HHS Awards $167M to Ihealth Labs for OTC Covid-19 Tests

Contract Overview

Contract Amount: $166,950,000 ($166.9M)

Contractor: Ihealth Labs Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2023-09-20

End Date: 2025-03-19

Contract Duration: 546 days

Daily Burn Rate: $305.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: OVER THE COUNTER (OTC) COVID-19 TESTS

Place of Performance

Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95131

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $166.9 million to IHEALTH LABS INC. for work described as: OVER THE COUNTER (OTC) COVID-19 TESTS Key points: 1. Significant award to a single vendor for essential health supplies. 2. Concentration of spending with IHEALTH LABS raises questions about market competition. 3. Potential risk of overpaying due to lack of competitive bidding. 4. The healthcare sector relies on consistent availability of diagnostic tools.

Value Assessment

Rating: fair

The contract value of $166.95M for 546 days suggests a substantial commitment. Without competitive benchmarks, it's difficult to assess if this price is optimal compared to similar large-scale diagnostic supply contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as competitive pressures are absent.

Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these essential COVID-19 tests.

Public Impact

Ensures continued availability of critical COVID-19 testing supplies for public health. Supports the government's pandemic preparedness and response capabilities. Potential for increased out-of-pocket costs for consumers if government stockpiles are depleted and market prices are higher.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Lack of transparency in pricing without competitive bids.
Dependence on a single supplier for critical health resources.

Positive Signals

Ensures supply of essential diagnostic tools.
Supports national health security objectives.

Sector Analysis

The Department of Health and Human Services is procuring diagnostic substances, specifically Over-the-Counter COVID-19 tests. Spending in this area is crucial for public health infrastructure and pandemic response, with benchmarks often set by competitive solicitations for large volumes.

Small Business Impact

This contract does not appear to involve small businesses as prime contractors. Opportunities for small businesses in the supply chain or through subcontracting are not evident from the provided data.

Oversight & Accountability

The Office of Assistant Secretary for Preparedness and Response (ASPR) within HHS is responsible for this award. Oversight should focus on ensuring the necessity of the sole-source award and monitoring contract performance and delivery.

Related Government Programs

In-Vitro Diagnostic Substance Manufacturing
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Sole-source award
Lack of competitive pricing
Potential for overpayment
Dependence on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $166.9 million to IHEALTH LABS INC.. OVER THE COUNTER (OTC) COVID-19 TESTS

Who is the contractor on this award?

The obligated recipient is IHEALTH LABS INC..

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 $166.9 million.

What is the period of performance?

Start: 2023-09-20. End: 2025-03-19.

What was the justification for awarding this contract on a sole-source basis instead of competing it?

The justification for a sole-source award typically involves urgent and compelling needs where only one responsible source can provide the required supplies or services. For critical health supplies like COVID-19 tests, this might be due to specific product requirements, existing stockpiles, or time constraints that preclude a full and open competition process.

What is the projected per-unit cost of these OTC COVID-19 tests under this contract?

The provided data does not include a specific per-unit cost or a breakdown that would allow for its calculation. The total award amount and duration are given, but without the quantity of tests procured, a per-unit cost benchmark cannot be established. This information is crucial for assessing value for money.

How does the government ensure the quality and efficacy of these tests when procured through a sole-source contract?

Quality and efficacy are typically ensured through pre-existing government approvals (like FDA Emergency Use Authorization), stringent contract specifications, and performance monitoring. Even in sole-source situations, contracts will outline quality control measures, testing requirements, and acceptance criteria to ensure the procured items meet necessary standards.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › In-Vitro Diagnostic Substance Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75A50223C00040

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 150C CHARCOT AVE, SAN JOSE, CA, 95131

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $166,950,000

Exercised Options: $166,950,000

Current Obligation: $166,950,000

Actual Outlays: $166,950,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline