HHS awarded $497M for biological product manufacturing, with limited competition

Contract Overview

Contract Amount: $497,413,460 ($497.4M)

Contractor: Emergent Biodefense Operations Lansing LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2008-09-30

End Date: 2011-12-31

Contract Duration: 1,187 days

Daily Burn Rate: $419.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: BARDA

Place of Performance

Location: ATLANTA, DEKALB County, GEORGIA, 30329, UNITED STATES OF AMERICA

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $497.4 million to EMERGENT BIODEFENSE OPERATIONS LANSING LLC for work described as: BARDA Key points: 1. The contract value of $497.4 million represents a significant investment in biological product manufacturing capabilities. 2. The limited competition nature of this award warrants scrutiny regarding potential price efficiencies and market responsiveness. 3. The contract duration of nearly 4 years suggests a substantial, long-term need for the services provided. 4. The fixed-price contract type aims to transfer risk to the contractor, potentially stabilizing costs. 5. The award to Emergent BioDefense Operations Lansing LLC highlights a concentration of critical manufacturing capacity within a single entity. 6. The geographic location in Georgia may indicate specific regional manufacturing strengths or strategic placement for distribution.

Value Assessment

Rating: fair

Benchmarking the value of this $497.4 million contract is challenging without specific performance metrics or comparable contracts. The fixed-price nature suggests an attempt to control costs, but the lack of robust competition could have led to a less favorable price than a fully competed award. Without detailed cost breakdowns or performance data, it's difficult to definitively assess value for money, but the significant investment warrants careful monitoring of outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential offerors. This approach is typically used when only one source is capable of meeting the requirement, often due to specialized capabilities, proprietary technology, or urgent needs. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from competitive bidding. This necessitates strong justification and oversight to ensure the price paid is fair and reasonable.

Public Impact

The primary beneficiaries are likely the Department of Health and Human Services and potentially the public through the ensured availability of critical biological products. The services delivered involve the manufacturing of biological products, crucial for public health preparedness and response. The geographic impact is centered in Georgia, where the contractor's facility is located, potentially supporting local employment and the regional economy. Workforce implications include the creation or maintenance of specialized jobs in biological product manufacturing within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced innovation.
Sole-source awards can create vendor lock-in, limiting future flexibility.
Dependence on a single contractor for critical biological products poses a supply chain risk.
Transparency concerns may arise due to the absence of a competitive bidding process.

Positive Signals

Ensures availability of critical biological products, potentially for national security or public health emergencies.
Fixed-price contract can provide cost certainty if contractor manages performance effectively.
Awarding to an established entity may leverage existing expertise and infrastructure.

Sector Analysis

This contract falls within the broader pharmaceutical and biotechnology manufacturing sector, a critical area for national health security and defense. The market for specialized biological product manufacturing is often characterized by high barriers to entry due to regulatory requirements, specialized equipment, and skilled labor. Government contracts in this space are vital for ensuring the availability of essential medical countermeasures and treatments, particularly during public health crises. Comparable spending benchmarks would typically involve other large-scale manufacturing contracts for vaccines, therapeutics, or diagnostic components.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The large contract value suggests it is likely beyond the scope of typical small business set-asides. There is no explicit information regarding subcontracting plans for small businesses, which could be a missed opportunity to engage the small business ecosystem in critical manufacturing supply chains.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS), specifically the Centers for Disease Control and Prevention (CDC) as the awarding agency. The contract type (firm fixed price) implies that cost oversight might be less intensive than cost-plus contracts, focusing more on performance and delivery. Transparency is limited by the sole-source nature of the award. Inspector General jurisdiction would apply to any investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

BARDA Contracts
Biodefense Preparedness Programs
Strategic National Stockpile Acquisitions
Biological Defense Research and Development
Public Health Emergency Countermeasures

Risk Flags

Sole-source award limits competitive pricing.
Potential for supply chain disruption due to single-source dependency.
Lack of transparency inherent in non-competed contracts.
Contract value is substantial, requiring rigorous oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $497.4 million to EMERGENT BIODEFENSE OPERATIONS LANSING LLC. BARDA

Who is the contractor on this award?

The obligated recipient is EMERGENT BIODEFENSE OPERATIONS LANSING LLC.

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 $497.4 million.

What is the period of performance?

Start: 2008-09-30. End: 2011-12-31.

What is the specific type of biological product being manufactured under this contract?

The data indicates the contract is for 'Biological Product (except Diagnostic) Manufacturing' under NAICS code 325414. While the specific product is not detailed in the provided data, this classification typically encompasses the production of vaccines, therapeutic proteins, antibodies, and other biological agents used for medical treatment or prevention. Further investigation into the contract's statement of work or associated documentation would be required to identify the precise product(s).

What is the justification for the sole-source award, and were there any attempts to explore other sources?

The provided data lists the contract type as 'NOT COMPETED,' which aligns with a sole-source award. The specific justification for this sole-source designation is not included in the abbreviated data. Typically, sole-source awards are justified based on factors such as unique capabilities of a single contractor, proprietary technology, urgent and compelling needs where competition is not feasible, or when only one responsible source exists. Without the official justification document, it's impossible to ascertain the precise reasons or if alternative sources were considered and deemed unsuitable.

How does the contract's fixed price of $497.4 million compare to similar biological product manufacturing contracts?

Directly comparing the $497.4 million fixed price to similar contracts is difficult without knowing the specific biological product, quantity, and duration. However, the total contract value is substantial, indicating a large-scale manufacturing effort. To benchmark, one would need to identify contracts for comparable products (e.g., vaccines, therapeutics) with similar production volumes and timelines. Factors like the complexity of the manufacturing process, regulatory hurdles, and the contractor's facility capabilities significantly influence pricing. A comprehensive analysis would involve reviewing historical contract data for similar items and assessing the market rates for specialized biological manufacturing.

What performance metrics or milestones were established to ensure the contractor's success and accountability?

The provided data does not include details on specific performance metrics or milestones. For a contract of this magnitude and nature, performance would typically be governed by a detailed Statement of Work (SOW) outlining deliverables, quality standards, production schedules, and potentially adherence to Good Manufacturing Practices (GMP). Accountability would be managed through contract administration, regular progress reviews, and potential penalties for non-performance or quality issues. The firm fixed-price nature shifts some risk to the contractor, but the government would still monitor adherence to the SOW and quality requirements.

What is the track record of Emergent BioDefense Operations Lansing LLC in fulfilling government contracts, particularly for biological products?

Emergent BioDefense Operations Lansing LLC has a history of receiving government contracts, particularly related to biodefense and public health preparedness. Their track record includes significant awards from agencies like BARDA (Biomedical Advanced Research and Development Authority) for the development and manufacturing of medical countermeasures. While they have been a key player in government initiatives, their performance has also faced scrutiny at times, particularly concerning production capabilities and delivery timelines for certain high-profile programs. A thorough review of their contract history, including past performance evaluations and any associated challenges, would be necessary for a complete assessment.

What are the potential risks associated with relying on a single contractor for such a significant biological product manufacturing requirement?

Relying on a single contractor, especially for critical biological products, presents several risks. These include supply chain vulnerability – any disruption at the contractor's facility (e.g., due to natural disaster, equipment failure, or labor issues) could halt production. There's also the risk of price escalation in future contracts due to the lack of competition. Furthermore, a sole-source arrangement can stifle innovation, as the contractor may have less incentive to improve processes or develop new technologies if they are guaranteed future business. Dependence on one entity also poses a national security risk if that entity faces financial instability or operational challenges.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Emergent Biosolutions Inc. (UEI: 173570271)

Address: 3500 N MARTIN LUTHER KING JR BLVD # 1, LANSING, MI, 48906

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: $1,105,622,060

Exercised Options: $1,105,622,060

Current Obligation: $497,413,460

Contract Characteristics

Multi-Year Contract: Yes

Timeline