HHS Awards $27.7M to McKesson for Pharmacy Supplies in FY22, Serving IHS

Contract Overview

Contract Amount: $27,669,074 ($27.7M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2022-08-09

End Date: 2023-12-31

Contract Duration: 509 days

Daily Burn Rate: $54.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: FY 2022 2023-GIMC-PHARMACY-SUPPLIES-PRIME VENDOR CONTRACT MCKESSON CORP

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75039

State: Texas Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $27.7 million to MCKESSON CORPORATION for work described as: FY 2022 2023-GIMC-PHARMACY-SUPPLIES-PRIME VENDOR CONTRACT MCKESSON CORP Key points: 1. The contract awarded to McKesson Corporation for pharmacy supplies represents a significant investment by the Indian Health Service. 2. McKesson is a major player in the pharmaceutical distribution market, indicating substantial competition in the sector. 3. The firm fixed-price contract type helps mitigate cost overrun risks for the government. 4. Spending in this sector is critical for healthcare delivery to underserved populations.

Value Assessment

Rating: good

The contract value of $27.7 million for FY22 appears reasonable given the scope of pharmacy supply needs for the Indian Health Service. Benchmarking against similar large-scale pharmaceutical distribution contracts would provide further validation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust price discovery process. This method typically leads to more competitive pricing for the government.

Taxpayer Impact: The competitive award process likely ensured taxpayer funds were used efficiently for essential pharmacy supplies.

Public Impact

Ensures availability of critical medications and medical supplies for Native American communities served by the IHS. Supports the operational capacity of healthcare facilities within the Indian Health Service. Contributes to public health outcomes by providing necessary pharmaceutical products.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in pharmaceutical markets impacting long-term value.
Dependence on a single prime vendor could create supply chain vulnerabilities.

Positive Signals

Awarded through full and open competition.
Firm fixed-price contract type limits cost uncertainty.
Addresses critical healthcare needs for a specific population.

Sector Analysis

The pharmaceutical supply sector is characterized by high demand and complex logistics. This contract falls within the typical spending patterns for government healthcare providers procuring essential medications.

Small Business Impact

While McKesson Corporation is a large business, the contract's nature as a prime vendor for essential supplies may limit direct subcontracting opportunities for small businesses in specialized pharmaceutical services.

Oversight & Accountability

The Department of Health and Human Services, through the Indian Health Service, is responsible for oversight. Contract performance monitoring and adherence to delivery schedules are key accountability measures.

Related Government Programs

Pharmaceutical Preparation Manufacturing
Department of Health and Human Services Contracting
Indian Health Service Programs

Risk Flags

Potential for price escalation in pharmaceutical markets.
Supply chain vulnerability due to reliance on a prime vendor.
Ensuring equitable distribution to all IHS facilities.
Monitoring contract performance for adherence to quality standards.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $27.7 million to MCKESSON CORPORATION. FY 2022 2023-GIMC-PHARMACY-SUPPLIES-PRIME VENDOR CONTRACT MCKESSON CORP

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 $27.7 million.

What is the period of performance?

Start: 2022-08-09. End: 2023-12-31.

What is the historical price trend for similar pharmaceutical supplies procured by the IHS or other federal agencies?

Analyzing historical pricing data for comparable pharmaceutical supplies is crucial for assessing long-term value. Trends influenced by market dynamics, manufacturer price changes, and volume discounts can significantly impact the overall cost-effectiveness of such contracts over time. Understanding these trends helps in negotiating future contracts and identifying potential cost-saving opportunities.

What are the contingency plans in place to mitigate supply chain disruptions for these essential pharmaceuticals?

Contingency plans are vital given the critical nature of pharmaceutical supplies. These should include backup supplier identification, alternative transportation routes, and inventory management strategies to buffer against unforeseen events like natural disasters or geopolitical issues. Robust risk mitigation protocols ensure continuity of care for patients relying on these medications.

How does the performance of this contract compare to benchmarks for pharmaceutical distribution efficiency and reliability?

Evaluating performance against established benchmarks for pharmaceutical distribution is key to ensuring effectiveness. Metrics such as on-time delivery rates, order accuracy, and product quality are essential. Consistent performance meeting or exceeding these benchmarks indicates efficient contract management and reliable service delivery, ultimately benefiting patient care and program outcomes.

Industry Classification

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

Product/Service Code: SPECIAL INDUSTRY MACHINERY

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: $27,669,074

Exercised Options: $27,669,074

Current Obligation: $27,669,074

Actual Outlays: $27,669,074

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36W79720D0001

IDV Type: IDC

Timeline