HHS awarded GlaxoSmithKline $682M for vaccines, with a significant portion for influenza

Contract Overview

Contract Amount: $682,167,045 ($682.2M)

Contractor: Glaxosmithkline, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2017-04-01

End Date: 2018-03-31

Contract Duration: 364 days

Daily Burn Rate: $1.9M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF VACINES FOR CHILDREN

Place of Performance

Location: DURHAM, DURHAM County, NORTH CAROLINA, 27709

State: North Carolina Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $682.2 million to GLAXOSMITHKLINE, LLC for work described as: IGF::OT::IGF VACINES FOR CHILDREN Key points: 1. Contract value of $682M over one year indicates substantial demand for vaccine supply. 2. The contract was awarded through full and open competition, suggesting a competitive market. 3. A high number of bids (7) implies strong interest and potentially good price discovery. 4. The firm fixed-price structure shifts risk to the contractor, ensuring cost certainty for the government. 5. The contract's focus on vaccines places it within a critical public health sector. 6. The North Carolina location for the contractor may have implications for distribution logistics.

Value Assessment

Rating: good

The contract value of $682M for a one-year period for vaccine supply is substantial. Benchmarking against similar large-scale vaccine procurements would be necessary for a precise value-for-money assessment. However, the firm fixed-price nature suggests that the government has secured costs upfront, which is a positive indicator for budget predictability. The specific breakdown of vaccine types and quantities would further inform the value assessment.

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 participation of seven bidders suggests a robust competitive environment for vaccine supply. This level of competition is generally favorable for price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: The broad competition for this vaccine contract likely resulted in a more competitive pricing structure, benefiting taxpayers by ensuring they receive good value for essential public health supplies.

Public Impact

The primary beneficiaries are the public, who receive access to essential vaccines, including those for influenza. The contract ensures the supply of critical medical countermeasures, supporting national public health initiatives. Geographic impact is nationwide, as vaccines are distributed across the United States. The contract supports the pharmaceutical and biotechnology workforce involved in vaccine production and distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting vaccine availability.
Dependence on a single large contractor for a significant portion of vaccine needs.
Fluctuations in demand for specific vaccines could lead to overstocking or shortages.

Positive Signals

Ensures a stable and reliable supply of critical vaccines for public health.
The firm fixed-price contract provides cost certainty for the government.
Full and open competition suggests a healthy market and potential for competitive pricing.

Sector Analysis

The pharmaceutical and biotechnology sector is characterized by high R&D investment, stringent regulatory oversight, and significant market demand for life-saving products like vaccines. This contract represents a substantial procurement within the medical supplies sub-sector, reflecting the government's role as a major purchaser of healthcare goods. Comparable spending benchmarks would involve analyzing other large-scale vaccine procurements by federal agencies.

Small Business Impact

There is no explicit indication of small business set-asides for this contract. Given the scale and specialized nature of vaccine manufacturing and distribution, it is common for large pharmaceutical companies to be the primary awardees. Subcontracting opportunities for small businesses might exist in logistics, support services, or component supply, but this would depend on the prime contractor's strategy.

Oversight & Accountability

The Centers for Disease Control and Prevention (CDC) is responsible for overseeing this contract. Oversight mechanisms would include performance monitoring, quality control checks, and adherence to delivery schedules. Transparency is generally maintained through contract award databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Vaccines for Children Program
Strategic National Stockpile
Influenza Vaccine Procurement
Public Health Emergency Preparedness

Risk Flags

Supply Chain Risk
Demand Volatility
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $682.2 million to GLAXOSMITHKLINE, LLC. IGF::OT::IGF VACINES FOR CHILDREN

Who is the contractor on this award?

The obligated recipient is GLAXOSMITHKLINE, 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 $682.2 million.

What is the period of performance?

Start: 2017-04-01. End: 2018-03-31.

What is the historical spending pattern for vaccine procurement by the CDC?

Historical spending data for vaccine procurement by the CDC reveals a consistent and significant investment in public health. Over the past decade, the CDC has allocated billions of dollars annually to acquire a wide range of vaccines to support various immunization programs, including the Vaccines for Children (VFC) program and annual influenza vaccination campaigns. Spending fluctuates based on the introduction of new vaccines, public health emergencies (like pandemics), and the specific needs of different age demographics. For instance, the COVID-19 pandemic saw a dramatic increase in vaccine-related expenditures. Analyzing trends shows a growing reliance on large, multi-year contracts with major pharmaceutical manufacturers to ensure a stable supply chain and leverage economies of scale. This particular contract, valued at $682 million for a single year, aligns with the scale of previous large vaccine procurements, particularly for influenza and other routine immunizations, underscoring the ongoing commitment to vaccine accessibility.

How does the pricing of this contract compare to similar vaccine procurements?

Directly comparing the pricing of this $682 million contract to similar vaccine procurements requires access to detailed pricing information for specific vaccine types and quantities, which is often proprietary. However, the contract's firm fixed-price structure is a key indicator. This structure aims to secure a set price for the goods delivered, shifting the risk of cost overruns to the contractor, GlaxoSmithKline. When compared to cost-plus contracts, a firm fixed-price agreement generally offers better price certainty for the government. The fact that this contract was awarded under full and open competition with seven bidders suggests that the market dynamics likely drove competitive pricing. Without specific per-unit costs for comparable vaccines (e.g., influenza vaccines), a precise benchmark is difficult, but the competitive award process implies a reasonable market price was achieved for the government.

What are the primary risks associated with this vaccine supply contract?

Several risks are associated with this vaccine supply contract. Firstly, supply chain disruptions, whether due to manufacturing issues, raw material shortages, or logistical challenges, could impact the timely delivery of essential vaccines. Secondly, there's a risk of demand fluctuation; if public health needs shift unexpectedly (e.g., a less severe flu season than anticipated, or conversely, a pandemic requiring different vaccines), the contracted quantities might not perfectly align with actual requirements, potentially leading to waste or shortages. Thirdly, reliance on a single large contractor, even with competition, carries inherent risks if the contractor faces financial instability or operational failures. Finally, the efficacy and safety of vaccines are paramount; any adverse events or recalls could have significant public health and financial repercussions, although these are typically managed through stringent regulatory processes and contractual clauses.

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

GlaxoSmithKline (GSK) has a long-standing and significant track record of supplying vaccines to the U.S. federal government, particularly through contracts with the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC). They are a major global vaccine manufacturer and have been a key partner in national immunization programs for many years. GSK has historically secured substantial contracts for influenza vaccines, as well as other routine childhood and adult vaccines. Their performance on these contracts is generally characterized by their ability to meet large-scale production demands and adhere to delivery schedules. While specific performance metrics for every contract are not publicly detailed, their continued success in winning large federal contracts indicates a generally positive track record in terms of reliability, quality, and meeting government requirements for vaccine supply.

How does this contract contribute to national public health preparedness?

This contract plays a crucial role in national public health preparedness by ensuring a consistent and substantial supply of essential vaccines. Vaccines are a cornerstone of preventive healthcare, mitigating the impact of infectious diseases and reducing the burden on the healthcare system. By securing a large volume of vaccines, including those for influenza, the government can effectively manage seasonal outbreaks and respond to potential public health emergencies. This procurement supports the operational readiness of immunization programs, ensuring that healthcare providers have access to the necessary tools to protect the population. Furthermore, having established contracts with major manufacturers like GlaxoSmithKline streamlines the procurement process during critical times, allowing for rapid deployment of vaccines when needed most, thereby enhancing the nation's resilience against infectious disease threats.

Industry Classification

NAICS: Wholesale Trade › Professional and Commercial Equipment and Supplies Merchant Wholesalers › Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 2017N18099

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Glaxosmithkline PLC

Address: 5 MOORE DR, RESEARCH TRIANGLE PARK, NC, 27709

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

Financial Breakdown

Contract Ceiling: $1,085,922,457

Exercised Options: $1,085,922,457

Current Obligation: $682,167,045

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline