VA awards $41M+ for surgical instruments, with limited competition and a high per-unit cost

Contract Overview

Contract Amount: $41,033,070 ($41.0M)

Contractor: Medtronic Care Management Services, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-09-01

End Date: 2022-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.4M/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT FOR SEPTEMBER 2022

Place of Performance

Location: GOLDEN, JEFFERSON County, COLORADO, 80401

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $41.0 million to MEDTRONIC CARE MANAGEMENT SERVICES, LLC for work described as: EXPRESS REPORT FOR SEPTEMBER 2022 Key points: 1. The contract value of over $41 million for a single month indicates significant demand for these specialized instruments. 2. The 'NOT COMPETED' status raises concerns about potential overpayment and lack of market-driven pricing. 3. The high dollar amount for a short duration suggests a critical need or a specific project phase. 4. The absence of small business set-asides means opportunities for smaller firms in this sector may be limited. 5. The fixed-price contract type offers some cost certainty but doesn't mitigate the risk of a non-competitive award. 6. The specific NAICS code points to a specialized manufacturing sector with potentially few suppliers.

Value Assessment

Rating: questionable

The award of over $41 million for a single month's delivery order is substantial. Without a competitive process, it is difficult to benchmark the value for money. The provided data does not include unit costs or quantities, making a direct comparison to similar contracts or market rates impossible. The lack of competition inherently limits the government's ability to secure the best possible pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This indicates that the Department of Veterans Affairs likely identified a single source for these specific surgical and medical instruments. The lack of competition means that multiple vendors were not given the opportunity to bid, which can lead to higher prices and reduced innovation.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not leverage market forces to drive down costs.

Public Impact

Veterans will benefit from the availability of necessary surgical and medical instruments for their care. The contract supports the provision of critical medical supplies within the Department of Veterans Affairs healthcare system. The geographic impact is primarily within the VA healthcare facilities that utilize these instruments. The contract supports the manufacturing and supply chain related to surgical and medical instruments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards reduce transparency and accountability.
Limited data provided to assess true value for money.
Short contract duration (29 days) with a high value raises questions about planning and urgency.

Positive Signals

Contract ensures availability of critical medical supplies for veterans.
Fixed-price contract offers some cost predictability.
Award is to a known entity within the medical device sector.

Sector Analysis

The contract falls under the Surgical and Medical Instrument Manufacturing (NAICS 339112) sector. This industry is characterized by the production of a wide range of medical devices, from simple instruments to complex diagnostic equipment. The market can be highly specialized, with significant barriers to entry due to regulatory requirements and R&D investment. Federal spending in this area is crucial for supporting healthcare delivery, particularly within agencies like the VA. Comparable spending benchmarks are difficult to establish without more specific product details, but the overall federal market for medical supplies is substantial.

Small Business Impact

The contract data indicates that this award was not subject to small business set-asides (ss: false, sb: false). This suggests that the procurement was either too specialized, too large in scope for typical small business capabilities, or that the contracting officer did not identify opportunities for small business participation. Consequently, this specific award does not appear to directly benefit the small business ecosystem through set-aside provisions or mandated subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' internal procurement and financial management systems. As a sole-source award, it may receive heightened scrutiny from program managers and potentially the VA Office of Inspector General if specific concerns arise regarding its necessity or pricing. Transparency is limited due to the non-competitive nature, making external oversight more challenging.

Related Government Programs

Department of Veterans Affairs Medical Supplies
Surgical Instrument Procurement
Medical Device Manufacturing Contracts
Federal Healthcare Spending

Risk Flags

Sole-source award raises concerns about price reasonableness.
Lack of competition limits potential for cost savings.
High dollar value for a short period requires justification.
Limited data available for comprehensive value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $41.0 million to MEDTRONIC CARE MANAGEMENT SERVICES, LLC. EXPRESS REPORT FOR SEPTEMBER 2022

Who is the contractor on this award?

The obligated recipient is MEDTRONIC CARE MANAGEMENT SERVICES, 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 $41.0 million.

What is the period of performance?

Start: 2022-09-01. End: 2022-09-30.

What is the specific type of surgical and medical instrument being procured under this contract?

The provided data does not specify the exact type of surgical and medical instruments. The NAICS code 339112, 'Surgical and Medical Instrument Manufacturing,' covers a broad range of products. To understand the value and necessity of this $41 million award, further details on the specific instruments (e.g., scalpels, diagnostic tools, implants, monitoring devices) and their intended use within the VA healthcare system would be required. Without this specificity, it's challenging to assess if the price is justified or if alternative, more cost-effective solutions exist.

What is the historical spending pattern for this specific type of instrument with this contractor or similar contractors?

Historical spending data for this specific instrument and contractor is not provided in the Express Report. However, the award of over $41 million within a single month (September 2022) for a delivery order suggests a significant, potentially recurring need. To assess historical patterns, one would need to examine contract awards for NAICS code 339112, particularly those related to surgical and medical instruments, over multiple fiscal years. Analyzing trends in award values, competition levels, and pricing for similar items would provide context for the current expenditure and help identify any deviations or escalations in spending.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided Express Report does not detail the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. For a delivery order of this magnitude, especially within a healthcare context, one would expect to see metrics related to delivery timeliness, product quality, defect rates, and potentially support services. The absence of this information makes it difficult to evaluate the contractor's performance and ensure that the VA is receiving the expected level of service and product quality commensurate with the $41 million expenditure.

Why was this contract awarded on a sole-source basis instead of being competed?

The reason for the sole-source award is not detailed in the Express Report. Typically, sole-source contracts are justified under specific circumstances, such as when only one responsible source can provide the required supplies or services, there is a public exigency, or the government has made a unique determination. For medical instruments, this could be due to proprietary technology, unique compatibility requirements with existing VA systems, or a critical, time-sensitive need where a full competition process would be impractical. A formal justification and approval (J&A) document would normally accompany such awards, outlining the rationale.

What is the estimated total contract value if this were a longer-term contract, not just a single month's delivery order?

The provided data represents a delivery order for a specific period (September 2022) with a value of $41,033,070.12. It is not indicative of a total contract value over a longer term. Delivery orders are typically issued against existing indefinite-delivery, indefinite-quantity (IDIQ) contracts or other contract vehicles. To estimate a longer-term value, one would need to identify the parent contract, its duration, ceiling value, and historical task order issuance. Without this information, projecting a total contract value beyond the reported month is speculative.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Surgical and Medical Instrument Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Medtronic Public Limited Company

Address: 7980 CENTURY BLVD, CHANHASSEN, MN, 55317

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

Financial Breakdown

Contract Ceiling: $200,000,000

Exercised Options: $41,033,070

Current Obligation: $41,033,070

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79122D0008

IDV Type: IDC

Timeline