HHS awards $447M for viral transport media, with Remel Inc. as the sole awardee

Contract Overview

Contract Amount: $447,442,037 ($447.4M)

Contractor: Remel Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2020-05-16

End Date: 2021-06-30

Contract Duration: 410 days

Daily Burn Rate: $1.1M/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: REMEL MICRO TEST VIRAL TRANSPORT MEDIA

Place of Performance

Location: LENEXA, JOHNSON County, KANSAS, 66215

State: Kansas Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $447.4 million to REMEL INC. for work described as: REMEL MICRO TEST VIRAL TRANSPORT MEDIA Key points: 1. The contract value of $447 million represents a significant investment in essential medical supplies. 2. Competition dynamics appear limited, as the award was made after exclusion of sources, raising questions about price discovery. 3. The definitive contract structure suggests a long-term need for these supplies. 4. Performance context is tied to the critical need for diagnostic materials, particularly during public health events. 5. The sector positioning is within the broader healthcare and life sciences industry, specifically for in-vitro diagnostics. 6. The contract's duration of 410 days indicates a substantial supply requirement over a defined period.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific unit cost data and comparisons to similar viral transport media procurements. The total award of $447 million is substantial, indicating a large volume of product. However, the absence of detailed pricing breakdowns and competitive bids makes it difficult to definitively assess whether the government achieved optimal value for money. Further analysis of unit pricing against market rates would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while the process aimed for competition, specific circumstances led to the exclusion of certain potential bidders. The exact number of bidders considered after the exclusion is not detailed, but the designation suggests a limited pool of participants. This limited competition may have impacted the government's ability to secure the most competitive pricing.

Taxpayer Impact: The limited competition may have resulted in higher prices for taxpayers compared to a scenario with broader, unrestricted competition. Without a wider range of bids, the government might not have benefited from the full price discovery mechanisms inherent in open markets.

Public Impact

Healthcare providers and diagnostic laboratories benefit from the reliable supply of viral transport media, crucial for disease testing. The services delivered include the manufacturing and provision of essential in-vitro diagnostic substances. The geographic impact is likely national, supporting public health infrastructure across the United States. Workforce implications may include jobs in manufacturing, logistics, and quality control related to the production of these medical supplies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about potential overpayment and lack of price optimization.
Lack of detailed unit cost data hinders a thorough value-for-money assessment.
The 'after exclusion of sources' clause warrants further investigation into the reasons for bidder limitations.

Positive Signals

The award addresses a critical need for diagnostic materials, supporting public health initiatives.
A single, large contract can streamline procurement and ensure a consistent supply chain.
The definitive contract structure provides stability for the supplier and ensures availability.

Sector Analysis

The contract falls within the broader healthcare and life sciences sector, specifically the sub-sector of in-vitro diagnostics (IVD). This market is characterized by stringent regulatory requirements and a high demand for quality and reliability. The global IVD market is substantial, driven by advancements in diagnostic technologies and increasing healthcare needs. This specific procurement addresses a fundamental component of diagnostic testing, essential for public health surveillance and clinical decision-making.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no explicit mention of small business set-asides. This suggests that the contract was not specifically targeted towards small businesses, and larger entities likely dominated the bidding or fulfillment process. Consequently, the direct impact on the small business ecosystem for this particular contract appears minimal, with no clear subcontracting opportunities for small businesses indicated in the summary data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services (HHS) and its various components, such as the Health Resources and Services Administration (HRSA). Accountability measures would be embedded within the contract terms, including performance standards and delivery schedules. Transparency is facilitated through federal procurement databases like FPDS, where contract awards are recorded. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Medical Supplies Procurement
In-Vitro Diagnostic Manufacturing
Public Health Emergency Response
Federal Supply Schedule (FSS) Contracts
Department of Health and Human Services Contracts

Risk Flags

Limited competition may impact price.
Lack of detailed unit cost data hinders value assessment.
Potential for supply chain disruption with a single awardee.
Contract awarded after exclusion of sources requires scrutiny.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $447.4 million to REMEL INC.. REMEL MICRO TEST VIRAL TRANSPORT MEDIA

Who is the contractor on this award?

The obligated recipient is REMEL INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Health Resources and Services Administration).

What is the total obligated amount?

The obligated amount is $447.4 million.

What is the period of performance?

Start: 2020-05-16. End: 2021-06-30.

What is the historical spending pattern for viral transport media by HHS?

Analyzing historical spending patterns for viral transport media by HHS is crucial for understanding the scale and consistency of demand. While this specific $447 million contract is substantial, prior spending data would reveal if this represents a significant increase, a continuation of a trend, or a one-time surge. Examining previous years' expenditures on similar items, including contract values, awardees, and competition levels, can provide context for the current award. For instance, if historical data shows consistent, high-volume procurements of viral transport media, it suggests an ongoing operational need. Conversely, a sudden spike might indicate a response to a specific public health crisis. Without access to detailed historical spending reports for this specific item category, it's difficult to definitively characterize the pattern, but the size of this award suggests a significant and sustained requirement.

How does the unit cost of this viral transport media compare to market rates or similar government contracts?

A comprehensive comparison of the unit cost for this viral transport media against market rates and similar government contracts is essential for assessing value for money. The total contract value of $447 million, awarded to Remel Inc., does not provide unit cost information directly. To perform this analysis, one would need to know the total quantity of viral transport media procured under this contract. Once the quantity is known, the average unit price can be calculated (Total Contract Value / Total Quantity). This calculated unit price can then be benchmarked against publicly available market prices from commercial suppliers and against unit prices from other government contracts for the same or comparable products. Variations in pricing could be attributed to factors such as volume discounts, contract terms, specific product features, and the level of competition. A significantly higher unit price compared to benchmarks would raise concerns about the fairness of the price and the effectiveness of the procurement process.

What specific factors led to the exclusion of sources in this 'Full and Open Competition After Exclusion of Sources' award?

The designation 'Full and Open Competition After Exclusion of Sources' indicates that while the procurement was intended to be open, certain potential sources were deliberately excluded from the bidding process. The specific reasons for this exclusion are not detailed in the provided summary data but typically stem from factors such as the unique capabilities of a specific vendor, national security concerns, urgent and compelling needs that preclude a full solicitation period, or specific statutory requirements. For instance, if Remel Inc. possessed a proprietary technology or a unique manufacturing process essential for meeting the government's specific requirements for this viral transport media, sources lacking this capability might have been excluded. Alternatively, if there was a critical, time-sensitive need that could only be met by a limited number of qualified vendors, exclusions might have occurred. Understanding the precise justification for excluding other sources is vital for evaluating whether the competition was appropriately limited and if the government secured the best possible outcome under the circumstances.

What is Remel Inc.'s track record with federal contracts, particularly for medical supplies?

Assessing Remel Inc.'s track record with federal contracts, especially for medical supplies, provides insight into their reliability and performance history. A review of federal procurement databases would reveal the number and value of contracts previously awarded to Remel Inc. by various government agencies. Key performance indicators to examine include on-time delivery rates, product quality compliance, and any history of contract disputes, terminations, or penalties. Understanding their past performance in fulfilling similar medical supply contracts, particularly those involving diagnostic media, can help gauge the risk associated with this $447 million award. A history of successful contract performance suggests a lower risk of delivery issues or quality problems, while a pattern of underperformance might indicate potential challenges ahead. Without specific historical contract data for Remel Inc., a definitive assessment of their track record is not possible from the provided information.

What are the potential risks associated with a single awardee for such a large volume of critical medical supplies?

A single awardee for a large volume of critical medical supplies, such as this $447 million contract for viral transport media, presents several potential risks. Firstly, there is a risk of supply chain disruption; if the sole contractor experiences production issues, natural disasters, or financial instability, the government could face shortages of essential materials. Secondly, the lack of ongoing competition can lead to complacency and potentially less favorable pricing in future procurements or contract modifications. Thirdly, the government's leverage in negotiations may be reduced, as switching to an alternative supplier for such a large, established contract could be complex and costly. Finally, over-reliance on a single source can stifle innovation and prevent other capable suppliers from entering the market or demonstrating their capabilities. Mitigating these risks often involves robust contract management, contingency planning, and exploring opportunities for diversifying the supplier base in subsequent procurements.

How does the definitive contract type impact flexibility and pricing compared to other contract types?

The use of a 'DEFINITIVE CONTRACT' for this $447 million award has implications for flexibility and pricing. Definitive contracts are typically used for supplies or services when the exact quantity is not known in advance but a general scope of work is defined. They offer more flexibility than fixed-price contracts with detailed specifications, allowing for adjustments as needs evolve. However, this flexibility can also introduce pricing uncertainty if not managed carefully. While the contract type is 'FIRM FIXED PRICE' (pt), which aims to establish a set price, the definitive nature suggests potential for adjustments or multiple orders under the contract umbrella. This means that while the price per unit might be fixed for a given order, the overall cost can fluctuate based on the quantity ordered over the contract's duration. Compared to other contract types like Indefinite Delivery/Indefinite Quantity (IDIQ) contracts, definitive contracts can sometimes offer more predictability in terms of the overall commitment, but potentially less flexibility in adapting to rapidly changing requirements without formal modifications.

Industry Classification

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

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 75R60220Q00104

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Thermo Electron Corporation (UEI: 001408673)

Address: 12076 SANTA FE TRAIL DR, LENEXA, KS, 66215

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

Financial Breakdown

Contract Ceiling: $447,442,037

Exercised Options: $447,442,037

Current Obligation: $447,442,037

Actual Outlays: $447,442,037

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline