HHS awarded $427.7M for childhood vaccines, with GSK as the sole contractor

Contract Overview

Contract Amount: $427,687,177 ($427.7M)

Contractor: Glaxosmithkline Holdings (americas) Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2011-04-01

End Date: 2012-03-31

Contract Duration: 365 days

Daily Burn Rate: $1.2M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: VACCINE FOR CHILDREN 2011

Place of Performance

Location: WILMINGTON, NEW CASTLE County, DELAWARE, 19801

State: Delaware Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $427.7 million to GLAXOSMITHKLINE HOLDINGS (AMERICAS) INC. for work described as: VACCINE FOR CHILDREN 2011 Key points: 1. The contract value represents a significant investment in public health, specifically for pediatric immunization programs. 2. Competition dynamics were limited, with GSK being the sole awardee, raising questions about price negotiation. 3. Performance risk appears moderate given the nature of vaccine supply and established contractor relationships. 4. This contract is a key component of the national strategy for disease prevention in young children. 5. The biological product manufacturing sector is highly specialized, with few large-scale producers. 6. The firm-fixed-price structure aims to control costs, but the lack of competition may offset this benefit.

Value Assessment

Rating: fair

Benchmarking vaccine procurement is complex due to fluctuating market demands and specialized manufacturing requirements. While the $427.7 million award is substantial, direct comparisons are difficult without knowing the specific vaccine types and quantities. The firm-fixed-price nature suggests an attempt to lock in costs, but the limited competition means there's less pressure on the contractor to offer the most competitive pricing. Further analysis would require understanding the unit costs and comparing them to historical HHS vaccine purchases or similar government contracts for biological products.

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. However, the data shows only one awardee, GlaxoSmithKline Holdings (Americas) Inc., suggesting that despite the open competition, only one bidder met the requirements or submitted a winning proposal. This scenario can sometimes lead to less aggressive pricing than a multi-bidder scenario, as the government has fewer alternatives.

Taxpayer Impact: While the competition was open, the single awardee limits the government's leverage in price negotiations, potentially leading to higher costs for taxpayers than if multiple competitive bids were received.

Public Impact

Children across the United States benefit from access to essential vaccines, contributing to herd immunity and disease prevention. The Centers for Disease Control and Prevention (CDC) receives critical biological products to support its immunization initiatives. The geographic impact is national, ensuring vaccine availability for pediatricians and public health clinics nationwide. This contract supports jobs within the pharmaceutical manufacturing sector, specifically in biological product development and production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in suboptimal pricing for taxpayers.
Reliance on a single supplier for critical vaccines could pose supply chain risks.
The firm-fixed-price contract might not fully account for potential cost efficiencies achievable through further negotiation.

Positive Signals

The contract ensures a consistent supply of vital childhood vaccines, supporting public health goals.
The awardee, GlaxoSmithKline, is a major pharmaceutical company with a track record in vaccine production.
The firm-fixed-price structure provides cost certainty for the government over the contract period.

Sector Analysis

The biological product manufacturing sector is characterized by high barriers to entry, significant research and development costs, and stringent regulatory oversight. This contract falls within the pharmaceutical and biotechnology industry, a critical component of the healthcare sector. Spending in this area is often driven by public health needs and government initiatives to ensure widespread access to preventative medicines. Comparable spending benchmarks would typically involve analyzing historical procurement data for similar vaccines or biological agents by federal agencies.

Small Business Impact

There is no indication of small business set-asides for this contract, nor is there information suggesting subcontracting opportunities for small businesses. The nature of large-scale vaccine manufacturing typically involves major pharmaceutical corporations, making it less likely for small businesses to be primary contractors or significant subcontractors in this specific procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its sub-agency, the Centers for Disease Control and Prevention (CDC). Accountability measures are embedded in the contract's performance requirements and delivery schedules. Transparency is generally maintained through federal contract databases, although specific details of pricing and negotiation strategies may be proprietary. The HHS Office of Inspector General (OIG) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this award.

Related Government Programs

National Vaccine Program
Childhood Immunization Programs
Strategic National Stockpile
Public Health Emergency Preparedness

Risk Flags

Limited competition may lead to higher prices.
Sole awardee raises concerns about long-term market dynamics.
Potential for supply chain disruption if contractor faces issues.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $427.7 million to GLAXOSMITHKLINE HOLDINGS (AMERICAS) INC.. VACCINE FOR CHILDREN 2011

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 $427.7 million.

What is the period of performance?

Start: 2011-04-01. End: 2012-03-31.

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

Historical spending data for childhood vaccines by the CDC reveals a consistent and significant investment over the years, driven by the ongoing need to maintain high immunization rates and combat infectious diseases. While specific figures fluctuate annually based on vaccine needs, public health campaigns, and the introduction of new vaccines, the overall trend indicates a sustained commitment. For instance, prior to this $427.7 million award in 2011, the CDC likely procured vaccines through various contracts, with annual expenditures potentially ranging in the hundreds of millions of dollars. Analyzing spending patterns over a decade or more would show increases correlating with population growth, expanded vaccine recommendations (e.g., HPV), and efforts to bolster the national vaccine supply chain. This sustained funding underscores the critical role of federal procurement in ensuring vaccine accessibility and public health security for children.

How does the unit cost of these vaccines compare to commercial market rates?

Determining the precise unit cost comparison for these vaccines is challenging without access to the specific contract line items and the exact types and quantities of vaccines procured under the $427.7 million award. Government contracts, especially those awarded through full and open competition, often aim for competitive pricing, but the final negotiated price can be influenced by volume, delivery schedules, and the specific terms of the firm-fixed-price agreement. Commercial market rates for vaccines can vary significantly based on the manufacturer, the specific vaccine, the volume purchased by a provider, and whether it's through a distribution network or directly from the manufacturer. Generally, large government procurements can achieve lower unit costs due to bulk purchasing power. However, if the competition was limited to a single bidder, as suggested by the awardee data, the government's negotiating leverage might be reduced, potentially leading to unit costs that are not as low as they could be in a more competitive scenario. A detailed analysis would require comparing the contract's unit prices against publicly available commercial price lists or data from similar government procurements.

What are the key performance indicators (KPIs) for this vaccine contract?

Key Performance Indicators (KPIs) for a federal contract involving the supply of childhood vaccines typically focus on ensuring the timely, safe, and effective delivery of these critical public health products. Essential KPIs would likely include: 1. **Delivery Schedule Adherence:** Meeting specified delivery dates and quantities to ensure uninterrupted supply for immunization programs. 2. **Product Quality and Integrity:** Maintaining vaccine efficacy and safety throughout the supply chain, including proper storage and handling (cold chain management). 3. **Compliance with Regulations:** Adhering to all FDA regulations, Good Manufacturing Practices (GMP), and other relevant federal and state requirements. 4. **Reporting and Documentation:** Providing accurate and timely reports on inventory, distribution, and any adverse events. 5. **Responsiveness:** The contractor's ability to respond effectively to urgent requests or changes in demand. Failure to meet these KPIs could result in contract penalties, corrective action plans, or even termination, highlighting the critical nature of performance in maintaining public health.

What is GlaxoSmithKline's track record with federal vaccine contracts?

GlaxoSmithKline (GSK) has a significant and established track record of supplying vaccines to the U.S. federal government, particularly through the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC). They are a major global pharmaceutical company with a dedicated vaccines division that produces a wide range of immunizations. Historically, GSK has been a key supplier for various childhood vaccines, including those on the recommended immunization schedule. Their participation in federal contracts often involves large-scale procurements aimed at ensuring national vaccine availability. While specific contract details and performance histories are often proprietary, GSK's continued presence as a bidder and awardee on substantial vaccine contracts indicates a generally positive standing with federal agencies regarding their manufacturing capabilities, product quality, and ability to meet large-volume demands. However, like any large contractor, they may have faced specific performance reviews or challenges on individual contracts over time.

What is the potential impact of a sole-source award (even if initially competed) on long-term vaccine pricing?

Even when a contract is initially awarded under 'full and open competition' but results in a single awardee, the long-term impact on vaccine pricing can be significant. A sole awardee, over time, may face reduced pressure to innovate or offer cost reductions, as the government has limited alternative suppliers for that specific product or service. This can lead to price increases in subsequent contract renewals or modifications if the initial awardee becomes entrenched. Furthermore, it can discourage new entrants into the market who might otherwise compete on price or innovation. For taxpayers, this can translate into higher overall spending on essential vaccines over the long run. Agencies often try to mitigate this through robust market research, encouraging multiple bidders, and negotiating multi-year contracts with price caps or economic price adjustment clauses, but the risk of sustained higher costs remains a concern with limited competition.

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: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Glaxosmithkline PLC (UEI: 238980408)

Address: 1105 N MARKET ST, STE 622, WILMINGTON, DE, 19801

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

Financial Breakdown

Contract Ceiling: $796,731,400

Exercised Options: $796,731,400

Current Obligation: $427,687,177

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline