HHS awarded AstraZeneca $125.6M for COVID-19 vaccine development and manufacturing

Contract Overview

Contract Amount: $125,647,983 ($125.6M)

Contractor: Astrazeneca Pharmaceuticals LP

Awarding Agency: Department of Health and Human Services

Start Date: 2020-05-20

End Date: 2020-10-31

Contract Duration: 164 days

Daily Burn Rate: $766.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Healthcare

Official Description: ISSUE ADVANCED AGREEMENT PRIOR TO AWARD OF AN OTHER TRANSACTION AGREEMENT (OTA)FOR THE COVID19 VACCINE DEVELOPMENT AND MANUFACTURING

Place of Performance

Location: WILMINGTON, NEW CASTLE County, DELAWARE, 19803

State: Delaware Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $125.6 million to ASTRAZENECA PHARMACEUTICALS LP for work described as: ISSUE ADVANCED AGREEMENT PRIOR TO AWARD OF AN OTHER TRANSACTION AGREEMENT (OTA)FOR THE COVID19 VACCINE DEVELOPMENT AND MANUFACTURING Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. The contract type (Cost No Fee) indicates a focus on achieving a specific outcome rather than profit. 3. The short performance period (164 days) suggests an urgent response to the pandemic. 4. AstraZeneca's role in vaccine development positions them as a key player in the public health response. 5. The significant funding highlights the government's commitment to rapid vaccine availability.

Value Assessment

Rating: good

The contract value of $125.6 million for vaccine development and manufacturing is substantial, reflecting the urgency and complexity of the COVID-19 crisis. Benchmarking this against other large-scale pharmaceutical development contracts is challenging due to the unique circumstances of the pandemic. However, the 'Cost No Fee' contract type suggests that the government is primarily focused on ensuring the successful development and manufacturing of the vaccine, with contractor profit being secondary. This can indicate a potentially good value if the vaccine is successfully developed and deployed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The specific number of bidders is not provided, but the competitive nature of the award process suggests that the government sought the best available solution and pricing. This approach is generally favorable for price discovery and ensuring taxpayer funds are used efficiently.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by fostering a competitive environment where multiple companies vie for the contract.

Public Impact

The primary beneficiaries are the public, who will gain access to a potentially life-saving COVID-19 vaccine. The services delivered include the critical development and manufacturing of vaccine doses. The geographic impact is national, aiming to provide widespread vaccine availability across the United States. Workforce implications include potential job creation within AstraZeneca's manufacturing and research facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions given the global nature of vaccine manufacturing.
Reliance on a single contractor for a critical public health product carries inherent risks.
The 'Cost No Fee' structure, while potentially beneficial, could disincentivize aggressive cost management if not carefully monitored.

Positive Signals

Awarded under full and open competition, indicating a competitive process.
AstraZeneca is a well-established pharmaceutical company with significant experience in vaccine development.
The contract addresses a critical national need for a COVID-19 vaccine.
The 'Cost No Fee' arrangement prioritizes successful delivery over contractor profit.

Sector Analysis

The pharmaceutical industry is characterized by high R&D costs, long development cycles, and stringent regulatory oversight. This contract falls within the pharmaceutical preparation manufacturing sector, a critical component of the healthcare industry. The market for vaccine development and manufacturing is highly specialized, with a limited number of companies possessing the necessary expertise and infrastructure. The significant government investment reflects the unprecedented demand and urgency driven by the COVID-19 pandemic, likely exceeding typical annual spending for a single vaccine development program.

Small Business Impact

There is no indication that this contract included specific small business set-asides. Given the nature of large-scale pharmaceutical development and manufacturing, it is likely that any subcontracting opportunities would be with specialized suppliers within the pharmaceutical supply chain, rather than directly with small businesses in a set-aside capacity. The primary focus appears to be on securing the vaccine from a major manufacturer.

Oversight & Accountability

Oversight for this contract would likely fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). Mechanisms for oversight would include regular progress reports from AstraZeneca, milestone reviews, and potentially site inspections to ensure compliance with development and manufacturing standards. Transparency is crucial in such public health initiatives, and while specific details of ongoing oversight may not be publicly detailed, the Inspector General's office within HHS would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

COVID-19 Vaccine Research and Development Programs
Operation Warp Speed Contracts
Biopharmaceutical Manufacturing Contracts
Public Health Emergency Response Funding

Risk Flags

Potential for supply chain vulnerabilities
Reliance on a single manufacturer for critical supply
Scientific and manufacturing scale-up risks inherent in vaccine development

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $125.6 million to ASTRAZENECA PHARMACEUTICALS LP. ISSUE ADVANCED AGREEMENT PRIOR TO AWARD OF AN OTHER TRANSACTION AGREEMENT (OTA)FOR THE COVID19 VACCINE DEVELOPMENT AND MANUFACTURING

Who is the contractor on this award?

The obligated recipient is ASTRAZENECA PHARMACEUTICALS LP.

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 $125.6 million.

What is the period of performance?

Start: 2020-05-20. End: 2020-10-31.

What is AstraZeneca's track record in developing and manufacturing vaccines prior to this contract?

AstraZeneca has a significant history in pharmaceutical research and development, including experience with vaccine production. Prior to this contract, the company was known for its work on various therapeutic areas and had established manufacturing capabilities. Their involvement in developing a COVID-19 vaccine was a continuation of their broader efforts in infectious disease research. While specific details of their vaccine portfolio before 2020 are extensive, their established presence in the pharmaceutical industry suggested a capacity to undertake such a large-scale project. The company's prior experience would have been a key factor considered during the competitive bidding process for this critical contract.

How does the $125.6 million award compare to typical government spending on vaccine development?

The $125.6 million awarded to AstraZeneca is substantial and likely higher than typical government spending on a single vaccine development program in pre-pandemic times. However, the COVID-19 pandemic represented an unprecedented global health crisis, necessitating rapid and large-scale investment. Government initiatives like Operation Warp Speed were designed to accelerate vaccine development and manufacturing through significant financial commitments. Compared to the billions invested across multiple vaccine candidates during the pandemic, this specific award to AstraZeneca, while large, was part of a broader, highly-funded national effort. The urgency and scale of the pandemic justified this level of investment to secure a viable vaccine quickly.

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

The primary risks associated with this contract included the scientific uncertainty of vaccine development (i.e., the vaccine might not be effective or safe), manufacturing challenges (scaling up production reliably), and potential supply chain disruptions. Mitigation strategies likely involved rigorous scientific review, phased funding tied to milestones, and potentially government support for manufacturing infrastructure. The 'Cost No Fee' contract type, while aiming for successful delivery, also carries a risk of less stringent cost control if not properly overseen. The government's decision to award under full and open competition also aimed to mitigate risks by selecting a capable contractor.

How effective was the vaccine developed under this contract in addressing the COVID-19 pandemic?

The vaccine developed by AstraZeneca, known as Vaxzevria (or Covishield in some regions), demonstrated significant efficacy in clinical trials and was authorized for emergency use by regulatory bodies worldwide, including the FDA (though its use was later limited in the US). It played a crucial role in global vaccination efforts, contributing to reduced severe illness, hospitalizations, and deaths. Its effectiveness varied slightly across different variants, and concerns about rare side effects like blood clots led to some usage restrictions in certain countries. Overall, it was a vital tool in the global response to the pandemic, though its impact was complemented by other vaccines.

What were historical spending patterns for pharmaceutical preparation manufacturing before this contract?

Prior to the COVID-19 pandemic, federal spending on pharmaceutical preparation manufacturing, while significant, was generally more distributed and less concentrated on emergency vaccine development. Annual spending would typically support ongoing research, development of treatments for existing diseases, and maintenance of the pharmaceutical industrial base. Contracts were often awarded through standard procurement processes for specific drugs or medical supplies. The scale and urgency of the COVID-19 response led to a dramatic increase and a shift in spending priorities, with massive investments directed towards accelerating vaccine and therapeutic development, as exemplified by this contract.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › N – Health R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: BAA-18-100-SOL-00003

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Astrazeneca PLC

Address: 1800 CONCORD PIKE, WILMINGTON, DE, 19803

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

Financial Breakdown

Contract Ceiling: $125,647,983

Exercised Options: $125,647,983

Current Obligation: $125,647,983

Actual Outlays: $125,647,983

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline