VA's $80.5M kidney dialysis contract awarded to Fresenius Medical Care Holdings Inc. for 182 days

Contract Overview

Contract Amount: $80,500,271 ($80.5M)

Contractor: Fresenius Medical Care Holdings Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-04-01

End Date: 2017-09-30

Contract Duration: 182 days

Daily Burn Rate: $442.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

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

Place of Performance

Location: WALTHAM, MIDDLESEX County, MASSACHUSETTS, 02451

State: Massachusetts Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $80.5 million to FRESENIUS MEDICAL CARE HOLDINGS INC for work described as: IGF::CT::IGF 3RD-4TH QTR EXPRESS REPORT: Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract's duration of 182 days indicates a short-term need or bridge contract. 3. The firm-fixed-price contract type shifts risk to the contractor for cost overruns. 4. Awarded as a delivery order under a larger contract vehicle. 5. The specific product/service code (PSC) is not detailed, limiting granular analysis. 6. The contract was awarded in Massachusetts, indicating a specific geographic focus.

Value Assessment

Rating: fair

The contract value of $80.5 million for a 182-day period is substantial, averaging over $442,000 per day. Without comparable short-term contracts for kidney dialysis services, it is difficult to definitively benchmark value. However, the daily rate suggests a significant cost. The firm-fixed-price structure is generally favorable for the government when scope is well-defined, but the high daily cost warrants scrutiny.

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 number of bidders is not specified, but this method generally promotes price discovery and potentially lower costs for the government. The use of a delivery order suggests this was part of a pre-existing contract vehicle, which may have its own competition history.

Taxpayer Impact: A competitive award process is beneficial for taxpayers as it encourages multiple vendors to offer their best pricing, potentially leading to cost savings compared to sole-source or limited competition awards.

Public Impact

Veterans in Massachusetts requiring kidney dialysis services are the primary beneficiaries. The contract ensures the continued provision of essential medical services for veterans. The geographic impact is concentrated in Massachusetts. The contract supports the healthcare workforce involved in providing dialysis treatment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High daily cost warrants further investigation into cost-effectiveness for the short duration.
Lack of specific service details within the provided data limits a full understanding of value.
The short duration could indicate a reactive procurement rather than strategic planning.

Positive Signals

Awarded through full and open competition, suggesting a robust market engagement.
Firm-fixed-price contract type provides cost certainty to the government.
Ensures continuity of critical healthcare services for veterans.

Sector Analysis

The healthcare sector, specifically medical services, is characterized by high demand and specialized providers. Kidney dialysis centers are a critical component of care for patients with end-stage renal disease. Federal spending in this area often involves large contracts to ensure access to care for beneficiaries, such as veterans. Benchmarking would typically involve comparing daily rates or per-patient costs for similar services across different healthcare providers and government agencies.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. As a delivery order under a potentially larger contract vehicle, small business participation would depend on the terms of the base contract. Without further information, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' procurement and program management offices. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is facilitated by contract award databases, but detailed performance metrics and cost breakdowns are often not publicly available.

Related Government Programs

Department of Veterans Affairs Healthcare Services
Medicare/Medicaid Kidney Dialysis Services
Federal Supply Schedule (FSS) Contracts

Risk Flags

High Daily Cost
Short Contract Duration
Lack of Specific Service Metrics in Summary

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $80.5 million to FRESENIUS MEDICAL CARE HOLDINGS INC. IGF::CT::IGF 3RD-4TH QTR EXPRESS REPORT:

Who is the contractor on this award?

The obligated recipient is FRESENIUS MEDICAL CARE HOLDINGS 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 $80.5 million.

What is the period of performance?

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

What is the historical spending pattern for kidney dialysis services by the Department of Veterans Affairs?

The Department of Veterans Affairs (VA) has consistently allocated significant funds towards healthcare services, including kidney dialysis. Historical data indicates a steady demand for these services due to the prevalence of chronic kidney disease among the veteran population. Spending fluctuates based on the number of veterans requiring treatment, the complexity of their conditions, and the prevailing contract rates. Analyzing past contract awards for similar services, including those with Fresenius Medical Care Holdings Inc. and other providers, would reveal trends in pricing, competition levels, and the overall volume of services procured. For instance, prior years might show longer-term contracts or different competitive landscapes that could provide context for the short-term, high-value award in question.

How does the daily cost of this contract compare to other VA dialysis contracts or industry benchmarks?

The daily cost of approximately $442,309 for this 182-day contract is exceptionally high. Without specific details on the scope of services (e.g., number of patients served, type of dialysis, included supplies), a precise comparison is challenging. However, this daily rate significantly exceeds typical benchmarks for outpatient dialysis centers. For context, Medicare reimbursement rates for dialysis treatments are considerably lower, and even high-acuity inpatient dialysis services rarely reach such daily expenditures per patient. This high cost suggests either a very large patient volume, highly specialized services, or potentially an inflated price for a short-term need. Further investigation into the contract's specific deliverables and comparable short-term emergency procurements would be necessary for a definitive assessment.

What is Fresenius Medical Care Holdings Inc.'s track record with the VA and other federal agencies?

Fresenius Medical Care Holdings Inc. is a major provider of kidney dialysis products and services globally and has a significant history of contracting with the U.S. government, particularly the Department of Veterans Affairs. They are often awarded contracts for dialysis services at VA medical centers and community-based outpatient clinics. Their track record typically involves providing routine dialysis treatments, managing dialysis facilities, and supplying necessary equipment and consumables. While they are a large, established provider, like any major contractor, they may have faced scrutiny or performance issues on specific contracts. Reviewing past performance evaluations, contract awards, and any associated disputes or corrective actions would provide a comprehensive view of their reliability and value proposition to the VA.

What are the potential risks associated with a short-duration, high-value contract like this?

Short-duration, high-value contracts, such as this $80.5 million delivery order for kidney dialysis services lasting 182 days, carry specific risks. One primary risk is the potential for inflated pricing due to the urgency or perceived temporary nature of the need, as vendors may factor in higher overhead or profit margins for shorter engagements. Another risk is the lack of continuity in care or service quality if the contract is not seamlessly transitioned or renewed. For the government, there's a risk of becoming dependent on a single provider for critical services without the benefit of long-term performance data. Furthermore, the short timeframe may limit thorough performance evaluation, making it harder to identify and address issues proactively, potentially leading to suboptimal outcomes or value for money.

Does the contract specify the number of veterans to be served or the volume of dialysis treatments?

The provided data summary does not explicitly state the number of veterans to be served or the specific volume of dialysis treatments anticipated under this $80.5 million contract. The contract is for 'Kidney Dialysis Centers' and awarded as a 'Delivery Order' with a 'Firm Fixed Price' type. Typically, such contracts would outline expected service levels, patient caseloads, or treatment volumes, often tied to performance metrics. The absence of this detail in the summary makes it difficult to assess the per-unit cost or the efficiency of the service delivery. It is likely that these specifics are detailed within the full contract documentation, which would be necessary for a complete analysis of the contract's value and operational scope.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fresenius Medical Care Capital City, LLC (UEI: 324661834)

Address: 920 WINTER ST, WALTHAM, MA, 02451

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

Financial Breakdown

Contract Ceiling: $80,500,271

Exercised Options: $80,500,271

Current Obligation: $80,500,271

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0019

IDV Type: IDC

Timeline