HHS awarded $201.5M contract for flu vaccine manufacturing, exceeding initial estimates by $45.9M

Contract Overview

Contract Amount: $201,453,726 ($201.5M)

Contractor: Sanofi Vaccines US Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2015-12-18

End Date: 2017-02-28

Contract Duration: 438 days

Daily Burn Rate: $459.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF 2016 PED FLU

Place of Performance

Location: SWIFTWATER, MONROE County, PENNSYLVANIA, 18370

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $201.5 million to SANOFI VACCINES US INC. for work described as: IGF::OT::IGF 2016 PED FLU Key points: 1. Contract value significantly surpassed the initial estimate, raising questions about cost control. 2. The award was made under full and open competition, suggesting a competitive market. 3. A single award was made, indicating potential concentration risk with the selected vendor. 4. The contract duration of 438 days is relatively short for a pharmaceutical supply chain. 5. The fixed-price contract type aims to mitigate cost overrun risks for the government. 6. The vendor has a substantial contract history, suggesting experience but also potential for lock-in.

Value Assessment

Rating: fair

The contract value of $201.5 million is substantial for pharmaceutical preparation manufacturing. Benchmarking against similar contracts for vaccine production is difficult without more specific details on the exact product and quantities. However, the fact that the award exceeded the initial estimate by over $45.9 million (approximately 23%) suggests potential issues with initial cost projections or a competitive bidding process that drove up the final price. The fixed-price nature of the contract is a positive indicator for cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were likely solicited and had the opportunity to bid. The presence of 5 bids suggests a reasonable level of competition. However, the final award amount exceeding the initial estimate by a significant margin warrants further investigation into whether the competition effectively drove down prices or if other factors influenced the final cost.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it promotes price discovery and encourages vendors to offer competitive pricing. The significant difference between the initial estimate and the final award suggests that taxpayers may have paid more than initially anticipated, even with competition.

Public Impact

The primary beneficiaries are the public, who will receive flu vaccines to prevent illness and reduce healthcare burdens. The contract ensures the supply of essential pharmaceutical preparations, specifically vaccines, for public health initiatives. The geographic impact is national, as the vaccines are intended for distribution across the United States. The contract supports the pharmaceutical manufacturing workforce involved in vaccine production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns given the award significantly exceeded initial estimates.
Reliance on a single vendor for a critical public health product could pose supply chain risks.
Limited contract duration may necessitate future competitive procurements, increasing administrative burden.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Fixed-price contract type helps to control costs and provides budget certainty.
The vendor has a history of performing government contracts, suggesting reliability.

Sector Analysis

This contract falls within the Pharmaceutical Preparation Manufacturing sector, a critical component of the broader Healthcare industry. This sector is characterized by high R&D investment, stringent regulatory requirements, and significant market concentration among a few large players. Federal spending in this area is often driven by public health needs, such as pandemic preparedness and routine vaccination programs. Comparable spending benchmarks would typically involve analyzing contracts for similar vaccine types and quantities, considering factors like production scale and formulation complexity.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities, which are not detailed in this summary. Without specific subcontracting plans or goals, it's difficult to assess the direct impact on the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services (HHS) and its respective contracting officers. The Centers for Disease Control and Prevention (CDC) would likely be the programmatically responsible agency. Transparency is generally facilitated through contract databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. Specific performance metrics and reporting requirements would be detailed within the contract itself.

Related Government Programs

Public Health Emergency Fund
Strategic National Stockpile
Vaccine Injury Compensation Program
National Vaccine Program

Risk Flags

Award value significantly exceeded initial estimate.
Single award for critical pharmaceutical product.
Relatively short contract duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $201.5 million to SANOFI VACCINES US INC.. IGF::OT::IGF 2016 PED FLU

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 $201.5 million.

What is the period of performance?

Start: 2015-12-18. End: 2017-02-28.

What is the historical spending pattern for influenza vaccines by the Centers for Disease Control and Prevention?

Analyzing historical spending patterns for influenza vaccines by the CDC is crucial for understanding budget trends, vendor reliance, and the overall scale of federal investment in this area. While specific historical data for this exact contract is not provided, general trends show consistent annual federal spending on influenza vaccines, often through multiple contracts awarded to various pharmaceutical manufacturers. This spending fluctuates based on public health recommendations, anticipated demand, and the availability of different vaccine formulations. The CDC typically procures vaccines to support national immunization programs and to maintain readiness for influenza seasons. Examining past contract awards, their values, durations, and the number of bidders can reveal whether spending has been increasing or decreasing, and if competition has remained stable or become more concentrated over time. This context helps in evaluating the current $201.5 million award not just in isolation, but as part of a larger, ongoing federal commitment to influenza prevention.

How does the awarded price compare to market rates for similar pharmaceutical preparations?

Directly comparing the awarded price of $201.5 million to precise market rates for similar pharmaceutical preparations is challenging without detailed specifications of the vaccine (e.g., type, dosage, formulation, specific strains covered) and the exact quantities procured. However, the contract's value significantly exceeded its initial estimate by approximately $45.9 million, or 23%. This substantial variance suggests that either the initial estimate was conservative, or the competitive bidding process resulted in a higher-than-anticipated final price. To benchmark effectively, one would need access to data on recent contracts for comparable influenza vaccines from other government agencies or large private healthcare providers, as well as industry reports on manufacturing costs and pricing trends. The fixed-price nature of this contract provides some assurance against cost escalation, but the initial price point relative to the estimate remains a key area for value assessment.

What is the track record of SANOFI VACCINES US INC. with federal contracts, particularly in vaccine procurement?

SANOFI VACCINES US INC. has a significant track record with federal contracts, particularly within the pharmaceutical and vaccine procurement space. As a major global vaccine manufacturer, Sanofi Pasteur (the vaccines division of Sanofi) is a frequent awardee of contracts from agencies like the Department of Health and Human Services (HHS) and the Department of Defense. Their history includes supplying various types of vaccines, including influenza vaccines, to government entities. Examining their past performance on similar contracts would involve reviewing contract databases for on-time delivery, quality compliance, and adherence to budget. A substantial contract history suggests experience and capability, but also necessitates scrutiny to ensure competitive pricing and consistent performance. The $201.5 million award to SANOFI VACCINES US INC. for flu vaccines aligns with their established role in the federal vaccine supply chain.

What are the potential risks associated with a single award contract for essential pharmaceuticals?

A single award contract, even if competed, carries inherent risks, especially for essential pharmaceuticals like vaccines. The primary risk is supply chain vulnerability; if the sole awardee experiences production issues, quality control problems, or logistical disruptions, the government and the public could face shortages. This concentration of supply can also reduce leverage in future negotiations, as the government may become dependent on that specific vendor. While full and open competition was used for this award, indicating multiple bids were considered, the fact that only one vendor ultimately received the contract means the government is reliant on SANOFI VACCINES US INC. for the duration of this agreement. Mitigating these risks often involves maintaining strong communication, monitoring performance closely, and potentially developing contingency plans or exploring alternative suppliers for future procurements.

How does the contract duration of 438 days compare to typical federal vaccine procurement contracts?

A contract duration of 438 days (approximately 14.5 months) for pharmaceutical preparations, particularly vaccines, is relatively short. Federal vaccine procurement contracts, especially those involving large quantities and complex manufacturing processes, often have longer durations, sometimes spanning multiple years with options for extension. Shorter durations can be advantageous for ensuring up-to-date formulations and adapting to evolving public health needs. However, they also necessitate more frequent re-competition, which can increase administrative workload and potentially lead to less favorable pricing if vendors are not incentivized by longer-term commitments. For seasonal products like influenza vaccines, shorter cycles might be appropriate, but for broader public health preparedness, longer-term agreements can offer greater stability and predictability in supply.

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: 2016N17632

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: $330,149,915

Exercised Options: $330,149,915

Current Obligation: $201,453,726

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline