HHS awards $2.17M for pharmaceutical supplies to McKesson Corporation, serving New Mexico clinics

Contract Overview

Contract Amount: $2,168,837 ($2.2M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2019-11-20

End Date: 2020-08-09

Contract Duration: 263 days

Daily Burn Rate: $8.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMACEUTICAL PURCHASES FOR THE CROWNPOINT HEALTH CARE FACILITY AND THE PUEBLO PINTADO CLINIC***PHARMACY DEPARTMENT

Place of Performance

Location: CROWNPOINT, MCKINLEY County, NEW MEXICO, 87313

State: New Mexico Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $2.2 million to MCKESSON CORPORATION for work described as: PHARMACEUTICAL PURCHASES FOR THE CROWNPOINT HEALTH CARE FACILITY AND THE PUEBLO PINTADO CLINIC***PHARMACY DEPARTMENT Key points: 1. Value for money appears reasonable given the essential nature of pharmaceutical supplies. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators are low, with a firm fixed-price contract type mitigating cost overrun risks. 4. Performance context is tied to essential healthcare services for specific clinics. 5. Sector positioning is within healthcare procurement, specifically pharmaceuticals for tribal health facilities.

Value Assessment

Rating: good

The contract value of $2.17 million for pharmaceutical supplies over approximately 9 months appears within a reasonable range for federal healthcare procurement. Benchmarking against similar contracts for pharmaceutical distribution to remote or underserved areas would provide further context. The firm fixed-price structure suggests that the government has locked in costs, which is generally favorable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The specific number of bidders is not provided, but this procurement method generally fosters competitive pricing and allows the government to select the best value offer. The open nature suggests a healthy market for these types of supplies.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it increases the likelihood of obtaining goods and services at competitive market rates, preventing potential overpayment.

Public Impact

Patients at the Crownpoint Health Care Facility and Pueblo Pintado Clinic benefit from uninterrupted access to necessary medications. Essential pharmaceutical supplies are delivered to support the operational needs of these two Indian Health Service facilities. The geographic impact is concentrated in New Mexico, serving specific tribal communities. Workforce implications include ensuring healthcare providers have the necessary medications to treat patients effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions affecting remote clinics.
Dependence on a single large supplier could pose risks if not managed proactively.

Positive Signals

Firm fixed-price contract limits cost uncertainty for the government.
Full and open competition suggests a competitive market was leveraged.
Essential nature of the supplies ensures critical healthcare needs are met.

Sector Analysis

This contract falls within the broader healthcare sector, specifically focusing on pharmaceutical procurement. The market for pharmaceutical distribution is large and competitive, with major players like McKesson Corporation dominating a significant share. This contract represents a small portion of overall federal pharmaceutical spending but is critical for the specific healthcare facilities it serves.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses. Given the nature of pharmaceutical distribution, large established companies are typically awarded such contracts. Subcontracting opportunities for small businesses are not explicitly detailed but could potentially exist within the broader supply chain managed by the prime contractor.

Oversight & Accountability

Oversight is likely managed by the Indian Health Service contracting officers and program managers responsible for the Crownpoint Health Care Facility and Pueblo Pintado Clinic. Transparency is facilitated through federal procurement databases like FPDS. Accountability measures would involve performance monitoring against contract terms and delivery schedules.

Related Government Programs

Indian Health Service Pharmacy Services
Federal Supply Schedule (FSS) Pharmaceutical Contracts
Department of Health and Human Services Medical Supplies

Risk Flags

Potential for supply chain vulnerability
Dependence on a single large supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $2.2 million to MCKESSON CORPORATION. PHARMACEUTICAL PURCHASES FOR THE CROWNPOINT HEALTH CARE FACILITY AND THE PUEBLO PINTADO CLINIC***PHARMACY DEPARTMENT

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Indian Health Service).

What is the total obligated amount?

The obligated amount is $2.2 million.

What is the period of performance?

Start: 2019-11-20. End: 2020-08-09.

What is McKesson Corporation's track record with the Indian Health Service and other federal agencies for pharmaceutical supply contracts?

McKesson Corporation is a major pharmaceutical distributor with extensive experience serving federal agencies, including the Department of Veterans Affairs and the Department of Defense, in addition to the Indian Health Service (IHS). They are a frequent awardee of large-scale contracts for the supply of pharmaceuticals and medical products. Their track record generally indicates a capacity to handle significant volumes and complex distribution networks. However, like any large contractor, they may have faced scrutiny or performance issues on specific contracts, which would be detailed in contract performance reports and agency evaluations. A review of historical contract data within FPDS and agency-specific performance management systems would provide a more granular understanding of their performance trends with IHS.

How does the awarded price compare to market rates for similar pharmaceutical supplies?

Direct comparison of the total contract value ($2.17 million) to general market rates is challenging without specific itemized pricing and quantities. However, the firm fixed-price (FFP) contract type suggests that the price was negotiated and agreed upon before performance began, aiming to secure a specific cost. The fact that it was awarded under full and open competition implies that multiple vendors offered pricing, and the government selected the most advantageous offer. To assess value more precisely, one would need to benchmark the unit prices of key pharmaceuticals against GSA Federal Supply Schedule (FSS) pricing, other IHS contracts, or commercial price lists for comparable volumes and delivery terms. The 'br' value of 8247 in the provided data might represent a benchmark or reference price, but its exact meaning requires further context.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential supply chain disruptions (e.g., manufacturing delays, transportation issues) that could impact the availability of critical medications at the clinics, and the risk of price increases for pharmaceuticals over the contract period if the FFP was not structured to account for market volatility. Mitigation strategies likely involve robust inventory management by McKesson, contingency planning for alternative transportation, and clear performance standards within the contract. The FFP structure itself mitigates the risk of cost overruns for the government, shifting that risk to the contractor. The IHS would also monitor contractor performance closely and have clauses for addressing non-performance or delivery failures.

How effective is the Indian Health Service in ensuring consistent pharmaceutical supply to remote facilities like Crownpoint and Pueblo Pintado?

The effectiveness of the Indian Health Service (IHS) in ensuring consistent pharmaceutical supply to remote facilities is a complex issue often influenced by factors beyond direct contracting. While contracts like this one aim to secure supply, the IHS's overall effectiveness depends on its budget, logistical capabilities, and the specific challenges of serving geographically dispersed and often underserved populations. Remote locations can face unique hurdles such as transportation infrastructure, weather-related delays, and limited local healthcare resources. The IHS utilizes various contracting mechanisms, including FFP contracts with large distributors and potentially local purchasing agreements, to address these needs. Performance metrics within these contracts, along with patient and provider feedback, would be key indicators of effectiveness.

What is the historical spending pattern for pharmaceutical supplies by the IHS in New Mexico?

Historical spending patterns for pharmaceutical supplies by the IHS in New Mexico would reveal trends in demand, pricing, and contractor reliance. Analyzing past contracts awarded by IHS for similar services in the region would show whether spending has been consistent, increasing, or decreasing, and which contractors have been most frequently utilized. This data can highlight potential market consolidation or shifts in procurement strategies. For instance, if spending has consistently gone to a few large distributors, it might indicate a stable but potentially less competitive market for certain types of supplies. Conversely, fluctuations or increased competition in historical awards could suggest evolving market dynamics or changes in IHS procurement approaches.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6555 STATE HIGHWAY 161, IRVING, TX, 75039

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

Financial Breakdown

Contract Ceiling: $2,168,837

Exercised Options: $2,168,837

Current Obligation: $2,168,837

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline