NIH's $45M pharmaceutical contract awarded to DLA Troop Support for clinical center needs

Contract Overview

Contract Amount: $45,000,000 ($45.0M)

Contractor: DLA Troop Support

Awarding Agency: Department of Health and Human Services

Start Date: 2022-10-24

End Date: 2023-09-30

Contract Duration: 341 days

Daily Burn Rate: $132.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMACEUTICALS AND RELATED SUPPLIES FOR THE NIH CLINICAL CENTER (CC), PHARMACY DEPARTMENT.

Place of Performance

Location: PHILADELPHIA, PHILADELPHIA County, PENNSYLVANIA, 19111

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $45.0 million to DLA TROOP SUPPORT for work described as: PHARMACEUTICALS AND RELATED SUPPLIES FOR THE NIH CLINICAL CENTER (CC), PHARMACY DEPARTMENT. Key points: 1. Contract aims to ensure a steady supply of pharmaceuticals for the NIH Clinical Center. 2. The award was made via a sole-source justification, raising questions about competition. 3. The contract's fixed-price nature provides cost certainty for the government. 4. Performance period spans nearly a full year, indicating a significant operational requirement. 5. The pharmaceutical sector is critical for healthcare delivery and research.

Value Assessment

Rating: fair

The contract value of $45 million for a one-year period for pharmaceutical supplies appears to be within a reasonable range for a large federal research hospital. However, without specific details on the types and quantities of pharmaceuticals, a precise value-for-money assessment is challenging. Benchmarking against similar large-scale pharmaceutical procurements by other federal agencies or large hospital systems would be necessary for a more definitive evaluation. The fixed-price contract type helps mitigate cost overrun risks for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. The justification for this approach is not detailed in the provided data. Sole-source awards can limit price discovery and potentially lead to higher costs compared to a competitively bid contract. The absence of multiple bidders means the government did not benefit from a competitive process to secure the best possible pricing and terms.

Taxpayer Impact: Sole-source awards can mean taxpayers may not be getting the most cost-effective solution, as the benefits of competition in driving down prices are forgone.

Public Impact

Patients at the NIH Clinical Center will benefit from uninterrupted access to necessary medications. The contract supports the operational needs of the National Institutes of Health's research and treatment facilities. The primary geographic impact is within the Bethesda, Maryland area where the Clinical Center is located. The contract ensures the availability of pharmaceuticals essential for clinical trials and patient care.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
Sole-source awards can indicate potential market concentration or barriers to entry for other suppliers.

Positive Signals

Ensures critical pharmaceutical supply chain continuity for a major research hospital.
Fixed-price contract provides budget predictability.

Sector Analysis

The pharmaceutical manufacturing sector is a vital component of the healthcare industry, encompassing the research, development, and production of drugs and medicines. This contract falls under the broader category of pharmaceutical preparation manufacturing, supplying essential medications for clinical use. The market for pharmaceuticals is substantial, driven by healthcare demand, research, and an aging population. This specific contract supports a key federal research institution, highlighting the government's role as a significant purchaser in this sector.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. Given the sole-source nature and the likely scale of pharmaceutical supply for a major clinical center, it is improbable that small businesses would be primary awardees or significant subcontractors unless they are specialized suppliers. Further analysis would be needed to determine if any subcontracting opportunities exist for small businesses within the awarded contractor's supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services and the National Institutes of Health. As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency regarding the sole-source justification and performance monitoring would be key accountability measures. The contract's fixed-price nature simplifies some aspects of financial oversight, focusing on delivery and quality.

Related Government Programs

NIH Clinical Center Pharmacy Operations
Federal Pharmaceutical Procurement
DLA Troop Support Medical Supplies

Risk Flags

Sole-source award lacks competitive pricing pressure.
Lack of detailed product information hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $45.0 million to DLA TROOP SUPPORT. PHARMACEUTICALS AND RELATED SUPPLIES FOR THE NIH CLINICAL CENTER (CC), PHARMACY DEPARTMENT.

Who is the contractor on this award?

The obligated recipient is DLA TROOP SUPPORT.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $45.0 million.

What is the period of performance?

Start: 2022-10-24. End: 2023-09-30.

What is the historical spending pattern for pharmaceutical supplies at the NIH Clinical Center?

Analyzing historical spending patterns for pharmaceutical supplies at the NIH Clinical Center is crucial for understanding the context of this $45 million award. Without specific historical data, it's difficult to determine if this contract represents an increase, decrease, or stable level of spending. Typically, federal agencies maintain records of past procurements, including contract values, durations, and awarded vendors. Examining these records would reveal trends in pharmaceutical needs, potential price fluctuations over time, and the typical competitive landscape for these supplies. A significant deviation from historical spending could warrant further investigation into the reasons, such as changes in patient volume, research initiatives, or market price increases. Understanding past performance and costs associated with similar contracts can also inform the current value assessment.

What specific types and quantities of pharmaceuticals are included in this contract?

The specific types and quantities of pharmaceuticals covered under this $45 million contract are not detailed in the provided summary data. This information is critical for a thorough value-for-money assessment and for understanding the scope of the NIH Clinical Center's pharmaceutical needs. The NIH Clinical Center, being a leading research hospital, likely requires a wide array of medications, including specialized drugs for clinical trials, treatments for complex diseases, and general pharmaceuticals. Knowing the exact formulary and estimated volumes would allow for benchmarking against market prices for those specific items and comparing the negotiated rates against industry standards or other federal contracts. Without this granularity, the assessment of whether $45 million represents a fair price is inherently limited.

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

The justification for awarding this $45 million pharmaceutical contract on a sole-source basis is a key area requiring further scrutiny. Federal procurement regulations typically require full and open competition unless specific exceptions apply. Common justifications for sole-source awards include the availability of only one responsible source, urgent and compelling needs that preclude competition, or specific statutory authority. For pharmaceutical supplies, a sole-source award might be justified if a particular manufacturer's product is uniquely required, or if there's a critical, time-sensitive need that only one supplier can meet. However, without the official justification document, it's impossible to validate the necessity of bypassing the competitive process. This lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.

How does the pricing in this contract compare to market rates for similar pharmaceuticals?

Directly comparing the pricing in this $45 million contract to market rates for similar pharmaceuticals is challenging without knowing the specific items and quantities procured. However, the fact that it was a sole-source award raises a red flag regarding potential price inflation. Competitive bidding processes are designed to leverage market dynamics and secure the best possible prices for the government. When competition is absent, contractors may have less incentive to offer deeply discounted rates. To perform a robust comparison, one would need access to the contract's detailed pricing structure and benchmark it against publicly available pharmaceutical pricing databases, other federal contracts for similar items (if competitively awarded), or pricing agreements with large healthcare systems. The 'Pharmaceutical Preparation Manufacturing' NAICS code suggests a broad category, making precise benchmarking difficult without item-level detail.

What are the potential risks associated with a sole-source award for essential pharmaceuticals?

A sole-source award for essential pharmaceuticals, like this $45 million contract, carries several potential risks. Firstly, the lack of competition can lead to higher costs for taxpayers, as the government may not benefit from the price reductions typically achieved through competitive bidding. Secondly, it can reduce the incentive for the sole-source provider to maintain high service levels or innovate, as there is no immediate threat of losing the contract to a competitor. Thirdly, it can create a dependency on a single supplier, making the NIH Clinical Center vulnerable to supply chain disruptions if that supplier faces production issues, financial difficulties, or geopolitical challenges. Finally, it raises concerns about fairness and transparency in the procurement process, potentially signaling barriers to entry for other qualified suppliers in the market.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of the United States

Address: 700 ROBBINS AVENUE, PHILADELPHIA, PA, 19111

Business Categories: Category Business, Federally Funded Research and Development Corp, Government, U.S. Interstate Government Entity, U.S. National Government, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $45,000,000

Exercised Options: $45,000,000

Current Obligation: $45,000,000

Actual Outlays: $45,000,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline