HHS awards $35M to Fresenius Kabi for pharmaceutical preparations, impacting pandemic preparedness

Contract Overview

Contract Amount: $35,057,832 ($35.1M)

Contractor: Fresenius Kabi, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2020-09-18

End Date: 2021-03-31

Contract Duration: 194 days

Daily Burn Rate: $180.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMA TRANCHE 2 FK

Place of Performance

Location: LAKE ZURICH, LAKE County, ILLINOIS, 60047

State: Illinois Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $35.1 million to FRESENIUS KABI, LLC for work described as: PHARMA TRANCHE 2 FK Key points: 1. Significant award to a single vendor for critical medical supplies. 2. Limited competition raises questions about price discovery and value. 3. Potential risk associated with sole-source procurement for essential items. 4. Sector focus on pharmaceutical manufacturing highlights supply chain vulnerabilities.

Value Assessment

Rating: fair

The contract value of $35M for pharmaceutical preparations is substantial. Without comparable contracts or detailed cost breakdowns, assessing its value against market rates is difficult. The firm fixed-price structure provides cost certainty but may not reflect the lowest possible price achievable through competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition scenario. This approach can expedite procurement during emergencies but often leads to higher prices and reduced innovation compared to open competition. The lack of competitive bidding limits the government's ability to ensure the best possible price.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition. While essential for preparedness, the absence of bidding means less assurance of cost-effectiveness.

Public Impact

Ensures availability of critical pharmaceutical products for public health emergencies. Supports domestic manufacturing capabilities for essential medical supplies. Highlights reliance on specific vendors for national stockpiles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for overpayment
Supply chain concentration

Positive Signals

Addresses critical need
Supports preparedness goals

Sector Analysis

The pharmaceutical manufacturing sector is vital for national security and public health. Spending in this area often involves high R&D costs and regulatory hurdles. This contract falls within the broader healthcare and life sciences sector, where government procurement plays a crucial role in ensuring access to essential medicines.

Small Business Impact

The contract was awarded to Fresenius Kabi, LLC, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award, suggesting missed opportunities for small business participation.

Oversight & Accountability

The award was made by the Office of the Assistant Secretary for Preparedness and Response (ASPR), a key agency for managing health emergencies. Oversight would focus on contract performance, delivery schedules, and ensuring the procured pharmaceuticals meet quality standards.

Related Government Programs

Pharmaceutical Preparation Manufacturing
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Sole-source award limits price competition.
Potential for higher costs due to lack of bidding.
Concentration of supply with a single vendor.
Urgency of need may override standard procurement processes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $35.1 million to FRESENIUS KABI, LLC. PHARMA TRANCHE 2 FK

Who is the contractor on this award?

The obligated recipient is FRESENIUS KABI, LLC.

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 $35.1 million.

What is the period of performance?

Start: 2020-09-18. End: 2021-03-31.

What was the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award typically relates to urgent and compelling needs, such as immediate response to a public health emergency where only one vendor can meet the requirement within the necessary timeframe. Specific details would be found in the contract's justification and approval (J&A) document, which outlines the rationale and market research conducted.

How does the unit price compare to similar pharmaceutical preparations procured competitively?

Without access to specific product details and competitive benchmark data, a direct comparison is impossible. However, sole-source contracts generally carry a higher risk of inflated pricing due to the absence of competitive pressure. A thorough review would require identifying the specific pharmaceutical product and researching its market price.

What measures are in place to ensure the quality and efficacy of these pharmaceutical preparations?

Quality assurance for pharmaceutical procurements typically involves adherence to Good Manufacturing Practices (GMP), rigorous testing by the vendor, and potential government inspections or quality surveillance. The contract likely includes specific quality clauses and acceptance criteria that must be met before payment is finalized.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75A50120Q00038

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fresenius SE

Address: 3 CORPORATE DR, LAKE ZURICH, IL, 60047

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

Financial Breakdown

Contract Ceiling: $35,057,832

Exercised Options: $35,057,832

Current Obligation: $35,057,832

Actual Outlays: $35,057,832

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline