HHS awarded $427M for childhood vaccines, with GSK as the primary contractor

Contract Overview

Contract Amount: $426,986,970 ($427.0M)

Contractor: Glaxosmithkline Holdings (americas) Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2008-04-01

End Date: 2009-03-31

Contract Duration: 364 days

Daily Burn Rate: $1.2M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: VACCINE FOR CHILDREN 2008

Place of Performance

Location: PHILADELPHIA, PHILADELPHIA County, PENNSYLVANIA, 19102, UNITED STATES OF AMERICA

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $427.0 million to GLAXOSMITHKLINE HOLDINGS (AMERICAS) INC. for work described as: VACCINE FOR CHILDREN 2008 Key points: 1. The contract value represents a significant investment in public health, specifically for childhood immunization programs. 2. Competition dynamics for vaccine procurement can be complex, influenced by existing supply chains and regulatory approvals. 3. Potential risks include supply chain disruptions and the need for ongoing quality assurance of biological products. 4. Performance context is critical, as vaccine efficacy and public trust are paramount for program success. 5. This contract positions the agency to secure essential biological products for a vital public health initiative.

Value Assessment

Rating: good

The awarded amount of $426,986,969.58 for childhood vaccines appears substantial, reflecting the scale and importance of national immunization programs. Benchmarking against similar large-scale vaccine procurements would provide a clearer picture of value for money. However, given the critical nature of vaccines and the established presence of major pharmaceutical suppliers like GlaxoSmithKline, the pricing is likely competitive within the market for such essential public health goods. The fixed-price nature of the contract also offers cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This process is designed to foster a competitive environment, potentially leading to better pricing and terms for the government. The presence of 4 bids suggests a reasonable level of interest from the market, though the specific number of bidders doesn't inherently guarantee the most optimal outcome without further analysis of the bidding landscape.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging multiple suppliers to offer their best prices, thereby driving down costs and ensuring the government receives competitive value for its investment in essential vaccines.

Public Impact

Children across the nation benefit from access to essential vaccines, contributing to herd immunity and disease prevention. The services delivered include the procurement and supply of critical biological products for the national immunization schedule. The geographic impact is nationwide, ensuring vaccine availability across all states and territories. Workforce implications may include support for logistics, distribution, and public health outreach related to vaccination campaigns.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain vulnerabilities impacting timely delivery of vaccines.
Ensuring consistent quality and efficacy of biological products over the contract duration.
Managing the complexities of vaccine distribution to diverse geographic locations.

Positive Signals

Securing a large volume of essential childhood vaccines through a competitive process.
Partnering with an established pharmaceutical provider with a track record in vaccine production.
The contract supports a critical public health objective with significant long-term benefits.

Sector Analysis

The pharmaceutical and biotechnology sector is characterized by high R&D costs, stringent regulatory oversight, and significant market concentration among a few major players. Vaccine procurement represents a substantial segment within this sector, driven by public health needs and government initiatives. Comparable spending benchmarks would involve analyzing other large-scale government procurements of biological products or pharmaceuticals, which often run into hundreds of millions of dollars due to the complexity and scale of production and distribution.

Small Business Impact

This contract does not appear to have specific small business set-aside provisions, as indicated by 'sb': false. The primary contractor, GlaxoSmithKline, is a large multinational corporation. While large contracts may sometimes include subcontracting opportunities for small businesses, the direct award analysis does not highlight specific set-aside goals or significant subcontracting plans for SMBs in this instance. The focus is on securing the primary vaccine supply from a major manufacturer.

Oversight & Accountability

Oversight for this contract would typically fall under the Centers for Disease Control and Prevention (CDC) and the Department of Health and Human Services (HHS). Mechanisms likely include regular performance reviews, quality assurance checks, and adherence to delivery schedules. Transparency is generally maintained through contract award databases and public health reporting. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

National Vaccine Injury Compensation Program
CDC Immunization Services
HHS Public Health Emergency Fund
Department of Defense Vaccine Procurement

Risk Flags

Potential for supply chain disruption
Dependence on a single large manufacturer
Ensuring long-term vaccine availability

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $427.0 million to GLAXOSMITHKLINE HOLDINGS (AMERICAS) INC.. VACCINE FOR CHILDREN 2008

Who is the contractor on this award?

The obligated recipient is GLAXOSMITHKLINE HOLDINGS (AMERICAS) INC..

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 $427.0 million.

What is the period of performance?

Start: 2008-04-01. End: 2009-03-31.

What is the historical spending trend for childhood vaccines by the CDC over the last decade?

Analyzing historical spending trends for childhood vaccines by the CDC over the last decade reveals a consistent and significant investment in immunization programs. While specific figures fluctuate annually based on vaccine needs, public health initiatives, and market dynamics, the overall expenditure has generally trended upwards. Factors contributing to this include the introduction of new vaccines, increased vaccination coverage targets, and the rising cost of pharmaceutical production. For instance, spending in the early 2010s might have been in the range of $2-3 billion annually, potentially growing to $4-5 billion or more in recent years, encompassing a wide array of vaccines for various age groups and diseases. This sustained funding underscores the federal government's commitment to preventing infectious diseases through widespread vaccination.

How does the per-unit cost of vaccines procured under this contract compare to market rates for similar biological products?

Determining the precise per-unit cost comparison for vaccines procured under this specific $427 million contract is challenging without access to the detailed unit pricing within the contract itself. However, given that the contract was awarded under full and open competition to a major supplier like GlaxoSmithKline, it is reasonable to infer that the per-unit costs are benchmarked against prevailing market rates for similar biological products. Government agencies often leverage bulk purchasing power and competitive bidding processes to secure favorable pricing. While vaccine prices can vary significantly based on the specific antigen, manufacturing complexity, and required cold chain logistics, the government's objective in such procurements is to achieve cost-effectiveness relative to the commercial market, ensuring that taxpayer funds are used efficiently to acquire essential public health resources.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance for this vaccine supply contract?

Key performance indicators (KPIs) for a vaccine supply contract of this magnitude typically focus on ensuring the timely and reliable delivery of high-quality biological products. Essential KPIs would likely include: 1. On-Time Delivery Rate: Measuring the percentage of vaccine orders delivered by the specified deadlines. 2. Quality Assurance: Monitoring adherence to stringent quality control standards, including temperature excursions during transport and storage, and product integrity. 3. Fill Rate: Assessing the percentage of requested vaccine quantities successfully fulfilled. 4. Responsiveness: Evaluating the contractor's ability to respond to urgent requests or address unforeseen supply chain issues. 5. Compliance: Ensuring adherence to all contractual terms, regulatory requirements (e.g., FDA), and reporting obligations. Performance against these KPIs would inform payment schedules and potential contract modifications or renewals.

What is the track record of GlaxoSmithKline Holdings (Americas) Inc. in fulfilling large-scale government contracts for biological products?

GlaxoSmithKline Holdings (Americas) Inc., a subsidiary of the global pharmaceutical giant GlaxoSmithKline plc, has a substantial track record in fulfilling large-scale government contracts, particularly in the realm of vaccines and other biological products. The company is a major player in the global vaccine market, supplying numerous vaccines for childhood immunization programs, influenza, and other infectious diseases. Historically, GSK has been a key supplier to government health agencies, including the U.S. Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC), for decades. Their experience encompasses navigating complex regulatory environments, managing global supply chains, and ensuring the consistent production of high-quality pharmaceuticals. While specific contract performance details are often proprietary, GSK's continued involvement in significant government procurements suggests a generally reliable performance history in meeting the demanding requirements of public health initiatives.

What are the potential risks associated with relying on a single primary contractor for a significant portion of childhood vaccine supply?

Relying on a single primary contractor, even one as established as GlaxoSmithKline, for a significant portion of childhood vaccine supply introduces several potential risks. Foremost among these is supply chain disruption. Any unforeseen event impacting GSK's manufacturing facilities, raw material sourcing, or distribution network—such as natural disasters, labor disputes, or geopolitical instability—could lead to shortages, impacting national immunization schedules. Furthermore, a sole primary supplier might have less incentive to aggressively compete on price or innovation compared to a more diversified supplier base. There's also the risk of over-reliance, where the government's capacity to quickly pivot to alternative suppliers in an emergency might be diminished if other manufacturers have scaled down their production capabilities due to a lack of consistent government demand. Ensuring robust contingency plans and maintaining relationships with secondary suppliers are crucial mitigation strategies.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Biological Product (except Diagnostic) Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Glaxosmithkline PLC (UEI: 238980408)

Address: ONE FRANKLIN PLAZA, PHILADELPHIA, PA, 19102

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

Financial Breakdown

Contract Ceiling: $554,387,180

Exercised Options: $554,387,180

Current Obligation: $426,986,970

Timeline