HHS Awards $821M to Walgreen Co. for Medical Laboratories under ICATT Program

Contract Overview

Contract Amount: $821,303,840 ($821.3M)

Contractor: Walgreen CO.

Awarding Agency: Department of Health and Human Services

Start Date: 2021-10-01

End Date: 2022-05-31

Contract Duration: 242 days

Daily Burn Rate: $3.4M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: INCREASE COMMUNITY ACCESS TO TESTING (ICATT)

Place of Performance

Location: DEERFIELD, LAKE County, ILLINOIS, 60015

State: Illinois Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $821.3 million to WALGREEN CO. for work described as: INCREASE COMMUNITY ACCESS TO TESTING (ICATT) Key points: 1. Significant award to a single large business, Walgreen Co. 2. Focus on medical laboratories within the Department of Health and Human Services. 3. Contract duration of 242 days suggests a specific, time-bound need. 4. Potential for high taxpayer impact due to the large contract value.

Value Assessment

Rating: fair

The award amount of $821,303,840 is substantial. Without specific per-unit cost data or benchmarks for similar large-scale laboratory services contracts, a precise value assessment is difficult. The fixed-price incentive structure suggests an attempt to control costs, but the overall value is hard to gauge without more context.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and competitive negotiation, potentially leading to a higher price than if multiple vendors had vied for the contract. The rationale for sole-source is not provided.

Taxpayer Impact: The $821 million award represents a significant allocation of taxpayer funds. The lack of competition raises concerns about whether this represents the most cost-effective use of those funds for the services rendered.

Public Impact

Increased access to community testing services through a major pharmacy provider. Potential for improved public health response capabilities, especially during health crises. Impact on the accessibility and availability of medical laboratory services nationwide.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
High contract value
Limited duration

Positive Signals

Addresses community access to testing
Utilizes established provider infrastructure

Sector Analysis

The healthcare sector, particularly medical laboratories, is critical for public health. This contract's value is high, but benchmarks for similar large-scale, sole-source laboratory service contracts are not readily available for direct comparison.

Small Business Impact

This contract was awarded to Walgreen Co., a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award, suggesting limited direct benefit to the small business sector.

Oversight & Accountability

The contract was awarded by the Department of Health and Human Services (HHS), Office of Assistant Secretary for Preparedness and Response. Oversight would focus on contract performance, adherence to the fixed-price incentive structure, and the achievement of ICATT program goals.

Related Government Programs

Medical Laboratories
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
High contract value necessitates rigorous oversight to ensure taxpayer value.
Limited contract duration may indicate a specific, potentially urgent, need.
Lack of detailed performance metrics makes value assessment challenging.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $821.3 million to WALGREEN CO.. INCREASE COMMUNITY ACCESS TO TESTING (ICATT)

Who is the contractor on this award?

The obligated recipient is WALGREEN CO..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of Assistant Secretary for Preparedness and Response).

What is the total obligated amount?

The obligated amount is $821.3 million.

What is the period of performance?

Start: 2021-10-01. End: 2022-05-31.

What was the specific justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair pricing without competition?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of market availability. Without further documentation, it's unclear why competition was bypassed. To ensure fair pricing, HHS might have relied on historical data, independent cost estimates, or price negotiation techniques, but the absence of competition inherently limits robust price discovery and validation.

How does the per-unit cost of services under this $821 million contract compare to industry benchmarks for similar medical laboratory services, especially considering the fixed-price incentive structu

Assessing the per-unit cost requires detailed service breakdowns and volume data, which are not provided. The fixed-price incentive (FPI) contract aims to share cost risks and rewards between the government and contractor. However, without specific performance metrics and cost targets, it's difficult to determine if the incentive structure effectively controlled costs or if the resulting per-unit prices are competitive compared to other large-scale laboratory service agreements.

What is the measurable impact of the ICATT program, funded by this contract, on community access to testing, and how is this impact being tracked and verified?

The measurable impact on community access to testing would ideally be quantified through metrics like the number of tests performed, geographic reach of testing sites, and patient wait times. The effectiveness of the ICATT program relies on HHS's ability to track these outcomes against pre-defined goals. Verification would involve audits and performance reports from Walgreen Co. to ensure the program is meeting its objectives.

Industry Classification

NAICS: Health Care and Social Assistance › Medical and Diagnostic Laboratories › Medical Laboratories

Product/Service Code: MEDICAL SERVICES › LABORATORY TESTING SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Walgreens Boots Alliance, Inc.

Address: 200 WILMOT RD STE 2002, DEERFIELD, IL, 60015

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

Financial Breakdown

Contract Ceiling: $821,303,840

Exercised Options: $821,303,840

Current Obligation: $821,303,840

Actual Outlays: $821,303,840

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline