VA awards $55.3M contract for medical supplies to Medline Industries, LP, with 4 bidders

Contract Overview

Contract Amount: $55,319,167 ($55.3M)

Contractor: Medline Industries, LP

Awarding Agency: Department of Veterans Affairs

Start Date: 2010-10-01

End Date: 2011-09-30

Contract Duration: 364 days

Daily Burn Rate: $152.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: DIRECT-TO-PATIENT DISTRIBUTION OF MEDICAL/SURGICAL PRODUCTS.

Place of Performance

Location: MUNDELEIN, LAKE County, ILLINOIS, 60060

State: Illinois Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $55.3 million to MEDLINE INDUSTRIES, LP for work described as: DIRECT-TO-PATIENT DISTRIBUTION OF MEDICAL/SURGICAL PRODUCTS. Key points: 1. Contract value appears reasonable given the scope of direct-to-patient medical supply distribution. 2. Full and open competition suggests a healthy market with potential for competitive pricing. 3. Fixed-price contract type mitigates cost overrun risks for the government. 4. Contract duration of one year is standard for supply agreements. 5. Geographic focus on Illinois (st) indicates a regional distribution network. 6. No small business set-aside was utilized, suggesting larger prime contractors were expected.

Value Assessment

Rating: good

The contract value of $55.3 million for a one-year period for direct-to-patient medical supplies seems within a reasonable range for a federal agency like the VA. Benchmarking against similar contracts for medical supply distribution would provide a more precise value-for-money assessment. The firm fixed-price structure is generally favorable for the government, locking in costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With four bidders participating, the competition level suggests a reasonably active market for these types of medical supplies. This level of competition is generally conducive to achieving competitive pricing and ensuring the government receives fair market value.

Taxpayer Impact: The full and open competition with multiple bidders is beneficial for taxpayers as it drives down prices through market forces, ensuring efficient use of federal funds.

Public Impact

Veterans will benefit from the timely and reliable distribution of necessary medical and surgical products. The contract ensures the availability of essential medical supplies for patient care within the VA system. The geographic impact is primarily focused on Illinois, supporting VA facilities and patients in that region. The contract supports the healthcare workforce by ensuring they have the necessary supplies to perform their duties.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in subsequent years if competition diminishes.
Dependence on a single contractor for a critical supply chain function carries inherent risk.

Positive Signals

Firm fixed-price contract limits the government's exposure to cost fluctuations.
Full and open competition indicates a robust market and potential for ongoing competitive pricing.
Contract awarded to a known entity (Medline Industries, LP) suggests a degree of reliability.

Sector Analysis

The medical supply industry is a large and critical sector supporting healthcare providers. Federal agencies, particularly the Department of Veterans Affairs, are significant purchasers of medical, dental, and hospital equipment and supplies. This contract fits within the broader category of medical supply chain management, ensuring the availability of essential products for patient care. Comparable spending benchmarks would involve analyzing other large federal contracts for similar medical supply distribution services.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the primary contract was awarded to a large business capable of fulfilling the extensive requirements for medical supply distribution. The lack of a small business set-aside means direct opportunities for small businesses to participate as prime contractors are absent, though they might be involved as subcontractors to Medline Industries.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Oversight mechanisms would typically include performance monitoring, quality assurance checks, and invoice verification. Accountability is ensured through the firm fixed-price contract terms, which obligate the contractor to deliver specified goods at an agreed-upon price. Transparency is generally maintained through contract award databases, though detailed performance reports may not always be publicly accessible.

Related Government Programs

VA Medical Equipment and Supplies Contracts
Federal Supply Schedule (FSS) for Medical Products
Department of Defense Medical Supply Contracts

Risk Flags

Potential for supply chain disruption
Reliance on a single prime contractor
Quality control of distributed products

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $55.3 million to MEDLINE INDUSTRIES, LP. DIRECT-TO-PATIENT DISTRIBUTION OF MEDICAL/SURGICAL PRODUCTS.

Who is the contractor on this award?

The obligated recipient is MEDLINE INDUSTRIES, LP.

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 $55.3 million.

What is the period of performance?

Start: 2010-10-01. End: 2011-09-30.

What is Medline Industries, LP's track record with the Department of Veterans Affairs and other federal agencies?

Medline Industries, LP has a significant history of contracting with the Department of Veterans Affairs and other federal agencies for the provision of medical supplies. They are a major player in the healthcare supply chain. Analyzing their past performance on similar contracts, including any reported issues, delivery delays, or quality concerns, would provide insight into their reliability. Their extensive experience suggests a capacity to manage large federal contracts, but a detailed review of their performance history, including any contract disputes or terminations, is crucial for a comprehensive assessment. Data on past contract values and durations with the VA would also help contextualize this specific award.

How does the $55.3 million contract value compare to similar VA contracts for medical supply distribution?

To assess the value for money, the $55.3 million contract value needs to be benchmarked against comparable contracts awarded by the VA or other federal agencies for direct-to-patient distribution of medical/surgical products. Factors such as the specific types of products included, the volume required, the geographic scope of distribution, and the contract duration (this one is for 364 days) are critical for a fair comparison. If similar one-year contracts for comparable product mixes and distribution areas were awarded for significantly less or more, it would indicate whether this award represents a good or questionable value. Without access to a database of comparable contract values and terms, a precise comparison is difficult, but the amount appears substantial, reflecting the critical nature and scale of medical supply provision.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential supply chain disruptions (e.g., manufacturing issues, transportation delays), quality control failures of the medical products, and price increases in future contract renewals. The firm fixed-price (FFP) contract structure mitigates the risk of cost overruns for the government, as the price is set upfront. The VA's oversight and quality assurance processes are intended to mitigate risks related to product quality and delivery. However, the risk of supply chain disruption remains, especially given the reliance on a single prime contractor. Mitigation strategies could include requiring the contractor to maintain adequate inventory levels, have contingency plans for disruptions, and potentially diversifying suppliers in future solicitations.

How effective is the VA in ensuring competitive pricing through its contracting processes for medical supplies?

The VA generally employs robust contracting processes, including full and open competition, to ensure competitive pricing for medical supplies. The fact that this contract was awarded under full and open competition with four bidders suggests a healthy market dynamic. The effectiveness of this process is reflected in the final negotiated price. Analyzing the bid prices submitted by all four bidders, if available, would provide a clearer picture of the competitive pressure. Furthermore, the VA utilizes mechanisms like the Federal Supply Schedule (FSS) and other competitive solicitations to drive down costs. Continuous monitoring of market prices and regular re-competition of contracts are key to maintaining effectiveness.

What is the historical spending pattern for direct-to-patient medical supplies by the VA?

The VA has consistently been a major purchaser of medical supplies, with annual spending often in the billions of dollars across various categories. Spending on direct-to-patient distribution of medical/surgical products specifically would be a subset of this larger expenditure. Historical data would likely show fluctuations based on patient demand, healthcare policy changes, and the introduction of new medical technologies. Analyzing spending trends over the past 5-10 years would reveal whether this $55.3 million award is consistent with historical levels for similar contracts or represents a significant increase or decrease. Factors like the COVID-19 pandemic may have also influenced spending patterns in recent years.

Industry Classification

NAICS: Wholesale Trade › Professional and Commercial Equipment and Supplies Merchant Wholesalers › Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 MEDLINE PLAZA, MUNDELEIN, IL, 10

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $55,319,167

Exercised Options: $55,319,167

Current Obligation: $55,319,167

Parent Contract

Parent Award PIID: VA797P0102

IDV Type: IDC

Timeline