DoD awards $280M for COVID-19 therapeutic Sotrovimab, a sole-source pharmaceutical preparation

Contract Overview

Contract Amount: $279,862,800 ($279.9M)

Contractor: Glaxosmithkline, LLC

Awarding Agency: Department of Defense

Start Date: 2021-09-24

End Date: 2022-05-19

Contract Duration: 237 days

Daily Burn Rate: $1.2M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: :COVID-19: MONOCLONAL ANTIBODY (MAB) THERAPEUTIC SOTROVIMAB

Place of Performance

Location: DURHAM, DURHAM County, NORTH CAROLINA, 27709

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $279.9 million to GLAXOSMITHKLINE, LLC for work described as: :COVID-19: MONOCLONAL ANTIBODY (MAB) THERAPEUTIC SOTROVIMAB Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant investment in a specific therapeutic, highlighting pandemic response priorities. 3. Contract duration of 237 days suggests a focused, short-term need. 4. Firm-fixed-price contract type provides cost certainty for the government. 5. Geographic location of North Carolina noted for contractor operations. 6. No small business set-aside indicates a focus on large prime contractors.

Value Assessment

Rating: fair

The contract value of $279.9 million for Sotrovimab is substantial, reflecting the urgent need for COVID-19 therapeutics. Benchmarking against similar sole-source pharmaceutical procurements during the pandemic is challenging due to unique market conditions and rapid development cycles. However, the lack of competition inherently limits the government's ability to secure the best possible price. Without competitive bids, it's difficult to definitively assess if the price represents optimal value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. This approach is typically employed when only one responsible source can provide the required goods or services. While it ensures rapid acquisition, it bypasses the competitive process that usually drives down prices and fosters innovation. The absence of multiple bidders means the government did not benefit from price discovery through market forces.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure to achieve the lowest possible price. This can lead to higher overall costs compared to a fully competed contract, as the government relies on the contractor's proposed pricing without alternative offers to benchmark against.

Public Impact

Beneficiaries include patients requiring COVID-19 treatment, particularly those for whom Sotrovimab is indicated. Services delivered are the supply of a specific pharmaceutical therapeutic. Geographic impact is national, supporting the U.S. response to the pandemic. Workforce implications are primarily within the pharmaceutical manufacturing and distribution sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potential cost savings.
Lack of competition may reduce incentives for future cost efficiencies.
Reliance on a single supplier for a critical therapeutic poses supply chain risk.

Positive Signals

Firm-fixed-price contract provides budget certainty.
Procurement addresses a critical public health need during a pandemic.
Award ensures availability of a specific therapeutic option.

Sector Analysis

The pharmaceutical preparation manufacturing sector is characterized by high R&D costs, stringent regulatory requirements, and significant market concentration. This contract falls within the broader healthcare and life sciences sector, specifically focusing on biopharmaceutical manufacturing for therapeutic agents. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of pandemic-related drug procurements, which often involve direct negotiations and emergency authorizations rather than standard market dynamics.

Small Business Impact

This contract was not subject to small business set-aside provisions, as indicated by 'sb': false. The procurement likely involved a large pharmaceutical manufacturer capable of meeting the scale and specifications required for a national therapeutic supply. There is no direct indication of subcontracting opportunities for small businesses within the provided data, though the prime contractor may engage them in its broader operations.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Accountability is established through the firm-fixed-price contract terms, requiring delivery of the specified therapeutic. Transparency is limited due to the sole-source nature of the award, with details of the negotiation and pricing justification not publicly disclosed. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

COVID-19 Therapeutics Procurement
Department of Defense Pharmaceutical Contracts
Biopharmaceutical Manufacturing Contracts
Emergency Pandemic Response Spending

Risk Flags

Sole-source award
Lack of competition
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $279.9 million to GLAXOSMITHKLINE, LLC. :COVID-19: MONOCLONAL ANTIBODY (MAB) THERAPEUTIC SOTROVIMAB

Who is the contractor on this award?

The obligated recipient is GLAXOSMITHKLINE, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $279.9 million.

What is the period of performance?

Start: 2021-09-24. End: 2022-05-19.

What is the track record of GlaxoSmithKline, LLC with the Department of Defense for similar pharmaceutical procurements?

GlaxoSmithKline, LLC (GSK) is a major global pharmaceutical company with a history of supplying various medical products. While specific details on their track record with the DoD for COVID-19 therapeutics like Sotrovimab are not provided in this data snippet, GSK has engaged in numerous contracts with government agencies for pharmaceuticals and vaccines. Their experience in large-scale manufacturing and navigating regulatory pathways is extensive. However, the 'NOT COMPETED' status for this particular award suggests a specific, urgent need or a unique capability that may have bypassed standard competitive bidding processes, potentially indicating a less common or more specialized engagement for this specific product compared to routine procurements.

How does the $279.9 million award for Sotrovimab compare to other COVID-19 therapeutic procurements by the U.S. government?

The $279.9 million award for Sotrovimab is a significant sum, reflecting the high cost of developing and producing novel therapeutics, especially during a global health crisis. During the COVID-19 pandemic, the U.S. government made substantial investments in various therapeutics, including monoclonal antibodies and antivirals, through both competitive and sole-source contracts. For instance, procurements for other monoclonal antibody treatments and antiviral medications also reached hundreds of millions of dollars. However, direct comparisons are complex due to varying quantities, contract types, pricing structures, and the specific stage of the pandemic at the time of procurement. Sotrovimab's value should be assessed within the context of its efficacy, availability, and the specific market conditions at the time of its award.

What are the primary risks associated with a sole-source award for a critical medical supply like Sotrovimab?

The primary risks associated with a sole-source award for a critical medical supply like Sotrovimab include a lack of price competition, potentially leading to higher costs for the government and taxpayers. Without competing bids, there's less assurance that the negotiated price represents the best value achievable in the market. Furthermore, sole-source awards can reduce transparency in the procurement process. There's also a risk of over-reliance on a single supplier, which could create vulnerabilities in the supply chain if the contractor faces production issues or other disruptions. This lack of competition might also diminish the incentive for the contractor to offer cost efficiencies in the future.

What was the intended use and expected effectiveness of Sotrovimab in the context of the COVID-19 pandemic?

Sotrovimab is a monoclonal antibody therapeutic designed to neutralize the SARS-CoV-2 virus, thereby reducing the risk of hospitalization and death in individuals with mild to moderate COVID-19 who are at high risk for progression to severe disease. It works by binding to the spike protein of the virus, preventing it from entering human cells. During the pandemic, Sotrovimab was considered an important treatment option, particularly against certain variants. Its effectiveness was evaluated through clinical trials and real-world data, contributing to the arsenal of tools available to combat the virus. The DoD's procurement aimed to ensure availability of this specific therapeutic for eligible populations within the U.S. healthcare system or for military personnel.

How does the contract duration of 237 days (approximately 8 months) align with typical pharmaceutical supply contracts?

A contract duration of 237 days (approximately 8 months) for a pharmaceutical supply like Sotrovimab suggests a focused, potentially short-term need rather than a long-term, ongoing requirement. Pharmaceutical supply contracts can vary significantly in duration. Some may be for immediate delivery of a specific quantity, while others might cover longer periods with scheduled deliveries, research and development phases, or ongoing supply agreements. An 8-month duration could indicate a specific surge in demand, a limited production run, or a bridge to alternative treatments or future contract vehicles. It's shorter than many multi-year sustainment contracts but longer than a simple spot purchase, indicating a planned acquisition for a defined period.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Glaxosmithkline PLC (UEI: 238980408)

Address: 5 MOORE DR RESEARCH TRIANGLE PK, DURHAM, NC, 27709

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

Financial Breakdown

Contract Ceiling: $279,862,800

Exercised Options: $279,862,800

Current Obligation: $279,862,800

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $10,000,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline