Merck Sharp & Dohme Corp. awarded $1.18B contract for childhood vaccines in 2008

Contract Overview

Contract Amount: $1,180,245,725 ($1.2B)

Contractor: Merck Sharp & Dohme Corp.

Awarding Agency: Department of Health and Human Services

Start Date: 2008-03-27

End Date: 2009-03-31

Contract Duration: 369 days

Daily Burn Rate: $3.2M/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 CONTRACT

Place of Performance

Location: WEST POINT, MONTGOMERY County, PENNSYLVANIA, 19486

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $1.18 billion to MERCK SHARP & DOHME CORP. for work described as: VACCINE FOR CHILDREN 2008 CONTRACT Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. Firm-fixed-price structure aims to control costs for the government. 3. The contract duration of 369 days indicates a focused, short-term need. 4. The award value represents a significant investment in public health. 5. The Centers for Disease Control and Prevention (CDC) is the primary agency. 6. This contract falls under Pharmaceutical Preparation Manufacturing. 7. The contract was awarded in Pennsylvania.

Value Assessment

Rating: good

The contract value of over $1.18 billion for childhood vaccines is substantial. Without specific benchmarks for similar large-scale vaccine procurements from 2008, a direct value-for-money assessment is challenging. However, the firm-fixed-price nature of the contract suggests an effort to lock in costs and provide predictability for the government. The number of offers (4) indicates some level of market interest, but a more detailed analysis would require comparing pricing against historical vaccine costs and other government contracts for similar products.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. Four offers were received, indicating a competitive environment for this significant vaccine procurement. The open competition likely drove pricing and ensured the government could select from a range of qualified suppliers, potentially leading to better terms and conditions.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and a wider selection of quality products, ensuring taxpayer dollars are used efficiently.

Public Impact

Children across the United States benefit from access to essential vaccines. The contract ensures the supply of pharmaceutical preparations for public health. The geographic impact is national, covering all regions requiring vaccine distribution. The contract supports the pharmaceutical manufacturing workforce and related supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in the pharmaceutical market impacting long-term value.
Dependence on a single contractor for a critical public health supply.
Ensuring timely delivery and efficacy of vaccines is paramount.

Positive Signals

Awarded through full and open competition, indicating a competitive process.
Firm-fixed-price contract provides cost certainty for the government.
Significant investment in a critical public health program.

Sector Analysis

The pharmaceutical preparation manufacturing sector is characterized by high research and development costs, stringent regulatory requirements, and significant market concentration among a few large players. This contract fits within the broader healthcare and pharmaceutical industry, specifically focusing on vaccine production. Comparable spending benchmarks would involve analyzing other large-scale government procurements of vaccines or essential medicines, which often represent substantial investments due to the critical nature of the products and the scale of public health needs.

Small Business Impact

There is no explicit indication of small business set-asides for this contract. Given the scale and specialized nature of vaccine manufacturing, it is common for such large procurements to be awarded to established prime contractors. Subcontracting opportunities for small businesses might exist within the supply chain for raw materials or ancillary services, but this contract itself does not appear to be directly targeted at small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Disease Control and Prevention (CDC) through contract officers and specialists. Accountability measures would be embedded in the contract terms, including delivery schedules, quality standards, and payment milestones. Transparency is generally facilitated through federal procurement databases like FPDS-NG, where contract awards are reported. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

National Vaccine Injury Compensation Program
CDC Procurement and Grants Office
Department of Health and Human Services - Public Health Programs

Risk Flags

Contract Value
Procurement Type
Contract Duration
Contractor
Agency

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $1.18 billion to MERCK SHARP & DOHME CORP.. VACCINE FOR CHILDREN 2008 CONTRACT

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 $1.18 billion.

What is the period of performance?

Start: 2008-03-27. End: 2009-03-31.

What was the specific type of childhood vaccine procured under this contract?

The provided data does not specify the exact type of childhood vaccine procured under this contract. The contract is broadly categorized under 'Pharmaceutical Preparation Manufacturing' for 'VACCINE FOR CHILDREN'. To determine the specific vaccine(s), one would need to consult the detailed contract documentation or associated procurement records. This could include vaccines for diseases such as measles, mumps, rubella, polio, diphtheria, tetanus, pertussis, hepatitis B, or others recommended by the CDC's immunization schedules at the time of the award in 2008.

How does the $1.18 billion contract value compare to other large vaccine procurements by the government around 2008?

Comparing the $1.18 billion contract value to other large vaccine procurements around 2008 requires access to historical procurement data and specific contract details. However, it is understood that large-scale vaccine procurements for national immunization programs are typically substantial investments. Factors influencing the value include the number of doses, the specific vaccines, the duration of the contract, and market prices at the time. Without direct comparative data for similar contracts awarded in the same period, it's difficult to definitively state if this was high or low, but it reflects a significant commitment to public health.

What were the key performance indicators (KPIs) or deliverables outlined in this contract?

The provided summary data does not detail the specific Key Performance Indicators (KPIs) or deliverables for this contract. Typically, for pharmaceutical preparation contracts, key deliverables would include the timely manufacturing and delivery of vaccine doses meeting stringent quality and efficacy standards. Performance would likely be measured against agreed-upon production schedules, adherence to Good Manufacturing Practices (GMP), and successful completion of quality control testing. The firm-fixed-price nature suggests that meeting these defined deliverables was crucial for Merck Sharp & Dohme Corp. to receive full payment.

What is the track record of Merck Sharp & Dohme Corp. in fulfilling large government vaccine contracts prior to 2008?

Merck Sharp & Dohme Corp. (MSD) has a long-standing history and significant experience in vaccine development and manufacturing, including prior contracts with government agencies. While the specific details of their track record for large government vaccine contracts immediately preceding this 2008 award are not in the provided data, MSD is a major global pharmaceutical company known for producing a wide range of vaccines. Their established presence in the market suggests a capacity and experience in handling large-scale, complex procurements, including those for public health initiatives.

Were there any specific risks identified or mitigation strategies employed for this contract?

The provided summary data does not explicitly list identified risks or mitigation strategies for this specific contract. However, in the context of large pharmaceutical procurements, common risks include supply chain disruptions, manufacturing quality issues, potential for vaccine shortages, and changes in public health needs or recommendations. Mitigation strategies often involve robust quality assurance protocols, contingency planning for supply chain resilience, clear communication channels between the contractor and the agency, and potentially performance bonds or penalties outlined in the contract to ensure compliance and timely delivery.

How did the Centers for Disease Control and Prevention (CDC) ensure the quality and efficacy of the vaccines procured?

The Centers for Disease Control and Prevention (CDC) employs rigorous processes to ensure the quality and efficacy of procured vaccines. This includes adherence to strict manufacturing standards (like Good Manufacturing Practices - GMP), pre-approval of manufacturing facilities, and comprehensive lot-release testing. The CDC's Advisory Committee on Immunization Practices (ACIP) provides recommendations based on scientific evidence, further guiding procurement decisions. Post-market surveillance systems, such as the Vaccine Adverse Event Reporting System (VAERS), also monitor vaccine safety and effectiveness after distribution, ensuring ongoing quality assurance.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation 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: Merck & CO., Inc. (UEI: 054554290)

Address: 770 SUMNEYTOWN PIKE, WEST POINT, PA, 19486

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,470,204,889

Exercised Options: $1,470,204,889

Current Obligation: $1,180,245,725

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline