Seqirus Inc. contract for biological products manufacturing valued at $600.9M, awarded by HHS

Contract Overview

Contract Amount: $60,095,491 ($60.1M)

Contractor: Seqirus Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2006-04-01

End Date: 2017-04-25

Contract Duration: 4,042 days

Daily Burn Rate: $14.9K/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: EMERYVILLE, ALAMEDA County, CALIFORNIA, 94608

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $60.1 million to SEQIRUS INC for work described as: DRUGS AND BIOLOGICALS Key points: 1. The contract's value of $600.9M over its duration suggests significant investment in biological product manufacturing. 2. Competition dynamics for this contract are not immediately clear from the provided data, requiring further investigation. 3. The contract's long duration (4042 days) may indicate a need for sustained supply or development. 4. Performance context is limited, but the award type and agency suggest a critical need for the biological products. 5. This contract falls within the broader 'Healthcare' sector, specifically focusing on pharmaceutical manufacturing. 6. The 'COST NO FEE' pricing structure warrants scrutiny to ensure fair value and cost control.

Value Assessment

Rating: fair

Benchmarking the value of this $600.9M contract is challenging without specific details on the biological products and their market prices. The 'COST NO FEE' pricing structure, while potentially beneficial for the government in controlling costs, can also obscure true profitability for the contractor and may not incentivize efficiency if not properly managed. Comparing this to similar contracts for large-scale biological product manufacturing would provide better context for value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that multiple bidders were likely considered. The presence of 8 bidders (no) suggests a reasonably competitive environment for this type of specialized manufacturing. However, the specific details of the bidding process and the number of proposals received are crucial to fully assess the effectiveness of the competition in driving down costs and ensuring the best value.

Taxpayer Impact: A full and open competition with multiple bidders generally benefits taxpayers by fostering price discovery and encouraging contractors to offer competitive terms.

Public Impact

The primary beneficiaries are likely government agencies requiring biological products for public health initiatives or strategic reserves. The services delivered involve the manufacturing of biological products, crucial for disease prevention, treatment, or research. The geographic impact is primarily linked to the contractor's facilities in California (sn), but the distribution of products could be national. Workforce implications include job creation and skill development within the specialized field of biological product manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'COST NO FEE' pricing structure requires careful monitoring to ensure contractor efficiency and prevent cost overruns.
The long contract duration could lead to potential obsolescence of technology or changes in market needs.
Limited performance context makes it difficult to assess the contractor's historical success with similar large-scale manufacturing.

Positive Signals

Awarded under full and open competition, suggesting a robust selection process.
The contract involves the manufacturing of critical biological products, indicating a strategic importance.
The large number of bidders (8) points to a healthy market interest and potential for competitive pricing.

Sector Analysis

This contract operates within the pharmaceutical and biotechnology sector, a critical area for national health security and public well-being. The market for biological products is substantial, driven by advancements in medical science and the need for vaccines, therapeutics, and diagnostics. This contract likely fits into a broader government strategy for ensuring the availability of essential biological materials, potentially for emergency preparedness or ongoing public health programs. Comparable spending benchmarks would involve analyzing other large-scale manufacturing contracts for similar biological agents or pharmaceuticals.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). Given the scale and specialized nature of biological product manufacturing, it is common for such contracts to be awarded to larger, established firms. There is no explicit information on subcontracting plans, but large prime contractors are often required to engage small businesses in their supply chains, which could provide opportunities for smaller entities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). Accountability measures would be embedded in the contract terms, including delivery schedules, quality control, and reporting requirements. Transparency is generally facilitated through contract databases, but detailed operational oversight information may be limited to government contracting officers and inspectors general.

Related Government Programs

Biologics and Pharmaceuticals Manufacturing
Public Health Preparedness
Strategic National Stockpile
Medical Countermeasures

Risk Flags

Long contract duration may increase risk of obsolescence or market shifts.
'COST NO FEE' pricing requires stringent cost oversight to ensure value.
Limited public information on specific biological products manufactured.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $60.1 million to SEQIRUS INC. DRUGS AND BIOLOGICALS

Who is the contractor on this award?

The obligated recipient is SEQIRUS 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 $60.1 million.

What is the period of performance?

Start: 2006-04-01. End: 2017-04-25.

What is the specific type of biological product being manufactured under this contract?

The provided data indicates the contract is for 'Biological Product (except Diagnostic) Manufacturing' (nd). However, the specific type of biological product is not detailed. This could range from vaccines, therapeutic proteins, antibodies, or other complex biological agents. Understanding the exact nature of the product is crucial for assessing its market value, the technical expertise required, and its strategic importance to public health or national security. Further investigation into contract details or related procurements would be necessary to identify the specific product.

How does the $600.9M contract value compare to historical spending on similar biological product manufacturing by HHS?

Without specific historical spending data for comparable biological product manufacturing contracts by HHS, a direct comparison is difficult. However, a $600.9M contract value over a significant duration suggests a substantial investment. To provide context, an analysis would require identifying previous contracts for similar product categories (e.g., influenza vaccines, pandemic response therapeutics) awarded by HHS or other relevant agencies. Benchmarking against the average cost per unit or total contract value for similar procurements would reveal whether this contract represents a typical, high, or low investment for the specified manufacturing scope.

What are the key performance indicators (KPIs) and quality control measures associated with this contract?

The provided data does not specify the key performance indicators (KPIs) or quality control measures for this contract. Typically, for biological product manufacturing, KPIs would include adherence to production schedules, yield rates, purity and potency of the final product, and compliance with Good Manufacturing Practices (GMP). Quality control would involve rigorous testing at various stages of production, validation of manufacturing processes, and strict adherence to regulatory standards set by agencies like the FDA. The 'COST NO FEE' (pt) pricing structure might influence the emphasis on specific KPIs related to efficiency and cost management, but detailed contractual clauses would outline these requirements.

What is the track record of Seqirus Inc. in fulfilling large-scale biological product manufacturing contracts?

Seqirus Inc. is a known entity in the influenza vaccine market, having acquired Novartis's vaccine business. Their track record in fulfilling large-scale biological product manufacturing contracts would need to be assessed based on their history with government contracts, production capacity, supply chain reliability, and quality compliance. While the contract award itself suggests they met initial vetting criteria, a deeper dive into their past performance ratings, any past contract disputes or successes, and their capacity to scale production for diverse biological products would provide a more comprehensive view of their capabilities and reliability for this specific $600.9M award.

What are the potential risks associated with the long duration (4042 days) of this contract?

The long duration of 4042 days (approximately 11 years) for this biological product manufacturing contract presents several potential risks. Firstly, there's a risk of technological obsolescence; advancements in manufacturing processes or the biological products themselves could render the current contract terms or specifications outdated. Secondly, market dynamics can shift significantly over such a period, potentially impacting the demand or perceived value of the contracted products. Thirdly, long-term contracts can sometimes lead to complacency or reduced urgency in cost management and efficiency improvements by the contractor. Finally, geopolitical or regulatory changes could affect the supply chain or the viability of producing certain biological agents over an extended timeframe.

How does the 'COST NO FEE' pricing structure impact the government's ability to ensure value for money?

The 'COST NO FEE' (pt) pricing structure means the contractor is reimbursed for allowable costs but does not receive a fee or profit margin. While this might seem advantageous for the government by eliminating profit, it can complicate value assessment. The government must have robust mechanisms to audit and control the contractor's allowable costs, ensuring they are reasonable and necessary. Without a profit motive, the contractor might have less incentive for cost efficiency unless explicitly built into the contract's performance metrics. The government bears the risk of cost overruns if cost controls are not stringent, and it can be challenging to benchmark 'fair value' when profit is removed from the equation.

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

Address: 475 GREEN OAKS PKWY, HOLLY SPRINGS, NC, 27540

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $220,507,491

Exercised Options: $220,507,491

Current Obligation: $60,095,491

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline