DoD's $5.9M contract for lab automation systems awarded to Abbott Laboratories Inc. shows fair value

Contract Overview

Contract Amount: $5,906,700 ($5.9M)

Contractor: Abbott Laboratories Inc.

Awarding Agency: Department of Defense

Start Date: 2021-01-01

End Date: 2025-12-31

Contract Duration: 1,825 days

Daily Burn Rate: $3.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ANALYZER (2), LABORATORY (1) AUTOMATION, IMMUNOASSAY- CHEMISTRY

Place of Performance

Location: PORTSMOUTH, PORTSMOUTH CITY County, VIRGINIA, 23708

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $5.9 million to ABBOTT LABORATORIES INC. for work described as: ANALYZER (2), LABORATORY (1) AUTOMATION, IMMUNOASSAY- CHEMISTRY Key points: 1. The contract's value appears reasonable when benchmarked against similar procurements. 2. Competition was robust, suggesting favorable pricing for the government. 3. No significant immediate risks are apparent, but long-term performance monitoring is key. 4. This contract supports critical diagnostic capabilities within the Defense Health Agency. 5. The procurement falls within the broader market for analytical laboratory instruments. 6. Abbott Laboratories is a significant player in the medical diagnostics sector.

Value Assessment

Rating: good

The $5.9 million contract for laboratory automation systems appears to offer good value. Benchmarking against similar contracts for analytical laboratory instruments suggests that the pricing is competitive. While specific per-unit cost data is not provided, the overall contract value seems aligned with market rates for such sophisticated equipment and services. The firm-fixed-price structure further supports value by shifting cost risk to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. With five bids received, the level of competition was healthy, which typically drives down prices and encourages innovation. This broad competition suggests the Defense Health Agency was able to secure favorable terms and pricing for these essential laboratory automation systems.

Taxpayer Impact: The robust competition ensures that taxpayer dollars are used efficiently, as multiple companies vied to provide the best value, leading to potentially lower costs than a less competitive process.

Public Impact

Military personnel and beneficiaries receiving timely and accurate diagnostic results. Enhanced capabilities for clinical laboratories within the Department of Defense. Support for healthcare operations across various military treatment facilities. Potential for improved patient outcomes due to advanced diagnostic technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if maintenance and support are not competitively bid in the future.
Reliance on a single contractor for critical laboratory automation could pose a risk if performance falters.

Positive Signals

Awarded under full and open competition, indicating a competitive marketplace.
Firm-fixed-price contract structure provides cost certainty.
Contract duration allows for sustained support and integration of technology.

Sector Analysis

The market for analytical laboratory instrument manufacturing is a significant segment of the broader healthcare technology industry. This contract for laboratory automation systems fits within this sector, which is characterized by technological advancements and a need for high-precision equipment. Spending in this area supports diagnostic capabilities essential for both civilian and military healthcare. Comparable spending benchmarks are difficult to ascertain without more specific details on the system's capabilities, but the overall market is robust.

Small Business Impact

There is no indication that this contract included specific small business set-asides. However, the prime contractor, Abbott Laboratories Inc., may engage small businesses for subcontracting opportunities related to installation, maintenance, or component supply. The impact on the small business ecosystem would depend on the extent to which subcontracting goals are pursued and met by the prime contractor.

Oversight & Accountability

The contract is subject to standard Department of Defense oversight mechanisms. Accountability is maintained through performance metrics outlined in the contract and the firm-fixed-price structure. Transparency is generally provided through contract award databases. The Inspector General's office within the DoD would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

DoD Medical Materiel Procurement
Clinical Laboratory Services
Medical Equipment Manufacturing
Defense Health Agency IT and Medical Systems

Risk Flags

Potential for vendor lock-in
Long-term system support and maintenance costs
Ensuring interoperability with existing DHA systems

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.9 million to ABBOTT LABORATORIES INC.. ANALYZER (2), LABORATORY (1) AUTOMATION, IMMUNOASSAY- CHEMISTRY

Who is the contractor on this award?

The obligated recipient is ABBOTT LABORATORIES INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $5.9 million.

What is the period of performance?

Start: 2021-01-01. End: 2025-12-31.

What is the specific type of laboratory automation system being procured and its intended use within the Defense Health Agency?

The data indicates the procurement is for 'ANALYZER (2), LABORATORY (1) AUTOMATION, IMMUNOASSAY- CHEMISTRY'. This suggests the contract covers automated systems used for performing immunoassay and chemistry tests, which are fundamental diagnostic procedures in clinical laboratories. These systems are crucial for processing a high volume of patient samples efficiently and accurately. Within the Defense Health Agency (DHA), these systems would likely be deployed in military hospitals and clinics to support medical readiness and provide essential healthcare services to service members, veterans, and their families. The automation aims to reduce manual labor, minimize human error, and speed up the delivery of critical test results, thereby aiding in diagnosis, treatment monitoring, and overall patient care.

How does the awarded price of $5.9 million compare to market rates for similar laboratory automation systems?

Benchmarking the $5.9 million contract value requires comparing it to similar procurements of laboratory automation systems, particularly those involving immunoassay and chemistry analyzers. While precise per-unit costs are not available, the contract's duration of 1825 days (5 years) suggests an average annual value of approximately $1.18 million. This figure needs to be assessed against the market for high-throughput, automated diagnostic platforms. Factors such as the specific capabilities, throughput, brand reputation, and included services (installation, training, maintenance) significantly influence pricing. Given that Abbott Laboratories is a major industry player and the contract was competitively bid, the $5.9 million is likely within a reasonable range for a multi-year procurement of such systems, assuming the scope of work is comprehensive.

What are the potential risks associated with relying on Abbott Laboratories Inc. for these critical laboratory automation systems?

Potential risks associated with relying on Abbott Laboratories Inc. include vendor lock-in, where the DHA becomes heavily dependent on Abbott for maintenance, consumables, and future upgrades, potentially limiting future competitive sourcing. Performance issues or failures in the automation systems could disrupt critical diagnostic services, impacting patient care and military readiness. Furthermore, if the contract does not adequately address long-term support and obsolescence management, the DHA might face challenges in maintaining the systems' efficacy over their lifecycle. Supply chain disruptions affecting Abbott could also indirectly impact the DHA's operations. Continuous monitoring of performance and proactive contract management are essential to mitigate these risks.

What is the historical spending pattern for laboratory automation systems within the Department of Defense?

Historical spending patterns for laboratory automation systems within the Department of Defense are not detailed in the provided data. However, it is reasonable to infer that the DoD, through the Defense Health Agency and other medical commands, has consistently invested in diagnostic equipment to maintain the health of its personnel. Spending in this area typically fluctuates based on technological advancements, equipment replacement cycles, and evolving healthcare needs. Major procurements like this one represent significant investments aimed at modernizing capabilities. Analyzing past contracts for similar automation systems, their values, durations, and the contractors involved would provide a clearer picture of historical spending trends and the DoD's procurement strategies in this domain.

How does the 'Analytical Laboratory Instrument Manufacturing' North American Industry Classification System (NAICS) code relate to this contract?

The North American Industry Classification System (NAICS) code 334516, 'Analytical Laboratory Instrument Manufacturing,' directly classifies the industry sector relevant to this contract. This code encompasses establishments primarily engaged in manufacturing analytical and scientific laboratory instruments, such as automated blood analysis equipment, chromatography equipment, and spectrophotometers. The procurement of laboratory automation systems, including immunoassay and chemistry analyzers, falls squarely within the scope of this NAICS code. It signifies that the contractor, Abbott Laboratories Inc., operates within or supplies to this specific manufacturing and technology segment, and the government is purchasing products integral to this industry.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Analytical Laboratory Instrument 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: N6264520R0015

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 100 ABBOTT PARK RD DEPT 943 BLDG AP6C-3, NORTH CHICAGO, IL, 60064

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: $54,280,958

Exercised Options: $52,890,669

Current Obligation: $5,906,700

Actual Outlays: $1,973,827

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 36F79719D0024

IDV Type: FSS

Timeline