HHS awarded $72.7M for biological products, with GlaxoSmithKline as the primary contractor

Contract Overview

Contract Amount: $72,766,564 ($72.8M)

Contractor: Glaxosmithkline Holdings (americas) Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2006-05-01

End Date: 2015-04-30

Contract Duration: 3,286 days

Daily Burn Rate: $22.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: COST NO FEE

Sector: Healthcare

Official Description: DRUGS AND BIOLOGICALS

Place of Performance

Location: PHILADELPHIA, PHILADELPHIA County, PENNSYLVANIA, 19102

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $72.8 million to GLAXOSMITHKLINE HOLDINGS (AMERICAS) INC. for work described as: DRUGS AND BIOLOGICALS Key points: 1. The contract value of $72.7 million over its duration suggests a significant investment in biological product manufacturing. 2. The use of a definitive contract indicates a long-term relationship for a specific product or service. 3. The contract's duration of 3286 days (approximately 9 years) points to a stable, ongoing need. 4. The 'Biological Product (except Diagnostic) Manufacturing' classification highlights a specialized area within the pharmaceutical sector. 5. The absence of small business set-asides suggests the primary contractor is likely a large entity. 6. The contract's performance period spans a considerable timeframe, allowing for potential fluctuations in market conditions and pricing.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the biological products procured and their market prices. However, a $72.7 million award over nearly nine years for manufacturing specialized biological products could represent a reasonable investment if the products are critical and competitively priced. Further analysis would require comparing the per-unit cost of the procured biologicals against similar products from other manufacturers or against historical HHS spending on comparable items. The 'COST NO FEE' contract type suggests that the government reimburses the contractor for allowable costs, which can sometimes lead to higher overall spending if not carefully managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that all responsible sources were permitted to submit offers. This suggests a competitive process was intended to ensure fair pricing and access to the best available solutions. The number of offers received (8) is a moderate number, suggesting some level of interest but not an overwhelming response. The competitive nature of the award is a positive sign for price discovery and value for the government.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation, leading to better value for public funds.

Public Impact

The primary beneficiary is the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR), which likely utilizes the procured biological products for public health initiatives or emergency preparedness. The services delivered involve the manufacturing of biological products, crucial for medical countermeasures, disease prevention, or treatment. The geographic impact is primarily national, as HHS operates across the United States, though the specific use of the products may be targeted. Workforce implications include employment within GlaxoSmithKline's manufacturing facilities and potentially in related supply chain and research sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'COST NO FEE' contract type, while common for research and development or uncertain outcomes, can sometimes lead to less cost control compared to fixed-price contracts if not rigorously monitored.
The long duration of the contract (nearly 9 years) could potentially lead to price increases over time if escalation clauses are not carefully managed or if market conditions change significantly.
Without specific details on the biological products, it's difficult to assess if the pricing is competitive against alternative treatments or manufacturers.
The absence of small business participation (sb: false) means that opportunities for smaller, specialized firms in this sector may have been limited for this specific award.

Positive Signals

The award was made under 'FULL AND OPEN COMPETITION,' indicating a robust and fair bidding process designed to achieve best value.
The contractor, GlaxoSmithKline, is a major pharmaceutical company with significant experience in biological product manufacturing, suggesting a high likelihood of successful delivery.
The contract's long duration (3286 days) implies a stable and predictable supply of critical biological products for HHS.
The definitive contract type suggests a well-defined scope of work and a structured relationship between the government and the contractor.

Sector Analysis

The pharmaceutical and biotechnology sector is characterized by high R&D costs, stringent regulatory requirements, and significant market potential. This contract falls within the 'DRUGS AND BIOLOGICALS' category, a sub-sector focused on the manufacturing of complex biological products. The market for such products is often driven by public health needs, disease outbreaks, and advancements in medical science. Comparable spending benchmarks would involve analyzing other large-scale contracts for vaccine production, therapeutic biologics, or other critical medical supplies awarded by HHS or other federal agencies.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). This suggests that the procurement was likely aimed at large, established manufacturers capable of handling the scale and complexity of biological product manufacturing. While this specific contract may not directly benefit small businesses, the overall health of the pharmaceutical sector, which includes many small innovative firms, is important. Large prime contractors often engage small businesses as subcontractors, but without specific subcontracting plans detailed in the award, the direct impact on the small business ecosystem for this particular contract is unclear.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). As a definitive contract awarded through full and open competition, it is subject to standard federal procurement regulations and oversight. Accountability measures would include performance monitoring, delivery schedules, and quality control of the biological products. Transparency is generally maintained through contract databases like FPDS, although specific operational details might be sensitive. The Inspector General for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

HHS - Biomedical Advanced Research and Development Authority (BARDA) Contracts
Department of Defense - Pharmaceutical and Medical Supply Contracts
National Institutes of Health (NIH) Research Grants
Strategic National Stockpile Acquisitions

Risk Flags

Potential PSC/NAICS code mismatch
Cost-reimbursement nature requires diligent oversight
Long contract duration may expose to price escalation

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $72.8 million to GLAXOSMITHKLINE HOLDINGS (AMERICAS) INC.. DRUGS AND BIOLOGICALS

Who is the contractor on this award?

The obligated recipient is GLAXOSMITHKLINE HOLDINGS (AMERICAS) INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of Assistant Secretary for Preparedness and Response).

What is the total obligated amount?

The obligated amount is $72.8 million.

What is the period of performance?

Start: 2006-05-01. End: 2015-04-30.

What specific biological products were procured under this contract, and what is their intended use?

The provided data identifies the contract's North American Industry Classification System (NAICS) code as '325414 - Biological Product (except Diagnostic) Manufacturing' and the Product Service Code (PSC) as '99 -- Non-Nuclear Energy, Utilities, And Energy Conservation (Not Elsewhere Classified)' (though this PSC seems potentially misaligned with the NAICS code, suggesting a possible data anomaly or a very broad classification). The specific biological products are not detailed in the provided snippet. However, given the awarding agency (HHS, specifically ASPR), the products are likely related to public health preparedness, countermeasures against biological threats, or essential medical supplies. ASPR's mission includes preparing for and responding to public health emergencies, so these could include vaccines, therapeutics, or diagnostic components critical for such scenarios. Without more granular data, the exact nature and intended use remain speculative but are strongly linked to national health security.

How does the awarded amount of $72.7 million compare to typical spending on similar biological product manufacturing contracts?

Comparing the $72.7 million award to similar contracts requires access to a broader dataset of federal procurement for biological products. However, for a contract spanning approximately nine years (3286 days), this amount averages to roughly $8 million per year. This figure can be considered moderate to significant, depending on the criticality and volume of the specific biological products. Large-scale vaccine manufacturing contracts or those for novel therapeutics can easily reach hundreds of millions or even billions of dollars. Conversely, contracts for smaller batches of specialized biologics might be in the low millions. The 'COST NO FEE' structure also implies that the final cost could fluctuate based on actual expenses incurred by the contractor, making direct comparisons to fixed-price contracts less straightforward. Further analysis would involve identifying contracts with similar PSCs and NAICS codes awarded around the same period.

What is GlaxoSmithKline's track record with HHS and other federal agencies for similar procurements?

GlaxoSmithKline Holdings (Americas) Inc. is a major global pharmaceutical company with a well-established history of contracting with U.S. federal agencies, including HHS. Their track record typically involves the development, manufacturing, and supply of a wide range of vaccines, therapeutics, and other pharmaceutical products. For HHS, GSK has likely been a key partner in various public health initiatives, including pandemic preparedness and response efforts. Federal procurement databases would show numerous awards to GSK across different agencies like the Department of Defense (DoD), Veterans Affairs (VA), and others, for both R&D and product supply. While specific performance metrics for past contracts are not detailed here, GSK's status as a leading pharmaceutical manufacturer suggests a generally reliable, albeit large-scale, supplier. Any concerns or exceptional performance would typically be reflected in contract performance reports and agency evaluations, which are not publicly detailed in this summary.

What are the potential risks associated with a 'COST NO FEE' contract for biological product manufacturing?

The 'COST NO FEE' contract type, often used when the extent or nature of the work is uncertain or when the contractor is not expected to profit from the effort itself (e.g., cost-reimbursement research), presents specific risks. For the government, the primary risk is the potential for cost overruns. Since the contractor is reimbursed for allowable costs, there is less direct financial incentive to control expenses compared to a fixed-price contract. This necessitates robust government oversight to ensure that costs are reasonable, allocable, and allowable. Without stringent monitoring, the total expenditure could exceed initial estimates. Another risk is the potential for scope creep if the definition of 'allowable costs' is not tightly managed. For biological product manufacturing, where R&D and production can be complex and subject to unforeseen challenges, effective cost management and oversight are critical to ensure value for taxpayer money.

How does the duration of this contract (nearly 9 years) impact its overall value and risk profile?

The nearly nine-year duration of this contract (3286 days) indicates a long-term commitment by HHS for the supply of specific biological products. This extended period offers stability and predictability for both the government and the contractor, ensuring a consistent supply chain for potentially critical items. For the government, it can lock in pricing and availability, which is advantageous for long-term planning, especially in areas like public health preparedness. However, a long duration also increases the risk of price escalation if not adequately managed through contract clauses. Market conditions, raw material costs, and inflation can significantly impact the actual cost over such an extended period. Furthermore, technological advancements in biological product manufacturing could render the contracted products or processes less efficient or desirable over time. Therefore, the value is realized through sustained supply, but the risk lies in potential cost increases and technological obsolescence.

What is the significance of the PSC code (if accurately assigned) in understanding the nature of this contract?

The provided data lists the PSC as '99 -- Non-Nuclear Energy, Utilities, And Energy Conservation (Not Elsewhere Classified)'. This PSC code appears to be a significant mismatch with the NAICS code '325414 - Biological Product (except Diagnostic) Manufacturing' and the description 'Biological Product (except Diagnostic) Manufacturing'. PSC codes are used by the government to categorize the type of product or service being procured, while NAICS codes classify the industry of the business performing the contract. A PSC related to energy or utilities is highly unlikely for a contract focused on manufacturing biological products. This discrepancy suggests a potential data entry error in the source system (e.g., FPDS) or a very unusual classification choice. If the NAICS code and description are accurate, the PSC should likely fall under categories related to medical supplies, pharmaceuticals, or research and development equipment. The misaligned PSC hinders a precise understanding of the contract's specific deliverables without further clarification.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Biological Product (except Diagnostic) Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: DHHSORDCVB0504

Offers Received: 8

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Glaxosmithkline PLC

Address: ONE FRANKLIN PLAZA, PHILADELPHIA, PA, 19102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $72,766,564

Exercised Options: $72,766,564

Current Obligation: $72,766,564

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline