VA awards $164M Pharmacy Benefits Management contract to Palisade-Heritage Joint Venture II, LLC

Contract Overview

Contract Amount: $164,241 ($164.2K)

Contractor: Palisade-Heritage Joint Venture II, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-06-01

End Date: 2027-05-31

Contract Duration: 1,094 days

Daily Burn Rate: $150/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMACY BENEFITS MANAGEMENT

Place of Performance

Location: FARGO, CASS County, NORTH DAKOTA, 58102

State: North Dakota Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $164,240.99 to PALISADE-HERITAGE JOINT VENTURE II, LLC for work described as: PHARMACY BENEFITS MANAGEMENT Key points: 1. Contract aims to enhance pharmacy benefit management services for veterans. 2. Competition dynamics suggest a potentially competitive bidding process for this award. 3. Fixed-price contract type may offer cost certainty for the government. 4. Contract duration of approximately three years provides a stable service period. 5. Awarded by the Department of Veterans Affairs, aligning with its mission to serve veterans. 6. The contract falls under the 'COMPETED UNDER SAP' category, indicating a streamlined procurement process.

Value Assessment

Rating: good

The contract value of $164.24 million over approximately three years for Pharmacy Benefit Management services appears reasonable given the scope. Benchmarking against similar large-scale PBM contracts is challenging without more specific service details, but the firm-fixed-price structure suggests a defined cost expectation. The award to a joint venture indicates a potential for specialized expertise. Further analysis would require comparing the specific services and deliverables to other VA or DoD PBM contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was competed under the Simplified Acquisition Procedures (SAP), which typically allows for full and open competition among eligible vendors. While the specific number of bids received is not detailed, the 'COMPETED UNDER SAP' designation suggests that multiple offers were likely solicited and evaluated. This approach aims to ensure fair pricing and access to a range of qualified contractors.

Taxpayer Impact: Competing under SAP generally promotes price discovery and can lead to more favorable pricing for taxpayers by encouraging a competitive environment, even within simplified acquisition thresholds.

Public Impact

Veterans will benefit from potentially improved access to and management of their prescription medications. The contract supports the delivery of essential pharmacy benefit management services. The geographic impact is likely nationwide, serving veterans across various locations. This contract may have implications for the pharmacy and healthcare administration workforce, potentially creating or sustaining jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if transition costs are high.
Ensuring consistent service quality across all veteran populations.
Monitoring contract performance to ensure adherence to service level agreements.

Positive Signals

Firm-fixed-price contract provides cost predictability.
Award to a joint venture may bring specialized expertise.
Streamlined procurement process (SAP) can lead to faster service delivery.

Sector Analysis

The Pharmacy Benefit Management (PBM) sector is a critical component of the healthcare industry, managing prescription drug benefits for various payers, including government agencies. The Department of Veterans Affairs' spending in this area is substantial, reflecting the healthcare needs of its large veteran population. This contract fits within the broader trend of government agencies outsourcing complex administrative functions to specialized third-party administrators to improve efficiency and control costs. Comparable spending benchmarks would typically involve analyzing other large federal PBM contracts or contracts for third-party administration of insurance and pension funds.

Small Business Impact

Information regarding small business set-asides or subcontracting plans was not explicitly provided in the data. However, the 'COMPETED UNDER SAP' designation does not preclude the use of small business preferences or set-asides if applicable. Further investigation into the specific solicitation details would be needed to determine the extent of small business participation or impact.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures will be defined within the contract's terms and conditions, including performance metrics and service level agreements. Transparency is generally facilitated through contract award announcements and public databases, though detailed performance data may be less accessible. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Federal Civilian Health and Medical Program of the Uniformed Services (TRICARE)
Medicare Part D Prescription Drug Benefit
Medicaid Pharmacy Services

Risk Flags

Potential for service disruption during transition.
Ensuring cost-effectiveness of drug procurement and management.
Data security and patient privacy compliance.
Contractor performance variability.
Adequacy of competition under SAP for long-term needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $164,240.99 to PALISADE-HERITAGE JOINT VENTURE II, LLC. PHARMACY BENEFITS MANAGEMENT

Who is the contractor on this award?

The obligated recipient is PALISADE-HERITAGE JOINT VENTURE II, 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 $164,240.99.

What is the period of performance?

Start: 2024-06-01. End: 2027-05-31.

What is the specific track record of Palisade-Heritage Joint Venture II, LLC in managing large-scale pharmacy benefit programs for federal agencies?

Detailed information on the specific track record of Palisade-Heritage Joint Venture II, LLC in managing large-scale pharmacy benefit programs for federal agencies is not readily available in the provided data. As a joint venture, its performance history may be a composite of its individual member companies' experiences. To assess their track record, one would need to investigate past performance on similar contracts, client testimonials, and any reported successes or challenges. Federal procurement databases and agency performance reports are key resources for this type of analysis. Understanding their experience with the specific complexities of veteran healthcare and pharmacy needs would be particularly important for evaluating their suitability for this contract.

How does the awarded price of $164.24 million compare to the estimated value or market rates for similar Pharmacy Benefit Management services?

The awarded price of $164.24 million for Pharmacy Benefit Management services over approximately three years represents an average annual value of roughly $54.7 million. Without specific details on the scope of services, number of covered lives, and specific PBM functions (e.g., formulary management, claims processing, mail-order pharmacy, specialty drug management), a direct comparison to market rates is difficult. However, this figure can be benchmarked against other large federal contracts for PBM services or third-party administration. Factors such as the complexity of the veteran population's needs, the specific negotiated drug pricing agreements, and administrative overhead will influence the overall cost. A detailed cost-benefit analysis comparing this contract's value proposition against alternative service providers or in-house management would be necessary for a comprehensive assessment.

What are the primary risk indicators associated with this contract, and how are they being mitigated?

Primary risk indicators for this Pharmacy Benefit Management contract could include potential service disruptions, challenges in managing drug costs effectively, data security and privacy breaches, and difficulties in achieving desired veteran satisfaction levels. Mitigation strategies are typically embedded within the contract itself. The firm-fixed-price structure helps mitigate cost overrun risks for the government. Performance standards, service level agreements (SLAs), and regular performance reviews are crucial for ensuring service quality and addressing potential issues proactively. The Department of Veterans Affairs will likely have robust oversight mechanisms in place, including contract management personnel and potentially quality assurance surveillance plans, to monitor contractor performance and identify risks early. The joint venture structure itself might introduce risks related to internal coordination and accountability among partners.

How effective is the Department of Veterans Affairs in managing its Pharmacy Benefit Management contracts to ensure optimal value and service delivery for veterans?

The effectiveness of the Department of Veterans Affairs (VA) in managing its Pharmacy Benefit Management (PBM) contracts is a complex issue often subject to scrutiny. The VA manages a vast healthcare system with unique challenges, including serving a diverse veteran population with complex health needs. Historically, the VA has faced challenges related to IT modernization, contract management, and ensuring timely access to care and medications. However, the VA has also made significant strides in improving its PBM operations, leveraging technology and strategic partnerships to enhance efficiency and veteran outcomes. The success of individual contracts, like this one with Palisade-Heritage Joint Venture II, LLC, depends heavily on the specific terms, the contractor's performance, and the VA's ongoing oversight and program management capabilities. Continuous evaluation of performance metrics, veteran feedback, and cost-effectiveness is essential for ensuring optimal value and service delivery.

What are the historical spending patterns of the Department of Veterans Affairs on Pharmacy Benefit Management services, and how does this award fit into that trend?

The Department of Veterans Affairs (VA) consistently allocates significant resources to Pharmacy Benefit Management (PBM) services due to the large number of veterans utilizing its healthcare system and the high cost of prescription drugs. Historical spending patterns show a substantial and often increasing trend in pharmaceutical expenditures, driven by factors such as an aging veteran population, the introduction of new and expensive therapies, and the expansion of healthcare services. This $164.24 million award for a three-year period fits within this established pattern of substantial investment in PBM. It represents a continuation of the VA's strategy to manage its pharmaceutical benefits through contracted services, likely aiming for cost efficiencies and specialized expertise that may be difficult to replicate entirely in-house. Analyzing year-over-year spending and contract awards provides context for the scale and importance of PBM services within the VA's overall budget.

Industry Classification

NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds

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

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 36C26324Q0394

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5216 SAND TRAP PL, VALRICO, FL, 33596

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $224,241

Exercised Options: $164,241

Current Obligation: $164,241

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline