HHS awarded $59.4M contract for biological product manufacturing to Novartis, with 5 bidders

Contract Overview

Contract Amount: $59,391,256 ($59.4M)

Contractor: Novartis Vaccines and Diagnostics, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2013-09-12

End Date: 2014-01-15

Contract Duration: 125 days

Daily Burn Rate: $475.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ASPR-13-10102

Place of Performance

Location: EMERYVILLE, ALAMEDA County, CALIFORNIA, 94608, UNITED STATES OF AMERICA

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $59.4 million to NOVARTIS VACCINES AND DIAGNOSTICS, INC. for work described as: ASPR-13-10102 Key points: 1. The contract value of $59.4 million appears reasonable given the scope of biological product manufacturing. 2. Full and open competition suggests a competitive bidding process, potentially leading to better pricing. 3. The short duration (125 days) may indicate a specific, time-sensitive need rather than long-term production. 4. The contract falls under the 'Biological Product (except Diagnostic) Manufacturing' category, indicating specialized services. 5. The award to a large, established company like Novartis suggests a focus on reliability and expertise. 6. The contract's geographic focus is California, aligning with the contractor's operational presence.

Value Assessment

Rating: good

The contract value of $59.4 million for biological product manufacturing is within a typical range for such specialized services. Benchmarking against similar contracts for vaccine or therapeutic production would provide a more precise value-for-money assessment. However, the fixed-price nature of the contract shifts risk to the contractor, which can be favorable for the government if costs are managed effectively. The relatively short performance period suggests a focused project rather than a broad, long-term manufacturing agreement.

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. With five bidders participating, the competition level suggests a healthy market for these specialized manufacturing services. A higher number of bidders generally leads to more competitive pricing and a wider range of technical solutions. The agency's decision to use full and open competition implies confidence in the market's ability to meet the requirement effectively.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it encourages multiple companies to vie for the contract, driving down costs and ensuring the government receives the best possible value for its investment.

Public Impact

The primary beneficiaries are likely the Department of Health and Human Services and potentially the public, through the ensured availability of biological products. The service delivered is the manufacturing of biological products, crucial for public health initiatives. The geographic impact is centered in California, where the manufacturing is expected to take place. Workforce implications include employment opportunities within the biological product manufacturing sector in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions if Novartis faces unforeseen manufacturing issues.
Reliance on a single contractor for a critical biological product could pose a risk if alternatives are not readily available.
The short contract duration might indicate a one-off need, potentially leading to re-competition and associated transition costs in the future.

Positive Signals

Award to a well-established company like Novartis suggests a high likelihood of successful delivery.
Full and open competition indicates a robust market and potential for competitive pricing.
The firm fixed-price contract structure incentivizes contractor efficiency and cost control.

Sector Analysis

The biological product manufacturing sector is a highly specialized and regulated industry. This contract fits within the broader pharmaceutical and biotechnology landscape, which is characterized by significant R&D investment, stringent quality control, and complex supply chains. The market size for biological product manufacturing is substantial, driven by demand for vaccines, therapeutics, and diagnostics. Comparable spending benchmarks would typically involve analyzing contracts for similar product types and manufacturing scales, often in the tens to hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of biological product manufacturing, it is common for such contracts to be awarded to large, established firms with the necessary infrastructure and expertise. There is no explicit indication of subcontracting requirements for small businesses within the provided data, though it is possible that Novartis may engage small businesses as part of its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services, specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified biological products. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Biologics and Vaccine Procurement
Medical Countermeasures Manufacturing
Public Health Emergency Preparedness
Pharmaceutical Manufacturing Contracts

Risk Flags

Short contract duration may indicate a specific, time-bound need.
Reliance on a single large contractor for specialized manufacturing.
Potential for supply chain vulnerabilities in biological product manufacturing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $59.4 million to NOVARTIS VACCINES AND DIAGNOSTICS, INC.. ASPR-13-10102

Who is the contractor on this award?

The obligated recipient is NOVARTIS VACCINES AND DIAGNOSTICS, 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 $59.4 million.

What is the period of performance?

Start: 2013-09-12. End: 2014-01-15.

What is Novartis's track record with government contracts, particularly for biological product manufacturing?

Novartis, through its various divisions including Novartis Vaccines and Diagnostics, has a history of engaging in government contracts. While specific details for this particular contract (ASPR-13-10102) are limited in the provided data, the company is a major global pharmaceutical and biotechnology firm with extensive experience in research, development, and manufacturing of vaccines and other biological products. Their track record generally indicates a capacity for large-scale production and adherence to regulatory standards. A deeper dive into their contract history with HHS and other agencies would reveal specific performance metrics, past issues, and successes in similar manufacturing endeavors. This would include examining any past performance evaluations or disputes related to government contracts.

How does the $59.4 million contract value compare to similar biological product manufacturing contracts awarded by HHS or other agencies?

The $59.4 million contract value for biological product manufacturing is a significant but not extraordinary amount for this sector. Contracts for vaccine production, therapeutic manufacturing, or specialized biologics can range widely, from tens of millions to hundreds of millions of dollars, depending on the product's complexity, scale of production, and duration. For instance, contracts related to pandemic preparedness or the development of novel treatments often involve substantial funding. To provide a precise benchmark, one would need to compare this contract against others for similar types of biological products (e.g., viral vaccines, monoclonal antibodies) awarded over a comparable timeframe and with similar production volumes. The relatively short performance period (125 days) suggests this value might represent a specific production run or phase rather than a multi-year manufacturing agreement.

What are the key risks associated with this specific contract, and how are they mitigated?

Key risks for this contract include potential manufacturing delays or quality control issues, given the complexity of biological product production. Supply chain disruptions for raw materials or specialized components could also impact delivery timelines. The reliance on a single contractor, even a large one like Novartis, presents a risk if unforeseen problems arise that cannot be quickly resolved. Mitigation strategies are likely embedded in the contract terms. The firm fixed-price structure incentivizes Novartis to manage costs and timelines effectively. Furthermore, government oversight, quality assurance protocols, and potential penalties for non-performance serve as risk mitigation measures. The short duration might also limit the exposure to long-term risks.

How effective is the firm fixed-price contract type in ensuring value for money for this biological product manufacturing requirement?

The firm fixed-price (FFP) contract type is generally considered effective for ensuring value for money when the scope of work is well-defined and the risks are manageable. For biological product manufacturing, where specifications can be precise, an FFP contract shifts the risk of cost overruns to the contractor (Novartis). This incentivizes the contractor to be efficient and control costs to maximize profit. For the government, it provides cost certainty, as the price is fixed regardless of the contractor's actual costs. This is advantageous for taxpayers, as it prevents unexpected cost increases. However, if unforeseen technical challenges arise that significantly increase the contractor's costs, the contractor may be less willing or able to absorb them, potentially impacting quality or delivery if not managed through contract clauses.

What is the historical spending pattern for biological product manufacturing by the Office of the Assistant Secretary for Preparedness and Response (ASPR)?

The Office of the Assistant Secretary for Preparedness and Response (ASPR) within HHS is responsible for leading the nation in preventing, preparing for, and responding to public health emergencies. A significant portion of their budget is allocated to procuring medical countermeasures, including vaccines and therapeutics, which often fall under biological product manufacturing. Historical spending patterns for ASPR in this area would likely show fluctuations tied to specific public health threats (e.g., influenza pandemics, emerging infectious diseases) and strategic stockpiling initiatives. Spending can be substantial during such events or for long-term preparedness contracts. Analyzing ASPR's contract awards over the past decade would reveal trends in investment in domestic manufacturing capabilities, specific product categories prioritized, and the types of contractors (large vs. small, domestic vs. foreign) they typically engage.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 11100SOL00020

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Novartis AG (UEI: 485609796)

Address: 350 MASSACHUSETTS AVE, CAMBRIDGE, MA, 02139

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: $59,391,256

Exercised Options: $59,391,256

Current Obligation: $59,391,256

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSO100201200014I

IDV Type: IDC

Timeline