HHS awards $110M for plasma collection system changes, with limited competition

Contract Overview

Contract Amount: $110,266,005 ($110.3M)

Contractor: American National RED Cross, the

Awarding Agency: Department of Health and Human Services

Start Date: 2020-03-27

End Date: 2021-03-26

Contract Duration: 364 days

Daily Burn Rate: $302.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: THE PURPOSE OF THIS LETTER CONTRACT AND EVENTUAL DEFINITIVE CONTRACT IS TO ACQUIRE SERVICES RELATED TO THE FUNCTIONALITY AND SYSTEM CHANGES THAT THE CONTRACTOR MUST MAKE BEFORE COLLECTING CONVALESCENT PLASMA SAMPLES.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20006

State: District of Columbia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $110.3 million to AMERICAN NATIONAL RED CROSS, THE for work described as: THE PURPOSE OF THIS LETTER CONTRACT AND EVENTUAL DEFINITIVE CONTRACT IS TO ACQUIRE SERVICES RELATED TO THE FUNCTIONALITY AND SYSTEM CHANGES THAT THE CONTRACTOR MUST MAKE BEFORE COLLECTING CONVALESCENT PLASMA SAMPLES. Key points: 1. Contract awarded to a single entity, raising questions about price competitiveness. 2. Focus on system changes for plasma collection suggests a critical but specialized need. 3. The contract duration of one year with a high value indicates significant operational scope. 4. Firm Fixed Price contract type offers cost certainty but may limit flexibility. 5. The award falls under 'All Other Professional, Scientific, and Technical Services', a broad category. 6. Geographic location is Washington D.C., a common hub for federal contracts.

Value Assessment

Rating: fair

The contract value of $110M for a one-year period for system changes related to plasma collection is substantial. Benchmarking this against similar contracts for IT system development or specialized scientific services is challenging due to the unique nature of convalescent plasma collection. However, the lack of competition suggests potential for inflated pricing, as the contractor faced no pressure to offer the most competitive bid. Without comparable bids, a definitive value-for-money assessment is difficult, but the high cost warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, the American National Red Cross, was considered. This approach is typically justified when a unique capability or circumstance exists, such as a pre-existing relationship or specialized knowledge. However, it bypasses the standard competitive bidding process, which is designed to foster price discovery and ensure the government receives the best possible value. The lack of competition here means taxpayers did not benefit from a potentially lower price that could have been achieved through a bidding war.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the lowest possible price, potentially leading to higher costs for taxpayers. Without competitive pressure, the awarded price may not reflect true market value.

Public Impact

The primary beneficiary is the American National Red Cross, which will receive funding to implement necessary system changes. The services delivered will support the critical function of collecting convalescent plasma samples, vital for public health initiatives. The geographic impact is centered in Washington D.C., where the contract is managed. Workforce implications are likely within the contractor's organization, requiring personnel to execute system modifications.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
High contract value for a one-year term raises questions about cost-effectiveness without competitive benchmarking.
The broad 'All Other Professional, Scientific, and Technical Services' category lacks specificity, making detailed performance evaluation harder.

Positive Signals

Contract supports a critical public health function (convalescent plasma collection).
Firm Fixed Price contract provides cost certainty for the government.
Awardee is a well-known organization (American National Red Cross) with a direct mission alignment.

Sector Analysis

The contract falls under the 'All Other Professional, Scientific, and Technical Services' NAICS code (541990). This is a broad category encompassing a wide range of services not elsewhere classified. The market for specialized IT system development and scientific technical services can be competitive, but the sole-source nature of this award bypasses typical market dynamics. Comparable spending in this specific niche of plasma collection system modification is difficult to ascertain without more granular data, but overall federal spending on professional and technical services is in the hundreds of billions annually.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. The award to the American National Red Cross, a large non-profit organization, suggests that small businesses were not directly involved in this prime contract. Without a competitive process, opportunities for small businesses to participate as subcontractors are not explicitly driven by the contract's structure.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). As a sole-source award, the justification and terms would be subject to review. Transparency is limited due to the lack of a competitive bidding process. Inspector General jurisdiction would apply to ensure funds are used appropriately and for their intended purpose.

Related Government Programs

Public Health Services
Biomedical Research and Development
Emergency Preparedness and Response
Health IT Systems

Risk Flags

Sole-source award
High contract value without clear benchmarks
Broad service category lacks specificity

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $110.3 million to AMERICAN NATIONAL RED CROSS, THE. THE PURPOSE OF THIS LETTER CONTRACT AND EVENTUAL DEFINITIVE CONTRACT IS TO ACQUIRE SERVICES RELATED TO THE FUNCTIONALITY AND SYSTEM CHANGES THAT THE CONTRACTOR MUST MAKE BEFORE COLLECTING CONVALESCENT PLASMA SAMPLES.

Who is the contractor on this award?

The obligated recipient is AMERICAN NATIONAL RED CROSS, THE.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of Assistant Secretary for Preparedness and Response).

What is the total obligated amount?

The obligated amount is $110.3 million.

What is the period of performance?

Start: 2020-03-27. End: 2021-03-26.

What is the specific justification for awarding this contract on a sole-source basis to the American National Red Cross?

The provided data does not explicitly state the justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of providing the required services, often due to unique capabilities, proprietary technology, or urgent and compelling circumstances. Given the context of convalescent plasma collection, it's possible the American National Red Cross possesses unique infrastructure, expertise, or existing systems that made them the only viable option for the required functionality and system changes within the specified timeframe. Further investigation into HHS's justification documentation would be necessary to confirm the precise reasons.

How does the $110M contract value compare to historical spending on similar system modification projects within the federal government?

Direct comparison of the $110M contract value for system changes related to convalescent plasma collection is difficult without more specific data on comparable projects. The NAICS code 541990 is very broad. However, federal spending on IT system development and professional services can range from millions to billions of dollars. The value of this contract, while substantial for a one-year duration, is not inherently out of line for significant system overhauls. The lack of competition, however, prevents a direct value-for-money comparison against potential alternative bids, making it hard to determine if this represents optimal pricing.

What are the key performance indicators (KPIs) and deliverables expected under this contract?

The provided data snippet focuses on the contract's purpose and financial aspects, not specific performance indicators or deliverables. The stated purpose is 'to acquire services related to the functionality and system changes that the contractor must make before collecting convalescent plasma samples.' Key deliverables would likely include documented system requirements, developed and tested software modules, updated operational procedures, and successful integration of new functionalities into the existing plasma collection workflow. Performance would be measured against the successful implementation and operational readiness of these system changes.

What is the track record of the American National Red Cross in managing large federal IT or system development contracts?

The American National Red Cross is a well-established organization with a long history of managing complex operations, including blood and plasma collection, which inherently involves significant logistical and data management systems. While they may not be a traditional IT contractor, their experience in handling sensitive biological materials and large-scale donor management suggests a capacity for managing related system requirements. Their track record with federal agencies, particularly HHS, in areas related to public health and emergency response would be a key indicator of their ability to successfully execute this contract.

What are the potential risks associated with a sole-source award for critical public health infrastructure changes?

The primary risk of a sole-source award for critical infrastructure changes is the potential for inflated costs due to the absence of competitive pressure. This can lead to reduced value for taxpayer money. Another risk is a lack of innovation, as the contractor may have less incentive to explore novel or more efficient solutions compared to a competitive environment. Furthermore, if the sole-source contractor underperforms or faces unforeseen challenges, the government has limited alternative options for immediate remediation without potentially renegotiating terms or initiating a new, lengthy sole-source justification process.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 431 18TH ST, WASHINGTON, DC, 20006

Business Categories: Category Business, Corporate Entity Tax Exempt, Domestic Shelter, Manufacturer of Goods, Nonprofit Organization, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $233,766,005

Exercised Options: $110,266,005

Current Obligation: $110,266,005

Actual Outlays: $110,266,005

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline