VA's $725M Pharmaceutical Prime Vendor Contract Awarded to McKesson Corporation

Contract Overview

Contract Amount: $725,136,728 ($725.1M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-12-01

End Date: 2022-12-31

Contract Duration: 30 days

Daily Burn Rate: $24.2M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2023 DECEMBER

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75039

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $725.1 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2023 DECEMBER Key points: 1. The Department of Veterans Affairs awarded a significant contract for pharmaceutical supplies. 2. McKesson Corporation, a major player, secured this substantial award. 3. The contract falls under the Pharmaceutical Preparation Manufacturing sector. 4. This award represents a key component of VA's healthcare supply chain.

Value Assessment

Rating: good

The contract value of $725.1 million for a 30-day period suggests a high volume of pharmaceutical purchases. Benchmarking against similar large-scale pharmaceutical prime vendor contracts would be necessary for a precise pricing assessment, but the scale indicates significant expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating a robust price discovery process. This method allows multiple vendors to bid, theoretically driving down costs and ensuring fair market value.

Taxpayer Impact: The competitive award process aims to ensure taxpayer funds are used efficiently for essential pharmaceutical supplies for veterans.

Public Impact

Ensures timely access to essential medications for veterans. Supports the operational readiness of VA healthcare facilities nationwide. Contributes to the stability of the pharmaceutical supply chain for a critical government agency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in subsequent periods.
Dependence on a single vendor for a large volume of critical supplies.

Positive Signals

Awarded through full and open competition.
Significant contract value indicates substantial demand and potential for economies of scale.

Sector Analysis

The pharmaceutical sector is a critical component of healthcare spending. This contract, valued at over $725 million for a single month, highlights the significant investment the VA makes in procuring medications, aligning with national benchmarks for healthcare supply chain expenditures.

Small Business Impact

While this specific award went to a large corporation, the broader pharmaceutical supply chain often involves numerous small and medium-sized businesses as subcontractors or suppliers. Further analysis would be needed to determine the extent of small business participation in this specific contract's fulfillment.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract to ensure timely delivery, quality of pharmaceuticals, and adherence to contract terms. Regular performance reviews and audits are standard oversight mechanisms.

Related Government Programs

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

Risk Flags

High contract value concentrated with one vendor.
Potential for price increases in future periods.
Dependence on a single source for critical supplies.
Need for ongoing performance monitoring to ensure quality and delivery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $725.1 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACEUTICAL PRIME VENDOR (PPV)FY2023 DECEMBER

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 $725.1 million.

What is the period of performance?

Start: 2022-12-01. End: 2022-12-31.

What is the projected annual spending for the Pharmaceutical Prime Vendor program based on this monthly award?

Based on the December 2022 award of $725,136,727.84, a simple extrapolation would suggest an annual spending of approximately $8.7 billion if this rate were consistent. However, pharmaceutical demand often fluctuates seasonally and based on specific needs, so actual annual spending could vary significantly. A more accurate projection would require historical data and forecasting.

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

Key performance indicators likely include on-time delivery rates, order accuracy, product quality and integrity, responsiveness to VA needs, and adherence to pricing agreements. The VA would monitor these KPIs through regular reporting and performance reviews to ensure the contractor meets contractual obligations and provides value.

How does the VA mitigate the risk of supply chain disruptions for essential pharmaceuticals with this large contract?

The VA likely mitigates supply chain risks through robust contract management, including performance monitoring and contingency planning. They may also maintain relationships with secondary suppliers or have emergency procurement protocols in place. The competitive nature of the award also encourages vendor preparedness.

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: $725,136,728

Exercised Options: $725,136,728

Current Obligation: $725,136,728

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36W79720D0001

IDV Type: IDC

Timeline