HHS awarded Novartis $74M for childhood vaccines, a firm-fixed-price contract with 5 bidders

Contract Overview

Contract Amount: $74,096,603 ($74.1M)

Contractor: Novartis Vaccines and Diagnostics, Inc.

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: $203.6K/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: EMERYVILLE, ALAMEDA County, CALIFORNIA, 94608

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $74.1 million to NOVARTIS VACCINES AND DIAGNOSTICS, INC. for work described as: VACCINE FOR CHILDREN 2013 Key points: 1. The contract's firm-fixed-price structure offers predictable costs for the government. 2. With 5 bidders, the competition level suggests a reasonably competitive market for these vaccines. 3. The contract duration of one year indicates a need for ongoing vaccine supply. 4. The award to Novartis, a known pharmaceutical manufacturer, suggests a focus on established suppliers. 5. The geographic focus on California (SN: CALIFORNIA) may indicate a specific regional need or distribution hub.

Value Assessment

Rating: good

The contract value of $74 million for a year's supply of childhood vaccines appears reasonable given the scale of public health needs. Benchmarking against similar vaccine procurements would provide a more precise value-for-money assessment. The firm-fixed-price type generally ensures cost certainty for the government, reducing the risk of cost overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with 5 bidders participating. This level of competition is generally positive, suggesting that multiple capable suppliers were aware of and responded to the government's need. A higher number of bidders typically leads to better price discovery and potentially lower prices for the government.

Taxpayer Impact: The full and open competition indicates that taxpayer dollars were likely used efficiently, as multiple companies vied for the contract, driving down costs.

Public Impact

Children across the nation will benefit from access to essential vaccines, contributing to public health and disease prevention. The Centers for Disease Control and Prevention (CDC) will receive a supply of vaccines crucial for its immunization programs. The contract supports the pharmaceutical manufacturing sector and associated supply chains. While the award specifies California, the ultimate impact is national, ensuring vaccine availability for public health initiatives.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in future contract renewals if competition decreases.
Dependence on a single supplier for a critical public health resource could pose a risk if supply chains are disrupted.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Full and open competition suggests a healthy market and potential for competitive pricing.
Award to an established manufacturer like Novartis implies reliability in production and quality.

Sector Analysis

The pharmaceutical manufacturing sector is critical for public health, with vaccine production being a key sub-segment. Government procurements, particularly through agencies like the CDC, represent significant market share for vaccine suppliers. This contract fits within the broader landscape of federal efforts to ensure widespread access to immunizations, often involving large-value, long-term agreements.

Small Business Impact

There is no explicit indication of small business set-asides for this contract. However, large pharmaceutical contracts often involve complex supply chains where small businesses may participate as subcontractors to prime contractors like Novartis, providing specialized services or components.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The firm-fixed-price nature simplifies financial oversight compared to cost-plus contracts. The Centers for Disease Control and Prevention, as the agency, would monitor performance and delivery. Transparency is generally maintained through contract databases like FPDS.

Related Government Programs

Childhood Immunization Programs
Vaccine Purchase Agreements
Public Health Preparedness Contracts

Risk Flags

Supply Chain Vulnerability
Price Volatility Risk
Dependence on Specific Manufacturer

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $74.1 million to NOVARTIS VACCINES AND DIAGNOSTICS, INC.. VACCINE FOR CHILDREN 2013

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 $74.1 million.

What is the period of performance?

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

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

Novartis Vaccines and Diagnostics has a history of supplying vaccines to government entities. While specific details on past federal contracts require deeper database analysis, their position as a major pharmaceutical company suggests experience in meeting government procurement standards for quality, safety, and delivery. Past performance reviews and contract compliance data would be crucial for a comprehensive assessment of their track record with federal agencies, including adherence to delivery schedules and product specifications.

How does the $74 million award compare to similar childhood vaccine procurements?

The $74 million award for a one-year supply of childhood vaccines is a substantial figure, reflecting the importance and scale of national immunization efforts. To benchmark this value, one would need to compare it against contracts for similar vaccine types (e.g., MMR, DTaP, Polio) awarded by the CDC or other federal health agencies (like DoD or VA) over comparable periods. Factors such as the specific vaccines included, the quantities procured, and the prevailing market prices at the time of award are critical for a meaningful comparison. Without access to detailed historical pricing data for comparable vaccine lots, a precise value-for-money assessment is challenging.

What are the primary risks associated with this contract?

Key risks include potential supply chain disruptions affecting vaccine availability, which could impact public health goals. Another risk is the potential for price increases in future contract renewals if competition diminishes or if market dynamics shift unfavorably. Furthermore, reliance on a single manufacturer for specific vaccines, even with competition in the bidding process, can create vulnerabilities. Ensuring consistent quality and efficacy of the delivered vaccines is an ongoing risk that requires diligent oversight.

How effective is the CDC in managing vaccine procurement contracts?

The CDC generally has a robust framework for managing vaccine procurement, leveraging its expertise in public health and epidemiology. Their established processes aim to ensure the acquisition of safe, effective, and timely vaccine supplies. Effectiveness is often measured by the success rate in meeting national immunization targets and maintaining adequate vaccine reserves. Oversight mechanisms, including quality assurance checks and performance monitoring, are integral to their management approach. However, like any large-scale procurement, challenges can arise, necessitating adaptive management strategies.

What have been the historical spending patterns for childhood vaccines by the federal government?

Federal spending on childhood vaccines has historically been significant and generally increasing, driven by expanding immunization schedules, population growth, and the development of new vaccines. Agencies like the CDC and HRSA manage substantial budgets dedicated to vaccine procurement. Spending patterns often reflect public health priorities, such as combating outbreaks or ensuring broad coverage for preventable diseases. Analyzing historical data reveals trends in contract values, supplier concentration, and the types of vaccines most frequently procured, providing context for current and future investments.

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: 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: $533,780,000

Exercised Options: $533,780,000

Current Obligation: $74,096,603

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline