HHS awarded $428M for childhood vaccines, with Sanofi as the sole contractor

Contract Overview

Contract Amount: $428,143,094 ($428.1M)

Contractor: Sanofi Vaccines US Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2014-04-01

End Date: 2015-03-31

Contract Duration: 364 days

Daily Burn Rate: $1.2M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: VACCINE FOR CHILDREN (VFC) 2014

Place of Performance

Location: SWIFTWATER, MONROE County, PENNSYLVANIA, 18370

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $428.1 million to SANOFI VACCINES US INC. for work described as: VACCINE FOR CHILDREN (VFC) 2014 Key points: 1. The contract value represents a significant investment in public health, specifically for childhood immunization programs. 2. Competition dynamics were limited, with a single awardee, raising questions about price negotiation and potential for cost savings. 3. The fixed-price contract type offers some cost certainty but may not fully capture efficiencies if market prices decrease. 4. Performance is tied to the delivery of essential vaccines, directly impacting child health outcomes. 5. This contract falls within the broader pharmaceutical and healthcare sector, a critical area of federal spending. 6. The duration of the contract is approximately one year, suggesting a need for regular re-evaluation of market conditions and contractor performance.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific per-unit cost data for the vaccines procured. However, the total award of $428 million for a one-year supply of childhood vaccines indicates a substantial commitment. Comparing this to other large-scale vaccine procurements by the government would be necessary to assess if the pricing is competitive. The fixed-price nature provides a degree of predictability, but the absence of competitive bidding in the award phase limits the ability to confirm optimal value for money.

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. However, the data provided shows only one awardee, Sanofi Vaccines US Inc. This suggests that while the process was open, only one bidder met the requirements or submitted a competitive offer. The limited number of actual bidders (implied by a single awardee) could impact price discovery and potentially lead to less aggressive pricing than if multiple strong competitors had vied for the contract.

Taxpayer Impact: A single awardee in a full and open competition means taxpayers may not have benefited from the most competitive pricing that could have been achieved with multiple strong bids. This could translate to higher costs for the government and, ultimately, for taxpayers.

Public Impact

Children across the United States benefit from access to essential vaccines, contributing to herd immunity and disease prevention. The Centers for Disease Control and Prevention (CDC) receives a critical supply of vaccines to administer through the Vaccines for Children (VFC) program. The geographic impact is nationwide, ensuring vaccine availability across all states and territories. This contract supports jobs within the pharmaceutical manufacturing and distribution sectors, particularly at Sanofi.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition indicated by a single awardee could lead to higher prices than a multi-bidder scenario.
Reliance on a single supplier for a critical public health commodity poses a supply chain risk.
The fixed-price contract may not fully capture potential cost savings if market prices for these vaccines decline during the contract period.

Positive Signals

The contract was awarded under full and open competition, ensuring a fair process.
The fixed-price contract provides cost certainty for the government.
The procurement addresses a critical public health need for childhood immunizations.

Sector Analysis

This contract falls within the pharmaceutical manufacturing and distribution sector, a vital component of the healthcare industry. Federal spending in this area is substantial, driven by public health initiatives, defense medical readiness, and research and development. The market for vaccines is characterized by high barriers to entry due to research costs, regulatory hurdles, and manufacturing complexity. Comparable spending benchmarks would involve analyzing other large-scale vaccine procurements by agencies like the CDC, DoD, or BARDA.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. Given the nature of vaccine manufacturing and the large contract value, it is likely that the primary awardee is a large pharmaceutical company. The impact on the small business ecosystem would be minimal unless specific subcontracting opportunities were mandated and utilized.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Disease Control and Prevention (CDC), the awarding agency. Accountability measures are embedded in the contract terms, including delivery schedules and quality standards for the vaccines. Transparency is facilitated through federal contract databases like FPDS. The Inspector General for the Department of Health and Human Services (HHS) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Vaccines for Children Program
CDC Procurement of Vaccines
HHS Pharmaceutical Contracts
National Vaccine Injury Compensation Program
Public Health Emergency Preparedness

Risk Flags

Limited competition
Supply chain risk
Potential for higher costs due to single awardee

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $428.1 million to SANOFI VACCINES US INC.. VACCINE FOR CHILDREN (VFC) 2014

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 $428.1 million.

What is the period of performance?

Start: 2014-04-01. End: 2015-03-31.

What is the historical spending trend for childhood vaccines by the CDC over the past five years?

Analyzing historical spending data for childhood vaccines by the CDC is crucial for understanding budget allocation trends and identifying any significant year-over-year fluctuations. While specific figures for this contract are for 2014, a broader trend analysis would reveal if spending has been consistently high, increasing, or decreasing. Factors influencing these trends could include changes in vaccination schedules, the introduction of new vaccines, public health campaigns, or shifts in federal appropriations. Understanding this context helps in evaluating whether the $428 million awarded in 2014 was an anomaly or part of a sustained investment in childhood immunization.

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

A key aspect of value-for-money assessment is comparing the per-unit cost of vaccines obtained through this contract against prevailing market rates and similar government procurements. Without specific unit cost data, this comparison is difficult. However, if the CDC has published average costs for specific vaccines (e.g., DTaP, MMR, Polio) during the contract period, these could be used as a benchmark. Variations in pricing could be attributed to different contract types, competition levels, and the specific formulations or manufacturers involved. A higher-than-market cost could indicate a lack of competitive pressure or specific contractual terms.

What are the specific vaccines included in this $428 million contract and their intended use?

The contract for $428 million awarded to Sanofi Vaccines US Inc. by the CDC is intended to procure a range of essential childhood vaccines. These typically include vaccines against diseases such as diphtheria, tetanus, pertussis (DTaP), measles, mumps, rubella (MMR), polio, Haemophilus influenzae type b (Hib), hepatitis B, and varicella (chickenpox), among others. The specific vaccines procured would align with the recommended immunization schedule for infants and children as established by the Advisory Committee on Immunization Practices (ACIP). The primary goal is to ensure widespread availability of these vaccines through the Vaccines for Children (VFC) program, thereby preventing outbreaks and protecting public health.

What is Sanofi Vaccines US Inc.'s track record in supplying vaccines to the federal government, particularly the CDC?

Sanofi Vaccines US Inc. has a significant history of supplying vaccines to various government agencies, including the Centers for Disease Control and Prevention (CDC). As a major global pharmaceutical company, Sanofi is a key player in the vaccine market and has been a consistent contractor for federal immunization programs. Their track record would typically involve a history of meeting delivery schedules, adhering to quality standards, and navigating complex regulatory requirements. Evaluating past performance, including any instances of contract disputes, delivery delays, or quality issues, is essential for assessing the reliability of Sanofi as a supplier for this critical public health contract.

What are the potential risks associated with having a single supplier for such a large volume of essential childhood vaccines?

The primary risk associated with a single supplier for essential childhood vaccines is supply chain vulnerability. Any disruption at the manufacturer's facility, such as production issues, quality control problems, or unforeseen events like natural disasters or pandemics, could lead to significant shortages. This could jeopardize public health by hindering immunization efforts and potentially leading to outbreaks of preventable diseases. Furthermore, a sole-source or single-award situation can reduce the government's leverage in price negotiations, potentially leading to higher costs over time compared to a scenario with multiple competing suppliers.

How does the contract's fixed-price structure influence potential cost savings or overruns for the government?

A Firm Fixed Price (FFP) contract, like the one awarded to Sanofi, establishes a set price for the vaccines regardless of the contractor's actual costs. This structure offers the government significant cost certainty, as the total expenditure is known upfront. It shifts the risk of cost overruns to the contractor. However, it also means that if the market price for these vaccines were to decrease during the contract period, or if Sanofi achieved unexpected efficiencies in production, the government would not benefit from those lower costs. Conversely, if Sanofi's costs were to increase unexpectedly, they would bear that burden, not the government.

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: 2014N15784

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Genzyme Corporation

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: $957,385,438

Exercised Options: $957,385,438

Current Obligation: $428,143,094

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline