HHS awarded $590M contract for pharmaceutical preparations to Sanofi Vaccines US Inc. in 2012

Contract Overview

Contract Amount: $589,767,830 ($589.8M)

Contractor: Sanofi Vaccines US Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2012-04-01

End Date: 2013-03-31

Contract Duration: 364 days

Daily Burn Rate: $1.6M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: VFC 2012

Place of Performance

Location: SWIFTWATER, MONROE County, PENNSYLVANIA, 18370

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $589.8 million to SANOFI VACCINES US INC. for work described as: VFC 2012 Key points: 1. The contract value of nearly $590 million represents a significant investment in pharmaceutical preparations. 2. Competition dynamics for this contract are assessed to understand pricing efficiency. 3. Risk indicators are evaluated based on contract type and performance period. 4. Performance context is provided by comparing this award to similar pharmaceutical contracts. 5. The contract falls within the broader pharmaceutical manufacturing sector, a critical area for public health. 6. Analysis focuses on value for money and the effectiveness of the procurement process.

Value Assessment

Rating: fair

The contract value of $589,767,830.2 for pharmaceutical preparations is substantial. Benchmarking this against similar large-scale pharmaceutical supply contracts is crucial for assessing value. Without specific details on the exact pharmaceutical preparations and their market value at the time, a precise value-for-money assessment is challenging. However, the firm fixed-price nature suggests a degree of cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. With 5 bidders participating, this suggests a reasonably competitive environment. A higher number of bidders generally leads to more robust price discovery and potentially better pricing for the government. The specific details of the bidding process and the nature of the competition would further illuminate the effectiveness of this procurement.

Taxpayer Impact: Full and open competition with multiple bidders is generally favorable for taxpayers, as it encourages competitive pricing and can lead to cost savings compared to less competitive procurement methods.

Public Impact

The primary beneficiaries of this contract are likely the recipients of the pharmaceutical preparations, contributing to public health initiatives. The services delivered involve the manufacturing and supply of essential pharmaceutical products. The geographic impact is primarily within Pennsylvania, where the contractor is located, but the ultimate impact is national through the supply of pharmaceuticals. Workforce implications include jobs in pharmaceutical manufacturing and related supply chain activities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single contractor for critical pharmaceutical supplies could pose a supply chain risk.
Ensuring consistent quality and efficacy of pharmaceutical preparations over the contract duration requires robust oversight.

Positive Signals

Awarded through full and open competition, maximizing potential for competitive pricing.
Firm fixed-price contract type provides cost certainty for the government.
Multiple bidders indicate a healthy market interest in supplying these pharmaceutical preparations.

Sector Analysis

The pharmaceutical preparation manufacturing sector is a vital component of the healthcare industry, characterized by high research and development costs, stringent regulatory requirements, and significant market demand. This contract fits within the broader landscape of government procurement for essential medicines and health supplies. Comparable spending benchmarks would involve analyzing other large-scale contracts for vaccine or drug manufacturing awarded by agencies like HHS or the Department of Defense.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside criterion for this contract (ss: false, sb: false). Therefore, the direct impact on small businesses through set-asides is minimal. However, the prime contractor, Sanofi Vaccines US Inc., may engage small businesses as subcontractors, contributing indirectly to the small business ecosystem. Further investigation into subcontracting plans would be necessary to fully assess the impact.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Centers for Disease Control and Prevention (CDC) and the Department of Health and Human Services (HHS). Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified pharmaceutical preparations. Transparency is generally facilitated through contract databases, though specific performance metrics and oversight reports may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

HHS Pharmaceutical Contracts
CDC Vaccine Procurement
Pharmaceutical Manufacturing Services
Definitive Contracts
Firm Fixed Price Contracts

Risk Flags

Potential for supply chain disruption if contractor faces production issues.
Ensuring long-term availability and affordability of critical pharmaceutical preparations.
Need for ongoing quality assurance and regulatory compliance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $589.8 million to SANOFI VACCINES US INC.. VFC 2012

Who is the contractor on this award?

The obligated recipient is SANOFI VACCINES US 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 $589.8 million.

What is the period of performance?

Start: 2012-04-01. End: 2013-03-31.

What was the specific type and quantity of pharmaceutical preparations procured under this contract?

The provided data indicates the contract NAICS code is 325412, which corresponds to Pharmaceutical Preparation Manufacturing. However, the specific type and quantity of pharmaceutical preparations are not detailed in the provided data. This level of specificity is typically found in the contract's statement of work or delivery schedules. Understanding the exact products procured is essential for a comprehensive analysis of the contract's value and impact, as different pharmaceutical preparations have vastly different costs and market values.

How does the awarded amount of approximately $590 million compare to historical spending on similar pharmaceutical preparations by the CDC?

Comparing the $589,767,830.2 award to historical CDC spending requires access to historical procurement data for similar pharmaceutical preparations. Without that specific data, a direct comparison is difficult. However, a contract of this magnitude suggests a significant need or a large-scale procurement initiative. Analyzing trends in CDC's pharmaceutical spending over time, particularly for critical health supplies, would provide context on whether this award represents an increase, decrease, or stable level of investment in this category.

What were the key performance indicators (KPIs) and evaluation criteria used during the full and open competition for this contract?

The provided data does not specify the key performance indicators (KPIs) or evaluation criteria used during the competition. In a full and open competition for pharmaceutical preparations, typical evaluation criteria would likely include factors such as technical approach, past performance, price, and adherence to regulatory standards. KPIs would focus on aspects like delivery timelines, product quality, and efficacy. The specific weighting of these criteria would have influenced the selection of the winning bid.

What is Sanofi Vaccines US Inc.'s track record with federal contracts, particularly with the Department of Health and Human Services?

Sanofi Vaccines US Inc. has a history of receiving federal contracts, particularly from agencies within the Department of Health and Human Services, given its role as a vaccine manufacturer. Analyzing their contract history would reveal the volume and value of contracts awarded, their performance ratings on past contracts, and any instances of contract disputes or terminations. A positive track record with HHS would suggest reliability and capability in fulfilling government requirements for pharmaceutical products.

What are the potential risks associated with a firm fixed-price contract for pharmaceutical preparations, and how were they mitigated?

A primary risk of a firm fixed-price (FFP) contract for pharmaceutical preparations is that the contractor may face unforeseen cost increases (e.g., raw material prices, manufacturing challenges) that reduce their profit margin or lead to quality compromises if not managed carefully. Conversely, the government risks overpaying if the contractor's actual costs are significantly lower than anticipated. Mitigation strategies often involve robust contract language, clear specifications, quality assurance provisions, and potentially performance-based incentives. The government's thorough review of the contractor's cost proposals and market analysis prior to award helps mitigate the risk of overpayment.

How does the competition level (5 bidders) for this contract influence the perceived value for money for taxpayers?

A competition involving 5 bidders is generally considered healthy and suggests that the government had multiple options to choose from, which typically drives down prices and improves the overall value for taxpayers. More bidders increase the likelihood that the government secured a competitive price. If the bids were closely clustered, it might indicate a well-defined market. If there was a significant spread, it could suggest varying approaches or cost structures among bidders. The government's ability to negotiate favorable terms with the lowest responsive, responsible bidder is a key outcome of such competition.

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: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sanofi Pasteur Vaxdesign Corp (UEI: 739980787)

Address: 1 DISCOVERY DR, SWIFTWATER, PA, 18370

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: $1,540,449,870

Exercised Options: $1,540,449,870

Current Obligation: $589,767,830

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline