HHS awarded Novartis $46.9M for childhood vaccines, with a firm fixed price contract

Contract Overview

Contract Amount: $46,927,474 ($46.9M)

Contractor: Novartis Vaccines and Diagnostics, 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: $128.6K/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: EMERYVILLE, ALAMEDA County, CALIFORNIA, 94608

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $46.9 million to NOVARTIS VACCINES AND DIAGNOSTICS, INC. for work described as: VACCINE FOR CHILDREN 2011 Key points: 1. The contract utilized a firm fixed price, which shifts risk to the contractor. 2. Novartis was the sole awardee under full and open competition. 3. The contract duration of 365 days suggests a focused procurement. 4. The Biological Product manufacturing sector is critical for public health. 5. The award was made by the Centers for Disease Control and Prevention (CDC). 6. The contract value is substantial, indicating significant demand for the vaccine.

Value Assessment

Rating: good

The contract value of $46.9M for a one-year supply of childhood vaccines appears reasonable given the critical nature of the product. Benchmarking against similar vaccine procurements would provide a more precise value-for-money assessment. The firm fixed price structure is generally favorable for the government, as it caps costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were eligible to bid. The fact that only one award was made suggests that Novartis was the most advantageous offer, or that the market for this specific vaccine is concentrated. The competitive process, even with a single award, should have driven a fair price.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple bids, leading to potentially lower prices and better terms for the government.

Public Impact

Children across the United States benefit from access to essential vaccines. The contract ensures the supply of biological products critical for public health. The geographic impact is national, covering all regions requiring the vaccine. The pharmaceutical manufacturing workforce is supported by this significant award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for single-source reliance if future procurements are not re-competed effectively.
Market concentration in vaccine manufacturing could limit future competition.

Positive Signals

Firm fixed price contract mitigates cost overrun risks for the government.
Awarded under full and open competition, suggesting a fair market process.
Ensures supply of critical public health product.

Sector Analysis

The procurement falls within the Biological Product (except Diagnostic) Manufacturing sector, a vital part of the healthcare industry. This sector is characterized by high research and development costs, stringent regulatory requirements, and significant market concentration among a few large pharmaceutical companies. The market size for childhood vaccines is substantial, driven by public health mandates and routine immunization schedules.

Small Business Impact

There is no indication of small business set-asides for this contract. Given the nature of vaccine manufacturing, it is typically dominated by large pharmaceutical corporations, making it unlikely for small businesses to be primary awardees. Subcontracting opportunities for small businesses may exist in supporting roles, but are not explicitly detailed in the provided data.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The firm fixed price nature provides a degree of cost control. Transparency is maintained through federal contract databases. The Inspector General for HHS would have jurisdiction over any potential fraud or mismanagement related to this award.

Related Government Programs

National Vaccine Injury Compensation Program
CDC Vaccine Purchase Program
HHS Biomedical Advanced Research and Development Authority (BARDA)

Risk Flags

Single awardee despite full and open competition may indicate market concentration.
Potential supply chain disruption if the sole awardee faces operational issues.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $46.9 million to NOVARTIS VACCINES AND DIAGNOSTICS, INC.. VACCINE FOR CHILDREN 2011

Who is the contractor on this award?

The obligated recipient is NOVARTIS VACCINES AND DIAGNOSTICS, 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 $46.9 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 would reveal trends in procurement volume, pricing, and the types of vaccines acquired over time. Analyzing this data could identify periods of increased or decreased spending, potentially linked to new vaccine introductions, public health campaigns, or changes in immunization schedules. It would also highlight the consistency of demand and the government's reliance on specific manufacturers. For instance, a review might show a steady increase in spending over the last decade due to population growth and the addition of new vaccines to the recommended schedule, or it could reveal fluctuations based on specific disease outbreaks or shifts in federal funding priorities. Understanding these patterns is crucial for forecasting future needs and ensuring budget stability for essential public health programs.

How does the price per unit of this vaccine compare to other similar childhood vaccines procured by the government?

Comparing the per-unit cost of this Novartis vaccine to other childhood vaccines procured by the government is essential for assessing value for money. This analysis would involve identifying comparable vaccines based on their therapeutic class, target age group, and manufacturer. Data from other CDC or Department of Defense vaccine contracts could serve as benchmarks. Factors such as the complexity of manufacturing, research and development investment, and market exclusivity periods influence pricing. If this vaccine's per-unit cost is significantly higher than comparable products, it could indicate potential issues with pricing negotiations, market power of the supplier, or unique characteristics of the vaccine itself. Conversely, a lower cost might suggest efficient production or strong competitive bidding.

What is the track record of Novartis Vaccines and Diagnostics, Inc. in fulfilling government contracts for biological products?

Evaluating Novartis Vaccines and Diagnostics, Inc.'s track record in fulfilling government contracts for biological products is crucial for assessing performance risk. This involves reviewing past contract performance evaluations, such as Contractor Performance Assessment Reporting System (CPARS) data, if available. Key indicators include on-time delivery, quality of products, responsiveness to issues, and adherence to contract terms. A history of successful contract completion suggests reliability and capability. Conversely, past performance issues, such as delays, product recalls, or disputes, would raise concerns about the contractor's ability to meet the current contract's requirements. Understanding their history provides insight into potential risks and the likelihood of successful project execution.

What are the potential risks associated with a single awardee under full and open competition for this vaccine?

While awarded under full and open competition, a single awardee for this vaccine presents specific risks. The primary concern is the potential for reduced competition in future procurements if the market is concentrated or if Novartis holds significant intellectual property. This could lead to price increases or less favorable terms for the government in subsequent contract actions. Furthermore, a single supplier creates a vulnerability in the supply chain; any disruption at Novartis (e.g., manufacturing issues, regulatory problems, or business decisions) could directly impact the availability of this critical vaccine for children. The government might have limited leverage to negotiate if alternative suppliers are scarce or non-existent.

How does the firm fixed price (FFP) contract type influence the risk profile for this vaccine procurement?

The Firm Fixed Price (FFP) contract type significantly influences the risk profile by placing the majority of the cost risk on the contractor, Novartis. Under an FFP agreement, the price is set and is not subject to adjustment based on the contractor's actual costs. This provides the government with cost certainty and protects against potential cost overruns. For Novartis, it incentivizes efficient management and cost control to maintain profitability. However, if the actual costs of production are higher than anticipated due to unforeseen circumstances (e.g., raw material price spikes, manufacturing challenges), Novartis bears the financial burden. This contract structure is generally favored by the government for supplies where the scope of work is well-defined and risks can be reasonably estimated.

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: Novartis AG (UEI: 485609796)

Address: 4560 HORTON ST, EMERYVILLE, CA, 94608

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

Financial Breakdown

Contract Ceiling: $451,660,000

Exercised Options: $451,660,000

Current Obligation: $46,927,474

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline