McKesson Corporation awarded $14M contract for NNMC pharmacy pharmaceutical supplies, covering a 1-year period

Contract Overview

Contract Amount: $14,000,000 ($14.0M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2025-07-21

End Date: 2026-01-31

Contract Duration: 194 days

Daily Burn Rate: $72.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ORDER FOR NNMC PHARMACY AGAINST VA 36W79720D0001 FOR PHARMACEUTICAL SUPPLIES - 1 YEAR POP

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75039

State: Texas Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $14.0 million to MCKESSON CORPORATION for work described as: ORDER FOR NNMC PHARMACY AGAINST VA 36W79720D0001 FOR PHARMACEUTICAL SUPPLIES - 1 YEAR POP Key points: 1. Contract value appears reasonable for a 1-year supply of pharmaceuticals for a federal medical center. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract is a firm fixed-price type, which shifts cost risk to the contractor. 4. Performance period is relatively short, allowing for periodic re-evaluation of needs and pricing. 5. The award is for pharmaceutical preparation manufacturing, a critical healthcare sector. 6. The contract is a delivery order against a larger contract vehicle.

Value Assessment

Rating: good

The contract value of $14 million for a one-year supply of pharmaceuticals for the NNMC pharmacy appears to be within a reasonable range for this type of service. Benchmarking against similar pharmaceutical supply contracts for federal facilities would provide a more precise value-for-money assessment. The firm fixed-price structure is standard for supply contracts and helps control costs for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this method generally fosters a competitive environment, which should lead to more favorable pricing for the government. The agency's adherence to full and open competition is a positive indicator of seeking the best value.

Taxpayer Impact: Full and open competition maximizes the potential for competitive pricing, which directly benefits taxpayers by ensuring the government is not overpaying for essential pharmaceutical supplies.

Public Impact

Beneficiaries include patients receiving care at the NNMC pharmacy. Services delivered are the provision of essential pharmaceutical supplies. Geographic impact is primarily focused on the National Naval Medical Center (NNMC) facility. Workforce implications are minimal, primarily related to the contractor's supply chain and delivery personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the number of bidders in the full and open competition.
No information provided on potential supply chain disruptions or alternative sourcing strategies.
The contract is a delivery order, meaning its ultimate value and scope depend on the parent contract.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process.
Firm fixed-price contract type provides cost certainty for the government.
The contract supports a critical healthcare function for a military medical center.

Sector Analysis

The pharmaceutical preparation manufacturing sector is a vital component of the healthcare industry, encompassing the production and distribution of medications. Federal agencies, particularly those within the Department of Defense and Health and Human Services, are significant purchasers of pharmaceuticals to support military personnel, veterans, and other beneficiaries. Spending in this sector is driven by healthcare demand, drug innovation, and government health initiatives. Comparable spending benchmarks would typically involve analyzing the total federal expenditure on pharmaceuticals across various agencies and contract types.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. As a delivery order against a potentially larger contract vehicle, the subcontracting opportunities for small businesses would depend on the terms of the parent contract and the prime contractor's subcontracting plan. Without further information, the direct impact on the small business ecosystem is unclear, though McKesson Corporation, as a large entity, may have established subcontracting relationships.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Health and Human Services, specifically the Indian Health Service, as the contracting agency. Accountability measures are inherent in the firm fixed-price contract type, requiring the contractor to deliver specified goods within the agreed-upon price. Transparency is facilitated through contract award databases, though detailed performance metrics and oversight reports may not always be publicly accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

VA Pharmaceutical Contracts
DoD Medical Supplies
Federal Pharmacy Services
Healthcare Services Contracts
Pharmaceutical Distribution Agreements

Risk Flags

Potential supply chain disruption risk
Dependence on a single large supplier
Lack of specific bidder count for competition assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $14.0 million to MCKESSON CORPORATION. ORDER FOR NNMC PHARMACY AGAINST VA 36W79720D0001 FOR PHARMACEUTICAL SUPPLIES - 1 YEAR POP

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 $14.0 million.

What is the period of performance?

Start: 2025-07-21. End: 2026-01-31.

What is the historical spending pattern for pharmaceutical supplies at NNMC or similar naval medical facilities?

Analyzing historical spending patterns for pharmaceutical supplies at NNMC or comparable naval medical facilities is crucial for assessing the value and necessity of this $14 million award. Without specific historical data, it's difficult to determine if this contract represents an increase, decrease, or stable level of spending. Trends in pharmaceutical prices, demand for specific medications, and changes in patient populations all influence historical spending. A review of past contracts, including their values, durations, and awarded contractors, would reveal whether this current award is in line with previous expenditures or if there are significant deviations that warrant further investigation into the underlying causes, such as market fluctuations or changes in medical services offered.

How does the unit cost of pharmaceuticals under this contract compare to other federal or commercial contracts?

Comparing the unit cost of pharmaceuticals under this $14 million contract to other federal or commercial contracts is essential for evaluating price reasonableness and value for money. This comparison should ideally involve like-for-like products (same drug, dosage, and quantity) and consider factors such as volume discounts, delivery terms, and contract duration. Benchmarking against contracts awarded by other federal agencies (e.g., VA, DoD) or large commercial group purchasing organizations (GPOs) can provide valuable insights. If the unit costs are significantly higher than benchmarks, it could indicate potential issues with the competition, the contractor's pricing strategy, or specific logistical requirements. Conversely, costs in line with or below benchmarks would suggest a competitive and efficient procurement.

What are the specific pharmaceutical products covered by this contract and their criticality?

The contract specifies 'Pharmaceutical Preparation Manufacturing' but lacks a detailed list of the specific pharmaceutical products covered. Understanding the exact medications, their therapeutic classes, and their criticality to patient care at NNMC is vital for assessing the contract's importance and potential risks. High-criticality drugs, such as life-saving medications or those with limited alternative suppliers, require particularly robust supply chain management and oversight. A breakdown of the anticipated quantities and types of pharmaceuticals would allow for a more thorough risk assessment, including potential impacts of shortages, price volatility for specific drugs, and the contractor's ability to meet demand for essential medicines.

What is McKesson Corporation's track record in fulfilling federal pharmaceutical supply contracts?

McKesson Corporation is a major pharmaceutical distributor and has a significant track record in fulfilling federal contracts for pharmaceutical supplies. As one of the largest companies in its sector, it likely holds numerous contracts across various federal agencies, including the Department of Defense and the Department of Veterans Affairs. Evaluating their past performance, including on-time delivery rates, product quality, responsiveness to issues, and adherence to contract terms, is crucial. Past performance reviews, available through federal procurement databases or agency records, can provide insights into McKesson's reliability and capability in meeting the demanding requirements of federal healthcare facilities like NNMC. Any history of significant performance issues or contract disputes would be a key risk indicator.

What are the potential risks associated with relying on a single large contractor like McKesson for pharmaceutical supplies?

Relying on a single large contractor like McKesson Corporation for pharmaceutical supplies, even under full and open competition, presents potential risks. These include supply chain vulnerabilities, where disruptions affecting McKesson (e.g., manufacturing issues, logistical failures, labor disputes) could directly impact NNMC's ability to obtain necessary medications. There's also a risk of price increases in future contract renewals if competition diminishes or if McKesson gains significant market leverage. Furthermore, dependence on one supplier might reduce the incentive for exceptional service or innovation compared to a more fragmented market. Mitigating these risks often involves robust contract management, contingency planning, and potentially diversifying suppliers for critical items in the long term.

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: $28,000,000

Exercised Options: $14,000,000

Current Obligation: $14,000,000

Actual Outlays: $4,589,965

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