VA awards $15.8M radiation oncology contract to Duke University Health System for services in North Carolina

Contract Overview

Contract Amount: $15,807,855 ($15.8M)

Contractor: Duke University Health System, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2021-12-01

End Date: 2025-11-30

Contract Duration: 1,460 days

Daily Burn Rate: $10.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Healthcare

Official Description: RADIATION ONCOLOGY SERVICES

Place of Performance

Location: DURHAM, DURHAM County, NORTH CAROLINA, 27705

State: North Carolina Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $15.8 million to DUKE UNIVERSITY HEALTH SYSTEM, INC. for work described as: RADIATION ONCOLOGY SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Fixed-price contract with economic price adjustment introduces potential for cost escalation. 3. Duration of 1460 days (4 years) suggests a long-term need for these specialized services. 4. The contract's value is significant within the specialized field of radiation oncology. 5. Performance is located in North Carolina, indicating a regional focus for service delivery. 6. No small business set-aside was applied, potentially impacting small business participation.

Value Assessment

Rating: fair

The contract value of $15.8 million over four years for radiation oncology services appears substantial. Benchmarking this against similar contracts is challenging without more specific service details and geographic scope. However, given the specialized nature of radiation oncology and the provider being a university health system, the pricing may reflect high-demand, expert services. The fixed-price with economic price adjustment structure introduces a risk of cost increases over the contract term, which warrants monitoring.

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 contractor possesses unique capabilities or when circumstances preclude full and open competition. The lack of competition means that pricing and service terms were negotiated directly with Duke University Health System, potentially leading to less favorable terms for the government compared to a competitive process.

Taxpayer Impact: The sole-source nature of this award means taxpayers did not benefit from the price reductions typically achieved through competitive bidding. This could result in a higher overall cost to the government for these essential services.

Public Impact

Veterans in North Carolina requiring radiation oncology services will benefit from this contract. Specialized cancer treatment services will be delivered, potentially improving health outcomes for beneficiaries. The geographic impact is concentrated in North Carolina, serving the veteran population in that state. The contract supports highly skilled medical professionals and ancillary staff within Duke University Health System.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Economic price adjustment clause introduces risk of cost overruns.
Lack of small business participation may limit opportunities for smaller providers.

Positive Signals

Award to a reputable university health system suggests access to high-quality medical expertise.
Long-term contract provides stability for service delivery to veterans.
Focus on a critical healthcare service like radiation oncology addresses a significant patient need.

Sector Analysis

Radiation oncology is a highly specialized segment within the broader healthcare sector, focusing on the use of radiation to treat cancer. This contract falls under healthcare services, specifically medical treatment. The market for such services is often characterized by high barriers to entry due to the need for advanced technology, specialized personnel, and regulatory compliance. Spending in this area is driven by the prevalence of cancer and the demand for advanced treatment modalities. Comparable spending benchmarks would typically be found within large healthcare systems or government health providers serving significant patient populations.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This means that opportunities for small businesses to participate in providing these specialized radiation oncology services are likely limited. The award to a large university health system suggests that the primary contractor will handle the bulk of the services, potentially bypassing the small business ecosystem unless specific partnerships are formed independently.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs (VA). The VA has established procurement regulations and contract management processes to ensure services are delivered as specified and at the agreed-upon price. Transparency is facilitated through contract databases like FPDS. Accountability measures would include performance reviews, adherence to service level agreements, and potential audits by the VA Office of Inspector General if performance or financial concerns arise.

Related Government Programs

VA Medical Services Contracts
Cancer Treatment Services
University Health System Contracts
Definitive Contracts
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Sole-source award may limit price competition.
Economic price adjustment introduces cost escalation risk.
Long contract duration requires careful performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $15.8 million to DUKE UNIVERSITY HEALTH SYSTEM, INC.. RADIATION ONCOLOGY SERVICES

Who is the contractor on this award?

The obligated recipient is DUKE UNIVERSITY HEALTH SYSTEM, INC..

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 $15.8 million.

What is the period of performance?

Start: 2021-12-01. End: 2025-11-30.

What is the track record of Duke University Health System in performing similar government contracts, particularly with the VA?

Duke University Health System has a history of receiving federal contracts, including those with the Department of Veterans Affairs. While specific performance metrics for past VA contracts are not detailed here, university health systems generally possess established infrastructure and expertise in delivering complex medical services. Their track record often involves academic research, patient care, and training. For this specific radiation oncology contract, the VA would have likely assessed Duke's capabilities and past performance, especially in managing complex medical treatments and adhering to federal healthcare standards, before awarding it on a sole-source basis. Further investigation into their specific performance history on prior VA agreements would provide a more complete picture of their reliability and quality of service delivery.

How does the awarded amount of $15.8 million compare to typical spending on radiation oncology services by large healthcare providers or the VA?

The $15.8 million awarded to Duke University Health System for radiation oncology services over approximately four years represents a significant investment. To benchmark this effectively, one would need to compare it against similar contracts for specialized medical services, considering factors like patient volume, scope of services (e.g., types of radiation therapy, diagnostic imaging, patient support), and geographic reach. Large academic medical centers often have substantial budgets for oncology departments, running into tens or hundreds of millions annually. For the VA, this amount is considerable for a single contract, reflecting the high cost of advanced cancer treatment technology and expert staffing. Without specific comparable VA contracts or detailed service breakdowns, it's difficult to definitively state if this represents high or low value, but it indicates a substantial commitment to this critical service area for veterans in North Carolina.

What are the primary risks associated with a fixed-price contract with economic price adjustment (FPEPA) for radiation oncology services?

The primary risk associated with a Fixed-Price with Economic Price Adjustment (FPEPA) contract for radiation oncology services lies in potential cost escalation. While the fixed-price component provides a baseline cost, the economic price adjustment allows for increases based on specific economic indicators (e.g., inflation, labor costs, material costs). For radiation oncology, this could mean increases in the cost of specialized equipment maintenance, energy consumption for linear accelerators, or wages for highly trained medical physicists and dosimetrists. This introduces uncertainty for the government regarding the final total cost of the contract. The VA must carefully monitor the economic indicators used for adjustment and ensure they accurately reflect actual cost increases without unduly inflating the overall expenditure. This structure shifts some of the cost-risk to the government compared to a firm fixed-price contract.

Given the sole-source nature, what assurances does the VA have regarding the quality and efficiency of the radiation oncology services provided by Duke University Health System?

Even with a sole-source award, the VA has several mechanisms to ensure the quality and efficiency of services provided by Duke University Health System. Firstly, the initial award implies that the VA assessed Duke's capabilities, resources, and past performance as sufficient to meet the contract requirements. Secondly, the contract itself will contain specific performance standards, service level agreements (SLAs), and reporting requirements. The VA will assign contract officers and potentially technical monitors to oversee performance, conduct regular reviews, and ensure adherence to these standards. Furthermore, the VA's own quality assurance protocols and patient feedback mechanisms will be in place. If performance falters, the VA retains the right to take corrective actions, potentially including termination for default, despite the sole-source nature of the award.

How does this contract fit into the VA's broader strategy for providing cancer care to veterans, especially in the Southeast region?

This contract is a component of the VA's broader strategy to ensure comprehensive cancer care for veterans, particularly in regions where specialized services might be less accessible through VA-owned facilities alone. By partnering with a leading academic medical center like Duke University Health System, the VA can leverage external expertise and advanced treatment capabilities. This approach is crucial for the Southeast region, which has a significant veteran population. The VA aims to provide high-quality, timely, and accessible care, and contracting with established providers like Duke allows them to fill service gaps, offer cutting-edge treatments, and potentially reduce wait times for veterans requiring radiation oncology. This specific award suggests a strategic decision to ensure veterans in North Carolina have access to specialized cancer care through a trusted, high-capacity provider.

What are the potential implications of awarding a large, long-term contract like this on a sole-source basis for future competition in this service area?

Awarding a large, long-term contract on a sole-source basis can have significant implications for future competition. It may discourage other potential providers from developing capabilities in this specific service area for the VA, as they perceive the market as closed. Furthermore, it can reduce the incentive for the incumbent contractor (Duke) to innovate or offer more competitive pricing in subsequent solicitations, assuming they anticipate another sole-source renewal. For taxpayers, it means potentially paying a premium over several years without the benefit of competitive pressure driving down costs. While sole-source awards are sometimes justified by unique circumstances, their repeated use can stifle market development and lead to higher long-term costs for the government. The VA would need to justify future sole-source awards rigorously to ensure they remain in the best interest of the government.

Industry Classification

NAICS: Educational Services › Colleges, Universities, and Professional Schools › Colleges, Universities, and Professional Schools

Product/Service Code: MEDICAL SERVICES › MEDICAL, DENTAL, AND SURGICAL SVCS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C24621R0025

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Duke University

Address: 2301 ERWIN RD, DURHAM, NC, 27710

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

Financial Breakdown

Contract Ceiling: $15,807,875

Exercised Options: $15,807,875

Current Obligation: $15,807,855

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline