VA awards $23.6M for biomedical equipment, highlighting a fixed-price contract with economic adjustments

Contract Overview

Contract Amount: $23,648,006 ($23.6M)

Contractor: Siemens Medical Solutions USA, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2010-03-31

End Date: 2010-03-31

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Healthcare

Official Description: HIGH TECH BIO-MEDICAL EQUIPMENT AND ACCESSORIES.

Place of Performance

Location: MALVERN, CHESTER County, PENNSYLVANIA, 19355

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $23.6 million to SIEMENS MEDICAL SOLUTIONS USA, INC. for work described as: HIGH TECH BIO-MEDICAL EQUIPMENT AND ACCESSORIES. Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. Fixed-price contract with economic price adjustment may offer some cost certainty while accounting for market fluctuations. 3. The contract duration of less than a year indicates a need for immediate or short-term equipment supply. 4. Awarded to a single vendor, Siemens Medical Solutions USA, Inc., for specialized biomedical equipment. 5. The North American Industry Classification System (NAICS) code 334510 points to a focus on electromedical and electrotherapeutic apparatus manufacturing. 6. The contract was awarded under the Department of Veterans Affairs, indicating a focus on healthcare services for veterans.

Value Assessment

Rating: good

The contract value of $23.6 million for biomedical equipment appears reasonable given the specialized nature of the products. Benchmarking against similar contracts for electromedical apparatus manufacturing would provide a clearer picture of value for money. The fixed-price with economic adjustment structure aims to balance cost control with market volatility, which is a common approach for such procurements. Without specific per-unit cost data or comparisons to other similar awards, a definitive value assessment is challenging, but the award to a known entity suggests a degree of established market pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, meaning all responsible sources were permitted to submit a bid. The presence of four bids indicates a healthy level of competition for this requirement. A competitive process like this generally leads to better price discovery and ensures the government receives offers from multiple qualified vendors, potentially driving down costs and improving the quality of the goods or services offered.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible pricing and quality for essential biomedical equipment for veterans' healthcare.

Public Impact

Veterans will benefit from access to advanced biomedical equipment and accessories necessary for their diagnosis and treatment. The services delivered include the provision of specialized electromedical and electrotherapeutic apparatus. The geographic impact is likely concentrated within facilities managed by the Department of Veterans Affairs, serving veterans across the nation. The contract supports the healthcare workforce by ensuring they have the necessary tools to provide quality patient care.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to the economic price adjustment clause, which could impact long-term budget predictability.
Reliance on a single vendor for this specific equipment may limit future flexibility and negotiation power.
The short duration of the contract might necessitate frequent re-competition, leading to administrative overhead.

Positive Signals

Awarded through full and open competition, indicating a robust and fair bidding process.
The contract is with a well-established company, Siemens Medical Solutions USA, Inc., suggesting reliability and expertise.
The use of a fixed-price contract with economic price adjustment can help manage costs while accommodating market fluctuations.

Sector Analysis

The electromedical and electrotherapeutic apparatus manufacturing sector is a critical component of the healthcare industry, providing essential diagnostic and therapeutic equipment. This contract falls within the broader medical device market, which is characterized by innovation, stringent regulatory requirements, and significant investment in research and development. Spending in this sector by government agencies like the VA is crucial for maintaining and upgrading healthcare infrastructure. Comparable spending benchmarks would typically involve analyzing other large-scale procurements of similar medical equipment by federal healthcare providers.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. The award to a large corporation like Siemens Medical Solutions USA, Inc. suggests that the primary focus was on meeting the specific technical requirements and scale of the procurement, rather than prioritizing small business participation through set-asides.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' procurement and program management offices. Accountability measures are embedded within the contract terms, including performance standards and payment schedules. Transparency is generally maintained through federal procurement databases where contract awards are reported. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to this contract were suspected or identified.

Related Government Programs

Department of Veterans Affairs Medical Equipment Procurement
Federal Healthcare Services Contracts
Electromedical Apparatus Supply
Fixed-Price Contracts with Economic Price Adjustment

Risk Flags

Economic Price Adjustment Clause
Short Contract Duration
Single Vendor Award

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $23.6 million to SIEMENS MEDICAL SOLUTIONS USA, INC.. HIGH TECH BIO-MEDICAL EQUIPMENT AND ACCESSORIES.

Who is the contractor on this award?

The obligated recipient is SIEMENS MEDICAL SOLUTIONS USA, INC..

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 $23.6 million.

What is the period of performance?

Start: 2010-03-31. End: 2010-03-31.

What is the historical spending pattern of the Department of Veterans Affairs on electromedical and electrotherapeutic apparatus?

Analyzing the historical spending patterns of the Department of Veterans Affairs (VA) on electromedical and electrotherapeutic apparatus reveals a consistent and significant investment in medical technology to support veteran healthcare. Over the years, the VA has procured a wide range of equipment, from basic diagnostic tools to advanced imaging and therapeutic devices. Spending in this category often fluctuates based on the modernization needs of VA medical centers, the introduction of new medical technologies, and specific public health initiatives. For instance, periods of increased spending might correlate with upgrades to imaging suites, the expansion of telehealth capabilities, or responses to specific health crises. The NAICS code 334510, associated with this contract, helps track spending specifically within the manufacturing of such apparatus. Examining multi-year spending data, including contract awards like the one to Siemens Medical Solutions USA, Inc., provides insight into the VA's commitment to maintaining state-of-the-art medical facilities and ensuring veterans have access to the latest healthcare technologies.

How does the pricing of this contract compare to similar procurements for biomedical equipment by other federal agencies?

Comparing the pricing of this $23.6 million contract for biomedical equipment to similar procurements by other federal agencies requires access to a comprehensive database of federal contract awards and detailed product specifications. Without specific line-item pricing or unit costs, a direct comparison is challenging. However, the fact that this contract was awarded under full and open competition with four bidders suggests that the pricing achieved was likely competitive within the market for such specialized equipment. Agencies like the Department of Defense or the Health Resources and Services Administration may procure similar items. Benchmarking would involve identifying contracts with comparable equipment types, quantities, and delivery timelines awarded around the same period. Factors such as volume discounts, contract type (fixed-price vs. cost-plus), and specific economic adjustment clauses can significantly influence price. A preliminary assessment suggests the pricing is within a reasonable range for a large federal healthcare provider like the VA, but a definitive conclusion requires detailed comparative analysis.

What are the potential risks associated with a fixed-price contract with economic price adjustment for biomedical equipment?

A fixed-price contract with economic price adjustment (EPA) for biomedical equipment presents a mixed risk profile. The primary risk for the government is the potential for price increases due to the EPA clause. While intended to account for inflation and market fluctuations in raw materials or labor, poorly structured EPA clauses can lead to higher-than-anticipated costs for the government, especially in periods of significant economic volatility. This can erode the initial cost savings anticipated from a fixed-price structure. For the contractor, the risk is that the EPA might not fully compensate for unforeseen cost escalations, potentially impacting their profit margins. Additionally, the administrative burden of tracking and justifying price adjustments can be substantial. The short duration of this contract (less than a year) might mitigate some long-term price risk, but it necessitates careful monitoring of market conditions throughout the performance period.

What is the track record of Siemens Medical Solutions USA, Inc. in fulfilling federal contracts for biomedical equipment?

Siemens Medical Solutions USA, Inc. has a substantial track record of fulfilling federal contracts, particularly within the healthcare and biomedical equipment sectors. As a major global player in medical technology, the company frequently engages with government agencies, including the Department of Veterans Affairs, the Department of Defense, and others. Their history typically involves supplying a wide array of sophisticated medical imaging systems, laboratory diagnostics, and therapeutic devices. Federal contract databases often show numerous awards to Siemens for various equipment and services, indicating a capacity to meet the complex requirements of government healthcare providers. While specific performance metrics for every contract are not always publicly detailed, their continued success in winning competitive bids suggests a generally positive performance history and a strong understanding of federal procurement processes and healthcare needs. Any assessment of their track record should consider the volume and complexity of contracts they have successfully managed.

How does the competition level (4 bidders) for this contract impact the overall value and taxpayer cost?

A competition level of four bidders for this biomedical equipment contract is generally considered healthy and indicative of a reasonably competitive market for these specialized goods. When multiple qualified vendors submit proposals, it creates pressure on each bidder to offer competitive pricing and superior technical solutions to win the contract. This increased competition typically leads to better value for the government and, consequently, for taxpayers, as it helps drive down costs and ensures the selection of the most advantageous offer. A higher number of bidders often correlates with even greater cost savings, but four bidders suggest that the market is sufficiently robust to provide meaningful choices and prevent a situation where the government might be forced to accept a less favorable offer due to a lack of alternatives. This level of competition helps ensure that the awarded price reflects fair market value.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Siemens Aktiengesellschaft (UEI: 316067164)

Address: 51 VALLEY STREAM PKWY, MALVERN, PA, 06

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $23,648,006

Exercised Options: $23,648,006

Current Obligation: $23,648,006

Parent Contract

Parent Award PIID: V797P6029B

IDV Type: IDC

Timeline