HHS Awards $4.69M BPA for Pharmaceuticals to McKesson Corporation, Not Competed

Contract Overview

Contract Amount: $4,692,718 ($4.7M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2022-08-25

End Date: 2025-08-23

Contract Duration: 1,094 days

Daily Burn Rate: $4.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: BPA OPEN MARKET PHARMACEUTICAL AND MEDICAL/SURGICAL PRODUCTS TO BE ORDERED ON AN AS NEEDED BASIS _ 75H71122A00161

Place of Performance

Location: CHINLE, APACHE County, ARIZONA, 86503

State: Arizona Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $4.7 million to MCKESSON CORPORATION for work described as: BPA OPEN MARKET PHARMACEUTICAL AND MEDICAL/SURGICAL PRODUCTS TO BE ORDERED ON AN AS NEEDED BASIS _ 75H71122A00161 Key points: 1. Significant contract value awarded to a single vendor. 2. Lack of competition raises concerns about potential overpricing. 3. The contract covers essential medical supplies for the Indian Health Service. 4. Long-term award (2022-2025) with a fixed-price structure.

Value Assessment

Rating: questionable

The contract value of $4.69M for pharmaceuticals and medical supplies appears high given the lack of competition. Benchmarking against similar government contracts for these items, especially those awarded through competitive processes, is crucial to assess if McKesson Corporation's pricing is reasonable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition award. This approach can lead to higher prices and reduced value for taxpayers as it bypasses the price discovery benefits of a competitive bidding process.

Taxpayer Impact: The lack of competition may result in higher costs for taxpayers compared to a competitively awarded contract for similar goods and services.

Public Impact

Ensures availability of critical pharmaceuticals and medical supplies for the Indian Health Service. Potential for increased healthcare costs for IHS beneficiaries if pricing is not optimal. Highlights reliance on large, established suppliers for essential medical goods.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for inflated pricing
Limited transparency in award justification

Positive Signals

Ensures supply chain for critical medical items
Fixed-price contract provides cost certainty

Sector Analysis

The healthcare sector, particularly pharmaceuticals and medical supplies, often involves complex supply chains and significant government spending. Benchmarks for similar contracts are essential for evaluating value, especially when competition is limited.

Small Business Impact

This award to McKesson Corporation, a large established entity, does not appear to include specific provisions or set-asides for small businesses. Further analysis is needed to determine if small businesses were excluded or had opportunities to participate.

Oversight & Accountability

The non-competitive nature of this award warrants scrutiny from oversight bodies to ensure the government obtained fair pricing and that the justification for not competing is robust.

Related Government Programs

Drugs and Druggists' Sundries Merchant Wholesalers
Department of Health and Human Services Contracting
Indian Health Service Programs

Risk Flags

Lack of competition
Potential for price inflation
Limited small business participation
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $4.7 million to MCKESSON CORPORATION. BPA OPEN MARKET PHARMACEUTICAL AND MEDICAL/SURGICAL PRODUCTS TO BE ORDERED ON AN AS NEEDED BASIS _ 75H71122A00161

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 $4.7 million.

What is the period of performance?

Start: 2022-08-25. End: 2025-08-23.

What was the specific justification for awarding this contract on a sole-source basis rather than through full and open competition?

The justification for a sole-source award typically involves circumstances where only one responsible source can provide the required supplies or services, or when urgency, national security, or specific technical requirements preclude competition. Without the specific justification document, it's impossible to confirm the rationale. However, for pharmaceuticals and medical supplies, such justifications are often scrutinized due to the availability of multiple potential suppliers in the market.

How does the per-unit cost of these pharmaceuticals and medical supplies compare to market rates or other government contracts?

A direct comparison of per-unit costs is challenging without access to the specific items and quantities ordered under this BPA. However, given the sole-source nature of the award, there is a heightened risk that prices may be higher than those achievable through competitive bidding. Benchmarking against GSA schedules, other agency contracts, or commercial price lists for equivalent items would be necessary to assess potential price deviations.

What mechanisms are in place to ensure the quality and efficacy of the pharmaceuticals and medical supplies provided by McKesson Corporation under this BPA?

Standard government contracting procedures typically include quality assurance clauses and inspection rights to ensure that delivered goods meet specified requirements. For pharmaceuticals and medical supplies, adherence to FDA regulations and specific product quality standards is paramount. The Indian Health Service would likely have quality control measures and performance monitoring in place to ensure McKesson Corporation meets these obligations throughout the contract period.

Industry Classification

NAICS: Wholesale Trade › Drugs and Druggists' Sundries Merchant Wholesalers › Drugs and Druggists' Sundries Merchant Wholesalers

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6555 STATE HWY 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: $4,692,718

Exercised Options: $4,692,718

Current Obligation: $4,692,718

Actual Outlays: $4,692,718

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline