VA awards $2.5M hearing aid contract to Starkey Labs, highlighting single-source procurement for electromedical apparatus

Contract Overview

Contract Amount: $2,526,917 ($2.5M)

Contractor: Starkey Laboratories Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2026-01-01

End Date: 2026-01-31

Contract Duration: 30 days

Daily Burn Rate: $84.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: JANUARY 2026 DATA - PURCHASE ORDER DATA FOR VA NATIONAL HEARING AID CONTRACT

Place of Performance

Location: EDEN PRAIRIE, HENNEPIN County, MINNESOTA, 55344

State: Minnesota Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.5 million to STARKEY LABORATORIES INC for work described as: EXPRESS REPORT: JANUARY 2026 DATA - PURCHASE ORDER DATA FOR VA NATIONAL HEARING AID CONTRACT Key points: 1. Contract value of $2.53 million for a 30-day period indicates a significant, albeit short-term, investment in hearing health technology. 2. The 'NOT COMPETED' status raises questions about potential missed opportunities for cost savings through competitive bidding. 3. Starkey Laboratories Inc. is the sole awardee, suggesting a specific need or existing relationship that bypassed a broader solicitation. 4. The contract falls under the Electromedical and Electrotherapeutic Apparatus Manufacturing NAICS code, placing it within a specialized industrial sector. 5. A firm-fixed-price contract type suggests that the price is set regardless of the actual costs incurred by the contractor. 6. The short duration of 30 days may point to an urgent need or a bridge contract pending a more comprehensive procurement.

Value Assessment

Rating: questionable

The contract value of $2.53 million for a single month of service appears high, especially given the lack of competition. Without comparative data on similar short-term procurements for electromedical apparatus, it's difficult to definitively benchmark value. The firm-fixed-price nature provides cost certainty but doesn't inherently guarantee optimal pricing when competition is absent. Further analysis would require understanding the specific services or devices procured and comparing them to market rates or previous competitive awards for similar items.

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. The data explicitly states 'NOT COMPETED'. This approach is typically used when only one responsible source is available or in cases of urgent and compelling need. The lack of competition means that potential bidders were not given an opportunity to offer their services or products, which can limit price discovery and potentially lead to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: For taxpayers, a sole-source award means there is no assurance that the government obtained the best possible price. The absence of competitive pressure could result in a higher expenditure than necessary for the goods or services provided.

Public Impact

Veterans will benefit from the provision of hearing aids and related electromedical apparatus, directly addressing their auditory health needs. The services delivered are crucial for improving the quality of life and functional capabilities of veterans experiencing hearing loss. The contract's impact is primarily focused on the Department of Veterans Affairs' healthcare system, serving beneficiaries nationwide. While specific workforce implications are not detailed, the contract supports the supply chain for essential medical devices.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award raises concerns about the availability of alternative, potentially more cost-effective solutions.
Short contract duration could indicate a reactive procurement rather than strategic planning.

Positive Signals

Contract ensures timely access to necessary hearing health technology for veterans.
Firm-fixed-price contract provides budget certainty for the VA.
Award to an established manufacturer like Starkey Laboratories Inc. may ensure product quality and reliability.

Sector Analysis

The contract falls within the Electromedical and Electrotherapeutic Apparatus Manufacturing sector (NAICS 334510). This industry is characterized by the production of medical devices used for diagnosis, monitoring, and treatment. The market for hearing aids is substantial, driven by an aging population and increasing awareness of hearing health. While specific market size data for this particular contract isn't provided, the VA's significant spending on medical equipment indicates its role as a major purchaser in this sector. Benchmarking this contract's value would ideally involve comparing it to other VA or government procurements of similar hearing aid devices or electromedical apparatus.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. The award to Starkey Laboratories Inc., a large manufacturer, suggests that small businesses were not directly involved in this specific procurement. Further investigation would be needed to determine if any subcontracting opportunities exist within Starkey's operations related to this award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs (VA). As a sole-source award, it may receive scrutiny from the VA's Office of Inspector General (OIG) to ensure the justification for non-competition was valid and that the pricing is reasonable. Transparency regarding the justification for the sole-source award and the specific services or products procured would be key to assessing accountability.

Related Government Programs

VA Medical Equipment Procurement
Hearing Health Services
Electromedical Device Manufacturing
Sole-Source Contract Awards

Risk Flags

Sole-source award without clear justification.
High contract value for a short duration.
Lack of transparency regarding specific goods/services procured.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.5 million to STARKEY LABORATORIES INC. EXPRESS REPORT: JANUARY 2026 DATA - PURCHASE ORDER DATA FOR VA NATIONAL HEARING AID CONTRACT

Who is the contractor on this award?

The obligated recipient is STARKEY LABORATORIES 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 $2.5 million.

What is the period of performance?

Start: 2026-01-01. End: 2026-01-31.

What is the justification for awarding this contract on a sole-source basis to Starkey Laboratories Inc.?

The provided data indicates the contract was 'NOT COMPETED' and awarded to Starkey Laboratories Inc. without further explanation. Typically, sole-source awards are justified by reasons such as urgent and compelling needs, the unavailability of comparable products or services from other sources, or when only one responsible source is capable of providing the required goods or services. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to determine the specific rationale. This lack of transparency is a concern, as it prevents an independent assessment of whether competitive procedures could have been used to achieve better value for the government and taxpayers.

How does the $2.53 million contract value for a 30-day period compare to typical spending on hearing aids by the VA?

The contract value of $2.53 million for a single month is substantial. However, without more context on what specific products or services this amount covers (e.g., number of devices, types of devices, associated services like fitting and maintenance), a direct comparison is difficult. The VA procures a wide range of medical equipment, and hearing aids are a significant category. To benchmark this value, one would need to analyze historical VA spending patterns for hearing aids, looking at both competitive and sole-source awards over similar durations or for equivalent quantities. The short 30-day period suggests this might be an interim or urgent need, rather than a long-term supply agreement, which could explain a higher monthly burn rate.

What are the potential risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risk associated with a sole-source award of this magnitude ($2.53 million) is the potential for overpayment due to the absence of competitive pressure. Without multiple bidders vying for the contract, the awarded contractor may not be incentivized to offer the lowest possible price. Other risks include a lack of innovation that might come from a competitive environment, and potential limitations in supply or service if the sole source encounters unforeseen issues. Furthermore, it raises questions about whether the government adequately explored all available options and if the chosen contractor is truly the only viable source, which could indicate a failure in market research or procurement planning.

What is Starkey Laboratories Inc.'s track record with the Department of Veterans Affairs?

Starkey Laboratories Inc. is a known manufacturer of hearing aids. While this specific contract is a single delivery order for January 2026, it is likely part of a broader relationship between Starkey and the VA. To assess their track record, one would need to examine historical contract data for Starkey with the VA, looking at the volume and value of previous awards, performance ratings, and any instances of disputes or contract modifications. A positive track record with consistent performance and fair pricing in past dealings would lend more confidence to this sole-source award, whereas a history of issues might raise red flags.

Does the firm-fixed-price contract type adequately mitigate risk for the VA in this sole-source scenario?

A firm-fixed-price (FFP) contract type is generally preferred as it shifts the risk of cost overruns to the contractor, providing budget certainty for the buyer. In this sole-source scenario, the FFP structure does offer the VA clarity on the total cost. However, it does not mitigate the risk that the fixed price itself might be higher than it would have been under a competitive procurement. The VA is locked into the agreed-upon price regardless of the contractor's actual costs. Therefore, while FFP provides cost certainty, the absence of competition means the VA may not be achieving the best possible price, even with this contract type.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Electromedical and Electrotherapeutic Apparatus 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

Address: 6700 WASHINGTON AVE S, EDEN PRAIRIE, MN, 55344

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

Financial Breakdown

Contract Ceiling: $2,526,917

Exercised Options: $2,526,917

Current Obligation: $2,526,917

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79125D0008

IDV Type: IDC

Timeline