HHS awarded $526M for childhood vaccines, with CDC managing this firm-fixed-price contract

Contract Overview

Contract Amount: $526,072,656 ($526.1M)

Contractor: Glaxosmithkline, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2013-04-01

End Date: 2014-03-31

Contract Duration: 364 days

Daily Burn Rate: $1.4M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: VACCINE FOR CHILDREN 2013

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 $526.1 million to GLAXOSMITHKLINE, LLC for work described as: VACCINE FOR CHILDREN 2013 Key points: 1. The contract value of $526 million represents a significant investment in public health, specifically for childhood immunizations. 2. Competition dynamics for this pharmaceutical contract are crucial for ensuring fair pricing and access to essential vaccines. 3. Performance risk is moderate, given the nature of vaccine manufacturing and distribution, but mitigated by firm-fixed-price terms. 4. This contract falls within the broader healthcare sector, focusing on pharmaceutical preparation manufacturing. 5. The Centers for Disease Control and Prevention (CDC) is the primary agency overseeing this critical public health initiative. 6. The contract duration of one year suggests a focus on immediate supply needs or a component of a larger vaccine program.

Value Assessment

Rating: good

Benchmarking the value of this $526 million contract requires comparison to similar large-scale vaccine procurements. Given the firm-fixed-price structure, the government has a defined cost, but the underlying unit price of the vaccine doses is key to assessing value. Without specific per-unit data or comparable contract pricing, a definitive value assessment is challenging. However, the scale of the award indicates a substantial quantity of vaccines, suggesting an attempt to achieve economies of scale.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of 5 bidders suggests a reasonably competitive environment for this pharmaceutical preparation manufacturing contract. This level of competition is generally favorable for price discovery and potentially leads to more cost-effective solutions for the government.

Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by driving down prices through market forces.

Public Impact

Children across the United States benefit from access to essential vaccines, contributing to herd immunity and disease prevention. The contract ensures the supply of pharmaceutical preparations, specifically vaccines, for the national immunization program. The geographic impact is national, covering all regions of the U.S. where CDC-administered vaccination programs operate. This contract supports the pharmaceutical manufacturing workforce and associated supply chain jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting vaccine availability.
Ensuring consistent quality and efficacy of manufactured vaccines.
Managing the logistics of vaccine distribution to various health centers.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Full and open competition likely resulted in competitive pricing.
Award to a known entity (GlaxoSmithKline) suggests established manufacturing capabilities.

Sector Analysis

The pharmaceutical industry is a major sector within healthcare, characterized by high R&D costs, stringent regulatory oversight, and significant government procurement. This contract for childhood vaccines represents a critical component of public health spending within the pharmaceutical preparation manufacturing sub-sector. Comparable spending benchmarks would involve other large-scale vaccine procurements or major drug manufacturing contracts, which often run into hundreds of millions of dollars due to the scale and complexity of production.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, GlaxoSmithKline, LLC, is a large pharmaceutical company. There is no explicit information provided regarding subcontracting plans with small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though large prime contractors may engage small businesses indirectly through their broader supply chains.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Disease Control and Prevention (CDC), a component of HHS. As a firm-fixed-price contract, the focus of oversight would be on delivery, quality, and adherence to contract terms. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

National Vaccine Injury Compensation Program
HHS Biomedical Advanced Research and Development Authority (BARDA) contracts
CDC Immunization Services Division funding
Pharmaceutical Manufacturing Contracts
Public Health Preparedness Contracts

Risk Flags

Potential for supply chain disruptions
Ensuring vaccine efficacy and safety
Maintaining cold chain integrity during distribution

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $526.1 million to GLAXOSMITHKLINE, LLC. VACCINE FOR CHILDREN 2013

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 $526.1 million.

What is the period of performance?

Start: 2013-04-01. End: 2014-03-31.

What is the historical spending pattern for childhood vaccines by the CDC over the last five years?

Analyzing historical spending patterns for childhood vaccines by the CDC is crucial for understanding trends, identifying potential fluctuations in demand or pricing, and assessing the consistency of investment in this area. While specific figures for this exact contract are tied to 2013-2014, broader CDC vaccine procurement data would reveal if this $526 million award was an outlier, a typical expenditure, or part of an increasing/decreasing trend. Factors influencing historical spending include changes in vaccination schedules, the introduction of new vaccines, public health emergencies, and fluctuations in manufacturer pricing. A detailed analysis would involve examining annual reports, budget allocations, and past contract awards related to vaccine procurement to establish a baseline and identify significant deviations.

How does the per-unit cost of the vaccines procured under this contract compare to market rates or other government contracts?

Determining the per-unit cost benchmark for the vaccines procured under this $526 million contract is essential for evaluating value for money. This comparison would involve obtaining the total number of vaccine doses purchased and dividing it by the total contract value to derive an average per-unit cost. This figure would then be benchmarked against prevailing market rates for similar vaccines sold to the public or private sector, as well as against per-unit costs from other government contracts, particularly those awarded by different agencies or for different time periods. Significant deviations from market or benchmark rates could indicate either exceptional value or potential overpayment, warranting further investigation into factors like bulk purchasing discounts, specific formulation requirements, or unique distribution needs.

What is GlaxoSmithKline's track record with government vaccine contracts, specifically with the CDC?

GlaxoSmithKline, LLC (GSK) has a significant history of supplying vaccines to government entities, including the CDC. Their track record with government vaccine contracts is generally characterized by large-scale awards and established manufacturing capabilities. For the CDC, GSK has been a consistent provider of various vaccines over the years. Evaluating their track record involves reviewing past performance evaluations, any documented instances of contract disputes or quality issues, and their overall reliability in meeting delivery schedules and quality standards. A positive track record suggests a lower risk associated with contract performance, while any negative history would necessitate closer scrutiny of current contract management and oversight.

What are the key performance indicators (KPIs) used to measure the success of this vaccine contract?

The key performance indicators (KPIs) for a contract of this nature, supplying childhood vaccines, would primarily focus on ensuring the availability, quality, and timely delivery of the pharmaceutical products. Essential KPIs likely include: 1) On-time delivery rates: measuring the percentage of vaccine shipments that arrive by the scheduled delivery dates. 2) Quality assurance: ensuring that the vaccines meet all specified standards for potency, purity, and safety, often verified through batch testing and adherence to Good Manufacturing Practices (GMP). 3) Fill rate: the percentage of the ordered quantity that is successfully delivered. 4) Contract compliance: adherence to all terms and conditions of the contract, including reporting requirements. Success is ultimately measured by the uninterrupted supply of safe and effective vaccines to support national immunization programs.

Are there any specific risks associated with the manufacturing or distribution of vaccines that this contract aims to mitigate?

This contract inherently involves risks related to the manufacturing and distribution of vaccines, which are complex biological products. Manufacturing risks include potential production delays, quality control failures, or contamination issues. Distribution risks encompass maintaining the cold chain (temperature control) throughout transit, preventing spoilage, and ensuring timely delivery to vaccination sites. This contract likely aims to mitigate these risks through several mechanisms: the firm-fixed-price structure incentivizes the contractor to manage costs and production efficiently; the full and open competition process selects capable manufacturers; and stringent quality control and delivery schedule requirements are embedded within the contract terms. The CDC's oversight also plays a critical role in monitoring and mitigating these risks throughout the contract period.

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

Solicitation ID: 2013N14972

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: $705,676,700

Exercised Options: $705,676,700

Current Obligation: $526,072,656

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline