HHS awarded $152M for up to 14.5M doses of AVA to Emergent BioDefense, a sole-source contract

Contract Overview

Contract Amount: $152,485,192 ($152.5M)

Contractor: Emergent Biodefense Operations Lansing LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2008-09-30

End Date: 2001-09-30

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Healthcare

Official Description: PURCHASE OF UP TO 14.5 MILLION DOSES OF AVA FOR THE SNS

Place of Performance

Location: LANSING, INGHAM County, MICHIGAN, 48906, UNITED STATES OF AMERICA

State: Michigan Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $152.5 million to EMERGENT BIODEFENSE OPERATIONS LANSING LLC for work described as: PURCHASE OF UP TO 14.5 MILLION DOSES OF AVA FOR THE SNS Key points: 1. The contract's value is substantial, reflecting the strategic importance of maintaining a national stockpile of medical countermeasures. 2. Sole-source procurement bypasses competitive bidding, potentially leading to higher costs and reduced innovation. 3. The long duration of the contract (awarded 2008, expiring 2031) suggests a sustained need for the product. 4. The product, AVA (Anthrax Vaccine Adsorbed), is critical for national biodefense preparedness. 5. The contractor, Emergent BioDefense, is a key player in the biodefense market, indicating sector concentration. 6. The absence of competition raises questions about price reasonableness and value for money. 7. The contract's fixed-price nature shifts some risk to the government if costs exceed projections.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized product. Without competitive bids, it's difficult to assess if the $152 million awarded for up to 14.5 million doses represents a fair market price. The government accepted the contractor's proposed pricing, which may not reflect the lowest possible cost achievable through competition. The long-term commitment and the critical nature of the product likely influenced the pricing, but a lack of comparable sole-source contracts for similar quantities makes a precise value assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The justification for sole-sourcing is not provided in the data, but typically for biodefense countermeasures, it may be due to the unique capabilities of a single manufacturer or urgent national security needs. The lack of competition means that multiple potential suppliers were not evaluated, and the government did not benefit from price reductions that often result from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium for this product due to the absence of competition. Without a competitive process, there is less downward pressure on pricing, potentially leading to less efficient use of taxpayer funds.

Public Impact

The primary beneficiaries are the U.S. population, who are protected by the Strategic National Stockpile (SNS) against potential anthrax attacks. The service delivered is the manufacturing and supply of Anthrax Vaccine Adsorbed (AVA) to maintain national biodefense readiness. The geographic impact is national, as the vaccine is intended for use across the United States in the event of a public health emergency. The contract supports specialized jobs in the biopharmaceutical manufacturing sector, particularly within Emergent BioDefense's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement limits price discovery and may result in higher costs for taxpayers.
Lack of competition could stifle innovation and reduce the incentive for the contractor to improve efficiency.
The long contract duration raises concerns about potential price increases over time if not adequately managed.
Dependence on a single supplier for a critical biodefense asset poses a supply chain risk.

Positive Signals

Ensures a consistent supply of a critical medical countermeasure for national security.
The contractor is a specialized entity with proven experience in biodefense product manufacturing.
The fixed-price contract structure provides some cost certainty for the government.
The contract supports the maintenance of the Strategic National Stockpile, a vital public health asset.

Sector Analysis

The biopharmaceutical sector, particularly the segment focused on biodefense and public health emergencies, is characterized by high R&D costs, stringent regulatory requirements, and often, government-driven demand for specific countermeasures. Contracts like this are crucial for maintaining national security by ensuring the availability of essential medical supplies. The market size for such specialized products is difficult to quantify but is heavily influenced by government funding and threat assessments. This contract fits within the broader landscape of federal investments in biosecurity and pandemic preparedness.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb: false'. The primary contractor is Emergent BioDefense Operations Lansing LLC, a significant entity in the biopharmaceutical industry. There is no explicit information regarding subcontracting opportunities for small businesses within this specific award. The focus is on a large-scale, specialized manufacturing requirement, which typically involves established prime contractors rather than a strategy to foster small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS), specifically the Office of the Assistant Secretary for Preparedness and Response (ASPR). Given the nature of the product and its strategic importance, regular reviews of contract performance, supply chain integrity, and product quality are expected. Transparency regarding the justification for sole-sourcing and ongoing contract management would be key oversight elements. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

Strategic National Stockpile (SNS)
Biodefense Countermeasures
Public Health Emergency Preparedness
Anthrax Vaccine Program

Risk Flags

Sole-source procurement
Potential for higher costs due to lack of competition
Long-term contract duration
Dependence on a single supplier for critical asset

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $152.5 million to EMERGENT BIODEFENSE OPERATIONS LANSING LLC. PURCHASE OF UP TO 14.5 MILLION DOSES OF AVA FOR THE SNS

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 $152.5 million.

What is the period of performance?

Start: 2008-09-30. End: 2001-09-30.

What is the historical spending trend for Anthrax Vaccine Adsorbed (AVA) under this contract and similar contracts?

The provided data indicates a single award of $152,485,192 for up to 14.5 million doses of AVA, awarded in 2008 with an expiration date of 2031. This suggests a long-term commitment to procuring AVA. Without access to historical spending data for this specific contract or comparable sole-source contracts for AVA, it is difficult to establish a precise spending trend. However, the substantial award amount and extended period imply significant and consistent government investment in maintaining a national stockpile of this critical vaccine. The total spending will depend on the actual number of doses purchased up to the maximum quantity. Analysis of past government reports on the SNS and biodefense spending would be necessary to contextualize this investment against broader trends.

How does the per-unit cost of AVA under this contract compare to potential market rates if it were competitively procured?

Determining the exact per-unit cost is challenging as the contract specifies 'up to 14.5 million doses' for a total of $152,485,192, and the actual number of doses purchased is not specified. If we assume the maximum quantity is purchased, the cost per dose would be approximately $10.51 ($152,485,192 / 14,500,000). However, this is a ceiling price. Because this is a sole-source contract, there is no direct comparison to market rates derived from competitive bidding. Historically, sole-source contracts for specialized biodefense products often result in higher per-unit costs compared to what might be achieved in a competitive market. Factors such as high development costs, limited production capacity, and the critical nature of the product can justify higher prices, but the absence of competition prevents definitive benchmarking against market rates.

What are the key performance indicators (KPIs) and quality assurance measures for this AVA contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) or specific quality assurance (QA) measures for this contract. However, for a critical medical countermeasure like Anthrax Vaccine Adsorbed (AVA) intended for the Strategic National Stockpile (SNS), stringent KPIs and QA protocols are standard. These would typically include metrics related to on-time delivery of doses, adherence to manufacturing quality standards (e.g., Good Manufacturing Practices - GMP), vaccine potency and stability testing, and successful completion of regulatory requirements set by the FDA. The contract likely includes clauses for regular inspections of manufacturing facilities, batch testing, and reporting on production status. The government's ASPR would be responsible for monitoring adherence to these standards and ensuring the vaccine meets all safety and efficacy requirements before acceptance into the SNS.

What is Emergent BioDefense's track record with government contracts, particularly in biodefense?

Emergent BioDefense (now Emergent BioSolutions) has a significant track record with U.S. government contracts, particularly in the biodefense sector. They are a major supplier of medical countermeasures to the Strategic National Stockpile (SNS). The company has been involved in producing anthrax vaccines, smallpox treatments, and other biological agents. While they have a long history of supplying the government, they have also faced scrutiny and challenges. For instance, issues related to manufacturing quality control and production shortfalls have been reported in the past, leading to contract modifications or reviews. Their extensive experience positions them as a key, albeit sometimes controversial, partner for federal agencies like HHS and BARDA in maintaining national biosecurity.

What are the risks associated with relying on a single supplier for a critical biodefense asset like AVA?

Relying on a single supplier, such as Emergent BioDefense for AVA, presents several significant risks. Firstly, there is a supply chain vulnerability; any disruption at the manufacturer's facility (e.g., due to natural disasters, equipment failure, labor issues, or regulatory actions) could halt production and jeopardize the national stockpile. Secondly, the lack of competition inherent in a sole-source arrangement can lead to higher prices and reduced incentives for the supplier to innovate or improve efficiency, potentially resulting in less value for taxpayer money. Thirdly, dependence on one company can limit the government's leverage in negotiations or in enforcing stringent performance standards. Finally, if the sole supplier faces financial difficulties or decides to exit the market, the government would face immense challenges in finding and qualifying an alternative supplier, especially for a complex product like a vaccine.

How has the funding for biodefense countermeasures evolved, and where does this AVA contract fit in?

Funding for biodefense countermeasures has evolved significantly, particularly following events like 9/11 and subsequent public health crises. Agencies like the Biomedical Advanced Research and Development Authority (BARDA), within HHS, play a crucial role in funding the development and procurement of medical countermeasures. This AVA contract, awarded in 2008 and spanning through 2031, represents a substantial, long-term commitment to securing a critical asset for the Strategic National Stockpile (SNS). It reflects a strategic decision to ensure availability rather than relying solely on market forces, especially for threats like anthrax. The contract's scale and duration indicate a sustained focus on maintaining a robust biodefense capability, aligning with broader federal investments aimed at enhancing national security and public health preparedness against biological threats.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: RFPBARDA0826

Offers Received: 1

Pricing Type: 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

Financial Breakdown

Contract Ceiling: $404,685,512

Exercised Options: $152,485,192

Current Obligation: $152,485,192

Contract Characteristics

Multi-Year Contract: Yes

Timeline