NIH contract for imaging equipment modification awarded to Philips Medical Systems for over $28.7M

Contract Overview

Contract Amount: $28,755,821 ($28.8M)

Contractor: Philips Medical Systems North America Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2006-01-18

End Date: 2013-12-17

Contract Duration: 2,890 days

Daily Burn Rate: $9.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: OTHER FUNCTIONS: MODIFICATION OF IMAGING EQUIPMENT FOR THE NIH/NIAID IRF

Place of Performance

Location: CLEVELAND, CUYAHOGA County, OHIO, 44143

State: Ohio Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $28.8 million to PHILIPS MEDICAL SYSTEMS NORTH AMERICA INC. for work described as: OTHER FUNCTIONS: MODIFICATION OF IMAGING EQUIPMENT FOR THE NIH/NIAID IRF Key points: 1. Contract value appears reasonable for specialized medical equipment modification over a 7-year period. 2. Full and open competition suggests a competitive bidding process. 3. Contract duration of nearly 8 years may indicate a long-term need for specialized services. 4. The award to a single vendor for modification services warrants scrutiny regarding potential vendor lock-in. 5. Fixed-price contract type helps mitigate cost overrun risks for the government. 6. The North American Industry Classification System (NAICS) code 339111 points to a specialized manufacturing sector.

Value Assessment

Rating: good

The contract value of $28.7 million over nearly 8 years for modification of imaging equipment for NIH/NIAID IRF appears to be within a reasonable range for specialized medical technology services. Benchmarking against similar contracts for advanced imaging equipment modifications is challenging without more specific details on the exact nature of the modifications and the equipment involved. However, the fixed-price nature of the contract provides cost certainty for the government, suggesting a degree of value for money if the modifications meet the required specifications.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This suggests a robust bidding process where multiple vendors had the opportunity to compete for the work. The number of bidders is not specified, but the open competition is generally a positive sign for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment among potential contractors.

Public Impact

The primary beneficiary is the National Institutes of Health (NIH), specifically the Integrated Research Facility (IRF) within the National Institute of Allergy and Infectious Diseases (NIAID). The contract delivers modifications to imaging equipment, crucial for research activities conducted by NIAID. The geographic impact is localized to the facility where the imaging equipment is housed and utilized for research. Workforce implications are likely related to specialized technicians and engineers required for the modification and maintenance of advanced imaging systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if Philips is the sole provider of necessary modifications or parts for the specialized imaging equipment.
Long contract duration could lead to complacency or reduced incentive for innovation from the contractor over time.
Dependence on a single contractor for critical equipment modifications may pose a risk if the contractor experiences financial instability or operational issues.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that likely secured favorable terms.
Firm fixed-price contract type provides cost predictability and limits the government's exposure to cost overruns.
The contractor, Philips Medical Systems, is a well-established entity in the medical technology sector, implying a level of expertise and reliability.

Sector Analysis

This contract falls within the medical equipment manufacturing and services sector, specifically focusing on the modification and maintenance of advanced imaging systems. The market for such specialized services is often characterized by a few key players with proprietary technology and expertise. The size of this specific contract, over $28.7 million, indicates a significant investment in research infrastructure by a major federal health agency. Comparable spending benchmarks would depend heavily on the specific type of imaging equipment and the complexity of the modifications required.

Small Business Impact

There is no indication that this contract involved small business set-asides. Given the specialized nature of modifying advanced imaging equipment, it is likely that the prime contractor, Philips Medical Systems, possesses unique capabilities. Subcontracting opportunities for small businesses are not explicitly detailed but could potentially exist for component manufacturing or specialized support services if not handled in-house by the prime.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officers and program managers at the National Institutes of Health (NIH). The firm fixed-price nature of the contract simplifies some aspects of oversight by focusing on deliverables rather than cost accumulation. Transparency is generally facilitated by the contract award process itself, especially under full and open competition. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

NIH Research Equipment Procurement
NIAID Imaging Technology Development
Medical Device Modification Services
Federal Health Research Infrastructure

Risk Flags

Long contract duration
Potential vendor lock-in
Specialized equipment modification

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $28.8 million to PHILIPS MEDICAL SYSTEMS NORTH AMERICA INC.. OTHER FUNCTIONS: MODIFICATION OF IMAGING EQUIPMENT FOR THE NIH/NIAID IRF

Who is the contractor on this award?

The obligated recipient is PHILIPS MEDICAL SYSTEMS NORTH AMERICA INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $28.8 million.

What is the period of performance?

Start: 2006-01-18. End: 2013-12-17.

What specific imaging equipment was modified under this contract, and what were the key modifications?

The provided data does not specify the exact type of imaging equipment modified. However, the NAICS code 339111, 'Laboratory Apparatus and Furniture Manufacturing,' suggests it pertains to specialized laboratory or research-grade equipment, likely including advanced imaging systems used in biomedical research. The 'modification' aspect implies enhancements, upgrades, or customization to meet the specific research needs of the National Institute of Allergy and Infectious Diseases (NIAID) Integrated Research Facility (IRF). Without further details, it's impossible to list the precise modifications, but they could range from software upgrades and hardware enhancements to integration with other research tools or adaptation for novel imaging techniques.

How does the contract value of approximately $28.7 million compare to similar imaging equipment modification contracts?

Direct comparison of the $28.7 million contract value is difficult without knowing the specific imaging modalities (e.g., MRI, CT, PET, microscopy) and the scope of modifications. However, for large-scale, multi-year modifications of advanced research-grade imaging equipment, this value is not inherently excessive, especially considering the long performance period (nearly 8 years). Contracts for acquiring new, high-end imaging systems can easily run into millions of dollars, and significant modifications or upgrades to existing complex systems can also represent substantial investments. The firm fixed-price nature suggests that the scope was well-defined, and the value reflects the anticipated cost of delivering those defined modifications.

What are the potential risks associated with a long-term contract (nearly 8 years) for equipment modification?

Long-term contracts, like this nearly 8-year agreement, carry several potential risks. Firstly, there's the risk of vendor lock-in, where the government becomes heavily reliant on a single provider for modifications, parts, and expertise, potentially limiting future options or negotiating power. Secondly, contractor performance might degrade over time due to reduced competitive pressure or complacency. Technological advancements could also outpace the contract's scope, making the modified equipment less cutting-edge than desired by the time the contract ends. Finally, the contractor's financial stability or strategic direction could change, potentially impacting their ability to fulfill long-term obligations.

What does the 'full and open competition' designation imply for the procurement process and potential savings?

The 'full and open competition' designation signifies that the contract was awarded after a process where all responsible sources were permitted to submit offers. This is the preferred method of government procurement as it maximizes the pool of potential bidders, thereby increasing competition. Increased competition generally leads to better pricing, higher quality goods or services, and more innovative solutions. For taxpayers, this means the government likely secured the modifications at a more competitive price than if the contract had been awarded through a limited or sole-source process. It also implies that the agency made a good-faith effort to find the best value available in the market.

What is the significance of the NAICS code 339111 (Laboratory Apparatus and Furniture Manufacturing) in the context of this contract?

The NAICS code 339111, 'Laboratory Apparatus and Furniture Manufacturing,' indicates that the primary business activity of the contractor, or at least the activity relevant to this contract, is the manufacturing of specialized equipment used in laboratories. In this case, it points towards the modification of sophisticated laboratory apparatus, specifically imaging equipment used for research. This classification helps categorize the contract within the broader industrial landscape, suggesting the work involves highly technical manufacturing processes and specialized components rather than simple maintenance or general services. It aligns with the nature of advanced scientific research conducted at institutions like the NIH.

What is the historical spending pattern for imaging equipment modification at NIH/NIAID, if available?

The provided data snippet focuses on a single contract and does not offer historical spending patterns for imaging equipment modification at NIH/NIAID. To assess historical spending, one would need to analyze procurement data over several fiscal years, identifying all contracts related to imaging equipment modification, upgrades, or related services awarded by these specific agencies. This analysis would involve filtering databases like FPDS or USASpending by agency, keywords (e.g., 'imaging modification,' 'scanner upgrade'), and NAICS codes. Comparing the current $28.7 million contract against past expenditures would reveal trends in contract values, duration, and potentially the number of competitors over time.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Laboratory Apparatus and Furniture Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 22100 BOTHELL EVERETT HIGHWAY, BOTHELL, WA, 98041

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

Financial Breakdown

Contract Ceiling: $28,755,821

Exercised Options: $28,755,821

Current Obligation: $28,755,821

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline