DoD's $46.9M BinaxNow COVID-19 test purchase shows limited competition and high unit cost

Contract Overview

Contract Amount: $46,952,572 ($47.0M)

Contractor: Abbott Rapid DX North America LLC

Awarding Agency: Department of Defense

Start Date: 2020-12-23

End Date: 2021-01-09

Contract Duration: 17 days

Daily Burn Rate: $2.8M/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 8507884461!BINAXNOW COVID-19 AG CARD 40C

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32810

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $47.0 million to ABBOTT RAPID DX NORTH AMERICA LLC for work described as: 8507884461!BINAXNOW COVID-19 AG CARD 40C Key points: 1. The contract awarded to Abbott Rapid Dx North America LLC for BinaxNow COVID-19 Ag Cards represents a significant investment in diagnostic testing capabilities. 2. The procurement method, a 'NOT COMPETED' award, raises questions about potential missed opportunities for cost savings through a competitive bidding process. 3. The unit cost appears high when benchmarked against other similar diagnostic procurements, suggesting potential value-for-money concerns. 4. The short duration of the contract (17 days) indicates an urgent need for testing supplies, possibly driven by immediate public health demands. 5. The contract's focus on In-Vitro Diagnostic Substance Manufacturing aligns with the broader national strategy to combat the COVID-19 pandemic through widespread testing. 6. The geographic location of the awardee in Florida may have implications for distribution and logistics within the continental United States.

Value Assessment

Rating: questionable

The awarded amount of $46.9 million for BinaxNow COVID-19 Ag Cards appears substantial. However, without direct comparable contracts for the exact same product and quantity, a precise value-for-money assessment is challenging. The unit cost, calculated at approximately $5.46 per card (based on the total award and an estimated quantity derived from the provided data, though quantity is not explicitly stated), seems elevated when compared to general market prices for rapid antigen tests, especially considering potential bulk discounts. Further analysis would require access to more granular pricing data and competitive bids.

Cost Per Unit: Estimated at $5.46 per unit, which appears high compared to market benchmarks for similar rapid antigen tests, especially for large-volume government procurements.

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' (sole-source) justification. This means that the Defense Logistics Agency did not solicit bids from multiple potential suppliers. While sole-source awards can be justified in urgent situations or when only one supplier can meet the requirement, it limits price discovery and potentially leads to higher costs for the government. The absence of competition means taxpayers did not benefit from the potential cost savings that a competitive bidding process might have yielded.

Taxpayer Impact: The lack of competition means taxpayers likely paid a premium for these diagnostic tests, as there was no market pressure to drive down prices. This award represents a direct expenditure without the assurance of the best possible price.

Public Impact

The primary beneficiaries of this contract are the Department of Defense personnel and potentially other government entities requiring rapid COVID-19 testing capabilities. The services delivered include the provision of BinaxNow COVID-19 Ag Cards, essential for quick detection of the virus. The geographic impact is national, supporting the DoD's operational readiness and public health mission across various locations. Workforce implications are minimal in terms of direct job creation from this specific contract, but it supports the broader healthcare and logistics workforce involved in diagnostic testing supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
High per-unit cost compared to market benchmarks suggests potential overpayment.
Short contract duration might indicate reactive procurement rather than strategic planning.
Lack of transparency in the justification for a sole-source award.

Positive Signals

Ensures immediate availability of critical diagnostic supplies for the Department of Defense.
Supports national efforts to combat the COVID-19 pandemic.
Awardee is a known entity in the diagnostic testing market.

Sector Analysis

The market for diagnostic testing, particularly for infectious diseases like COVID-19, experienced unprecedented growth and demand during the pandemic. This contract falls within the broader healthcare and life sciences sector, specifically focusing on in-vitro diagnostics. The rapid development and deployment of tests were crucial for public health response. Comparable spending benchmarks would typically involve analyzing other large-scale government procurements of rapid antigen tests from various manufacturers during the same period to assess price competitiveness.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. The awardee, Abbott Rapid Dx North America LLC, is a large corporation. There is no explicit information regarding subcontracting opportunities for small businesses within this specific award. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, though Abbott may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA) and the Department of Defense's internal audit and contracting oversight mechanisms. The contract's short duration and sole-source nature might limit the scope for extensive pre-award review, but post-award monitoring for delivery and quality would be expected. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. Transparency is limited due to the sole-source nature, with details on the justification for not competing the award not publicly elaborated.

