VA awards $126.7M for kidney dialysis services, with Davita Inc. as the primary contractor

Contract Overview

Contract Amount: $126,689,385 ($126.7M)

Contractor: Davita Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-04-01

End Date: 2017-09-30

Contract Duration: 182 days

Daily Burn Rate: $696.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Healthcare

Official Description: IGF::CT::IGF 3RD-4TH QTR EXPRESS REPORT:

Place of Performance

Location: DENVER, DENVER County, COLORADO, 80202

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $126.7 million to DAVITA INC. for work described as: IGF::CT::IGF 3RD-4TH QTR EXPRESS REPORT: Key points: 1. Contract value represents significant investment in essential healthcare services. 2. Full and open competition suggests a potentially competitive bidding process. 3. Fixed-price contract with economic price adjustment introduces some cost fluctuation risk. 4. Short contract duration (182 days) may indicate a bridge or specific project need. 5. Focus on kidney dialysis centers highlights a critical area of patient care. 6. Contract awarded to a single entity, Davita Inc., warrants review of market concentration.

Value Assessment

Rating: fair

The contract value of $126.7 million for a 182-day period is substantial, indicating a high demand for kidney dialysis services. Benchmarking this against similar contracts is challenging without more specific service details and geographic scope. However, the fixed-price nature with economic price adjustments suggests an attempt to control costs while accounting for potential market fluctuations in supplies or labor. The per-unit cost is not directly calculable from the provided data, but the overall award suggests a significant expenditure for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The data does not specify the number of bidders, which is crucial for assessing the true level of competition. A robust competition typically leads to better pricing and value for the government. The fact that it was competed openly is a positive sign for price discovery, though the ultimate outcome depends on the number and quality of bids received.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve service quality, ensuring the government receives the best possible value.

Public Impact

Beneficiaries include veterans requiring ongoing kidney dialysis treatment. Services delivered are critical for managing end-stage renal disease. Geographic impact is concentrated in Colorado, as indicated by the 'SN' field. Workforce implications include the need for skilled medical professionals in dialysis centers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for over-reliance on a single large provider (Davita Inc.) if this is a recurring award.
Economic price adjustment clause could lead to costs exceeding initial projections.
Short contract duration might imply a lack of long-term strategic planning or a temporary solution.

Positive Signals

Awarded through full and open competition, suggesting a fair process.
Addresses a critical healthcare need for veterans.
Contract is fixed-price, providing some cost certainty.

Sector Analysis

The healthcare sector, specifically the provision of specialized medical services like kidney dialysis, is a significant area of federal spending. This contract falls within the broader category of healthcare services, which includes a vast network of providers, equipment manufacturers, and pharmaceutical companies. The market for dialysis services is often characterized by a few large national providers, making competition dynamics particularly important. This award to Davita Inc. represents a portion of the government's overall expenditure on healthcare for beneficiaries.

Small Business Impact

The provided data indicates that small business participation (sb: false) and set-asides (ss: false) were not factors in this specific award. This suggests that the contract was not specifically targeted towards small businesses, and large businesses were the primary participants in the competition. Consequently, there are no direct subcontracting implications for small businesses stemming from this particular award, nor a direct positive impact on the small business ecosystem through this contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' procurement and program management offices. The Inspector General's office within the VA would have jurisdiction to investigate any potential fraud, waste, or abuse related to the contract's execution. Transparency is generally facilitated through contract databases like FPDS, where award details are published. Accountability measures would involve performance monitoring and adherence to the contract's terms and conditions.

Related Government Programs

VA Medical Care Programs
Medicare ESRD Program
Medicaid Kidney Disease Services
TRICARE Healthcare Services

Risk Flags

Potential for cost increases due to economic price adjustment.
Limited competition dynamics in specialized healthcare markets.
Concentration of service provision with a single large contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $126.7 million to DAVITA INC.. IGF::CT::IGF 3RD-4TH QTR EXPRESS REPORT:

Who is the contractor on this award?

The obligated recipient is DAVITA INC..

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 $126.7 million.

What is the period of performance?

Start: 2017-04-01. End: 2017-09-30.

What is Davita Inc.'s track record with the Department of Veterans Affairs for similar dialysis services?

Davita Inc. has a significant history of providing healthcare services, including dialysis, to various government agencies. For the Department of Veterans Affairs (VA), Davita has been a key provider, often through competitive contracts. Analyzing past VA contracts with Davita would reveal their performance history, including any quality issues, cost overruns, or compliance problems. A review of IG reports and contract performance evaluations related to Davita's previous VA engagements would offer insight into their reliability and value proposition for essential services like kidney dialysis. This specific contract, awarded in 2017, is one data point in a larger relationship that warrants a broader look at their overall performance trends with the VA.

How does the awarded amount compare to the VA's historical spending on kidney dialysis in Colorado?

The awarded amount of $126.7 million for a 182-day period represents a substantial expenditure for kidney dialysis services in Colorado. To benchmark this effectively, one would need to compare it against the VA's average spending per day or per patient for dialysis services in the same geographic region over previous years. Analyzing historical data for similar contracts, or even the aggregate spending on dialysis within VA facilities in Colorado, would provide context. If this award represents a significant increase or decrease compared to prior periods, it could indicate changes in service needs, market pricing, or competition levels. Without historical spending data specific to VA dialysis in Colorado, a precise comparison is difficult, but the magnitude of this single award suggests a high volume of service or a high cost per service.

What are the primary risk indicators associated with this fixed-price contract with economic price adjustment?

The primary risk indicator for this contract is the 'economic price adjustment' (EPA) clause. While the base price is fixed, the EPA allows for adjustments based on fluctuations in specific economic factors, such as inflation, labor costs, or material prices. This introduces a degree of cost uncertainty for the government, as the final cost could exceed the initially anticipated fixed price. The risk is that these adjustments could lead to higher-than-budgeted expenditures if economic conditions are unfavorable. The short duration of the contract (182 days) might mitigate some of this risk by limiting the period over which adjustments can occur, but it also suggests potential instability or a need for rapid service provision, which can carry its own operational risks.

How effective are VA's full and open competition processes in securing competitive pricing for specialized healthcare services like dialysis?

The effectiveness of VA's full and open competition for specialized healthcare services like dialysis can vary. While the process itself is designed to encourage broad participation and drive competitive pricing, the actual outcome depends heavily on the market structure for that specific service and region. For dialysis, the market often features a few dominant national providers, which can limit the number of truly competitive bids. If only a few bidders participate, or if the incumbent provider has significant advantages, the competition may not yield the lowest possible price. Therefore, while 'full and open' is the ideal, its effectiveness in practice for dialysis services hinges on the number of qualified and willing bidders and the specific terms of the solicitation.

What are the implications of awarding a large contract like this to a single entity, Davita Inc., for the long-term availability of dialysis services?

Awarding a significant contract like this $126.7 million contract to a single entity, Davita Inc., can have several long-term implications. On one hand, it can ensure continuity of care and leverage the expertise of an established provider. On the other hand, it raises concerns about market concentration and potential over-reliance. If Davita becomes the primary or sole provider for a large volume of VA dialysis needs in a region, it could reduce future competition, potentially leading to higher prices in subsequent contract awards. It also concentrates risk; if Davita faces operational issues, it could significantly disrupt services for veterans. The VA must carefully monitor market dynamics and consider strategies to foster broader competition in the future to ensure sustained access and value.

Industry Classification

NAICS: Health Care and Social Assistance › Outpatient Care Centers › Kidney Dialysis Centers

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 2000 16TH ST, DENVER, CO, 80202

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

Financial Breakdown

Contract Ceiling: $126,689,385

Exercised Options: $126,689,385

Current Obligation: $126,689,385

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0013

IDV Type: IDC

Timeline