.

What is the expected effectiveness of DaVita Inc. in delivering these dialysis services based on historical performance?

DaVita Inc. is a large, established provider of kidney dialysis services with a substantial footprint across the United States. Their historical performance, evidenced by numerous contracts with the VA and other healthcare providers, suggests a capacity to deliver these services effectively. They operate a network of dialysis centers and have experience managing patient care, staffing, and regulatory compliance. While specific effectiveness metrics for this particular contract are not yet available, their long-standing presence in the market and continued awards indicate a generally reliable performance. However, effectiveness can vary by location and specific contract terms, and ongoing monitoring by the VA would be crucial.

How does the $206 million award for a 3-month period compare to historical spending on kidney dialysis by the VA?

This award of approximately $206 million for a 3-month period (October 1, 2024 - December 31, 2024) represents a significant quarterly expenditure for kidney dialysis services. Annualized, this would equate to roughly $824 million. Historical spending data for the VA's kidney dialysis programs would be necessary for a direct comparison. However, given the scale of this single award, it suggests either a substantial increase in demand, a consolidation of services under a single provider, or a significant price increase compared to previous periods or other contract vehicles. Without historical context, it's difficult to definitively state if this represents a trend or an anomaly.

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

Address: 2000, 16TH STREET, 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: $205,913,750

Exercised Options: $205,913,750

Current Obligation: $205,913,750

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10G24D0093

IDV Type: IDC

Timeline