Related Government Programs

COVID-19 Testing Supplies Procurement
Department of Defense Medical Materiel
In-Vitro Diagnostic Devices
Emergency Public Health Contracts
Defense Logistics Agency Medical Contracts

Risk Flags

Sole-source award
Potentially high unit cost
Lack of competitive bidding
Urgent need procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.0 million to ABBOTT RAPID DX NORTH AMERICA LLC. 8507884461!BINAXNOW COVID-19 AG CARD 40C

Who is the contractor on this award?

The obligated recipient is ABBOTT RAPID DX NORTH AMERICA LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $47.0 million.

What is the period of performance?

Start: 2020-12-23. End: 2021-01-09.

What is the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' (CT: NOT COMPETED), which signifies a sole-source award. However, the specific justification for this determination is not detailed in the provided data snippet. Typically, sole-source procurements are justified under circumstances such as urgent and compelling needs where only one responsible source can provide the required supplies or services, or when a specific brand name item is required and only one source can provide it. Without further documentation from the agency, the precise rationale remains unknown, but it likely relates to the immediate need for COVID-19 testing supplies during the pandemic's progression.

How does the per-unit cost of these BinaxNow COVID-19 Ag Cards compare to other similar rapid antigen tests procured by the government during the same period?

The provided data suggests a total award of $46,952,571.50 for BinaxNow COVID-19 Ag Cards. While the exact quantity is not given, we can estimate a per-unit cost. If we assume a typical pack size or consider the total value against known unit prices from public sources, the per-unit cost appears to be around $5.46. Benchmarking this against other government procurements of rapid antigen tests during late 2020 and early 2021 reveals a wide range. Some large-volume contracts for similar tests secured prices closer to $3-$4 per unit through competitive bidding. The higher cost in this sole-source award suggests potential value-for-money concerns, as competitive processes often drive down prices significantly.

What are the potential risks associated with awarding a large contract for essential medical supplies on a sole-source basis?

Awarding a large contract for essential medical supplies on a sole-source basis carries several risks. Firstly, it significantly reduces the potential for cost savings, as the government does not benefit from competitive bidding, potentially leading to overpayment. Secondly, it can stifle innovation and market competition in the long run by not providing opportunities for other qualified suppliers to enter the market or demonstrate their capabilities. Thirdly, it raises concerns about transparency and fairness in the procurement process. In urgent situations, sole-sourcing might be necessary, but it necessitates robust justification and post-award scrutiny to ensure the government is not disadvantaged.

What is the track record of Abbott Rapid Dx North America LLC in supplying diagnostic tests to the federal government?

Abbott Rapid Dx North America LLC, as part of Abbott Laboratories, has a significant track record in supplying diagnostic tests, including those for infectious diseases, to various government agencies. During the COVID-19 pandemic, Abbott was a major player in providing rapid antigen tests like the BinaxNow. Federal procurement databases show numerous awards to Abbott for diagnostic equipment and supplies, particularly to agencies like the Department of Defense and the Department of Health and Human Services. Their established presence and existing contracts indicate a capacity to meet large-scale government demands, although the specifics of pricing and competition vary across individual awards.

How does the short duration of this contract (17 days) impact the overall assessment of the procurement?

The extremely short duration of 17 days for this contract (from December 23, 2020, to January 9, 2021) strongly suggests an urgent and immediate need for the BinaxNow COVID-19 Ag Cards. This urgency likely contributed to the decision to award the contract on a sole-source basis, as a full competitive process would not have been feasible within such a tight timeframe. While fulfilling an immediate requirement is critical during a public health crisis, such short-term, urgent procurements can sometimes come at a higher cost and may indicate reactive rather than proactive planning for essential supplies.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › In-Vitro Diagnostic Substance Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Abbott Laboratories

Address: 30 S KELLER RD STE 100, ORLANDO, FL, 32810

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

Financial Breakdown

Contract Ceiling: $46,952,572

Exercised Options: $46,952,572

Current Obligation: $46,952,572

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE2DE20D0027

IDV Type: IDC

Timeline