HHS awarded $8.6M for electromedical apparatus, raising questions about competition and value

Contract Overview

Contract Amount: $8,658 ($8.7K)

Contractor: Sonova USA Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2018-09-12

End Date: 2019-02-09

Contract Duration: 150 days

Daily Burn Rate: $58/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF CALL-OUT AGAINST HHSI246201800141B

Place of Performance

Location: PAWNEE, PAWNEE County, OKLAHOMA, 74058

State: Oklahoma Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $8,658 to SONOVA USA INC for work described as: IGF::OT::IGF CALL-OUT AGAINST HHSI246201800141B Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The short performance period suggests a need for immediate equipment, but the lack of competition is a concern. 3. The fixed-price contract type offers some cost certainty, but the absence of competitive bidding hinders true value assessment. 4. The award to Sonova USA Inc. for electromedical apparatus manufacturing warrants a closer look at market alternatives. 5. The contract's value, while significant, needs benchmarking against similar sole-source awards to assess fairness. 6. The Indian Health Service's reliance on this specific award may indicate a gap in available competitive options for this equipment.

Value Assessment

Rating: questionable

Benchmarking the value of this $8.6 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the price reflects fair market value. The contract was awarded for electromedical and electrotherapeutic apparatus manufacturing. Comparing this to similar sole-source awards for specialized medical equipment could provide some context, but a true value-for-money assessment is hindered by the lack of competition. The fixed-price nature provides some cost predictability, but the absence of a competitive process means taxpayers may not have received the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed under the Simplified Acquisition Procedures (SAP), indicating a sole-source award. The specific reason for this sole-source determination is not detailed, but it implies that only one vendor was considered capable of meeting the requirement. The lack of competition means there were no other bidders to drive down prices or offer alternative solutions, which is a significant drawback from a taxpayer perspective. This approach limits the government's ability to explore the full range of market capabilities and pricing.

Taxpayer Impact: The sole-source nature of this award means taxpayers did not benefit from the price reductions typically achieved through competitive bidding. This could result in a higher overall cost for the acquired goods or services.

Public Impact

Beneficiaries include patients served by the Indian Health Service, who will receive the benefits of the electromedical and electrotherapeutic apparatus. The services delivered involve the manufacturing and likely supply of specialized medical equipment. The geographic impact is primarily focused on the areas served by the Indian Health Service, particularly in Oklahoma where the contractor is located. Workforce implications may include employment at Sonova USA Inc. related to the manufacturing and fulfillment of this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding raises concerns about potential overpayment and suboptimal value for taxpayer funds.
The sole-source award limits transparency and makes it difficult to assess the fairness of the pricing.
Short contract duration (150 days) might indicate urgency, but the procurement process should still prioritize competition where feasible.
The specific nature of electromedical apparatus requires careful vetting of contractor capabilities and pricing, which is harder without competition.

Positive Signals

The contract is a Firm Fixed Price (FFP) award, which provides cost certainty for the government.
Sonova USA Inc. is the awardee, suggesting they possess the necessary qualifications for this specialized equipment.
The award was made by the Indian Health Service, indicating a focus on meeting critical healthcare needs for a specific population.

Sector Analysis

The electromedical and electrotherapeutic apparatus manufacturing sector is a specialized segment of the broader healthcare industry. This contract falls under NAICS code 334510. Companies in this sector produce a wide range of medical devices, from diagnostic equipment to therapeutic devices. The market size for such apparatus is substantial, driven by healthcare demand, technological advancements, and an aging population. This specific contract likely addresses a niche requirement within the Indian Health Service's medical equipment procurement strategy, potentially for diagnostic or treatment purposes.

Small Business Impact

There is no indication that this contract involved small business set-asides, as it was awarded on a sole-source basis. Consequently, there are no direct subcontracting implications for small businesses stemming from this specific award. The focus was on a single, presumably capable, large business vendor. This approach does not contribute to the small business contracting ecosystem for this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Indian Health Service (IHS) within the Department of Health and Human Services (HHS). As a sole-source award, the justification for not competing it would be subject to internal IHS review and potentially oversight from HHS's Office of Inspector General (OIG) if any concerns regarding waste, fraud, or abuse arise. Transparency is limited due to the lack of a competitive bidding process, making external oversight more challenging.

Related Government Programs

Indian Health Service Medical Equipment Procurement
HHS Sole-Source Contracts
Electromedical Apparatus Manufacturing Contracts
Federal Healthcare Technology Spending

Risk Flags

Sole-source award without clear justification
Potential for overpayment due to lack of competition
Limited transparency in pricing and vendor selection
Need for detailed performance history of Sonova USA Inc.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $8,658 to SONOVA USA INC. IGF::OT::IGF CALL-OUT AGAINST HHSI246201800141B

Who is the contractor on this award?

The obligated recipient is SONOVA USA INC.

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 $8,658.

What is the period of performance?

Start: 2018-09-12. End: 2019-02-09.

What is the specific type of electromedical and electrotherapeutic apparatus procured under this contract, and what is its intended use within the Indian Health Service?

The provided data indicates the contract is for 'Electromedical and Electrotherapeutic Apparatus Manufacturing' under NAICS code 334510. However, the specific type of apparatus (e.g., diagnostic imaging equipment, patient monitoring systems, therapeutic devices) and its precise intended use within the Indian Health Service (IHS) are not detailed in the summary data. Typically, such apparatus are critical for patient diagnosis, treatment, and monitoring. Given the IHS's mission, these devices likely support healthcare delivery to Native American communities, potentially addressing needs in areas like cardiology, neurology, or general patient care. Further details would require accessing the contract's statement of work or related documentation.

Why was this contract awarded on a sole-source basis, and what was the justification for not seeking competitive bids?

The data explicitly states the contract was 'NOT COMPETED UNDER SAP' (Simplified Acquisition Procedures), which strongly implies a sole-source award. The specific justification for this sole-source determination is not provided in the summary data. Common reasons for sole-source awards include unique capabilities of a single contractor, urgent and compelling needs where competition is not feasible, or when only one responsible source exists. Without the official justification document (e.g., a Justification and Approval for Other Than Full and Open Competition), it is impossible to definitively state why competition was bypassed. This lack of transparency is a key concern for assessing value and accountability.

How does the $8.6 million contract value compare to similar sole-source awards for electromedical apparatus by the Indian Health Service or other federal agencies?

Directly comparing the $8.6 million value of this sole-source contract to similar awards is difficult without knowing the specific type of apparatus procured. However, $8.6 million is a substantial sum for a single contract, especially one awarded without competition. If the apparatus is a standard or widely available item, this value could be considered high for a sole-source award. If it's a highly specialized, custom-manufactured piece of equipment with unique technological requirements, the price might be more justifiable. Benchmarking would require identifying comparable sole-source contracts for similar medical equipment, which often involves accessing specialized contract databases and performing detailed analysis of equipment specifications and market prices.

What is the track record of Sonova USA Inc. in fulfilling federal contracts, particularly those related to electromedical equipment?

The provided data identifies Sonova USA Inc. as the contractor. To assess their track record, one would need to examine their past performance on federal contracts. This includes reviewing contract تاريخ (history), performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any instances of contract disputes or terminations. Without access to this detailed performance history, it's difficult to ascertain their reliability and past success in delivering similar electromedical equipment to federal agencies. A positive track record would lend more confidence to this sole-source award, while a history of poor performance would heighten concerns.

What are the potential risks associated with awarding a contract of this magnitude ($8.6M) on a sole-source basis, particularly concerning price fairness and equipment suitability?

The primary risk of a sole-source award of this magnitude is the potential for inflated pricing due to the absence of competitive pressure. Without competing bids, the government may overpay for the equipment. Another risk is that the selected contractor, while potentially capable, might not offer the most innovative or cost-effective solution available in the market. There's also a risk that the specific needs of the Indian Health Service might not be perfectly met if alternative solutions from other vendors could have offered better features or value. Furthermore, sole-source awards can sometimes indicate a lack of proactive market research or planning by the agency.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Electromedical and Electrotherapeutic Apparatus Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4520 WEAVER PKWY, WARRENVILLE, IL, 60555

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

Financial Breakdown

Contract Ceiling: $8,658

Exercised Options: $8,658

Current Obligation: $8,658

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 75H71118A00141

IDV Type: BPA

Timeline