VA's September 2024 Medical Surgical Prime Vendor spending reached $29.4M with Medline Industries, LP

Contract Overview

Contract Amount: $29,399,831 ($29.4M)

Contractor: Medline Industries, LP

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-09-01

End Date: 2024-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.0M/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 SEPTEMBER 2024

Place of Performance

Location: NORTHFIELD, COOK County, ILLINOIS, 60093

State: Illinois Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $29.4 million to MEDLINE INDUSTRIES, LP for work described as: EXPRESS REPORT: MEDICAL SURGICAL PRIME VENDOR EXPENDITURES FOR THE MONTH OF SEPTEMBER 2024 Key points: 1. This contract represents a significant portion of the VA's medical supply chain, highlighting the importance of reliable vendor performance. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 3. While specific performance metrics are not detailed, the consistent delivery of medical supplies is a key indicator of operational success. 4. The contract's duration and firm-fixed-price structure suggest a predictable cost environment for the VA. 5. Understanding the broader market for surgical and medical instruments is crucial for benchmarking this expenditure. 6. The absence of small business set-asides in this specific award may limit opportunities for smaller specialized suppliers.

Value Assessment

Rating: fair

The VA's September 2024 expenditure of $29.4 million for medical surgical prime vendor services with Medline Industries, LP, requires context. Without direct comparison data for similar prime vendor contracts or detailed performance metrics for this specific period, a definitive value-for-money assessment is challenging. However, the firm-fixed-price contract type suggests cost predictability. The benchmark of $10,137,870 for a similar contract indicates this award is substantially larger, though direct comparability is limited by contract scope and duration.

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. This approach is typically used when a specific vendor possesses unique capabilities or when circumstances necessitate a direct award. The lack of competition means the VA did not benefit from a bidding process that could drive down prices through market forces. This raises questions about whether the VA secured the most advantageous pricing and terms available in the market.

Taxpayer Impact: For taxpayers, a sole-source award means there's a reduced likelihood of achieving the lowest possible price through competitive bidding, potentially leading to higher overall costs for essential medical supplies.

Public Impact

Veterans receiving care through VA facilities benefit from the consistent availability of necessary medical and surgical supplies. The contract ensures the supply chain for a wide range of medical and surgical instruments used in VA healthcare settings. The primary geographic impact is within the United States, supporting VA medical centers nationwide. This contract supports the operational workforce within the VA's medical supply chain and logistics departments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of detailed performance metrics makes it difficult to assess efficiency and effectiveness.
The significant dollar value of this contract warrants close monitoring for any signs of cost overruns or inefficiencies.
Absence of small business participation in this specific award could be a missed opportunity for economic inclusion.

Positive Signals

Firm-fixed-price contract provides cost certainty for the VA.
Consistent delivery of essential medical supplies supports uninterrupted veteran healthcare.
The contract duration of 29 months suggests a stable, long-term relationship for supply chain reliability.

Sector Analysis

The medical surgical supply industry is a critical component of the healthcare sector, characterized by a mix of large manufacturers and distributors. The VA's reliance on prime vendors like Medline Industries, LP, is a common strategy to streamline procurement of a vast array of products. This contract falls within the Surgical and Medical Instrument Manufacturing (NAICS 339112) sector. Benchmarking this expenditure against the total federal spending in this category or against similar prime vendor contracts across different agencies would provide further insight into its relative scale and cost-effectiveness.

Small Business Impact

This specific contract award to Medline Industries, LP, does not appear to include a small business set-aside. While prime vendors often manage large-scale distribution, the absence of set-asides at this level means direct contracting opportunities for small businesses within this particular award are limited. However, it is possible that Medline, as the prime contractor, may engage small businesses as subcontractors. Further analysis would be needed to determine the extent of subcontracting to small businesses and its overall impact on the small business ecosystem supporting the VA's medical supply needs.

Oversight & Accountability

Oversight for this contract is managed by the Department of Veterans Affairs. As a sole-source award, it likely undergoes review by VA contracting officers and potentially program managers to ensure compliance with terms and conditions. Transparency is facilitated through public contract databases, though detailed internal performance reviews and Inspector General audits would provide deeper accountability insights. The firm-fixed-price nature of the contract inherently limits the scope for cost-related oversight issues, shifting focus to delivery and quality.

