Novartis Vaccines secured a $88.7M contract for childhood vaccines, awarded by HHS CDC

Contract Overview

Contract Amount: $88,724,093 ($88.7M)

Contractor: Novartis Vaccines and Diagnostics, 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: $243.7K/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: EMERYVILLE, ALAMEDA County, CALIFORNIA, 94608

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $88.7 million to NOVARTIS VACCINES AND DIAGNOSTICS, INC. for work described as: VACCINE FOR CHILDREN (VFC) 2014 Key points: 1. The contract value of $88.7 million represents a significant investment in public health, specifically for the Vaccines for Children program. 2. Full and open competition was utilized, suggesting a robust market for vaccine suppliers. 3. The definitive contract type indicates a commitment to a specific supplier for a defined period. 4. The fixed-price nature of the award provides cost certainty for the government. 5. The contract duration of 364 days aligns with typical annual procurement cycles for essential supplies. 6. The award to Novartis Vaccines and Diagnostics, Inc. highlights a key player in the pharmaceutical manufacturing sector.

Value Assessment

Rating: good

The contract value of $88.7 million for a year's supply of vaccines appears reasonable given the critical nature of the VFC program. Benchmarking against similar large-scale vaccine procurements would provide a more precise value-for-money assessment. The fixed-price structure helps control costs, but the absence of detailed cost breakdowns makes a granular price assessment challenging. The award was made after full and open competition, which generally supports competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of 5 bidders suggests a healthy level of competition within the vaccine manufacturing market. This competitive process is expected to drive more favorable pricing and ensure the government receives competitive offers for essential vaccines.

Taxpayer Impact: Full and open competition benefits taxpayers by fostering a marketplace where multiple suppliers vie for the contract, potentially leading to lower prices and better value for the government's investment in childhood immunizations.

Public Impact

Children across the United States will benefit from access to essential vaccines through the Vaccines for Children (VFC) program. The contract ensures the supply of critical pharmaceutical preparations, contributing to disease prevention and public health. The geographic impact is nationwide, covering all states and territories participating in the VFC program. The contract supports the pharmaceutical manufacturing workforce involved in the production and distribution of these vaccines.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single supplier for a critical public health need could pose supply chain risks.
Ensuring equitable distribution across all regions may present logistical challenges.

Positive Signals

Awarded through full and open competition, indicating a competitive market.
Fixed-price contract provides cost predictability for the government.
Long-standing VFC program demonstrates a commitment to childhood immunization.
Novartis is a recognized leader in vaccine development and manufacturing.

Sector Analysis

The pharmaceutical preparation manufacturing sector is characterized by high R&D investment, stringent regulatory oversight, and significant market concentration among a few major players. This contract falls within the broader healthcare and life sciences industry, a critical area for federal spending focused on public health initiatives. Comparable spending benchmarks would involve analyzing other large-scale vaccine procurements by HHS and DoD, as well as international health organizations.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the nature of vaccine manufacturing, it is likely that large, established pharmaceutical companies are the primary bidders. Subcontracting opportunities for small businesses might exist in areas such as logistics, distribution, or specialized components, but the primary award is to a large firm. The impact on the small business ecosystem is likely indirect, focusing on supporting services rather than direct vaccine production.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Disease Control and Prevention (CDC), a component of HHS. Accountability measures are embedded in the contract terms, including delivery schedules and quality standards for the pharmaceutical preparations. Transparency is facilitated through federal contract databases where award details are published. The HHS Office of Inspector General (OIG) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Vaccines for Children Program
HHS Pharmaceutical Procurements
CDC Vaccine Contracts
Public Health Immunization Initiatives

Risk Flags

Potential supply chain disruption risk
Price escalation risk in future procurements
Dependence on single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $88.7 million to NOVARTIS VACCINES AND DIAGNOSTICS, INC.. VACCINE FOR CHILDREN (VFC) 2014

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 $88.7 million.

What is the period of performance?

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

What is the historical spending trend for the Vaccines for Children (VFC) program under HHS?

Historical spending data for the Vaccines for Children (VFC) program indicates a consistent and significant federal investment over the years. While specific annual figures fluctuate based on vaccine needs, public health emergencies, and market dynamics, the program has remained a cornerstone of childhood immunization efforts. For instance, prior to this 2014 award, annual spending often ranged in the tens to hundreds of millions of dollars, reflecting the scale of vaccine procurement required to serve millions of children. The trend generally shows sustained or increasing investment, driven by the ongoing need to maintain high vaccination rates against preventable diseases and the introduction of new vaccines into the recommended schedule. Analyzing multi-year data reveals the program's resilience and its critical role in national public health strategy, often outpacing inflation and population growth in its budgetary requirements.

