REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 23, 2026
FROM
ANDREW GOLDFRACH, ARMC Chief Executive Officer, Arrowhead Regional Medical Center
SUBJECT
Title
Agreement with Covidien Sales LLC for Purchase of Respiratory Monitoring Products
End
RECOMMENDATION(S)
Recommendation
Approve Agreement with Covidien Sales LLC, including non-standard terms, for the purchase of respiratory monitoring products in the not-to-exceed amount of $4,305,000, for the term of September 1, 2026 through September 30, 2031, with two automatic one-year renewal periods.
(Presenter: Andrew Goldfrach, ARMC Chief Executive Officer, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The total cost of $4,305,000 is funded by State Medi-Cal, Federal Medicare, private insurance, and other departmental revenue. Funding sources may change in the future pending any legislative activity related to the repeal and/or replacement of the Affordable Care Act. Adequate appropriation and revenue have been included in the Arrowhead Regional Medical Center (ARMC) 2026-27 budget and will be included in future recommended budgets.
BACKGROUND INFORMATION
The agreement with Covidien Sales LLC (Covidien), a subsidiary of Medtronic, will enable ARMC to purchase pulse oximetry and capnography products used for respiratory monitoring at rebate pricing. As Covidien provides both product lines, ARMC seeks to reduce costs and maximize rebate opportunities by standardizing purchases with a single vendor. Under the agreement, ARMC must purchase at least 85% of its pulse oximetry and capnography products from Medtronic and maintain a minimum annual spend of $500,000. Meeting these requirements will allow ARMC to qualify for reduced pricing and rebate incentives.
ARMC currently purchases these respiratory monitoring products through Vizient agreements between Masimo and Covidien, a Medtronic company. Vizient agreements provide access to group purchasing pricing and terms for participating healthcare providers, including ARMC.
On May 9, 2023, Masimo and Vizient entered into Agreement No. MS9142 for pulse oximetry and capnography products under which Masimo agreed to provide respiratory monitoring products to members of Vizient, including ARMC, based on terms and conditions set forth in the agreement.
On September 1, 2020, Covidien and Vizient entered into Agreement No. MS9141 for pulse oximetry and capnography products under which Covidien agreed to provide respiratory monitoring products to members of Vizient, including ARMC, based on terms and conditions set forth in the agreement.
ARMC is requesting approval of the agreement with Covidien to consolidate its purchases of these products into one agreement to lower pricing than what is included in those agreements with Vizient. The new pricing in the recommended agreement will be the result of a commitment to increase purchase volume of these products through Covidien.
The Agreement is Covidien’s standard commercial agreement, negotiated by the parties, which includes the following non-standard contract terms:
1. The term of the Agreement is automatically renewing for two additional 12-month periods.
• County Policies 11-05 and 11-06SP1 do not permit automatically renewing contracts after five years unless approved by the Board.
• Potential Impact: The term of the Agreement shall extend past five years unless the County provides notice of non-renewal.
2. Payment terms are 30 days.
• County standard payment terms are net 60 days.
• Potential Impact: County standard processing time is 60 days or more. Failing to pay within 30 days may result in a material breach of the Agreement, which could allow Covidien to terminate the Agreement and seek other legal remedies.
3. The Agreement provides a limited indemnification of the County.
• The County standard contract indemnity provision requires the contractor to indemnify, defend, and hold County harmless from third-party claims arising out of the acts, errors or omissions of any person.
• Potential Impact: Covidien is not required to defend, indemnify or hold the County harmless from any and all claims, including indemnification for claims arising from Covidien’s negligent or intentional acts and intellectual property infringement. If the County is sued for any claim, including intellectual property infringement based on its use of Covidien’s products, the County may be solely liable for the costs of defense and damages, which could exceed the total Agreement amount.
4. The Agreement does not require Covidien to meet all the County’s insurance standards as required pursuant to County Policies 11-05, 11-07 and 11-07SP.
• County policy requires contractors to carry appropriate insurance at limits and under conditions determined by the County’s Risk Management Department and as set forth in County policy and in the County standard contract.
• Potential Impact: The County has no assurance that Covidien will be financially responsible for claims that may arise under the Agreement, which could result in expenses to the County that exceed the total Agreement amount.
5. Covidien is entitled to recover attorneys’ fees and costs of enforcing its rights to payment under the Agreement.
• The County standard contract requires each party to bear its own costs and attorney fees, regardless of who is the prevailing party.
• Potential Impact: Covidien may be entitled to recover costs related to recovering payment, which could exceed the total Agreement amount.
ARMC recommends approval of the Agreement, including non-standard terms, as the Covidien respiratory monitoring products will provide for the safety and health needs of the County residents by providing tools to improve patient care for respiratory treatment.
PROCUREMENT
The Purchasing Department supports this non-competitive procurement based on manufacturer direct justification. Covidien is the manufacturer of the respiratory monitoring products. Purchasing directly from the manufacturer provides reduced pricing and higher rebate incentives than purchasing through distributors, resulting in the best value for the County.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Daniella Hernandez, Deputy County Counsel, 387-5455) on May 26, 2026; Risk Management (Stephanie Pacheco, Staff Analyst II, 386-9039) on May 26, 2026; Purchasing (Veronica Pedace, Buyer III, 387-2464) on June 1, 2026; ARMC Finance (Chen Wu, Finance and Budget Officer, 580-3165) on June 1, 2026; and County Finance and Administration (Jenny Yang, Administrative Analyst, 387-4884) on June 2, 2026.