Related Government Programs

VA Federal Supply Schedule (FSS) contracts
Department of Defense Medical Prime Vendor contracts
General Services Administration (GSA) Schedules for medical supplies

Risk Flags

Sole-source award
Lack of publicly available performance metrics
Potential for price inflation without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $29.4 million to MEDLINE INDUSTRIES, LP. EXPRESS REPORT: MEDICAL SURGICAL PRIME VENDOR EXPENDITURES FOR THE MONTH OF SEPTEMBER 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 $29.4 million.

What is the period of performance?

Start: 2024-09-01. End: 2024-09-30.

What is Medline Industries, LP's track record with the VA for similar prime vendor contracts?

Medline Industries, LP has a significant history of serving the Department of Veterans Affairs as a prime vendor for medical and surgical supplies. They are a major player in the federal healthcare supply chain. Analyzing past contract performance, including delivery timeliness, product quality, and any past disputes or corrective actions, would provide a more comprehensive view of their reliability. Historical spending data with the VA indicates a sustained relationship, suggesting a level of established performance, though specific metrics for this September 2024 period are not detailed here. Their extensive experience positions them as a capable, albeit sole-source, provider.

How does the $29.4 million September 2024 expenditure compare to historical VA spending on medical surgical prime vendors?

The $29.4 million expenditure for September 2024 represents a substantial monthly outlay for the VA's medical surgical prime vendor needs. To provide a robust comparison, historical data would be analyzed. For instance, if average monthly spending over the past year was significantly lower or higher, it could indicate changes in demand, contract scope, or pricing trends. Without that broader context, it's difficult to definitively state if this month's spending is an anomaly or representative. However, given the scale, it underscores the critical role of prime vendors in supporting VA operations.

What are the primary risks associated with a sole-source award for medical surgical supplies?

The primary risks associated with a sole-source award for medical surgical supplies include potential price inflation due to the lack of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market validation for pricing. Taxpayers may bear higher costs than if the contract were competed. Furthermore, reliance on a single source can create vulnerabilities in the supply chain if the contractor experiences operational disruptions. The VA must ensure robust oversight to mitigate these risks, focusing on performance standards and fair pricing, even without direct competition.

How effective is the firm-fixed-price contract type in managing costs for this medical supply contract?

The firm-fixed-price (FFP) contract type is generally effective in managing costs for predictable supply needs like those of a medical surgical prime vendor. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This provides the VA with cost certainty and shifts the risk of cost overruns to the contractor, Medline Industries, LP. It incentivizes the contractor to control their own costs efficiently to maximize profit. For routine supplies with well-defined specifications, FFP is a suitable choice for budget predictability.

What are the implications of the contract's duration (29 months) on VA's procurement strategy?

A contract duration of 29 months provides the VA with a stable and predictable supply of medical surgical items for a significant period. This stability allows for better long-term planning of healthcare services and resource allocation, reducing the administrative burden and uncertainty associated with frequent re-procurement. It also allows the contractor, Medline Industries, LP, to invest in their supply chain and logistics to meet the VA's needs reliably. However, a longer duration on a sole-source award might also reduce the urgency for the contractor to offer significant cost reductions over time.

Are there specific performance metrics or KPIs tied to this contract that are publicly available?

Publicly available data for federal contracts, including this one, typically includes basic award information such as the contractor, amount, and dates, but rarely includes detailed performance metrics or Key Performance Indicators (KPIs). These metrics are usually defined in the contract's statement of work and are monitored internally by the contracting agency. While the VA likely has internal mechanisms to track Medline's performance (e.g., on-time delivery, order accuracy, product quality), this specific information is generally not disclosed in public contract databases. Access to such data would be crucial for a thorough value assessment.

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: $29,399,831

Exercised Options: $29,399,831

Current Obligation: $29,399,831

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X23D0003

IDV Type: IDC

Timeline