How does the unit cost of vaccines under this contract compare to market rates or other federal contracts?

Determining the precise unit cost of vaccines under this specific $88.7 million contract is challenging without access to the detailed pricing structure and the specific types and quantities of vaccines procured. However, the contract was awarded under full and open competition, which typically drives prices towards market competitiveness. To perform a robust comparison, one would need to identify the specific National Drug Codes (NDCs) for the vaccines purchased, their quantities, and the price per unit. This data could then be benchmarked against publicly available pricing information from other federal agencies (like the Department of Defense or VA), state immunization programs, or even commercial price lists, adjusting for volume discounts and contract terms. Given that this is a definitive contract for a large volume, the price per unit is likely to be favorable compared to smaller, ad-hoc purchases, but a definitive comparison requires granular product-level data.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this vaccine supply contract?

Key performance indicators (KPIs) and service level agreements (SLAs) for a federal vaccine supply contract like this typically focus on ensuring the timely and reliable delivery of high-quality vaccines. While the specific details are not provided in the summary data, common KPIs would include on-time delivery rates, vaccine viability and potency upon arrival (meeting temperature storage requirements during transit), order fulfillment accuracy, and responsiveness to emergency needs. SLAs would define the acceptable thresholds for these KPIs, potentially including penalties for non-compliance. For the CDC and the VFC program, ensuring uninterrupted supply chains to prevent vaccine shortages is paramount. Therefore, KPIs related to inventory management, lead times for replenishment orders, and the contractor's ability to scale production or distribution in response to demand surges would also be critical.

What is Novartis Vaccines and Diagnostics, Inc.'s track record with federal vaccine procurements prior to this contract?

Novartis Vaccines and Diagnostics, Inc. (prior to its acquisition by GSK and subsequent divestitures) has a significant history of engaging in federal vaccine procurements. As a major global pharmaceutical company, it has been a key supplier for various government health initiatives, including those managed by the Department of Health and Human Services (HHS), the Centers for Disease Control and Prevention (CDC), and potentially the Department of Defense (DoD). Their track record would likely include numerous contracts for a wide range of vaccines, often awarded through competitive processes. Past performance evaluations, available through federal databases like the Contractor Performance Assessment Reporting System (CPARS), would provide insights into their reliability, quality of products, and adherence to contract terms in previous engagements. Generally, companies of Novartis's scale involved in such critical procurements maintain a robust history, though specific performance metrics would vary contract by contract.

What are the potential risks associated with relying on a single supplier for a significant portion of the VFC program's vaccine needs?

Relying on a single supplier, even one as established as Novartis in this instance, for a significant portion of the Vaccines for Children (VFC) program's needs introduces several potential risks. Firstly, supply chain disruptions, whether due to manufacturing issues, raw material shortages, geopolitical events, or natural disasters affecting the supplier's operations, could lead to critical vaccine shortages. Secondly, a lack of ongoing competition could reduce the government's leverage in future price negotiations, potentially leading to higher costs over time. Thirdly, if the supplier faces quality control issues or recalls, the impact on the VFC program could be widespread and severe, affecting vaccination schedules nationwide. Finally, over-reliance might stifle innovation or the adoption of newer, potentially more effective vaccines if the incumbent supplier does not prioritize their development or market entry.

How does the 'Definitive Contract' type impact the flexibility and long-term planning for the VFC program?

The 'Definitive Contract' type, in this context, likely refers to a contract that establishes the terms and conditions for the entire period of performance, often with specific quantities or delivery schedules outlined. For the VFC program, this provides a degree of certainty and predictability regarding vaccine supply and cost for the duration of the contract (364 days in this case). It allows the CDC to plan its immunization campaigns and inventory management with a reliable source. However, compared to more flexible contract types like indefinite-delivery/indefinite-quantity (IDIQ) contracts, a definitive contract might offer less adaptability to sudden surges in demand or unexpected changes in vaccine needs. If the VFC program requires significantly more or fewer vaccines than initially projected, modifications to a definitive contract might be necessary, potentially involving negotiation or supplemental agreements, which can be less agile than exercising options under an IDIQ.

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: 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: $88,724,093

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline