VA's $775M Pharmaceutical Prime Vendor Contract with McKesson Corporation: September 2021 Spending Analysis

Contract Overview

Contract Amount: $775,455,945 ($775.5M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2021-09-01

End Date: 2021-09-30

Contract Duration: 29 days

Daily Burn Rate: $26.7M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2021 SEPTEMBER

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75039

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $775.5 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2021 SEPTEMBER Key points: 1. The Department of Veterans Affairs (VA) spent $775.5 million on pharmaceuticals through the PPV contract in September 2021. 2. McKesson Corporation, a major player in pharmaceutical distribution, holds this contract. 3. The contract was awarded under full and open competition, suggesting a competitive pricing environment. 4. The sector is pharmaceutical preparation manufacturing, a critical area for healthcare delivery.

Value Assessment

Rating: good

The contract utilizes a firm fixed price structure, which provides cost certainty. Benchmarking against similar large-scale pharmaceutical distribution contracts is necessary for a complete value assessment, but the scale suggests potential for negotiated efficiencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Awarded under full and open competition, this method typically fosters competitive pricing. The specific price discovery mechanisms within the bidding process would offer further insight into the achieved value.

Taxpayer Impact: The competitive nature of the award aims to ensure taxpayer funds are used efficiently for essential pharmaceutical supplies.

Public Impact

Ensures timely access to a wide range of pharmaceuticals for veterans. Supports the VA's mission to provide comprehensive healthcare services. Contributes to the stability of the pharmaceutical supply chain for federal agencies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract periods.
Dependence on a single vendor for a large volume of pharmaceuticals.

Positive Signals

Competitive award process.
Firm fixed price contract type.

Sector Analysis

The pharmaceutical preparation manufacturing sector is characterized by high volume, complex supply chains, and significant regulatory oversight. Spending benchmarks for similar federal pharmaceutical contracts would provide context for this $775 million expenditure.

Small Business Impact

This contract is with a large prime vendor, McKesson Corporation. There is no direct indication of small business participation within this specific report, which is common for large prime vendor contracts.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight of this contract. Robust contract management and performance monitoring are crucial to ensure compliance and value for money.

Related Government Programs

Pharmaceutical Preparation Manufacturing
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Vendor Lock-in Potential
Supply Chain Disruptions
Price Volatility Risk
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $775.5 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2021 SEPTEMBER

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

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 $775.5 million.

What is the period of performance?

Start: 2021-09-01. End: 2021-09-30.

What is the year-over-year spending trend for this Pharmaceutical Prime Vendor contract?

This report focuses on September 2021 spending. To assess the trend, historical data for the PPV contract across multiple fiscal years would be required. Analyzing year-over-year changes can reveal patterns in demand, pricing fluctuations, and the overall effectiveness of the contract in meeting the VA's evolving pharmaceutical needs.

What are the key performance indicators (KPIs) used to evaluate McKesson Corporation's performance under this contract?

Performance evaluation likely includes metrics such as on-time delivery rates, order accuracy, product quality, and responsiveness to VA requirements. Specific KPIs are typically detailed within the contract's statement of work and performance standards, ensuring accountability and adherence to service level agreements.

How does the VA ensure the security and integrity of the pharmaceutical supply chain managed by this prime vendor?

The VA likely implements stringent security protocols, including background checks for personnel, secure storage and transportation requirements, and regular audits of McKesson's facilities and processes. Compliance with federal regulations like the Drug Supply Chain Security Act (DSCSA) is also critical for maintaining supply chain integrity.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6555 STATE HIGHWAY 161, IRVING, TX, 75039

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

Financial Breakdown

Contract Ceiling: $775,455,945

Exercised Options: $775,455,945

Current Obligation: $775,455,945

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36W79720D0001

IDV Type: IDC

Timeline