VA's January 2024 Medical Surgical Prime Vendor Spending Reached $24.7M with Medline Industries, LP

Contract Overview

Contract Amount: $24,745,286 ($24.7M)

Contractor: Medline Industries, LP

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-01-01

End Date: 2024-01-31

Contract Duration: 30 days

Daily Burn Rate: $824.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: MEDICAL SURGICAL PRIME VENDOR EXPENDITURES FOR THE MONTH OF JANUARY 2024

Place of Performance

Location: NORTHFIELD, COOK County, ILLINOIS, 60093

State: Illinois Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $24.7 million to MEDLINE INDUSTRIES, LP for work described as: EXPRESS REPORT: MEDICAL SURGICAL PRIME VENDOR EXPENDITURES FOR THE MONTH OF JANUARY 2024 Key points: 1. Analysis focuses on January 2024 expenditures for medical surgical supplies. 2. The contract vehicle is a prime vendor model, indicating broad supply chain management. 3. The specific NAICS code (339112) points to the manufacturing of surgical and medical instruments. 4. This expenditure represents a snapshot of a larger, ongoing contract. 5. The contract type is Firm Fixed Price, which generally offers cost certainty. 6. The geographic location of the vendor is Illinois.

Value Assessment

Rating: fair

The reported expenditure of $24.7 million for January 2024 represents a significant monthly outlay for medical surgical supplies. Benchmarking this against historical prime vendor spending for the VA or similar large federal healthcare providers would be necessary for a comprehensive value assessment. Without comparative data on the volume of goods or services procured, it is difficult to definitively assess value for money. The firm fixed price contract type suggests a degree of cost predictability, but the overall value is contingent on the negotiated rates and the efficiency of the supply chain.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source or potentially a limited competition award. Sole-source contracts can arise for various reasons, including the unique capabilities of a vendor or the urgency of the requirement. However, a lack of competition typically limits price discovery and may result in higher costs for the government compared to a fully competed contract. The absence of a competitive bidding process means that the VA did not benefit from multiple vendors proposing their best prices and terms.

Taxpayer Impact: For taxpayers, a sole-source award means that the government may not be achieving the most cost-effective pricing available in the market. This can lead to a less efficient use of public funds if competitive pressures are not present to drive down costs.

Public Impact

Veterans receiving medical care benefit from the timely availability of necessary surgical and medical instruments. The Department of Veterans Affairs (VA) is the primary beneficiary, ensuring its healthcare facilities are stocked. The services delivered include the procurement and distribution of a wide range of medical and surgical supplies. The geographic impact is likely nationwide, supporting VA medical centers and clinics across the country. Workforce implications include the logistics and administrative personnel involved in managing and fulfilling these supply orders.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
Reliance on a single vendor could create supply chain vulnerabilities.
Transparency in pricing and performance metrics is crucial for sole-source contracts.

Positive Signals

Firm Fixed Price contract offers cost certainty for this period.
Prime vendor model can streamline procurement and delivery of a broad range of supplies.
Established vendor relationship may ensure consistent availability of critical items.

Sector Analysis

The medical surgical supply industry is a significant segment of the healthcare market, characterized by a mix of large manufacturers and distributors. Prime vendor contracts, like this one, are common in federal healthcare procurement to manage the complex logistics of supplying a wide array of products to numerous facilities. The NAICS code 339112 specifically relates to the manufacturing of surgical and medical instruments, suggesting that Medline Industries, LP may be a manufacturer or a primary distributor with significant manufacturing ties. Benchmarking against similar prime vendor contracts within the VA or other agencies like the Department of Defense would provide further context on spending levels.

Small Business Impact

The provided data does not indicate whether this contract includes small business set-asides or subcontracting requirements. As a sole-source award to a large entity like Medline Industries, LP, the direct impact on small businesses through set-asides is unlikely. However, the prime vendor's own supply chain may involve small businesses as suppliers, though this is not explicitly detailed. Further investigation into subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures are usually embedded within the contract terms, including performance standards, delivery schedules, and quality requirements. Transparency is often enhanced through contract reporting mechanisms, although the level of detail available for sole-source contracts can vary. Inspector General jurisdiction would apply if any issues of fraud, waste, or abuse arise.

Related Government Programs

VA Medical Surgical Prime Vendor Program
Federal Supply Schedule (FSS) Contracts
Department of Defense Medical Supplies Procurement
General Services Administration (GSA) Schedules

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for supply chain disruption due to single vendor reliance.
Need for rigorous performance monitoring to ensure value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $24.7 million to MEDLINE INDUSTRIES, LP. EXPRESS REPORT: MEDICAL SURGICAL PRIME VENDOR EXPENDITURES FOR THE MONTH OF JANUARY 2024

Who is the contractor on this award?

The obligated recipient is MEDLINE INDUSTRIES, LP.

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 $24.7 million.

What is the period of performance?

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

What is the historical spending trend for this specific prime vendor contract with the VA?

To assess the historical spending trend, one would need to examine expenditure data for this contract over multiple fiscal years. This would involve querying federal procurement databases (like FPDS or USASpending.gov) for all contract actions awarded to Medline Industries, LP under the relevant contract vehicle for medical surgical prime vendor services. Analyzing this data would reveal if the $24.7 million expenditure in January 2024 is an anomaly, an increase, or consistent with past performance. It would also help identify any seasonality in spending or significant shifts in contract value over time, providing crucial context for evaluating current spending levels and forecasting future needs.

How does the January 2024 expenditure compare to the total annual spending for this contract in previous years?

Comparing the January 2024 expenditure of $24.7 million to the total annual spending in prior years requires accessing historical contract data. If, for example, the total annual spending in previous years averaged $200 million, then January's spending would represent approximately 12.35% of the annual total. This comparison helps determine if January was a particularly high-spending month or if current spending is on track with previous annual totals. A significant deviation could indicate changes in demand, contract scope, or pricing. Understanding this ratio is vital for budget planning and assessing the overall scale of the contract's financial activity.

What specific types of medical and surgical instruments are included under this prime vendor contract?

The NAICS code 339112 indicates the contract covers 'Surgical and Medical Instrument Manufacturing.' This broad category likely encompasses a vast array of products, including but not limited to surgical tools, diagnostic equipment, implants, catheters, syringes, and other disposable or reusable medical devices. A detailed breakdown would typically be found in the contract's statement of work or product catalog. Without this specific detail, it's challenging to pinpoint the exact nature of the $24.7 million expenditure, but it signifies a comprehensive supply of instruments essential for patient care within VA facilities.

What are the key performance indicators (KPIs) for this prime vendor contract, and how is Medline Industries, LP performing against them?

Key performance indicators for a medical surgical prime vendor contract typically include metrics such as on-time delivery rates, order fill rates, product quality, accuracy of shipments, and responsiveness to urgent requests. Performance against these KPIs is crucial for ensuring the VA healthcare system functions efficiently. To assess Medline Industries, LP's performance, one would need to review contract performance reports, quality assurance surveillance plan (QASP) data, and any documented feedback or corrective actions. A high-performing vendor ensures that medical facilities have the necessary supplies without interruption, directly impacting patient care.

Are there any known risks associated with Medline Industries, LP as a sole-source provider for these critical medical supplies?

As a sole-source provider, the primary risk is the lack of competitive pressure, which could lead to inflated prices or reduced incentives for innovation and efficiency. Another risk is supply chain dependency; if Medline faces production issues, natural disasters, or other disruptions, the VA's supply of critical instruments could be jeopardized. Furthermore, without regular competition, there's a potential for complacency in service quality or responsiveness. Mitigation strategies often involve robust contract management, clear performance standards, and potentially periodic market research to ensure the sole-source arrangement remains justified and cost-effective.

What is the typical profit margin or markup expected for prime vendor contracts of this nature, and how does this expenditure align?

Determining the exact profit margin or markup for a specific prime vendor contract like this is challenging without access to detailed pricing structures and cost-plus elements, if any. However, for Firm Fixed Price (FFP) contracts, the profit is built into the price. Industry benchmarks for healthcare distribution and supply chain services can provide a general range, often varying based on the breadth of services, product mix, and volume. The $24.7 million expenditure represents the total price paid, which includes the vendor's costs, overhead, and profit. A thorough analysis would require comparing the unit prices of specific items procured against market rates or competitive bids for similar items to infer the reasonableness of the overall markup.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Surgical and Medical Instrument Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3 LAKES DR, NORTHFIELD, IL, 60093

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $24,745,286

Exercised Options: $24,745,286

Current Obligation: $24,745,286

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X23D0003

IDV Type: IDC

Timeline