HHS awarded $51M for pediatric flu vaccine, with GSK as the sole supplier

Contract Overview

Contract Amount: $51,007,286 ($51.0M)

Contractor: Glaxosmithkline, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2013-02-22

End Date: 2014-02-21

Contract Duration: 364 days

Daily Burn Rate: $140.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PEDIATRIC FLU VACCINE

Place of Performance

Location: DURHAM, DURHAM County, NORTH CAROLINA, 27709

State: North Carolina Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $51.0 million to GLAXOSMITHKLINE, LLC for work described as: PEDIATRIC FLU VACCINE Key points: 1. The contract's value appears reasonable given the specialized nature of vaccine production and the need for a reliable supply chain. 2. Sole-source award to GlaxoSmithKline suggests limited market competition for this specific pediatric flu vaccine formulation. 3. The fixed-price contract structure mitigates cost overrun risks for the government. 4. This award represents a critical component of the national strategy for influenza prevention in young children. 5. The contract duration of one year aligns with typical vaccine procurement cycles. 6. The absence of small business set-asides indicates the specialized capabilities required for vaccine manufacturing.

Value Assessment

Rating: good

The contract value of $51 million for a year's supply of pediatric flu vaccine is within a reasonable range for specialized pharmaceutical products. Benchmarking against similar large-scale vaccine procurements, this price point reflects the significant research, development, and manufacturing costs associated with ensuring a safe and effective product. The firm fixed-price nature of the award provides cost certainty for the government, preventing unexpected increases.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that GlaxoSmithKline, LLC was the only qualified bidder or provider for this specific pediatric flu vaccine. This approach is often necessary for highly specialized or proprietary products where alternative suppliers cannot meet the exact specifications or regulatory requirements. The limited competition means that price discovery through a competitive bidding process was not utilized.

Taxpayer Impact: A sole-source award limits the government's ability to leverage competitive pressures to secure the lowest possible price, potentially resulting in higher costs for taxpayers compared to a fully competed contract.

Public Impact

Children across the United States benefit from access to a critical vaccine for preventing influenza. The Centers for Disease Control and Prevention (CDC) receives a vital supply to support public health initiatives. The contract ensures the availability of a specific formulation tailored for pediatric use. The geographic impact is national, ensuring widespread availability of the vaccine. The pharmaceutical manufacturing sector, specifically GlaxoSmithKline, is directly supported by this award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits competitive pricing and taxpayer value.
Reliance on a single supplier could pose supply chain risks if production is disrupted.
Lack of transparency in the sole-source justification process.

Positive Signals

Ensures a critical public health need (pediatric flu vaccine) is met.
Firm fixed-price contract provides cost certainty.
Award to an established manufacturer with a track record in vaccine production.

Sector Analysis

The pharmaceutical manufacturing sector is characterized by high barriers to entry, extensive regulatory oversight, and significant R&D investment. This contract falls within the 'Pharmaceutical Preparation Manufacturing' sub-sector. The market for vaccines is often dominated by a few large, specialized companies due to the complexity and cost of production and the need for regulatory approval. Comparable spending benchmarks for national vaccine procurements can vary widely based on the specific vaccine, volume, and market dynamics.

Small Business Impact

This contract did not include a small business set-aside, which is typical for highly specialized pharmaceutical manufacturing where only a few large companies possess the necessary capabilities and regulatory approvals. There is no indication of subcontracting opportunities for small businesses within this specific award, as the primary contractor is responsible for the entire production process.

Oversight & Accountability

The Centers for Disease Control and Prevention (CDC) within HHS is responsible for overseeing this contract. Oversight mechanisms would include monitoring delivery schedules, quality control, and adherence to contract terms. Transparency is generally maintained through contract award databases, though the specifics of sole-source justifications may have limited public detail. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Pediatric Vaccine Procurement
Influenza Prevention Programs
Public Health Services
Pharmaceutical Manufacturing Contracts
Centers for Disease Control and Prevention Acquisitions

Risk Flags

Sole-source award may limit price competition.
Potential supply chain risk due to single-source dependency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $51.0 million to GLAXOSMITHKLINE, LLC. PEDIATRIC FLU VACCINE

Who is the contractor on this award?

The obligated recipient is GLAXOSMITHKLINE, 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 $51.0 million.

What is the period of performance?

Start: 2013-02-22. End: 2014-02-21.

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

GlaxoSmithKline, LLC has a significant history of supplying vaccines to the U.S. federal government, particularly through agencies like 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 extensive experience in vaccine research, development, manufacturing, and distribution. Their portfolio includes various vaccines for different age groups and diseases, including influenza. Federal records indicate numerous past contracts for vaccine supplies, often awarded through competitive processes but sometimes through sole-source mechanisms for specific formulations or urgent needs. Their long-standing presence suggests a reliable, albeit sometimes costly, supplier for critical public health needs.

How does the $51 million award compare to other pediatric flu vaccine procurements?

The $51 million award for a one-year supply of pediatric flu vaccine is a substantial but not unprecedented figure for national public health procurements. The cost of vaccines is influenced by numerous factors, including the complexity of manufacturing, research and development investments, regulatory compliance, and the scale of production. While specific year-to-year comparisons are difficult without knowing the exact formulation and volume, this amount aligns with the general scale of federal vaccine acquisitions. The firm fixed-price nature of this contract provides cost certainty, which is a key consideration for budget planning. However, the sole-source nature means direct price-to-price comparisons with competitively bid contracts are not feasible, and the value proposition relies heavily on the necessity and efficacy of the specific vaccine provided by GSK.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract are centered around limited competition and potential supply chain vulnerability. Firstly, the lack of competition means the government may not be achieving the lowest possible price, potentially leading to less value for taxpayer dollars. Price negotiations are constrained when only one supplier is available. Secondly, reliance on a single supplier, GlaxoSmithKline, LLC, creates a significant risk if their production capabilities are disrupted due to manufacturing issues, raw material shortages, natural disasters, or other unforeseen events. This could lead to shortages of a critical pediatric vaccine, impacting public health. Lastly, the justification for a sole-source award needs to be robust to ensure it is truly necessary and not a result of inadequate market research or planning.

How effective is the CDC in managing pediatric flu vaccine supply through such contracts?

The Centers for Disease Control and Prevention (CDC) plays a crucial role in managing the nation's vaccine supply, including pediatric flu vaccines, through various contracting mechanisms. Their effectiveness is generally considered high, given their expertise in public health and epidemiology. The CDC works to ensure adequate supply, monitor vaccine safety and efficacy, and distribute vaccines to healthcare providers. For pediatric flu vaccines, the CDC often procures large quantities to meet national demand. While sole-source contracts like this one can raise concerns about price, they are sometimes deemed necessary for specific, highly specialized products to guarantee availability. The CDC's long-standing experience and established relationships with manufacturers like GlaxoSmithKline contribute to their ability to manage these complex procurements, though continuous evaluation of market dynamics and competition is essential.

What are historical spending patterns for pediatric flu vaccines by the federal government?

Historical spending patterns for pediatric flu vaccines by the federal government show a consistent and significant investment, reflecting the public health importance of influenza prevention in children. Annual spending fluctuates based on factors such as the number of vaccine doses procured, the specific strains included in the vaccine each year, and the pricing negotiated with manufacturers. Over the past decade, federal outlays for influenza vaccines, including pediatric formulations, have typically ranged in the hundreds of millions of dollars annually. Contracts are often awarded to major pharmaceutical companies like GlaxoSmithKline, Sanofi Pasteur, and others, sometimes through competitive bidding and other times via sole-source awards for specific needs or formulations. The trend indicates a sustained commitment to ensuring broad access to flu vaccines for the pediatric population.

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: Glaxosmithkline PLC (UEI: 238980408)

Address: 5 MOORE DR, RESEARCH TRIANGLE PARK, NC, 27709

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

Financial Breakdown

Contract Ceiling: $55,047,709

Exercised Options: $55,047,709

Current Obligation: $51,007,286

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline