HHS awards $456.6M for 18.75M vaccine doses to Emergent BioDefense, a sole-source contract

Contract Overview

Contract Amount: $456,642,037 ($456.6M)

Contractor: Emergent Biodefense Operations Lansing LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2007-09-25

End Date: 2016-12-31

Contract Duration: 3,385 days

Daily Burn Rate: $134.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: TAS::75 0140::TAS PURCHASE OF 18.75 MILLION DOSES OF A MEDICAL COUNTERMEASURE VACCINE

Place of Performance

Location: LANSING, INGHAM County, MICHIGAN, 48906

State: Michigan Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $456.6 million to EMERGENT BIODEFENSE OPERATIONS LANSING LLC for work described as: TAS::75 0140::TAS PURCHASE OF 18.75 MILLION DOSES OF A MEDICAL COUNTERMEASURE VACCINE Key points: 1. Significant investment in biodefense preparedness, acquiring a large quantity of a critical medical countermeasure. 2. Sole-source award to Emergent BioDefense raises questions about competition and potential price discovery. 3. Contract duration spans nearly a decade, indicating a long-term need or development cycle. 4. The large dollar value and single supplier raise concerns about market concentration and future sourcing options.

Value Assessment

Rating: questionable

The contract's total value is $456.6 million for 18.75 million doses. Without comparable contracts or detailed cost breakdowns, assessing the per-unit price against market benchmarks is difficult. The sole-source nature limits direct price comparison.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This approach can be justified for unique capabilities or urgent needs but often results in higher prices due to a lack of price discovery through market competition.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The long-term nature of the contract also means sustained, potentially inflated, spending.

Public Impact

Ensures availability of a critical medical countermeasure for national biodefense. Supports a specific U.S.-based manufacturer in the biopharmaceutical sector. Long-term commitment may impact budget allocation for other public health initiatives. Potential for future follow-on contracts or expansions based on evolving needs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Long contract duration.
High total contract value.
Lack of transparency in pricing.

Positive Signals

Secures critical medical countermeasure supply.
Supports domestic biodefense capabilities.

Sector Analysis

This contract falls within the Healthcare sector, specifically related to biopharmaceutical manufacturing and public health preparedness. Spending benchmarks for similar large-scale, sole-source procurements of specialized medical countermeasures can vary widely based on the product's complexity and market dynamics.

Small Business Impact

The contract was awarded to Emergent BioDefense Operations Lansing LLC, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award, suggesting limited direct benefit to the small business sector.

Oversight & Accountability

The long duration and sole-source nature of this contract warrant close oversight to ensure continued justification for the procurement method and to monitor performance and pricing effectively. Regular reviews by the agency are crucial.

Related Government Programs

Biological Product (except Diagnostic) Manufacturing
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Sole-source award limits competition and price discovery.
High contract value may indicate premium pricing.
Long contract duration increases long-term financial commitment.
Potential for vendor lock-in.
Lack of small business participation.
Dependence on a single supplier for a critical countermeasure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $456.6 million to EMERGENT BIODEFENSE OPERATIONS LANSING LLC. TAS::75 0140::TAS PURCHASE OF 18.75 MILLION DOSES OF A MEDICAL COUNTERMEASURE VACCINE

Who is the contractor on this award?

The obligated recipient is EMERGENT BIODEFENSE OPERATIONS LANSING LLC.

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 $456.6 million.

What is the period of performance?

Start: 2007-09-25. End: 2016-12-31.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award typically stems from a unique capability, proprietary technology, or an urgent need where only one source can fulfill the requirement. Agencies must document this justification thoroughly, often involving market research to confirm the lack of viable alternatives. Alternative competitive strategies might have been explored but deemed unsuitable due to specific program requirements or time constraints.

How does the per-unit cost compare to similar medical countermeasures, and what mechanisms are in place to ensure fair pricing over the contract's lifespan?

Without access to detailed cost data or comparable market prices for similar countermeasures, a direct per-unit cost comparison is challenging. Given the sole-source nature, price reasonableness is often assessed through techniques like cost analysis or comparison to historical pricing, if available. The contract's firm-fixed-price structure provides some cost certainty, but ongoing monitoring is essential.

What are the performance metrics and contingency plans if Emergent BioDefense fails to meet the contract's delivery or quality requirements?

Performance metrics are typically defined within the contract's statement of work, including delivery schedules, quality standards, and manufacturing protocols. Contingency plans would likely involve contractual remedies such as termination for default, liquidated damages, or the government's right to seek alternative sources if feasible. The agency's oversight would focus on monitoring adherence to these metrics.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: OPHEMCVB0702

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Emergent Biosolutions Inc. (UEI: 173570271)

Address: 3500 N MARTIN LUTHER KING JR BLVD # 1, LANSING, MI, 48906

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: $456,642,037

Exercised Options: $456,642,037

Current Obligation: $456,642,037

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Timeline