HHS awards $427.8M contract to Rite Aid for COVID-19 testing, bypassing competition

Contract Overview

Contract Amount: $427,810,496 ($427.8M)

Contractor: Rite AID Hdqtrs. Corp.

Awarding Agency: Department of Health and Human Services

Start Date: 2020-04-08

End Date: 2023-01-30

Contract Duration: 1,027 days

Daily Burn Rate: $416.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: COVID-19 SELF-SWAB AND POINT-OF-CARE TESTING PUBLIC-PRIVATE PARTNERSHIP

Place of Performance

Location: CAMP HILL, CUMBERLAND County, PENNSYLVANIA, 17011

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $427.8 million to RITE AID HDQTRS. CORP. for work described as: COVID-19 SELF-SWAB AND POINT-OF-CARE TESTING PUBLIC-PRIVATE PARTNERSHIP Key points: 1. Significant investment in public health infrastructure during a critical period. 2. Sole-source award raises questions about price discovery and potential alternatives. 3. Contract duration extends well beyond the initial pandemic surge. 4. Focus on point-of-care and self-swab testing addresses accessibility needs.

Value Assessment

Rating: questionable

The contract value of $427.8 million is substantial. Without competitive bidding, it's difficult to assess if this represents fair market value for the services provided. Benchmarking against similar public health testing contracts would be necessary for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This method limits price discovery and may not have secured the best possible pricing for taxpayers, as potential cost savings from competition were forgone.

Taxpayer Impact: The lack of competition on a contract of this magnitude could result in higher costs for taxpayers than if multiple vendors had vied for the award.

Public Impact

Increased access to COVID-19 testing for the public through Rite Aid locations. Supported the national response to the pandemic by providing essential diagnostic tools. Potential for long-term public health infrastructure development through public-private partnerships.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Extended contract duration beyond initial need.
Lack of transparency in award justification.

Positive Signals

Addresses critical public health need during pandemic.
Leverages existing retail infrastructure for broad reach.

Sector Analysis

The healthcare sector, particularly diagnostics and public health services, saw significant government investment during the COVID-19 pandemic. This contract falls under medical laboratories and diagnostic services, a critical area for public health response.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses within this contract. The award to a large retail pharmacy chain suggests a focus on established infrastructure rather than small business participation.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny regarding the justification for bypassing competitive procedures. Oversight should focus on ensuring the necessity of the sole-source approach and the reasonableness of costs incurred.

Related Government Programs

Medical Laboratories
Department of Health and Human Services Contracting
Office of the Assistant Secretary for Administration Programs

Risk Flags

Lack of competition may lead to inflated costs.
Extended contract duration raises questions about ongoing necessity.
Potential for better pricing through competitive bidding.
Limited transparency on sole-source justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $427.8 million to RITE AID HDQTRS. CORP.. COVID-19 SELF-SWAB AND POINT-OF-CARE TESTING PUBLIC-PRIVATE PARTNERSHIP

Who is the contractor on this award?

The obligated recipient is RITE AID HDQTRS. CORP..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of the Assistant Secretary for Administration).

What is the total obligated amount?

The obligated amount is $427.8 million.

What is the period of performance?

Start: 2020-04-08. End: 2023-01-30.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves circumstances where only one responsible source can provide the required supply or service. For this contract, the justification likely centered on the urgent need for widespread testing capabilities during the COVID-19 pandemic and the perceived ability of Rite Aid to rapidly deploy these services. However, without detailed documentation, it's unclear if alternative competitive strategies, such as urgent solicitations or phased procurements, were thoroughly explored.

How does the per-unit cost of testing under this contract compare to publicly available pricing or contracts awarded competitively?

Benchmarking the per-unit cost is challenging without specific pricing details within the provided data. Given the sole-source nature, it's plausible that the costs may be higher than if competitive bids had been solicited. A thorough analysis would require comparing the contract's unit prices for self-swab kits and point-of-care testing against other government contracts or commercial price lists for similar services during the same period.

What measures were in place to ensure the effectiveness and quality of the testing services provided by Rite Aid under this contract?

Effectiveness and quality assurance would typically be managed through contract performance standards, quality control plans, and regular reporting requirements. The Department of Health and Human Services would likely have oversight mechanisms to monitor testing accuracy, turnaround times, and adherence to public health guidelines. However, the specifics of these measures and their enforcement are not detailed in the provided summary data.

Industry Classification

NAICS: Health Care and Social Assistance › Medical and Diagnostic Laboratories › Medical Laboratories

Product/Service Code: MEDICAL SERVICES › LABORATORY TESTING SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rite AID Corporation

Address: 30 HUNTER LN, CAMP HILL, PA, 17011

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

Financial Breakdown

Contract Ceiling: $427,810,496

Exercised Options: $427,810,496

Current Obligation: $427,810,496

Actual Outlays: $427,810,496

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline