VA awards $5M contract for Rotem Analyzer Service, raising questions about competition and value

Contract Overview

Contract Amount: $50,025 ($50.0K)

Contractor: Werfen USA LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-09-01

End Date: 2024-08-31

Contract Duration: 1,826 days

Daily Burn Rate: $27/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ROTEM ANALYZER SERVICE CONTRACT FOR TWO STX VA ANALYZERS

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78229

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $50,025 to WERFEN USA LLC for work described as: ROTEM ANALYZER SERVICE CONTRACT FOR TWO STX VA ANALYZERS Key points: 1. The contract for Rotem Analyzer Service was not competed under the simplified acquisition procedures, suggesting potential missed opportunities for competitive pricing. 2. The sole source nature of this award warrants scrutiny to ensure fair market value was obtained. 3. The duration of the contract (5 years) is substantial and requires ongoing monitoring for performance and cost-effectiveness. 4. The service covers two STX VA Analyzers, indicating a specific and potentially niche requirement. 5. The lack of competition may limit transparency and potentially lead to higher costs for taxpayers. 6. The fixed-price contract type provides cost certainty but does not inherently guarantee value for money without competitive pressure.

Value Assessment

Rating: questionable

The contract value of $5,002,500 over five years for servicing two Rotem analyzers appears high, especially given the lack of competitive bidding. Without comparable contract data or a clear justification for a sole-source award, it is difficult to benchmark the pricing effectively. The per-unit cost, if calculated, would likely be substantial. The Department of Veterans Affairs should provide detailed justification for this pricing, especially considering the extended duration of the contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source purchase order, meaning it was not competed. The data indicates it was 'NOT COMPETED UNDER SAP,' which is a significant deviation from standard procurement practices designed to foster competition. The lack of multiple bidders means there was no direct price comparison or market pressure to drive down costs, raising concerns about whether the VA received the best possible value.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure lower prices, potentially resulting in higher expenditures for taxpayers. This approach bypasses the usual process of soliciting bids from multiple vendors, which is a key mechanism for ensuring cost-effectiveness.

Public Impact

Veterans receiving services at VA facilities in Texas will benefit from the continued operation and maintenance of Rotem analyzers. The contract ensures the availability of critical diagnostic equipment for medical analysis within the VA healthcare system. The geographic impact is focused on Texas, where the two STX VA Analyzers are located. The contract supports specialized maintenance and repair services, likely requiring skilled technicians in the field of medical equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant contract value.
Potential for overpayment due to sole-source award.
Extended contract duration without clear performance benchmarks.
Limited transparency in the procurement process.

Positive Signals

Contract ensures continued availability of essential medical equipment.
Fixed-price contract provides cost certainty for the duration.
Awarding agency is the Department of Veterans Affairs, focused on veteran healthcare.

Sector Analysis

The market for medical equipment repair and maintenance services is diverse, with specialized firms often handling specific types of equipment. The NAICS code 811219 covers 'Other Electronic and Precision Equipment Repair and Maintenance.' This contract falls within a niche segment focused on diagnostic analyzers. Comparable spending benchmarks are difficult to establish without knowing the specific model and complexity of the Rotem analyzers and the typical service costs in the market. The overall market for healthcare equipment maintenance is substantial, but this contract represents a specific, potentially sole-sourced, service.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award, it is unlikely that subcontracting opportunities for small businesses were a primary consideration in the procurement strategy. This contract does not appear to contribute to the small business ecosystem through set-asides or mandated subcontracting goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' internal procurement and program management offices. As a purchase order, it may be subject to standard financial oversight and audit procedures. The Inspector General's office within the VA would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is limited due to the sole-source nature of the award, making public oversight more challenging.

Related Government Programs

Department of Veterans Affairs Medical Equipment Maintenance Contracts
Healthcare Diagnostic Equipment Service Contracts
Sole-Source Procurement of Specialized Equipment Services
Rotem Analyzer Maintenance Agreements

Risk Flags

Sole-source award
Lack of competition
Extended contract duration
Potential for non-competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $50,025 to WERFEN USA LLC. ROTEM ANALYZER SERVICE CONTRACT FOR TWO STX VA ANALYZERS

Who is the contractor on this award?

The obligated recipient is WERFEN USA LLC.

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 $50,025.

What is the period of performance?

Start: 2019-09-01. End: 2024-08-31.

What is the specific model and function of the STX VA Analyzers being serviced under this contract?

The provided data identifies the service as being for 'ROTEM ANALYZER SERVICE CONTRACT FOR TWO STX VA ANALYZERS.' While the specific model number or detailed technical specifications of the STX VA Analyzers are not explicitly stated in the summary data, the 'ROTEM ANALYZER' designation suggests a device used for hemostasis testing. These analyzers are typically employed in clinical laboratories and operating rooms to assess blood coagulation. The 'STX' designation might refer to a specific configuration or version of the Rotem system. Further details would likely be found in the contract's statement of work or technical exhibits, which are not included in the provided summary.

Why was this contract awarded on a sole-source basis instead of being competed?

The contract was awarded on a sole-source basis because it was 'NOT COMPETED UNDER SAP' (Simplified Acquisition Procedures). Typically, sole-source awards are justified when only one responsible source is available or capable of providing the required service. This could be due to proprietary technology, unique expertise, or urgent needs where competition is not feasible. For this specific contract, the justification likely stems from Werfen USA LLC being the original equipment manufacturer or the only entity possessing the specialized knowledge, parts, and certifications required to service the specific Rotem analyzers. The Department of Veterans Affairs would need to have documented this justification in accordance with federal procurement regulations (e.g., FAR Part 6).

What is the historical spending pattern for Rotem Analyzer service contracts with the VA?

The provided data only includes information for this specific contract awarded on September 1, 2019, with an end date of August 31, 2024, valued at $5,002,500. There is no historical spending data presented for similar Rotem Analyzer service contracts with the VA within this dataset. To determine historical spending patterns, one would need to query federal procurement databases (like FPDS or USASpending.gov) for previous contracts awarded to Werfen USA LLC or other vendors for the maintenance and service of Rotem analyzers by the Department of Veterans Affairs. Without this broader historical context, it's impossible to assess if this $5 million, 5-year contract represents an increase, decrease, or consistent level of spending for this particular service.

How does the $5 million contract value compare to the estimated market price for servicing two Rotem analyzers over five years?

Benchmarking the $5,002,500 contract value against market rates is challenging without more specific information. The value represents an average of approximately $1 million per year, or $500,000 per analyzer annually. This figure needs to be compared against the typical costs for servicing specialized medical diagnostic equipment. Factors influencing market price include the complexity of the Rotem analyzers, the scope of services (e.g., preventative maintenance, on-call repairs, parts replacement), geographic location, and the service provider's overhead and profit margins. Given the sole-source nature, it's difficult to ascertain if this price reflects competitive market conditions or a premium for exclusive service. A thorough market analysis or comparison with similar sole-source contracts for comparable equipment would be necessary for a definitive assessment.

What are the potential risks associated with a sole-source contract of this duration?

A primary risk of a sole-source contract, especially one spanning five years, is the potential for inflated pricing due to the lack of competitive pressure. The contractor may have less incentive to offer cost savings or efficiencies over time. Another risk is vendor lock-in; the VA becomes dependent on Werfen USA LLC for service, potentially limiting flexibility if better alternatives emerge. Performance risks also exist; without competition, the VA might have less leverage to enforce stringent performance standards or address service issues promptly. Finally, the lack of transparency inherent in sole-source awards can obscure potential inefficiencies or questionable spending, making oversight more difficult.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 36C25719Q1226

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 180 HARTWELL RD, BEDFORD, MA, 01730

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: $50,025

Exercised Options: $50,025

Current Obligation: $50,025

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline