CDC's $25.6M adult vaccine contract awarded to Merck Sharp & Dohme Corp. in 2012

Contract Overview

Contract Amount: $25,652,163 ($25.7M)

Contractor: Merck Sharp & Dohme Corp.

Awarding Agency: Department of Health and Human Services

Start Date: 2012-07-06

End Date: 2013-06-30

Contract Duration: 359 days

Daily Burn Rate: $71.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 2012 ADULT VACCINES

Place of Performance

Location: WEST POINT, MONTGOMERY County, PENNSYLVANIA, 19486

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $25.7 million to MERCK SHARP & DOHME CORP. for work described as: 2012 ADULT VACCINES Key points: 1. The contract represents a significant investment in public health by securing essential adult vaccines. 2. Competition dynamics for this contract are crucial for ensuring fair pricing and access to critical medical supplies. 3. Performance context is key to understanding the effectiveness of vaccine procurement strategies. 4. Sector positioning highlights the role of major pharmaceutical manufacturers in federal health initiatives. 5. Risk indicators may include supply chain vulnerabilities and potential for price fluctuations in the pharmaceutical market.

Value Assessment

Rating: good

The contract value of $25.6 million for adult vaccines appears reasonable given the scale of public health needs. Benchmarking against similar large-scale vaccine procurements by federal agencies like the CDC or other health departments would provide a clearer picture of value for money. The firm fixed-price structure suggests a degree of cost certainty for the government, though it's important to assess if this price was competitive at the time of award.

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. The presence of 5 bidders suggests a healthy level of interest and competition in this market segment. This competitive process is designed to drive down prices and ensure the government receives the best value.

Taxpayer Impact: A competitive bidding process for essential vaccines helps ensure taxpayer dollars are used efficiently, potentially leading to lower costs per dose and greater availability of vaccines.

Public Impact

The primary beneficiaries are the adult population in the United States, who gain access to recommended vaccinations. Services delivered include the procurement and supply of critical adult vaccines, contributing to disease prevention and public health. The geographic impact is national, ensuring vaccine availability across the country through federal distribution channels. Workforce implications may involve the pharmaceutical manufacturing sector and public health professionals involved in vaccine administration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in subsequent contract periods if competition diminishes.
Dependence on a single manufacturer for specific vaccine types could pose supply chain risks.
Ensuring equitable distribution across diverse geographic regions can be challenging.

Positive Signals

Award to a reputable manufacturer with a strong track record in vaccine production.
Firm fixed-price contract provides cost predictability for the government.
Full and open competition suggests a robust market for vaccine supply.

Sector Analysis

The pharmaceutical industry is a major sector for federal spending, particularly in healthcare and defense. This contract falls within the biological product manufacturing sub-sector. The market for vaccines is characterized by high research and development costs, stringent regulatory requirements, and significant public health impact. Comparable spending benchmarks would involve looking at other large federal vaccine procurements, such as those for influenza or childhood immunizations.

Small Business Impact

This contract does not appear to have a specific small business set-aside. However, the prime contractor, Merck Sharp & Dohme Corp., may engage small businesses for subcontracting opportunities related to logistics, distribution, or ancillary services. The impact on the small business ecosystem would depend on the extent of such subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Centers for Disease Control and Prevention (CDC) and potentially the Department of Health and Human Services (HHS) Office of Inspector General. Mechanisms include contract performance monitoring, financial audits, and adherence to federal procurement regulations. Transparency is generally maintained through contract award databases and public reporting requirements.

Related Government Programs

CDC Vaccine Procurement Programs
HHS Public Health Initiatives
National Vaccine Injury Compensation Program
Department of Defense Vaccine Contracts

Risk Flags

Potential for supply chain disruption
Dependence on single manufacturer
Price volatility in pharmaceutical market

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $25.7 million to MERCK SHARP & DOHME CORP.. 2012 ADULT VACCINES

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 $25.7 million.

What is the period of performance?

Start: 2012-07-06. End: 2013-06-30.

What is Merck Sharp & Dohme Corp.'s track record with federal vaccine contracts prior to and following this award?

Merck Sharp & Dohme Corp. (MSD outside the US and Canada) has a long-standing history as a major pharmaceutical manufacturer with numerous federal contracts, particularly with agencies like the CDC and the Department of Defense, for a wide range of vaccines and pharmaceuticals. Prior to this 2012 contract, MSD had been a significant supplier of vaccines to the U.S. government for decades. Following this award, MSD continued to be a key player in federal vaccine procurement, securing contracts for various vaccines, including those for HPV, pneumococcal disease, and shingles. Their extensive experience in research, development, manufacturing, and regulatory compliance positions them as a consistent and reliable, albeit large, federal contractor in the vaccine space. Assessing their performance on specific contracts would involve reviewing contract performance reports, any associated awards or penalties, and their responsiveness to government requirements over time.

How does the $25.6 million contract value compare to other federal adult vaccine procurements in the same period?

Comparing the $25.6 million contract value requires context regarding the specific types and quantities of adult vaccines procured. Federal adult vaccine procurements can vary significantly based on disease prevalence, public health recommendations, and the specific vaccines targeted (e.g., influenza, pneumococcal, HPV, shingles). For instance, annual influenza vaccine contracts can range from tens to hundreds of millions of dollars, depending on the year and the number of doses ordered. Contracts for newer or more specialized adult vaccines might have different price points. Without knowing the exact vaccine types and quantities under this specific Merck contract, a direct comparison is difficult. However, $25.6 million for a year's supply of certain adult vaccines to a large population is within the expected range for federal procurements, especially when considering the firm fixed-price nature which locks in costs.

What are the primary risk indicators associated with this type of biological product manufacturing contract?

Primary risk indicators for biological product manufacturing contracts, such as this adult vaccine procurement, include supply chain disruptions (e.g., raw material shortages, manufacturing plant issues, geopolitical events affecting global supply), potential for adverse events or efficacy concerns requiring recalls or revised public health guidance, and price volatility in the pharmaceutical market. Regulatory risks are also significant, as changes in FDA requirements or international standards could impact production or approval. Furthermore, dependence on a limited number of manufacturers for critical vaccines can create a systemic risk if one supplier faces production challenges. For the government, ensuring consistent availability and quality of vaccines is paramount, and any failure in these areas poses a substantial public health risk.

How effective was the CDC's procurement strategy in ensuring adequate supply and preventing shortages of adult vaccines?

Assessing the effectiveness of the CDC's procurement strategy for this specific 2012 contract requires detailed analysis of vaccine availability and usage data during the contract period (July 2012 - June 2013). Generally, the CDC employs a multi-faceted approach to ensure adequate vaccine supply, including strategic contracting, maintaining safety stocks, and diversifying suppliers where possible. The fact that this was a firm fixed-price contract awarded under full and open competition suggests an effort to secure supply at a predictable cost. However, effectiveness is best measured by whether the procured vaccines met demand, prevented outbreaks, and avoided significant shortages during the contract's duration. Post-contract reviews, public health reports on vaccine-preventable diseases, and analyses of vaccine stock levels would provide insights into the strategy's success.

What were historical spending patterns for adult vaccines by the CDC in the years preceding 2012?

Historical spending patterns for adult vaccines by the CDC in the years preceding 2012 would likely show a consistent and growing investment in public health. The CDC's budget for vaccine procurement has generally increased over time, driven by the introduction of new vaccines, expanded immunization recommendations (e.g., HPV vaccine recommendations for adults), and a greater emphasis on preventative healthcare. Spending would fluctuate based on specific vaccine needs, such as increased influenza vaccine orders during severe flu seasons or procurements for newly available vaccines. Analyzing annual reports and budget justifications from the CDC or HHS for the years leading up to 2012 would reveal trends in spending across different vaccine categories, including adult vaccines, and highlight the increasing importance of these procurements in the agency's overall mission.

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

Solicitation ID: 2012N14298

Offers Received: 5

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: $106,280,620

Exercised Options: $106,280,620

Current Obligation: $25,652,163

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline