VA awards $12.4M for home oxygen services, with a 15-year contract duration

Contract Overview

Contract Amount: $12,446,234 ($12.4M)

Contractor: Northwest Respiratory Services LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2003-10-01

End Date: 2010-01-17

Contract Duration: 2,300 days

Daily Burn Rate: $5.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: DELIVERY HOME OXYGEN VISN 23

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55417

State: Minnesota Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $12.4 million to NORTHWEST RESPIRATORY SERVICES LLC for work described as: DELIVERY HOME OXYGEN VISN 23 Key points: 1. Contract awarded for home oxygen services, indicating a long-term need for durable medical equipment. 2. The contract spans over 15 years, suggesting stability in service provision but also potential for price escalation. 3. A single award was made, raising questions about the extent of competition and potential value. 4. The contract type is Firm Fixed Price, which shifts cost overrun risk to the contractor. 5. The North American Industry Classification System (NAICS) code 532291 points to a specialized rental market for home health equipment. 6. The contract was awarded by the Department of Veterans Affairs, highlighting a specific demographic focus.

Value Assessment

Rating: fair

The total award amount of $12.4 million over approximately 15 years suggests an average annual spend of around $829,000. Benchmarking this requires specific data on per-patient costs for home oxygen services, which can vary significantly based on equipment, oxygen usage, and geographic location. Without more granular data on the number of beneficiaries or service levels, a precise value-for-money assessment is difficult. However, the long duration could indicate a negotiated price that was deemed competitive at the time of award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with 6 bids received. This level of competition is generally positive for price discovery and ensuring a fair market price. The fact that only one award was made suggests that either one offer was significantly superior, or the government chose to consolidate services under a single provider for efficiency. Further analysis would be needed to understand if the number of bidders was sufficient for the market size.

Taxpayer Impact: Full and open competition with multiple bidders is beneficial for taxpayers as it drives down prices through market forces, ensuring the government receives competitive rates for essential services.

Public Impact

Veterans in VISN 23 (Minnesota) will benefit from continuous access to home oxygen therapy. The contract ensures the provision of home health equipment rental, specifically oxygen delivery systems. The geographic impact is focused on Minnesota, serving veterans within the VISN 23 network. This contract supports the healthcare infrastructure for veterans requiring respiratory assistance at home.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (15 years) may limit opportunities for future cost savings through re-competition or technological advancements.
Limited information on performance metrics makes it difficult to assess the contractor's ongoing effectiveness and value.
The specific breakdown of costs for different oxygen equipment and services is not readily available for detailed price analysis.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Firm Fixed Price contract shifts cost overrun risk to the contractor.
Long-term contract provides service stability for beneficiaries.

Sector Analysis

The market for durable medical equipment (DME) rental, particularly home oxygen, is a significant segment within the healthcare industry. This contract falls under the broader category of healthcare services and equipment provision. The NAICS code 532291, Home Health Equipment Rental, encompasses companies that rent medical equipment for home use. Spending in this sector is driven by an aging population, increasing prevalence of chronic respiratory conditions, and a preference for home-based care. Comparable spending benchmarks would typically look at per-patient per-month costs for oxygen therapy across different VA facilities or Medicare/Medicaid programs.

Small Business Impact

There is no indication that this contract included a small business set-aside. The contractor, NORTHWEST RESPIRATORY SERVICES LLC, is likely a larger entity given the contract value and duration. Subcontracting opportunities for small businesses are not explicitly detailed in the provided data, but typically, larger prime contractors may engage small businesses for specialized services or equipment maintenance.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs contracting officers and program managers. The long duration necessitates regular performance reviews and monitoring to ensure compliance with contract terms and service level agreements. Transparency is facilitated through contract award databases, but detailed operational oversight mechanisms are internal to the agency. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Durable Medical Equipment (DME) Contracts
Home Healthcare Services
Respiratory Therapy Equipment
Veterans Health Administration Contracts
Medical Equipment Rental

Risk Flags

Long contract duration may limit future cost optimization.
Limited transparency on specific performance metrics.
Potential for price escalation over the contract term.
Single award despite full and open competition warrants further review.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $12.4 million to NORTHWEST RESPIRATORY SERVICES LLC. DELIVERY HOME OXYGEN VISN 23

Who is the contractor on this award?

The obligated recipient is NORTHWEST RESPIRATORY SERVICES LLC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $12.4 million.

What is the period of performance?

Start: 2003-10-01. End: 2010-01-17.

What is the historical spending pattern for home oxygen services by the Department of Veterans Affairs in VISN 23?

Historical spending data for home oxygen services by the VA in VISN 23 prior to this award would provide crucial context. Analyzing past contract values, durations, and the number of competitors in previous solicitations can reveal trends in pricing, market dynamics, and potential shifts in demand. For instance, if previous contracts were shorter-term or awarded to different providers, it might indicate a change in the competitive landscape or a strategic decision to consolidate services. Without this historical data, it's challenging to determine if the $12.4 million award represents an increase or decrease in spending relative to prior periods or if it reflects market inflation or expanded service requirements.

How does the per-unit cost or service cost of this contract compare to similar VA contracts or industry benchmarks for home oxygen delivery?

A direct comparison of per-unit costs or service costs is essential for assessing value for money. This would involve breaking down the $12.4 million award into components such as monthly rental fees for oxygen concentrators, cost per liter of oxygen, delivery and setup fees, and maintenance charges. These figures would then be benchmarked against other VA VISNs, Medicare/Medicaid reimbursement rates for similar services, and private sector pricing. If this contract's costs are significantly higher than benchmarks, it could indicate potential overpricing or inefficiencies. Conversely, lower costs might suggest effective negotiation or economies of scale. The long duration of the contract also means that current market rates might differ substantially from the rates established at the time of award.

What are the specific performance metrics and service level agreements (SLAs) associated with this contract, and how is contractor performance monitored?

The effectiveness and value of this contract are heavily dependent on the defined performance metrics and SLAs. These would typically include response times for equipment delivery and repair, oxygen purity standards, patient education protocols, and equipment maintenance schedules. Robust monitoring by the VA contracting officer's representative (COR) is crucial to ensure the contractor consistently meets these requirements. Without insight into these metrics and the monitoring process, it's difficult to ascertain if the $12.4 million is yielding high-quality, timely, and appropriate care for veterans. A review of past performance evaluations or any documented issues would further inform this assessment.

What is the track record of NORTHWEST RESPIRATORY SERVICES LLC in fulfilling government contracts, particularly for healthcare equipment?

Investigating the track record of NORTHWEST RESPIRATORY SERVICES LLC is vital for understanding the risk associated with this award. This involves examining their past performance on similar government contracts, including their history with the VA or other federal agencies. Key areas to review include on-time delivery, quality of goods/services, adherence to budget, and any history of contract disputes, terminations, or corrective actions. A contractor with a proven history of successful performance is generally a lower risk. Conversely, a history of issues might suggest potential challenges in meeting the requirements of this significant, long-term contract, potentially impacting service delivery and value for taxpayer dollars.

Given the 15-year duration, what mechanisms are in place to ensure the contract remains cost-effective and incorporates technological advancements over time?

A 15-year contract duration presents a significant challenge in maintaining cost-effectiveness and incorporating technological advancements. Mechanisms such as periodic price reviews, option periods with re-negotiation clauses, or provisions for incorporating new technologies at mutually agreed-upon prices are critical. Without such provisions, the VA risks being locked into potentially outdated or overpriced services. The initial award price might have been competitive, but market evolution, new oxygen delivery technologies (e.g., liquid oxygen systems, advanced concentrators), and changes in healthcare delivery models could render the current terms less favorable over time. Understanding these contractual safeguards is key to assessing long-term value.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Consumer Goods Rental › Home Health Equipment Rental

Product/Service Code: MISCELLANEOUS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 716 PRIOR AVE N, SAINT PAUL

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

Financial Breakdown

Contract Ceiling: $49,258,712

Exercised Options: $12,446,234

Current Obligation: $12,446,234

Timeline