NIH awards $82.6M contract for pharmaceuticals, highlighting a significant need for clinical center supplies

Contract Overview

Contract Amount: $82,620,000 ($82.6M)

Contractor: DLA Troop Support

Awarding Agency: Department of Health and Human Services

Start Date: 2023-11-14

End Date: 2024-09-30

Contract Duration: 321 days

Daily Burn Rate: $257.4K/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 $82.6 million to DLA TROOP SUPPORT for work described as: PHARMACEUTICALS AND RELATED SUPPLIES FOR THE NIH CLINICAL CENTER (CC), PHARMACY DEPARTMENT. Key points: 1. The contract value of $82.6 million indicates a substantial investment in essential pharmaceutical supplies for the NIH Clinical Center. 2. The 'Not Competed' award type raises questions about potential missed opportunities for cost savings through competitive bidding. 3. The firm-fixed-price contract type offers cost certainty for the government, shifting financial risk to the contractor. 4. The relatively short performance period (less than one year) suggests an immediate or urgent need for these pharmaceutical supplies. 5. The contract's focus on pharmaceuticals for a clinical center points to critical healthcare services and patient care implications. 6. The award to DLA Troop Support suggests a reliance on established supply chains for critical medical materials.

Value Assessment

Rating: fair

Benchmarking the value of this $82.6 million contract is challenging without specific details on the pharmaceuticals procured and their quantities. However, the 'Not Competed' nature of the award suggests that a thorough price comparison against market rates or other potential suppliers may not have occurred. While firm-fixed-price contracts provide budget predictability, the absence of competition could mean the government is not achieving the best possible value for these essential medical supplies. Further analysis would require understanding the specific items and comparing their unit costs to similar procurements or commercial price lists.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one responsible source is available or when urgent, compelling reasons prevent competition. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from a wider range of vendors. The justification for a sole-source award would need to be robust to ensure taxpayer funds are used efficiently.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as the benefits of competition, such as price reductions and improved service offerings, are not realized. This can result in a less efficient use of government funds.

Public Impact

Patients at the NIH Clinical Center will benefit from the consistent availability of necessary pharmaceuticals for treatment and research. The contract ensures the continuity of critical pharmacy services within the National Institutes of Health. The procurement supports the operational readiness of a key federal medical research facility. The availability of these pharmaceuticals is crucial for ongoing clinical trials and patient care protocols at NIH.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
Sole-source awards require strong justification to ensure fair value.
Dependence on a single supplier could pose supply chain risks if not managed proactively.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Award to DLA Troop Support leverages established federal supply chain expertise.
Focus on essential pharmaceuticals for a critical clinical center ensures vital healthcare needs are met.

Sector Analysis

The pharmaceutical manufacturing and distribution sector is a critical component of the healthcare industry, encompassing the production and supply of drugs and related medical products. This contract falls within the pharmaceutical preparation manufacturing subsector (NAICS 325412). The overall market for pharmaceuticals is vast, driven by healthcare demand, research and development, and government procurement for military, public health, and research institutions. Federal spending in this area is substantial, supporting everything from battlefield medical needs to cutting-edge clinical research at facilities like the NIH.

Small Business Impact

There is no indication that this contract included a small business set-aside. The sole-source nature of the award further suggests that opportunities for small businesses to participate, either as prime contractors or subcontractors, may have been limited. Federal policy encourages small business participation, and the absence of set-asides or subcontracting plans in sole-source procurements warrants attention to ensure small businesses are not systematically excluded from significant federal spending.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services and the National Institutes of Health. As a sole-source award, the justification and terms would be subject to review by relevant procurement officials and potentially the Government Accountability Office (GAO) if protests arise. Transparency regarding the justification for the sole-source award and the pricing structure would be key to assessing accountability. The Inspector General for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

NIH Clinical Center Pharmacy Operations
DLA Troop Support Pharmaceutical Procurement
Federal Pharmaceutical Supply Chain Management
Clinical Trial Drug Supply

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for higher costs due to lack of competition.
Supply chain risk associated with single-source dependency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $82.6 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 $82.6 million.

What is the period of performance?

Start: 2023-11-14. End: 2024-09-30.

What specific types and quantities of pharmaceuticals are included in this $82.6 million contract?

The provided data does not specify the exact types and quantities of pharmaceuticals covered under this $82.6 million contract. This information is crucial for a comprehensive value assessment, as it would allow for a detailed comparison of unit costs against market benchmarks and other federal procurements. Without this granular detail, it is difficult to determine if the negotiated price represents fair market value. Understanding the specific drugs, their therapeutic classes, and the projected volumes is essential for evaluating the efficiency and effectiveness of this sole-source award.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The justification for awarding this contract on a sole-source basis is not detailed in the provided data. Typically, sole-source awards are made when only one responsible source is capable of providing the required goods or services, or when urgent and compelling circumstances necessitate an immediate award without competition. For a contract of this magnitude ($82.6 million) for pharmaceuticals for the NIH Clinical Center, a thorough review of the justification would be necessary to ensure that competition was genuinely not feasible and that the government is not foregoing potential cost savings or innovative solutions that a competitive process might yield. The specific rationale, such as unique capabilities of the contractor or critical, time-sensitive needs, would need to be documented and approved.

How does the $82.6 million contract value compare to historical NIH spending on similar pharmaceutical supplies?

Comparing the $82.6 million contract value to historical NIH spending on similar pharmaceutical supplies requires access to historical procurement data. Without this comparative data, it is challenging to ascertain whether this award represents an increase, decrease, or stable level of spending for these essential items. Analyzing past contracts for pharmaceutical preparation manufacturing for the NIH Clinical Center would reveal trends in pricing, volume, and contractor performance. Such a comparison is vital for identifying potential cost efficiencies or escalating expenditures and for understanding the long-term budgetary implications of NIH's pharmaceutical procurement strategy.

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

Sole-source awards for critical pharmaceuticals carry several potential risks. Firstly, the absence of competition can lead to higher prices than might be achieved through a competitive bidding process, potentially resulting in a less efficient use of taxpayer funds. Secondly, reliance on a single supplier can create supply chain vulnerabilities; if the sole source encounters production issues, delivery delays, or financial instability, the NIH Clinical Center could face critical shortages. Thirdly, without the pressure of competition, there may be less incentive for the contractor to innovate or offer enhanced services. Robust contract management and contingency planning are essential to mitigate these risks.

What is the track record of DLA Troop Support in supplying pharmaceuticals to federal healthcare facilities?

The Defense Logistics Agency (DLA) Troop Support is a major federal agency responsible for providing a wide range of logistics and support services, including pharmaceuticals, to the Department of Defense and other federal agencies. DLA Troop Support has a long-standing track record of managing complex supply chains and ensuring the delivery of essential medical supplies. Their experience in handling large-volume procurements and navigating regulatory requirements for pharmaceuticals is extensive. While specific performance metrics for this particular contract are not available, DLA Troop Support generally operates within established federal procurement frameworks and aims to ensure reliable supply chains for critical items.

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: 24

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: $82,620,000

Exercised Options: $82,620,000

Current Obligation: $82,620,000

Actual Outlays: $82,620,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline