VA awards $3.46M contract for analytical instruments, exceeding typical per-unit costs

Contract Overview

Contract Amount: $3,785,917 ($3.8M)

Contractor: Cepheid

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-10-01

End Date: 2025-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $3.5K/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: COST PER TEST

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $3.8 million to CEPHEID for work described as: COST PER TEST Key points: 1. The contract's per-unit cost appears high when benchmarked against similar procurements. 2. Competition was limited, raising questions about price discovery and potential overpayment. 3. The fixed-price contract structure offers some cost certainty but may not reflect true value. 4. The duration of the contract (1095 days) suggests a long-term need for these instruments. 5. The procurement falls within the analytical laboratory instrument manufacturing sector.

Value Assessment

Rating: questionable

The reported cost of $3,457,000 for one analytical laboratory instrument is significantly higher than typical market rates and comparable government procurements. While specific instrument capabilities are not detailed, this price point warrants further scrutiny. Without more granular data on the instrument's specifications and intended use, it is difficult to definitively assess value, but the initial benchmark suggests potential for overspending.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was competed under SAP (Small Acquisition Program), which typically involves simplified acquisition procedures and may not always result in the broadest possible competition. The data does not specify the number of bidders, but 'limited' competition suggests fewer than a full and open solicitation. This can lead to less aggressive pricing and potentially higher costs for the government.

Taxpayer Impact: Limited competition means taxpayers may not have received the most cost-effective solution, as fewer vendors were incentivized to offer their best prices.

Public Impact

Veterans Affairs medical facilities will benefit from advanced analytical laboratory instruments. These instruments are crucial for diagnostic testing and patient care. The contract supports the operational needs of the VA healthcare system. The procurement impacts the medical technology sector by providing demand for specialized equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High per-unit cost compared to market benchmarks.
Limited competition may have inflated the price.
Lack of detailed specifications makes value assessment difficult.

Positive Signals

Contract awarded to a single vendor, potentially indicating specialized capabilities.
Fixed-price contract provides some cost predictability.
Supports critical healthcare functions within the VA.

Sector Analysis

The analytical laboratory instrument manufacturing sector is characterized by high-value, specialized equipment used in research, diagnostics, and quality control. This contract represents a procurement within this niche, supporting the healthcare industry's need for advanced testing capabilities. Benchmarking spending in this sector is challenging without specific instrument details, but the overall market is driven by technological innovation and demand from healthcare providers and research institutions.

Small Business Impact

The provided data does not indicate if this contract included small business set-asides or subcontracting goals. Given the nature of specialized analytical instruments, it is possible that the primary contractor is a large business. Further investigation would be needed to determine the extent of small business participation.

Oversight & Accountability

The contract is a purchase order awarded by the Department of Veterans Affairs. Oversight would typically be managed by the contracting officer and program managers within the VA. Transparency is limited by the available data, and it is unclear if specific Inspector General reviews are associated with this particular award.

Related Government Programs

Medical Equipment Procurement
Laboratory Services
Veterans Health Administration
Analytical Instruments

Risk Flags

High Unit Cost
Limited Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $3.8 million to CEPHEID. COST PER TEST

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 $3.8 million.

What is the period of performance?

Start: 2022-10-01. End: 2025-09-30.

What specific type of analytical laboratory instrument was procured, and what are its key capabilities?

The provided data identifies the North American Industry Classification System (NAICS) code as 334516, which corresponds to 'Analytical Laboratory Instrument Manufacturing.' However, the specific type of instrument and its detailed capabilities are not specified in the data. This lack of detail makes it challenging to perform a precise value assessment or compare it to highly specific market alternatives. Instruments in this category can range widely from mass spectrometers and chromatographs to basic laboratory testing equipment. Understanding the exact nature of the instrument is crucial for evaluating its price against its intended function and technological sophistication.

How does the reported cost per unit compare to similar instruments purchased by the government or in the commercial market?

The reported total award amount is $3,457,000. Without knowing the quantity of instruments purchased, calculating a precise per-unit cost is impossible. However, if we assume this is for a single high-end analytical instrument, the cost would be exceptionally high. For context, advanced mass spectrometers or complex diagnostic platforms can range from tens of thousands to several hundred thousand dollars. A cost in the millions for a single unit would suggest either an extremely specialized, custom-built system, or potentially an error in reporting or interpretation of the data. Further clarification on the quantity and specific model is needed for a meaningful comparison.

What is the track record of the contractor (CEPHEID) in providing similar analytical instruments to the government?

Cepheid is a known manufacturer of molecular diagnostic instruments and tests. While the provided data lists 'CEPHEID' as the contractor, it does not detail their specific performance history on this or other government contracts. A review of past performance information, including any past issues, delivery timeliness, and quality of goods/services provided on previous VA or other federal contracts, would be necessary to fully assess their reliability for this award. Without this historical data, we rely solely on the current contract's details.

What are the potential risks associated with a limited competition procurement for specialized laboratory instruments?

Limited competition, especially under simplified acquisition procedures, carries several risks. Primarily, it reduces the incentive for vendors to offer their lowest possible prices, potentially leading to higher costs for the government (and taxpayers). It also limits the government's ability to explore a wider range of technological solutions or alternative vendors who might offer better value or more innovative features. Furthermore, a lack of robust competition can sometimes mask issues with product quality or vendor support, as the government has fewer options if problems arise.

How does this contract align with the Department of Veterans Affairs' overall spending on medical equipment and laboratory services?

The Department of Veterans Affairs (VA) has a substantial budget for healthcare services, which includes significant spending on medical equipment, pharmaceuticals, and laboratory services. Contracts for analytical instruments are a component of this broader spending. To assess alignment, one would need to compare this $3.46 million award against the VA's total annual expenditure on laboratory equipment and related services. If the VA procures numerous similar instruments annually, this contract might represent a standard procurement. However, if it's an outlier in terms of cost or scope, it warrants closer examination within the context of their overall medical supply chain and budget allocation.

Industry Classification

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

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 36C24822Q1737

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: $4,910,896

Exercised Options: $3,785,917

Current Obligation: $3,785,917

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline