VA's Pharmacy Prime Vendor Contract with McKesson Corporation Reached $37.4M in September 2019

Contract Overview

Contract Amount: $37,414,918 ($37.4M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-09-01

End Date: 2019-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.3M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV)FY2019 SEPTEMBER

Place of Performance

Location: BAY PINES, PINELLAS County, FLORIDA, 33744

State: Florida Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $37.4 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV)FY2019 SEPTEMBER Key points: 1. The Department of Veterans Affairs (VA) awarded a significant delivery order under the Pharmacy Prime Vendor (PPV) program. 2. McKesson Corporation, a major player in pharmaceutical distribution, holds this contract. 3. The contract utilized full and open competition, suggesting a competitive bidding process. 4. This spending falls within the pharmaceutical preparation manufacturing sector.

Value Assessment

Rating: good

The contract was awarded under a Firm Fixed Price (FFP) structure, which provides cost certainty. The reported award amount of $37.4M for a single month suggests substantial volume, but without specific unit data or historical benchmarks, a precise per-unit cost assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The use of full and open competition is a positive indicator for price discovery, as it allows multiple qualified vendors to bid. This competitive environment generally leads to more favorable pricing for the government.

Taxpayer Impact: The competitive nature of this award is expected to yield fair market prices, benefiting taxpayers by ensuring efficient use of funds 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 fluctuations in subsequent contract periods.
Dependence on a single vendor for a critical supply chain.

Positive Signals

Full and open competition utilized.
Firm Fixed Price contract type provides cost predictability.
Supports a vital healthcare program for veterans.

Sector Analysis

This spending is within the pharmaceutical preparation manufacturing sector, which is critical for national health and defense. Benchmarks for similar large-scale pharmaceutical distribution contracts can vary widely based on volume, specific drug classes, and contract terms.

Small Business Impact

While this specific award is to a large corporation, the broader Pharmacy Prime Vendor program may offer opportunities for small businesses in subcontracting roles or in the supply of specialized pharmaceutical products.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Robust oversight mechanisms are crucial to ensure compliance with contract terms, quality of service, and appropriate pricing, especially given the critical nature of pharmaceutical supply.

Related Government Programs

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

Risk Flags

Potential for price increases in future periods.
Dependence on a single large vendor.
Vulnerability to pharmaceutical supply chain disruptions.
Need for ongoing price competitiveness analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $37.4 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV)FY2019 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 $37.4 million.

What is the period of performance?

Start: 2019-09-01. End: 2019-09-30.

What is the projected annual spending for this Pharmacy Prime Vendor contract, and how does it compare to previous years?

The provided data only reflects a single month's spending ($37.4M). To assess the annual spending and trends, data for the entire contract period would be required. Comparing this to previous years would reveal if spending is increasing, decreasing, or remaining stable, offering insights into potential changes in demand or pricing strategies.

What specific pharmaceutical categories are covered under this contract, and are there any high-cost or critical drugs included?

The data indicates 'Pharmaceutical Preparation Manufacturing' but does not detail specific drug categories or individual items. Understanding the product mix is essential for risk assessment, as high-cost or life-saving medications represent a significant financial and operational risk if supply is disrupted or pricing is unfavorable.

What is the VA's strategy for managing potential supply chain disruptions or price volatility for pharmaceuticals under this contract?

The VA's strategy likely involves contract clauses that address supply chain resilience and price adjustments, potentially including mechanisms for market-based pricing reviews or alternative sourcing. Given the critical nature of pharmaceuticals, proactive risk mitigation and contingency planning are paramount to ensure uninterrupted veteran care.

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: $37,414,918

Exercised Options: $37,414,918

Current Obligation: $37,414,918

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline