VA awards $19.18M for kidney dialysis centers, a sole-source contract with a 29-day duration

Contract Overview

Contract Amount: $19,178,069 ($19.2M)

Contractor: American Renal Associates LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-11-01

End Date: 2025-11-30

Contract Duration: 29 days

Daily Burn Rate: $661.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: FY 26 NOVEMBER NDSC EXPRESS REPORT

Place of Performance

Location: BEVERLY, ESSEX County, MASSACHUSETTS, 01915

State: Massachusetts Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $19.2 million to AMERICAN RENAL ASSOCIATES LLC for work described as: EXPRESS REPORT: FY 26 NOVEMBER NDSC EXPRESS REPORT Key points: 1. The contract's short duration suggests a potential need for immediate service continuity. 2. Sole-source awards warrant scrutiny to ensure fair pricing and prevent market distortion. 3. The fixed-price contract type offers cost certainty for the government. 4. The award value of $19.18M for a 29-day period indicates a high per-diem cost. 5. The absence of small business set-asides or subcontracting plans needs further investigation. 6. The contract is for kidney dialysis centers, a critical healthcare service.

Value Assessment

Rating: questionable

The contract value of $19.18 million for a 29-day period equates to approximately $661,313 per day. This daily rate is exceptionally high and warrants a detailed comparison with similar dialysis services procured by the VA or other federal agencies. Without a competitive bidding process, it is difficult to ascertain if this represents a fair market price or if taxpayers are overpaying for the services rendered. The lack of transparency inherent in a sole-source award makes value assessment challenging.

Cost Per Unit: $661,313 per day (estimated)

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Veterans Affairs did not solicit bids from multiple vendors. While sole-source awards can be justified in specific circumstances, such as urgent needs or when only one vendor possesses the required capabilities, they limit price discovery and competition. The absence of a competitive process raises concerns about whether the government secured the best possible price and terms for these essential dialysis services.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as they bypass the competitive pressures that typically drive down prices. This lack of competition means the government may not be benefiting from the most cost-effective solutions available in the market.

Public Impact

Veterans requiring kidney dialysis services in Massachusetts will benefit from this contract. The contract ensures the continued provision of essential life-sustaining dialysis treatments. The geographic impact is focused on Massachusetts, where the services will be delivered. The contract supports healthcare professionals and support staff employed by American Renal Associates LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High daily cost raises concerns about potential overpayment.
Sole-source award limits transparency and competitive pricing.
Short contract duration may indicate a stop-gap measure or an inability to secure longer-term competitive bids.
Lack of small business participation noted.

Positive Signals

Ensures continuity of critical healthcare services for veterans.
Firm fixed-price contract provides cost certainty.
Awarded to a known provider of dialysis services.

Sector Analysis

The healthcare sector, specifically the provision of specialized medical services like kidney dialysis, is a significant area of federal spending. The Centers for Medicare & Medicaid Services (CMS) heavily influences pricing and standards in this sector. Federal agencies like the VA often procure these services to meet the healthcare needs of specific populations, such as veterans. Benchmarking this contract's value would involve comparing its daily rate to national averages for dialysis treatment and other government contracts for similar services, considering regional cost variations.

Small Business Impact

This contract does not appear to include any specific provisions for small business set-asides or subcontracting. The award was made to American Renal Associates LLC, a large provider. This suggests that opportunities for small businesses to participate in delivering these critical dialysis services through subcontracting are likely limited. Further review would be needed to confirm if any small business utilization plans were considered or required.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. Given the sole-source nature and the critical health service provided, regular performance reviews and financial audits would be expected. The VA's Office of Inspector General (OIG) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this award. Transparency is limited due to the sole-source justification.

Related Government Programs

VA Medical Care Programs
End-Stage Renal Disease (ESRD) Treatment Centers
Federal Supply Schedule (FSS) Healthcare Contracts
Medicare/Medicaid Reimbursement Rates for Dialysis

Risk Flags

High Per-Unit Cost
Sole-Source Award
Lack of Competition
Short Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $19.2 million to AMERICAN RENAL ASSOCIATES LLC. EXPRESS REPORT: FY 26 NOVEMBER NDSC EXPRESS REPORT

Who is the contractor on this award?

The obligated recipient is AMERICAN RENAL ASSOCIATES LLC.

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 $19.2 million.

What is the period of performance?

Start: 2025-11-01. End: 2025-11-30.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. The specific justification for this sole-source determination is not detailed in the provided data. Typically, sole-source awards are justified when only one responsible source is available or capable of meeting the government's needs, or in cases of urgent and compelling need. For a service like kidney dialysis, potential justifications could include a unique existing relationship, specialized equipment or facilities only available from one provider, or an immediate, unforeseen need to maintain service continuity for veterans where a full competitive process would be impractical or cause unacceptable delays. A thorough review of the contract file would be necessary to ascertain the official justification.

How does the daily cost of $661,313 compare to market rates for kidney dialysis?

The estimated daily cost of $661,313 derived from the total award ($19,178,068.70) divided by the contract duration (29 days) is exceptionally high when compared to typical market rates for kidney dialysis services. While costs can vary significantly based on location, type of dialysis (hemodialysis vs. peritoneal dialysis), patient acuity, and included services (e.g., physician oversight, supplies), daily rates for dialysis centers generally fall within a much lower range. For instance, Medicare reimbursement rates for dialysis treatments are substantially less per session. This high daily figure suggests potential overpricing, especially given the sole-source nature of the award, which limits competitive benchmarking. Further investigation into the specific services included and a comparison with other VA or government contracts for similar services are crucial.

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

Sole-source contracts for essential healthcare services like kidney dialysis present several risks. Firstly, the lack of competition can lead to inflated prices, meaning taxpayers may pay more than necessary. Secondly, it reduces the incentive for the awarded contractor to innovate or improve service quality, as there is no direct competitive pressure. Thirdly, it can create a perception of unfairness or cronyism, even if the award is justified. For the government, it also limits the ability to explore alternative providers or service models that might be more efficient or effective. Finally, if the sole-source provider experiences operational issues, the government has limited recourse to quickly transition services to another provider without significant disruption.

What is the historical spending pattern for kidney dialysis services by the Department of Veterans Affairs?

Historical spending data for kidney dialysis services by the Department of Veterans Affairs (VA) would typically show a significant and consistent investment due to the high prevalence of kidney disease among veterans. The VA operates numerous medical centers and clinics that provide dialysis, often through a mix of in-house services and contracted care. Spending in this category is generally driven by the number of veterans requiring treatment, the complexity of their conditions, and the cost of providing or contracting for these services. Analyzing past VA contracts for dialysis, including their duration, value, and whether they were competitively bid or sole-source, would provide context for the current award. A trend of increasing reliance on sole-source awards or consistently high per-unit costs in this area could indicate systemic issues.

What is the track record of American Renal Associates LLC in providing government contracts?

American Renal Associates LLC (ARA) is a major provider of outpatient dialysis services in the United States. While the provided data focuses on a single VA contract, ARA has a history of engaging with government healthcare programs, including Medicare and Medicaid, and potentially other federal agencies. Information regarding ARA's performance on past government contracts, including any awards, penalties, or significant issues, would be crucial for a comprehensive assessment. Their track record would typically be evaluated based on factors such as contract compliance, quality of care, patient outcomes, and adherence to regulatory requirements. A review of federal procurement databases and contract award histories could reveal patterns in their government contracting activities.

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: 500 CUMMINGS CTR STE 6550, BEVERLY, MA, 01915

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

Financial Breakdown

Contract Ceiling: $19,178,069

Exercised Options: $19,178,069

Current Obligation: $19,178,069

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10G24D0064

IDV Type: IDC

Timeline