VA awards $2.2M for test kits, but competition was limited, raising value concerns

Contract Overview

Contract Amount: $2,214,175 ($2.2M)

Contractor: Cepheid

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-09-19

End Date: 2027-09-18

Contract Duration: 1,460 days

Daily Burn Rate: $1.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: TEST KITS

Place of Performance

Location: COLUMBIA, RICHLAND County, SOUTH CAROLINA, 29209

State: South Carolina Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.2 million to CEPHEID for work described as: TEST KITS Key points: 1. Limited competition for test kits may have impacted price discovery and value for money. 2. The contract's duration of four years suggests a long-term need for these analytical instruments. 3. The sole source nature of this award warrants scrutiny regarding the necessity and justification. 4. Performance context is limited due to the lack of competitive bidding. 5. The contract falls within the analytical laboratory instrument manufacturing sector.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. Without comparable offers, it's difficult to ascertain if the $2.2 million price reflects fair market value. The fixed-price nature of the contract provides some cost certainty, but the absence of competition prevents a robust assessment of cost-effectiveness against potential alternatives. Further analysis would be needed to compare pricing to similar instruments or broader market trends for laboratory equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly limits the opportunity for price discovery and potentially leads to higher costs for the government compared to a fully competed procurement. The justification for a sole-source award needs to be thoroughly reviewed to ensure it was appropriate and that no other vendors could have met the requirement.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as competition is a key driver for cost savings in government contracting.

Public Impact

Veterans will benefit from access to necessary diagnostic testing through the provision of these test kits. The contract supports the availability of analytical laboratory instruments essential for medical diagnostics. The geographic impact is focused on South Carolina, where the Department of Veterans Affairs facilities will utilize these kits. The contract supports the manufacturing sector for analytical laboratory instruments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
Sole-source justification requires rigorous review to ensure necessity.
Long contract duration without competitive re-evaluation could reduce future value.

Positive Signals

Contract provides essential medical supplies for veterans.
Firm fixed-price contract offers cost certainty for the government.
Contract supports a specific manufacturing industry.

Sector Analysis

The contract falls within the Analytical Laboratory Instrument Manufacturing sector, a niche but critical area supporting healthcare and research. Spending in this sector is driven by the need for advanced diagnostic tools. While specific benchmarks for this exact type of test kit are not readily available, the overall market for laboratory instruments is substantial, with government agencies being significant purchasers to support public health initiatives and veteran care.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the sole-source nature, subcontracting opportunities for small businesses are unlikely to have been mandated or actively pursued. This contract does not appear to directly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of Veterans Affairs' contracting and program management offices. Transparency is limited due to the sole-source award, making public scrutiny of the value proposition more challenging. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Medical Supplies
Diagnostic Equipment
Veterans Health Administration Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to limited competition.
Long-term contract duration without re-competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.2 million to CEPHEID. TEST KITS

Who is the contractor on this award?

The obligated recipient is CEPHEID.

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 $2.2 million.

What is the period of performance?

Start: 2023-09-19. End: 2027-09-18.

What is the specific type of test kit being procured and its intended use?

The data indicates the contract is for 'TEST KITS' within the 'Analytical Laboratory Instrument Manufacturing' product service code. While the exact nature of the tests is not specified, these are likely diagnostic kits used in conjunction with analytical laboratory instruments. Their intended use is to support medical diagnostics and analysis within Department of Veterans Affairs facilities, ultimately contributing to the healthcare services provided to veterans. The procurement aims to ensure the availability of necessary testing supplies for these facilities.

What is the justification for the sole-source award, and were alternatives considered?

The provided data states the contract type as 'NOT COMPETED' and the award type as 'SOLE SOURCE'. This implies that a formal justification for not competing the award was required and approved by the agency. Typical justifications for sole-source awards include unique capabilities of a single provider, urgent and compelling needs where competition is not feasible, or when only one source is capable of meeting the requirement. Without access to the specific justification document, it's impossible to detail the exact reasons or confirm if alternatives were thoroughly considered and found unsuitable.

How does the $2.2 million contract value compare to similar procurements for test kits or analytical instruments?

Direct comparison of the $2.2 million contract value is difficult without knowing the specific type and quantity of test kits. However, the contract's sole-source nature inherently limits the ability to benchmark against competitive pricing. Generally, sole-source awards are at higher risk of being less cost-effective than competed contracts. To assess value, one would need to compare the per-unit cost or total value against market research data for similar analytical instruments or high-volume diagnostic kits, considering factors like technology, volume, and contract duration. The absence of competition makes a definitive value assessment challenging.

What are the performance standards and delivery expectations outlined in the contract?

The contract is a 'FIRM FIXED PRICE' type, which typically means the price is set and not subject to adjustment based on the contractor's cost experience. The contract duration is 1460 days (approximately 4 years), with a start date of September 19, 2023, and an end date of September 18, 2027. While specific performance standards (e.g., quality, accuracy, delivery timelines for individual orders) are not detailed in the provided summary data, they would be stipulated in the full contract document. The firm fixed-price nature implies the contractor is responsible for meeting these standards within the agreed-upon price.

What is the track record of the contractor, CEPHEID, with the Department of Veterans Affairs or other federal agencies?

Cepheid is a known manufacturer of diagnostic systems. While the provided data does not detail Cepheid's specific track record with the VA or other federal agencies beyond this award, their role as a manufacturer of analytical laboratory instruments suggests they are a recognized entity in this market. A comprehensive assessment would involve reviewing Cepheid's past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) on previous government contracts to gauge their reliability, quality of goods/services, and overall performance history.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Analytical Laboratory Instrument Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C24723Q0732

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Danaher Corporation

Address: 904, EAST CARIBBEAN DRIVE, SUNNYVALE, CA, 94089

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

Financial Breakdown

Contract Ceiling: $5,801,817

Exercised Options: $2,214,175

Current Obligation: $2,214,175

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline