VA awards $21.1M for high-tech biomedical equipment, with Philips Medical Systems as the sole awardee

Contract Overview

Contract Amount: $21,133,973 ($21.1M)

Contractor: Philips Medical Systems North America 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: BOTHELL, SNOHOMISH County, WASHINGTON, 98021, UNITED STATES OF AMERICA

State: Washington Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $21.1 million to PHILIPS MEDICAL SYSTEMS NORTH AMERICA INC. for work described as: HIGH TECH BIO-MEDICAL EQUIPMENT AND ACCESSORIES. Key points: 1. The contract value of $21.1 million for biomedical equipment suggests a significant investment in healthcare infrastructure. 2. Competition dynamics appear limited, as Philips Medical Systems North America Inc. was the sole awardee. 3. The fixed-price contract with economic price adjustment introduces potential cost escalation risks. 4. The contract duration is notably short, ending on March 31, 2010, suggesting a specific, possibly one-time need. 5. The award falls under the Irradiation Apparatus Manufacturing NAICS code, indicating a focus on specific types of medical technology. 6. The absence of small business set-aside flags indicates this was not specifically targeted to small businesses.

Value Assessment

Rating: fair

Benchmarking the value of this $21.1 million contract is challenging without more specific details on the equipment procured. However, the sole award to Philips Medical Systems, a major player in the industry, suggests a potentially negotiated price rather than one driven by intense market competition. The fixed-price with economic price adjustment clause warrants scrutiny for potential cost overruns compared to contracts with more stable pricing structures. The short duration also makes it difficult to assess long-term value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which theoretically allows any interested vendor to bid. However, with only one awardee, Philips Medical Systems North America Inc., it raises questions about the actual level of competition realized. It's possible that only one company could meet the stringent technical requirements, or that other potential bidders chose not to participate for various reasons. This limited number of bidders may have impacted price discovery.

Taxpayer Impact: While the competition was advertised as full and open, the single awardee suggests that taxpayers may not have benefited from the most competitive pricing achievable through a broader bidding process.

Public Impact

Veterans Affairs medical facilities will benefit from access to high-tech biomedical equipment. The services delivered include the provision of advanced medical devices and potentially related accessories. The geographic impact is likely nationwide, serving VA facilities across the United States. The contract supports the healthcare workforce by providing them with necessary tools for patient care.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation due to the economic price adjustment clause.
Limited competition indicated by a single awardee, potentially impacting cost-effectiveness.
Short contract duration raises questions about long-term strategic planning or a specific, immediate need.

Positive Signals

Awarded under full and open competition, allowing for broad market participation.
Procurement of high-tech biomedical equipment suggests investment in advanced healthcare capabilities.
The awardee, Philips Medical Systems, is a recognized leader in the field, implying quality equipment.

Sector Analysis

The procurement of high-tech biomedical equipment falls within the broader healthcare technology sector. This sector is characterized by rapid innovation, significant research and development investment, and stringent regulatory requirements. The market for medical devices is substantial, with major players like Philips competing for government contracts. This specific award likely represents a portion of the Department of Veterans Affairs' overall spending on medical equipment, which is benchmarked against national healthcare spending trends.

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 specifically mandated for small businesses through this award. The focus was on securing the required high-tech biomedical equipment, and the competition was open to all qualified vendors, regardless of size.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and procurement oversight mechanisms. Accountability measures would be tied to the terms and conditions of the fixed-price contract with economic price adjustment. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the procurement or execution of the contract.

Related Government Programs

Medical Equipment Procurement
Department of Veterans Affairs Healthcare Services
High-Technology Medical Devices
Irradiation Apparatus Manufacturing

Risk Flags

Potential for cost escalation due to Economic Price Adjustment.
Limited competition indicated by a single awardee.
Short contract duration may indicate a non-strategic or urgent need.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $21.1 million to PHILIPS MEDICAL SYSTEMS NORTH AMERICA INC.. HIGH TECH BIO-MEDICAL EQUIPMENT AND ACCESSORIES.

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 Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $21.1 million.

What is the period of performance?

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

What specific types of high-tech biomedical equipment were procured under this contract?

The provided data indicates the contract is for 'HIGH TECH BIO-MEDICAL EQUIPMENT AND ACCESSORIES' and falls under NAICS code 334517, 'Irradiation Apparatus Manufacturing.' This suggests the equipment likely includes devices that utilize radiation for medical purposes, such as imaging equipment (e.g., X-ray, CT scanners, linear accelerators for radiation therapy), sterilization equipment, or other specialized diagnostic and therapeutic apparatus. Without access to the detailed contract statement of work or line item details, the precise nature of the equipment remains unspecified beyond this classification.

How does the $21.1 million award compare to typical VA spending on similar biomedical equipment?

Comparing the $21.1 million award requires context on the specific type and quantity of equipment. Large-scale procurements for major imaging systems or radiation therapy units can easily reach millions of dollars. The Department of Veterans Affairs (VA) has a substantial budget for medical equipment to serve its large veteran population. Annual spending can fluctuate based on capital investment cycles and technological upgrades. While $21.1 million is a significant sum, it could represent a single large purchase or multiple smaller acquisitions across various facilities. Benchmarking would necessitate comparing it to other VA contracts for similar irradiation apparatus or high-tech medical equipment procured around the same period (2010).

What are the risks associated with a 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type?

A Fixed Price with Economic Price Adjustment (FPEPA) contract aims to provide price stability while acknowledging potential fluctuations in market conditions, particularly for long-term contracts or those involving materials subject to price volatility. The primary risk for the government is potential cost escalation. The 'economic price adjustment' clause allows the contractor to increase the price based on pre-defined economic indicators (e.g., inflation indices, raw material costs). While intended to protect contractors from unforeseen cost increases, it can lead to higher overall spending for the government if these indicators rise significantly. This contrasts with a firm fixed-price contract, where the price is set and does not change regardless of market fluctuations, placing the risk of cost increases entirely on the contractor.

Given the short contract duration (ending March 31, 2010), what might this imply about the procurement strategy?

A contract ending on March 31, 2010, suggests it was likely awarded in late 2009 or early 2010, and its duration was less than a year. This short timeframe could imply several things: it might have been intended to fulfill an immediate, urgent need; it could have been a bridge contract to cover a gap until a larger, long-term contract was established; or it might have been for a specific project or upgrade with a defined endpoint. It could also indicate that the equipment had a shorter expected lifespan or that the VA planned to re-evaluate its needs and re-compete the requirement shortly after the contract's expiration.

What does the sole award to Philips Medical Systems suggest about the market for irradiation apparatus manufacturing?

A sole award to a single vendor, even under a 'full and open' competition announcement, can suggest several market dynamics. It might indicate that Philips Medical Systems was the only bidder capable of meeting the highly specific technical requirements outlined in the solicitation. Alternatively, it could mean that Philips was the only bidder willing to offer terms acceptable to the VA, or perhaps the only one that submitted a compliant and competitive proposal. In specialized markets like advanced medical equipment, a limited number of manufacturers may possess the necessary technology, certifications, and capacity, leading to less robust competition than in more commoditized sectors.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Irradiation 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: Philips RS North America LLC (UEI: 404553448)

Address: 22100 BOTHELL EVERETT HWY, BOTHELL, WA, 98021

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

Financial Breakdown

Contract Ceiling: $21,133,973

Exercised Options: $21,133,973

Current Obligation: $21,133,973

Parent Contract

Parent Award PIID: V797P6011B

IDV Type: IDC

Timeline