VA awards $2.7M contract for reference lab testing to Laboratory Corporation of America

Contract Overview

Contract Amount: $2,711,212 ($2.7M)

Contractor: Laboratory Corporation of America

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2025-03-31

Contract Duration: 181 days

Daily Burn Rate: $15.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: REFERENCE LAB TESTING

Place of Performance

Location: AURORA, ADAMS County, COLORADO, 80045

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.7 million to LABORATORY CORPORATION OF AMERICA for work described as: REFERENCE LAB TESTING Key points: 1. Contract value represents a significant investment in essential medical laboratory services. 2. Competition dynamics for this contract are assessed to understand pricing efficiency. 3. Risk indicators are evaluated based on contractor performance and contract type. 4. Performance context is framed by the duration and scope of the testing services. 5. Sector positioning places this contract within the broader healthcare and laboratory services market.

Value Assessment

Rating: good

The contract value of $2.71 million for 181 days of reference laboratory testing appears reasonable given the critical nature of these services. Benchmarking against similar contracts for reference lab testing by the VA or other federal agencies would provide a more precise value-for-money assessment. The firm-fixed-price structure suggests that the contractor bears the risk of cost overruns, which can be favorable for the government if the scope is well-defined. However, without detailed service level agreements and specific test volumes, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were likely invited to bid. The presence of full and open competition generally fosters a more competitive bidding environment, potentially leading to better pricing and service offerings for the government. The number of bidders and the specific evaluation criteria used would further illuminate the strength of the competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of securing services at competitive market rates, maximizing the value of federal dollars spent.

Public Impact

Veterans will benefit from access to essential reference laboratory testing services. The contract ensures the delivery of critical diagnostic and analytical services. Services are likely to be delivered across various VA facilities within the Colorado region. This contract supports the operational capacity of the VA's healthcare system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased demand on Laboratory Corporation of America's resources.
Ensuring consistent quality and turnaround times for critical lab tests.
Managing contract modifications and scope creep effectively.

Positive Signals

Leverages established laboratory infrastructure and expertise of a major provider.
Firm-fixed-price contract provides cost certainty for the VA.
Full and open competition suggests a robust selection process.

Sector Analysis

The healthcare sector, particularly the segment focused on diagnostic and laboratory services, is a critical component of the federal healthcare system. Reference laboratory testing is a specialized area involving complex analyses often outsourced by healthcare providers due to the high cost of specialized equipment and personnel. The market for these services is competitive, with several large national providers and numerous regional players. Federal spending in this area is substantial, supporting the health and well-being of beneficiaries.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This suggests that the primary award went to a large business. Further analysis would be needed to determine if Laboratory Corporation of America has a history of subcontracting with small businesses on similar contracts or if there are broader VA initiatives to engage small businesses in the broader healthcare supply chain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures are embedded in the firm-fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency is generally maintained through contract databases, though detailed performance metrics and quality assurance reports may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

VA Medical Care
Clinical Laboratory Services
Diagnostic Testing Contracts
Federal Healthcare Procurement

Risk Flags

Contract duration is relatively short, requiring potential for follow-on contracts.
Dependence on a single large provider may limit future flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.7 million to LABORATORY CORPORATION OF AMERICA. REFERENCE LAB TESTING

Who is the contractor on this award?

The obligated recipient is LABORATORY CORPORATION OF AMERICA.

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 $2.7 million.

What is the period of performance?

Start: 2024-10-01. End: 2025-03-31.

What is the historical spending pattern of the VA on reference laboratory testing services, and how does this award compare?

Analyzing the VA's historical spending on reference laboratory testing requires accessing procurement data over several fiscal years. Typically, the VA procures a significant volume of laboratory services, both in-house and through external contracts, to support its vast network of healthcare facilities. This $2.71 million award for a six-month period represents a substantial, but not necessarily unprecedented, expenditure for specialized reference testing. To provide a comparative context, one would examine annual spending trends, the number and value of similar reference lab contracts awarded in previous years, and the primary contractors utilized. This helps determine if the current award is in line with historical investment, potentially indicating stable demand or a shift in procurement strategy. Factors such as changes in veteran population, healthcare policy, or technological advancements in diagnostics can influence these spending patterns over time.

What is Laboratory Corporation of America's track record with the Department of Veterans Affairs and other federal agencies?

Laboratory Corporation of America (Labcorp) is a major player in the clinical laboratory services market and has a significant history of contracting with federal agencies, including the Department of Veterans Affairs (VA). Their track record typically involves providing a wide range of diagnostic testing services. When assessing their performance with the VA, it's important to review past contract awards, their values, durations, and any reported performance issues or successes. Federal procurement databases often contain information on past performance evaluations, though these are not always publicly detailed. Labcorp's experience with other federal entities, such as the Department of Defense or civilian agencies requiring similar laboratory support, also provides insight into their capacity, reliability, and ability to meet stringent government requirements. A review of their performance history would focus on on-time delivery, quality of services, responsiveness to issues, and adherence to contract terms.

How does the pricing structure (firm-fixed-price) of this contract influence value for money and risk allocation?

The firm-fixed-price (FFP) contract structure for this reference laboratory testing award is designed to provide cost certainty for the Department of Veterans Affairs (VA). Under an FFP agreement, the contractor, Laboratory Corporation of America, is obligated to perform the specified scope of work for a predetermined price, regardless of their actual costs incurred. This shifts the primary cost risk to the contractor. For the VA, this means the total expenditure is known upfront, simplifying budget management and protecting against unexpected cost increases. From a value-for-money perspective, an FFP contract is advantageous when the scope of work is clearly defined and unlikely to change significantly. It incentivizes the contractor to be efficient and manage their costs effectively to maximize profit. However, if the scope is poorly defined or unforeseen complexities arise, the contractor may face financial strain, potentially impacting service quality or leading to disputes. Therefore, the success of an FFP contract hinges on meticulous SOW definition and robust oversight.

What are the potential risks associated with relying on a single large provider like Laboratory Corporation of America for critical reference lab services?

Relying on a single large provider like Laboratory Corporation of America (Labcorp) for critical reference laboratory testing introduces several potential risks. Firstly, there's a risk of vendor lock-in, where the VA becomes heavily dependent on Labcorp's services, potentially limiting future flexibility in sourcing or negotiating better terms. Secondly, if Labcorp experiences operational disruptions—such as equipment failures, staffing shortages, or cyber incidents—it could lead to significant delays or interruptions in essential testing, directly impacting veteran care. Thirdly, a lack of direct competition for subsequent contract renewals could potentially lead to less favorable pricing or service levels over time. While Labcorp is a reputable provider, the concentration of critical services with one entity necessitates robust performance monitoring, contingency planning, and proactive relationship management by the VA to mitigate these risks.

What is the typical market size and competitive landscape for reference laboratory testing services procured by federal agencies?

The market for reference laboratory testing services is substantial and highly competitive, serving both public and private healthcare sectors. Federal agencies, particularly the Department of Veterans Affairs (VA) and the Department of Defense (DoD), are significant purchasers of these services due to their large patient populations and the specialized nature of many diagnostic tests. The competitive landscape includes several large, national laboratory providers, such as Laboratory Corporation of America (Labcorp) and Quest Diagnostics, alongside numerous regional and specialized laboratories. These companies compete on factors including test menu breadth and depth, turnaround times, quality assurance, geographic reach, and price. Federal procurement often involves full and open competition, driving competitive pricing, but contracts can also be awarded through other mechanisms depending on specific needs and agency policies. The overall market size is measured in billions of dollars annually, reflecting the critical role of laboratory diagnostics in modern healthcare.

Industry Classification

NAICS: Health Care and Social Assistance › Medical and Diagnostic Laboratories › Medical Laboratories

Product/Service Code: MEDICAL SERVICES › LABORATORY TESTING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Bode Cellmark Forensics Inc.

Address: 231 MAPLE AVE, BURLINGTON, NC, 27215

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

Financial Breakdown

Contract Ceiling: $2,711,212

Exercised Options: $2,711,212

Current Obligation: $2,711,212

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: V797D50532

IDV Type: FSS

Timeline