Merck Sharp & Dohme Corp. awarded $1.04B contract for biological products, impacting public health
Contract Overview
Contract Amount: $1,035,982,833 ($1.0B)
Contractor: Merck Sharp & Dohme Corp.
Awarding Agency: Department of Health and Human Services
Start Date: 2006-01-18
End Date: 2007-12-31
Contract Duration: 712 days
Daily Burn Rate: $1.5M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: VFC 2006
Place of Performance
Location: WEST POINT, MONTGOMERY County, PENNSYLVANIA, 19486
Plain-Language Summary
Department of Health and Human Services obligated $1.04 billion to MERCK SHARP & DOHME CORP. for work described as: VFC 2006 Key points: 1. Contract awarded for essential biological products, crucial for public health initiatives. 2. The contract's value suggests a significant investment in disease prevention or treatment. 3. Full and open competition was utilized, indicating a potentially competitive bidding process. 4. The fixed-price nature of the contract provides cost certainty for the government. 5. The duration of the contract suggests a long-term need for these biological products. 6. The award to a single contractor may warrant further investigation into market dynamics.
Value Assessment
Rating: good
The contract value of over $1 billion represents a substantial commitment by the government for biological products. Benchmarking this against similar large-scale procurements for vaccines or therapeutics would provide further context on value for money. The firm fixed-price structure is generally favorable for cost control, assuming the initial pricing was competitive. Without specific per-unit data or comparison to market rates for these particular biological products, a precise value assessment is challenging, but the scale suggests a critical need.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting that multiple vendors were eligible to bid. This process is designed to foster a competitive environment, potentially leading to better pricing and terms for the government. The fact that the award went to MERCK SHARP & DOHME CORP. indicates they were the most advantageous offer, but the number of actual bidders is not specified. A robust competition typically involves several qualified bidders vying for the contract.
Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and encouraging innovation among potential suppliers.
Public Impact
The primary beneficiaries are the public, who will receive access to essential biological products, likely for disease prevention or treatment. Services delivered include the manufacturing and supply of critical biological products. The geographic impact is likely national, given the scale of the contract and the nature of public health initiatives. Workforce implications may include job creation within Merck Sharp & Dohme Corp. and its supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of specific details on the number of bidders limits the assessment of true competitive pressure.
- The significant dollar value could indicate a lack of alternative suppliers or a highly specialized product.
Positive Signals
- Awarded through full and open competition, suggesting a fair and accessible process.
- Firm fixed-price contract provides budget predictability.
- Long contract duration indicates a sustained commitment to a critical public health need.
Sector Analysis
This contract falls within the pharmaceutical and biotechnology sector, specifically focusing on biological product manufacturing. This is a critical area for public health, encompassing vaccines, therapeutic proteins, and other life-saving or health-improving substances. The market for such products is often characterized by high R&D costs, stringent regulatory requirements, and significant barriers to entry. Government contracts of this magnitude are common in this sector to ensure a stable supply of essential medicines and biological agents.
Small Business Impact
The provided data does not indicate any specific small business set-aside provisions for this contract. Given the large dollar value and the specialized nature of biological product manufacturing, it is less likely that small businesses would be the primary awardees, though they could potentially participate as subcontractors. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within the execution of this contract.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its agency, the Centers for Disease Control and Prevention (CDC). These agencies are responsible for monitoring contract performance, ensuring compliance with terms and conditions, and verifying the quality and delivery of the biological products. Transparency is generally maintained through contract databases, but specific performance metrics and detailed spending breakdowns may not always be publicly available. Inspector General offices within HHS would have jurisdiction for investigating any potential fraud, waste, or abuse.
Related Government Programs
- Vaccine Procurement Programs
- Biologics Contract Manufacturing
- Public Health Emergency Preparedness
- National Drug Authority Contracts
Risk Flags
- Potential for supply chain disruption due to single award
- Limited insight into the number of actual bidders despite 'full and open' competition
- Long contract duration may not adapt to future market/technology changes
Tags
healthcare, department-of-health-and-human-services, centers-for-disease-control-and-prevention, definitive-contract, large-contract, full-and-open-competition, firm-fixed-price, biological-products, pharmaceuticals, public-health, pennsylvania, merck-sharp-and-dohme-corp
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $1.04 billion to MERCK SHARP & DOHME CORP.. VFC 2006
Who is the contractor on this award?
The obligated recipient is MERCK SHARP & DOHME CORP..
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Centers for Disease Control and Prevention).
What is the total obligated amount?
The obligated amount is $1.04 billion.
What is the period of performance?
Start: 2006-01-18. End: 2007-12-31.
What is the specific type of biological product being procured under this contract?
The contract specifies 'Biological Product (except Diagnostic) Manufacturing' under NAICS code 325414. While this indicates the general category, the precise nature of the biological product (e.g., vaccine, therapeutic antibody, blood product) is not detailed in the provided summary. This level of specificity is crucial for understanding the contract's direct impact on public health, disease prevention efforts, or treatment availability. Further investigation into the contract's statement of work or associated documentation would be necessary to identify the exact products.
How does the awarded amount compare to historical spending on similar biological products by the CDC?
The awarded amount of approximately $1.04 billion is substantial. To assess its comparability, one would need to examine historical CDC or HHS spending data for similar large-scale procurements of biological products over the past decade. Factors such as inflation, changes in public health needs (e.g., pandemic response), and the introduction of new treatments or vaccines would influence year-over-year comparisons. A significant deviation from historical norms, either higher or lower, could indicate shifts in procurement strategy, market dynamics, or the criticality of the specific product being acquired.
What is the track record of MERCK SHARP & DOHME CORP. in fulfilling large government contracts for biological products?
MERCK SHARP & DOHME CORP. (MSD) is a major pharmaceutical company with a long history of developing and manufacturing vaccines and therapeutics. They have a significant track record of engaging with government agencies, including HHS and the CDC, for large-scale procurements. Assessing their specific performance on past contracts of similar size and scope would involve reviewing contract performance reports, any documented disputes or awards, and their overall reputation for quality, reliability, and timely delivery within the federal contracting space. Their established presence suggests a capacity to handle such a significant award.
What are the potential risks associated with a single award of this magnitude for biological products?
A single award of this magnitude, even under full and open competition, can present risks. These include potential over-reliance on a single supplier, which could lead to supply chain vulnerabilities if the contractor faces production issues, quality control problems, or unforeseen disruptions. Furthermore, if the competition was not as robust as intended (e.g., few bidders submitted proposals), taxpayers might not have received the best possible pricing. The long duration also means that market conditions or technological advancements could change, potentially making the contracted product less optimal over time.
How does the firm fixed-price (FFP) contract type mitigate or introduce risks for this biological product procurement?
A Firm Fixed Price (FFP) contract type is generally advantageous for the government as it shifts the risk of cost overruns to the contractor. For biological product manufacturing, where production costs can be complex and subject to variability, an FFP contract provides budget certainty. However, it also means the contractor must accurately estimate all costs upfront. If their estimates are too low, they may cut corners on quality or seek contract modifications. Conversely, if their estimates are too high, the government may overpay. The success of an FFP contract hinges on the contractor's accurate pricing and the government's ability to define clear specifications.
Industry Classification
NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Biological Product (except Diagnostic) Manufacturing
Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: 2006N08323
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Merck & CO., Inc. (UEI: 054554290)
Address: 770 SUMNEY TOWN PIKE, WEST POINT, PA, 19486
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $10,126,815,667
Exercised Options: $10,126,815,667
Current Obligation: $1,035,982,833
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Timeline
Start Date: 2006-01-18
Current End Date: 2007-12-31
Potential End Date: 2007-12-31 00:00:00
Last Modified: 2019-03-14
More Contracts from Merck Sharp & Dohme Corp.
- Vaccine for Children — $1.4B (Department of Health and Human Services)
- TAS::75 0512::TAS 00hcvgbc-2010-82343 - Merck Pediatric Vaccine Contract — $1.3B (Department of Health and Human Services)
- Vaccine for Children 2009 — $1.3B (Department of Health and Human Services)
- TAS::75 0512::TAS Purchase of Vaccine for Children — $1.3B (Department of Health and Human Services)
- Vaccine for Children 2011 — $1.3B (Department of Health and Human Services)
Other Department of Health and Human Services Contracts
- Contact Center Operations (CCO) — $5.5B (Maximus Federal Services, Inc.)
- TAS::75 0849::TAS Oper of Govt R&D Goco Facilities — $4.8B (Leidos Biomedical Research Inc)
- THE Purpose of This Contract IS to Provide the Full Complement of Services Necessary to Care for UC in ORR Custody Including Facilities Set-Up, Maintenance, and Support Internal and Perimeter (IF Applicable) Security, Direct Care and Supervision Inc — $3.5B (Rapid Deployment Inc)
- Contact Center Operations — $2.6B (Maximus Federal Services, Inc.)
- Federal Contract — $2.4B (Leidos Biomedical Research Inc)
View all Department of Health and Human Services contracts →