VA awards $2.27M for molecular diagnostic systems, bypassing competition

Contract Overview

Contract Amount: $2,268,519 ($2.3M)

Contractor: Cepheid

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-08-01

End Date: 2026-07-31

Contract Duration: 1,460 days

Daily Burn Rate: $1.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MOLECULAR DIAGNOSTIC TESTING SYSTEM LEASE AND PURCHASE OF INSTRUMENT SPECIFIC ASSAYS

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.3 million to CEPHEID for work described as: MOLECULAR DIAGNOSTIC TESTING SYSTEM LEASE AND PURCHASE OF INSTRUMENT SPECIFIC ASSAYS Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery. 2. The duration of the contract (4 years) suggests a long-term need for these diagnostic systems. 3. Focus on a specific type of diagnostic testing indicates a specialized requirement within the VA. 4. The award mechanism (Purchase Order) is typically used for simpler acquisitions, but here it covers a significant value. 5. Lack of competition may lead to higher costs for taxpayers compared to a more open bidding process. 6. The contract is for a lease and purchase, indicating a mixed acquisition strategy for the equipment and its associated consumables.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source nature and lack of publicly available comparable pricing for similar molecular diagnostic system leases and instrument-specific assays. The $2.27 million award over four years suggests a significant investment. Without competitive bids, it's difficult to ascertain if the VA secured the best possible price or if the current pricing reflects market value. Further analysis would require access to internal VA cost estimates or pricing data from similar sole-source awards for comparable systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Veterans Affairs did not solicit bids from multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The absence of competition means there was no opportunity for price negotiation or comparison against other market offerings, potentially limiting the government's ability to achieve the lowest possible price.

Taxpayer Impact: Taxpayers may be paying a premium for this molecular diagnostic system due to the lack of competitive bidding. Without competing offers, the VA may not have benefited from the cost savings that typically arise from a robust bidding process.

Public Impact

Veterans will benefit from access to advanced molecular diagnostic testing capabilities. The services delivered include the lease of diagnostic instruments and the purchase of specific assays for testing. The geographic impact is primarily within California, where the VA facility utilizing this system is located. This contract supports specialized laboratory functions within the VA healthcare system, potentially impacting diagnostic turnaround times and accuracy for patient care.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the sole-source justification makes it difficult to assess the necessity of this specific vendor.
The contract's duration could lock the VA into a specific technology, potentially hindering future adoption of more advanced or cost-effective solutions.
No small business set-aside was utilized, indicating no specific focus on engaging small businesses for this acquisition.

Positive Signals

Ensures access to critical molecular diagnostic testing for veterans.
The contract provides a clear period of performance, allowing for predictable resource allocation.
The firm fixed price contract type offers cost certainty for the VA over the contract duration.

Sector Analysis

The market for molecular diagnostic testing systems is a specialized segment within the broader healthcare and life sciences industry. This sector is characterized by rapid technological advancements and high research and development costs. Companies like Cepheid are key players, often holding patents or proprietary technology for specific diagnostic assays. Federal spending in this area supports the government's ability to provide advanced medical diagnostics, particularly for its own populations like veterans. Comparable spending benchmarks are difficult to establish without detailed specifications and competitive data, but significant investments are common for advanced medical equipment and associated consumables.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to Cepheid, a known entity in the diagnostics field, suggests a focus on established capabilities rather than fostering small business participation in this particular acquisition. The impact on the small business ecosystem for this specific contract is likely minimal, as the procurement did not prioritize small business engagement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. As a purchase order, it may have less formal oversight than a larger, more complex contract. Accountability measures would be tied to the delivery of the leased equipment and the performance of the assays as per the contract's terms. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Veterans Affairs Medical Equipment Procurement
Molecular Diagnostic Testing Services
In-Vitro Diagnostic Substance Manufacturing
Federal Healthcare IT Contracts

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Lack of transparency in the justification for sole-source procurement.
Potential for vendor lock-in with specialized diagnostic equipment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.3 million to CEPHEID. MOLECULAR DIAGNOSTIC TESTING SYSTEM LEASE AND PURCHASE OF INSTRUMENT SPECIFIC ASSAYS

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 $2.3 million.

What is the period of performance?

Start: 2022-08-01. End: 2026-07-31.

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

Cepheid has a history of contracts with various federal agencies, including the Department of Veterans Affairs (VA) and the Department of Defense (DoD). Their contracts often involve the supply of molecular diagnostic systems and associated reagents. For instance, the VA has previously awarded contracts for Cepheid's GeneXpert systems and cartridges. The nature of these contracts can vary, including sole-source awards for specific needs or competitive bids for broader requirements. Analyzing past performance and pricing trends across these agencies can provide context for the current award, though specific details on past performance quality and pricing competitiveness would require deeper data dives into contract histories and performance reviews.

How does the $2.27 million value compare to similar molecular diagnostic system contracts awarded by the VA or other federal agencies?

Directly comparing the $2.27 million value of this four-year lease and purchase contract to similar molecular diagnostic system contracts is challenging without more specific details on the scope of services, the exact models of instruments leased, and the volume of assays purchased. However, federal agencies often procure advanced diagnostic equipment and consumables, with contract values ranging from tens of thousands to millions of dollars, depending on the scale and technology. The sole-source nature of this award means it cannot be directly benchmarked against competitive bids for similar systems. To provide a more precise comparison, one would need to identify contracts with identical or highly similar diagnostic platforms, lease terms, and assay volumes awarded through competitive processes.

What are the primary risks associated with a sole-source award for essential medical equipment like molecular diagnostic systems?

The primary risks associated with a sole-source award for essential medical equipment include a lack of price competition, which can lead to inflated costs for the government and taxpayers. Without competing bids, there is less incentive for the sole provider to offer the most competitive pricing. Additionally, sole-source awards can limit the government's access to innovative technologies or alternative solutions that might be offered by other vendors. There's also a risk of vendor lock-in, where the agency becomes dependent on a single supplier, potentially facing challenges if that supplier's products become obsolete, too expensive, or if the supplier experiences business disruptions. Ensuring the justification for the sole-source award is robust and that the pricing is fair and reasonable becomes critical.

What is the expected effectiveness of this molecular diagnostic system in improving patient care for veterans?

Molecular diagnostic systems are crucial for rapid and accurate identification of infectious diseases, genetic disorders, and other conditions. For veterans, this can translate to faster diagnosis, more targeted treatment, and improved health outcomes. The effectiveness of this specific system, a lease and purchase of instrument-specific assays, will depend on its ability to provide timely and reliable results for the intended diagnostic tests. If the system enables quicker turnaround times for critical tests compared to previous methods, it can lead to earlier intervention, reduced hospital stays, and better management of chronic or acute conditions. The VA's choice of this system suggests an expectation of enhanced diagnostic capabilities that directly benefit veteran healthcare.

How has federal spending on molecular diagnostic systems evolved over the past five years, and what trends are apparent?

Federal spending on molecular diagnostic systems has generally seen an upward trend over the past five years, driven by advancements in technology, increased demand for personalized medicine, and a greater focus on infectious disease detection, particularly highlighted by the COVID-19 pandemic. Agencies like the Department of Health and Human Services (HHS), the Department of Defense (DoD), and the Department of Veterans Affairs (VA) are significant purchasers. Spending patterns often reflect the introduction of new platforms, the expansion of testing capabilities, and the need for rapid diagnostics. While specific aggregate data requires detailed analysis of federal procurement databases, the overall market growth suggests sustained investment in this area to support public health initiatives and healthcare delivery.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › In-Vitro Diagnostic Substance Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $2,268,519

Exercised Options: $2,268,519

Current Obligation: $2,268,519

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline