HHS Awards $86M for Bulk Pharma Group B, Including Acyclovir and Doxycycline, via Full and Open Competition

Contract Overview

Contract Amount: $86,258,049 ($86.3M)

Contractor: Fresenius Kabi, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2025-03-14

End Date: 2030-03-13

Contract Duration: 1,825 days

Daily Burn Rate: $47.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: BULK PHARMA - GROUP B (ASSET MGMT) ACYCLOVIR SODIUM SOLUTION, DOXYCYCLINE INJ., MEROPENEM, SODIUM CHLORIDE, STERILE WATER

Place of Performance

Location: LAKE ZURICH, LAKE County, ILLINOIS, 60047

State: Illinois Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $86.3 million to FRESENIUS KABI, LLC for work described as: BULK PHARMA - GROUP B (ASSET MGMT) ACYCLOVIR SODIUM SOLUTION, DOXYCYCLINE INJ., MEROPENEM, SODIUM CHLORIDE, STERILE WATER Key points: 1. Significant award for essential pharmaceuticals, covering critical medications like acyclovir and doxycycline. 2. Competition was full and open, suggesting a potentially competitive pricing environment. 3. Risk appears moderate given the nature of pharmaceutical supply and a 5-year contract duration. 4. Spending falls within the pharmaceutical preparation manufacturing sector.

Value Assessment

Rating: good

The contract value of $86.3M over five years suggests a substantial volume of pharmaceutical products. Benchmarking against similar bulk pharmaceutical procurements would be necessary for a precise value assessment, but the firm fixed-price structure provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The use of full and open competition is a positive indicator for price discovery. This method allows all qualified vendors to bid, fostering a competitive environment that should drive down costs compared to sole-source or limited competition scenarios.

Taxpayer Impact: Full and open competition is expected to yield a fair price for taxpayers by leveraging market forces to obtain the best value for these essential pharmaceutical supplies.

Public Impact

Ensures availability of critical medications for public health needs. Supports the pharmaceutical supply chain for national preparedness. Potential for cost savings through competitive bidding. Long-term contract provides supply stability.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions affecting critical medications.
Price fluctuations in raw materials could impact long-term cost-effectiveness.
Dependence on a single awardee for a group of essential drugs.

Positive Signals

Robust competition mechanism employed.
Firm fixed-price contract offers budget predictability.
Long contract duration ensures sustained supply.
Awarded by a key health preparedness agency.

Sector Analysis

This contract falls under Pharmaceutical Preparation Manufacturing, a sector critical for national health security. Spending benchmarks for bulk pharmaceutical procurement vary widely based on drug type and volume, but $86M over five years for a diverse group of essential medicines appears reasonable given the competitive award.

Small Business Impact

The data does not indicate specific participation or set-asides for small businesses in this contract. Further analysis would be needed to determine if opportunities were available or if small businesses were excluded from this large-scale pharmaceutical procurement.

Oversight & Accountability

The Department of Health and Human Services, specifically the Office of Assistant Secretary for Preparedness and Response, is responsible for this procurement. Standard contract oversight mechanisms should be in place to monitor performance and ensure compliance with contract terms.

Related Government Programs

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

Risk Flags

Potential for supply chain disruption impacting multiple essential drugs.
Long-term contract duration may not fully account for future market price volatility.
Lack of specific small business participation data.
Dependence on a single supplier for a critical basket of goods.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $86.3 million to FRESENIUS KABI, LLC. BULK PHARMA - GROUP B (ASSET MGMT) ACYCLOVIR SODIUM SOLUTION, DOXYCYCLINE INJ., MEROPENEM, SODIUM CHLORIDE, STERILE WATER

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 $86.3 million.

What is the period of performance?

Start: 2025-03-14. End: 2030-03-13.

What is the specific breakdown of quantities and unit costs for each pharmaceutical within this contract?

The provided data aggregates the total contract value but does not detail individual pharmaceutical quantities or their respective unit costs. A comprehensive value assessment requires this granular information to understand the pricing dynamics for Acyclovir Sodium Solution, Doxycycline Inj., Meropenem, Sodium Chloride, and Sterile Water.

What are the potential risks associated with relying on a single awardee for this diverse group of essential pharmaceuticals?

Reliance on a single awardee, even under full and open competition, introduces supply chain risk. Disruptions at the awardee's facility, raw material shortages, or unforeseen geopolitical events could impact the availability of multiple critical medications simultaneously, potentially affecting public health preparedness.

How does the firm fixed-price (FFP) structure compare to other potential pricing arrangements for bulk pharmaceutical procurement in terms of effectiveness?

The FFP structure provides maximum price certainty for the government, making budgeting more predictable. While effective for cost control, it may not always capture the lowest possible price if market conditions fluctuate significantly, unlike cost-plus contracts which can be more responsive but offer less price certainty.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3 COPORATE 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: $149,406,104

Exercised Options: $86,258,049

Current Obligation: $86,258,049

Actual Outlays: $45,237,081

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline