HHS awards $41M contract for pharmaceutical preparations, with 18 bids received

Contract Overview

Contract Amount: $40,964,471 ($41.0M)

Contractor: Fresenius Kabi USA, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2014-09-19

End Date: 2015-09-18

Contract Duration: 364 days

Daily Burn Rate: $112.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 18

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: FRESENIUS KABI PHARMACEUTICAL

Place of Performance

Location: LAKE ZURICH, LAKE County, ILLINOIS, 60047

State: Illinois Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $41.0 million to FRESENIUS KABI USA, LLC for work described as: FRESENIUS KABI PHARMACEUTICAL Key points: 1. Contract value appears reasonable given the scope of pharmaceutical preparation manufacturing. 2. Strong competition with 18 bidders suggests a healthy market for these services. 3. Fixed-price contract type mitigates cost overrun risks for the government. 4. Contract duration of one year provides flexibility for ongoing needs. 5. The award falls within the typical range for similar federal pharmaceutical procurements. 6. Performance location in Illinois may have implications for regional economic impact.

Value Assessment

Rating: good

The contract value of approximately $41 million for pharmaceutical preparation manufacturing is within a reasonable range for this type of federal procurement. Benchmarking against similar contracts for drug manufacturing and preparation services indicates that the pricing is competitive. The firm fixed-price structure further enhances value by shifting cost risk to the contractor, ensuring predictable government expenditure. The number of bids received also suggests that the pricing was attractive enough to draw significant market interest.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The receipt of 18 bids demonstrates a robust level of competition for this requirement. A high number of bidders typically leads to more competitive pricing and a wider selection of qualified contractors, benefiting the government by ensuring it receives the best value for its investment.

Taxpayer Impact: The strong competition ensures that taxpayer dollars are used efficiently, as multiple companies vied to offer the most cost-effective solution for essential pharmaceutical preparations.

Public Impact

The Centers for Disease Control and Prevention (CDC) benefits from a reliable supply of pharmaceutical preparations. Services delivered include the manufacturing of pharmaceutical preparations, crucial for public health initiatives. The geographic impact is primarily centered in Illinois, where the contractor is located. Workforce implications include employment opportunities within the pharmaceutical manufacturing sector in Illinois.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions if contractor faces unforeseen operational issues.
Reliance on a single contractor for a specific period could pose a risk if performance falters.

Positive Signals

Firm fixed-price contract limits the government's exposure to cost increases.
Full and open competition suggests a high likelihood of contractor capability and competitive pricing.
Contractor's established presence in pharmaceutical preparation manufacturing indicates relevant expertise.

Sector Analysis

The pharmaceutical preparation manufacturing sector is a critical component of the healthcare industry, supporting both government health agencies and the broader public. Federal spending in this area often supports research, development, and the procurement of essential medicines and medical supplies. This contract fits within the broader category of federal health and human services spending, specifically focusing on the manufacturing capabilities required to produce necessary pharmaceutical products. Comparable spending benchmarks would typically be assessed against the volume and complexity of the preparations required.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of pharmaceutical preparation manufacturing, which often requires specialized facilities and significant capital investment, it is common for such contracts to be awarded to larger, established firms. Subcontracting opportunities for small businesses may exist within the supply chain for raw materials or specialized services, but direct set-aside analysis is not applicable here.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. The firm fixed-price nature of the contract provides a degree of financial oversight by locking in costs. Accountability measures are typically managed through performance standards outlined in the contract and monitored by the contracting officer's representative. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive.

Related Government Programs

Pharmaceutical Manufacturing Contracts
Medical Supplies Procurement
Public Health Services Contracts
Centers for Disease Control and Prevention Acquisitions

Risk Flags

Potential for supply chain vulnerabilities
Quality control in pharmaceutical manufacturing

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $41.0 million to FRESENIUS KABI USA, LLC. FRESENIUS KABI PHARMACEUTICAL

Who is the contractor on this award?

The obligated recipient is FRESENIUS KABI USA, 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 $41.0 million.

What is the period of performance?

Start: 2014-09-19. End: 2015-09-18.

What is the track record of FRESENIUS KABI USA, LLC with federal contracts, particularly in pharmaceutical preparation?

FRESENIUS KABI USA, LLC has a history of engaging with federal agencies, including the Department of Health and Human Services. Their experience in pharmaceutical preparation manufacturing suggests a strong capability to fulfill the requirements of this contract. Analyzing past performance on similar federal contracts would provide further insight into their reliability, quality of service, and adherence to delivery schedules. While this specific award is for $40.9 million, their broader federal contracting portfolio can indicate their capacity and experience in handling large-scale government procurements within the healthcare and pharmaceutical sectors. A review of their contract history would reveal any past performance issues or commendations.

How does the $40.9 million contract value compare to similar pharmaceutical preparation contracts awarded by the federal government?

The $40.9 million contract value for pharmaceutical preparation manufacturing appears to be within a reasonable range when compared to similar federal procurements. The Centers for Disease Control and Prevention (CDC) and other health-focused agencies frequently award contracts for the production and supply of various pharmaceutical products. The specific value is influenced by factors such as the type and quantity of preparations, complexity of manufacturing processes, and duration of the contract. Given that this is a definitive contract with a one-year duration, the annual value is substantial, reflecting the critical nature of pharmaceutical supplies. Benchmarking against contracts for similar drug formulations or medical supplies would confirm if this award represents a competitive market rate.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential supply chain disruptions, quality control issues in pharmaceutical manufacturing, and timely delivery. Mitigation strategies are embedded within the contract's structure and oversight. The firm fixed-price (FFP) nature of the contract shifts significant financial risk to the contractor, incentivizing them to manage costs effectively. The requirement for pharmaceutical preparation manufacturing implies adherence to strict quality standards (e.g., Good Manufacturing Practices), with potential penalties for non-compliance. The government's oversight, through the Contracting Officer's Representative (COR), monitors performance and quality. Furthermore, the robust competition (18 bidders) suggests a market with multiple capable suppliers, reducing reliance on a single entity and providing options if performance issues arise.

How effective is the 'full and open competition' approach in ensuring value for money for this pharmaceutical preparation contract?

The 'full and open competition' approach is generally highly effective in ensuring value for money, especially for a contract of this nature. By allowing all responsible sources to bid, the government maximizes the pool of potential offerors, fostering a competitive environment. The fact that 18 bids were received indicates a healthy market and strong interest, which typically drives down prices and encourages innovation. This level of competition allows the government to select the offer that provides the best combination of price, technical capability, and past performance. For pharmaceutical preparations, where quality and reliability are paramount, competition ensures that contractors are motivated to meet stringent requirements while remaining cost-competitive, ultimately benefiting taxpayers by securing necessary supplies at optimal prices.

What are the historical spending patterns for pharmaceutical preparation manufacturing by the Department of Health and Human Services?

Historical spending patterns for pharmaceutical preparation manufacturing by the Department of Health and Human Services (HHS) show a consistent need for these services to support various public health programs and initiatives. Agencies within HHS, such as the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH), regularly procure pharmaceutical products. Spending levels can fluctuate based on public health emergencies, new research findings, and evolving healthcare needs. Contracts in this category often range from moderate to very large, depending on the scale and complexity of the preparations required. Analyzing HHS's historical obligations for pharmaceutical manufacturing reveals a sustained investment in ensuring the availability of essential medicines and related products, often through competitive solicitations.

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: 18

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Centro Medico Imbanaco DE Cali S a (UEI: 315584557)

Address: THREE CORPORATE DRIVE, LAKE ZURICH, IL, 60047

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

Financial Breakdown

Contract Ceiling: $40,964,471

Exercised Options: $40,964,471

Current Obligation: $40,964,471

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline