VA awards $761K pharmacy services contract to South Dakota State University for 4 years

Contract Overview

Contract Amount: $761,484 ($761.5K)

Contractor: South Dakota State University

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-05-01

End Date: 2027-04-30

Contract Duration: 1,460 days

Daily Burn Rate: $522/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: BH: PHARMACY SERVICES -- SDSU (BASE YEAR + 9 OPTION YEARS)

Place of Performance

Location: HOT SPRINGS, FALL RIVER County, SOUTH DAKOTA, 57747

State: South Dakota Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $761,483.72 to SOUTH DAKOTA STATE UNIVERSITY for work described as: BH: PHARMACY SERVICES -- SDSU (BASE YEAR + 9 OPTION YEARS) Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. Firm-fixed-price structure shifts risk to the contractor, potentially leading to higher initial bids. 3. The contract duration of 4 years (including base and option years) provides stability but may not reflect evolving needs. 4. The North American Industry Classification System (NAICS) code 611310 indicates a focus on higher education services. 5. The award to a university suggests a focus on research, training, or specialized pharmaceutical services. 6. The contract value is relatively small, indicating a niche service requirement.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific service details or comparable contracts. The $761,483.72 award over four years averages to approximately $190,370 per year. Given the sole-source nature, it's difficult to assess if this represents competitive pricing. The firm-fixed-price contract type suggests that the contractor bears the cost risk, which can sometimes lead to higher initial pricing to account for unforeseen expenses. Without more context on the specific pharmacy services required by the VA and the scope of work, a definitive value-for-money assessment is limited.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not publicly competed. This typically occurs when only one responsible source is available or when the agency determines it is in the government's best interest to award to a specific entity. The lack of competition means that the VA did not benefit from multiple bids, which could have driven down the price and potentially led to a wider range of innovative solutions. The justification for this sole-source award would need to be reviewed to understand the specific circumstances.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as competition is a key driver for cost efficiency in government contracting.

Public Impact

Veterans in South Dakota may benefit from specialized pharmacy services facilitated by this contract. The contract supports educational and research activities at South Dakota State University related to pharmacy. The geographic impact is primarily focused on South Dakota, where the university is located and services are likely rendered. This contract could indirectly support the training and development of future pharmacists and pharmacy technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price discovery and potential cost savings for taxpayers.
Sole-source justification needs thorough review to ensure necessity and prevent potential impropriety.
Contract duration might not align with evolving VA pharmacy needs without clear modification clauses.
Scope of services is not detailed, making it difficult to assess performance metrics and value.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Award to an educational institution may foster innovation and specialized knowledge in pharmacy services.
Contract provides a stable funding stream for the awarded services over its duration.

Sector Analysis

The healthcare sector, particularly within the Department of Veterans Affairs, relies heavily on pharmaceutical services. This contract falls under the broader category of healthcare support services. While the NAICS code points to higher education, the VA's need for pharmacy services indicates a specialized application within this sector. Comparable spending benchmarks would typically involve contracts for pharmaceutical procurement, distribution, or specialized clinical pharmacy support. The value of this contract appears modest compared to large-scale pharmaceutical supply agreements but could be significant for the specific services provided by SDSU.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). Therefore, there are no direct implications for small business subcontracting goals related to this specific award. The focus is on a large educational institution, and the absence of small business considerations suggests that the services required were not deemed suitable for a small business set-aside or that no small businesses were identified as capable sources.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting officers and program managers. Accountability measures would be defined by the contract's performance standards and reporting requirements. Transparency is facilitated by the contract award notice, but further details on the specific services and performance would require access to the contract itself. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

VA Pharmacy Benefits Management (PBM)
VA Medical Care Programs
Federal Grants to Universities
Higher Education Support Services

Risk Flags

Sole-source award lacks competitive pricing validation.
Limited scope definition hinders comprehensive value assessment.
Potential for uncompetitive pricing due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $761,483.72 to SOUTH DAKOTA STATE UNIVERSITY. BH: PHARMACY SERVICES -- SDSU (BASE YEAR + 9 OPTION YEARS)

Who is the contractor on this award?

The obligated recipient is SOUTH DAKOTA STATE UNIVERSITY.

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 $761,483.72.

What is the period of performance?

Start: 2023-05-01. End: 2027-04-30.

What specific pharmacy services is South Dakota State University contracted to provide to the VA under this award?

The provided data does not specify the exact nature of the pharmacy services South Dakota State University is contracted to provide. The NAICS code 611310 (Colleges, Universities, and Professional Schools) suggests the services might be related to research, training, specialized pharmaceutical development, or educational programs that support VA pharmacy operations, rather than direct dispensing or procurement of medications. Further details would be found in the contract's statement of work (SOW). Without the SOW, it's impossible to determine if this is for clinical services, academic partnerships, or other specialized support.

What is the justification for awarding this contract on a sole-source basis to South Dakota State University?

The justification for a sole-source award typically stems from unique capabilities, specialized knowledge, or specific circumstances where only one entity can fulfill the requirement. For South Dakota State University, this could be due to their specific research programs, unique academic expertise in a niche area of pharmacy, existing partnerships with the VA, or perhaps the contract is tied to a grant or educational initiative. The Department of Veterans Affairs would have a formal justification document (e.g., a Justification and Approval - J&A) outlining the rationale for not competing the award, which is usually made public but not included in this data summary.

How does the firm-fixed-price contract type impact the risk and cost for both the VA and South Dakota State University?

A firm-fixed-price (FFP) contract is characterized by a set price that is not subject to adjustment based on the contractor's cost experience. For the VA, this means predictable costs, as they know the total amount they will pay, assuming the contractor meets all requirements. The risk of cost overruns lies entirely with South Dakota State University. If their costs to perform the services exceed the fixed price, their profit margin will decrease, or they could incur a loss. Conversely, if they manage their costs efficiently, their profit margin will be higher. This contract type incentivizes the contractor to control costs and perform efficiently.

What is the historical spending pattern for pharmacy services at the Department of Veterans Affairs, and how does this award compare?

Historical spending data for VA pharmacy services is extensive, as it is a core function. The VA manages one of the largest pharmacy programs in the nation, encompassing medication procurement, distribution, and clinical pharmacy services. This specific award of $761,483.72 over four years is relatively small in the context of the overall VA pharmacy budget, which runs into billions of dollars annually. This suggests that the contract is for a very specific, likely specialized, set of services provided by SDSU, rather than broad pharmaceutical supply or widespread clinical support. It represents a niche requirement within the larger VA healthcare system.

Are there any performance metrics or key performance indicators (KPIs) associated with this contract to ensure service quality?

The provided data does not include specific performance metrics or Key Performance Indicators (KPIs) for this contract. However, for any government contract, especially one involving healthcare services, performance standards are typically defined within the contract's Statement of Work (SOW) or a separate Performance Work Statement (PWS). These metrics would outline the expected quality, timeliness, and effectiveness of the services provided by South Dakota State University. The VA contracting officer and program managers are responsible for monitoring performance against these standards and taking corrective action if necessary. The firm-fixed-price nature implies that meeting these standards is crucial for the contractor's profitability.

Industry Classification

NAICS: Educational Services › Colleges, Universities, and Professional Schools › Colleges, Universities, and Professional Schools

Product/Service Code: MEDICAL SERVICES › MEDICAL, DENTAL, AND SURGICAL SVCS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C26322R0153

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2201 ADMINISTRATION LANE, BROOKINGS, SD, 57007

Business Categories: Category Business, Educational Institution, Government, Higher Education, U.S. National Government, Not Designated a Small Business, Higher Education (Public), U.S. Regional/State Government

Financial Breakdown

Contract Ceiling: $2,212,357

Exercised Options: $761,484

Current Obligation: $761,484

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline