Department of Defense awards $1.6B contract for COVID-19 monoclonal antibody treatments

Contract Overview

Contract Amount: $1,597,461,996 ($1.6B)

Contractor: Glaxosmithkline, LLC

Awarding Agency: Department of Defense

Start Date: 2021-11-15

End Date: 2023-09-30

Contract Duration: 684 days

Daily Burn Rate: $2.3M/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: :COVID-19: SOTROVIMAB MONOCLONAL ANDTIBODIES

Place of Performance

Location: DURHAM, DURHAM County, NORTH CAROLINA, 27709

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $1.60 billion to GLAXOSMITHKLINE, LLC for work described as: :COVID-19: SOTROVIMAB MONOCLONAL ANDTIBODIES Key points: 1. Contract awarded for critical pharmaceutical supplies during a public health emergency. 2. Significant investment in a specific therapeutic agent for pandemic response. 3. Long-term contract duration suggests sustained need or strategic stockpiling. 4. Fixed-price contract type aims to control costs over the performance period. 5. Sole-source award raises questions about competition and potential cost efficiencies. 6. Geographic concentration of the contractor in North Carolina.

Value Assessment

Rating: fair

The contract value of $1.6 billion for pharmaceutical preparation manufacturing is substantial. Benchmarking this specific award is challenging without detailed cost breakdowns or comparisons to similar large-scale procurements of monoclonal antibodies during the pandemic. The firm-fixed-price structure provides cost certainty for the government, but the absence of broad competition may have limited price discovery. Further analysis of the unit price against market rates at the time of award would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was intended, specific circumstances led to the exclusion of certain potential bidders. This suggests a limited competitive landscape, potentially due to the specialized nature of the product or the urgency of the requirement. The exact number of bidders and the rationale for excluding others are not detailed, making it difficult to fully assess the impact on price discovery.

Taxpayer Impact: A limited competition may result in higher prices for taxpayers compared to a fully open and robust bidding process. The government may not have secured the most cost-effective solution available in the market.

Public Impact

Beneficiaries include patients requiring treatment for COVID-19. Services delivered are the provision of critical pharmaceutical supplies (monoclonal antibodies). Geographic impact is national, supporting the U.S. response to the pandemic. Workforce implications are primarily within the pharmaceutical manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to suboptimal pricing.
Contract duration may exceed actual need, leading to potential waste.
Reliance on a single supplier for a critical medical countermeasure poses supply chain risks.

Positive Signals

Ensures availability of a specific, potentially life-saving treatment.
Firm-fixed-price contract provides budget predictability.
Long-term award may indicate strategic importance for national health security.

Sector Analysis

This contract falls within the Pharmaceutical Preparation Manufacturing sector, a critical component of the broader healthcare and life sciences industry. The market for monoclonal antibodies is highly specialized, driven by scientific innovation and significant R&D investment. Spending in this area surged during the COVID-19 pandemic to secure necessary treatments and vaccines. Comparable spending benchmarks would involve other large government procurements of biologics and specialized pharmaceuticals for public health emergencies.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. Given the scale and specialized nature of pharmaceutical manufacturing, it is unlikely that small businesses would be primary awardees for such a large definitive contract. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in the award information.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is facilitated through contract databases like FPDS, though detailed cost justifications for limited competition may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

COVID-19 Therapeutics
Monoclonal Antibody Treatments
Department of Defense Medical Procurement
Pharmaceutical Manufacturing Contracts
National Stockpile Programs

Risk Flags

Limited competition
Potential for excess inventory
Reliance on single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.60 billion to GLAXOSMITHKLINE, LLC. :COVID-19: SOTROVIMAB MONOCLONAL ANDTIBODIES

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 $1.60 billion.

What is the period of performance?

Start: 2021-11-15. End: 2023-09-30.

What was the specific justification for excluding other sources in this 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award?

The justification for excluding other sources in a 'Full and Open Competition After Exclusion of Sources' award typically stems from specific technical requirements, urgent needs, or the unique capabilities of the selected contractor. For pharmaceutical procurements, this could involve proprietary manufacturing processes, specific clinical trial data demonstrating efficacy for a particular product, or the need to secure a supply chain for a treatment that has received emergency use authorization. Without the specific Justification for Other Than Full and Open Competition (JOFOC) document, it's impossible to definitively state the reasons. However, the urgency and specialized nature of developing and manufacturing effective COVID-19 treatments during the pandemic likely played a significant role in limiting the competitive pool.

How does the awarded price per unit compare to market rates for similar monoclonal antibody treatments during the contract period?

Determining the exact price per unit and comparing it to market rates is challenging with the provided data. The contract value is a total award amount, not a per-unit price. Furthermore, market rates for monoclonal antibodies fluctuated significantly during the COVID-19 pandemic due to high demand, manufacturing complexities, and evolving clinical guidance. To perform this comparison, one would need access to the contract's detailed pricing structure (e.g., price per vial or per treatment course) and benchmark it against publicly available pricing data from other government contracts, pharmaceutical distributors, or published analyses of drug pricing during the relevant period (2021-2023).

What are the potential risks associated with awarding a long-term contract (684 days) for a specific therapeutic agent like Sotrovimab?

Awarding a long-term contract for a specific therapeutic agent like Sotrovimab carries several potential risks. Firstly, medical science and public health needs can evolve rapidly; a treatment that is critical today might become less relevant or superseded by more effective alternatives due to viral mutations or new drug development. This could lead to the government holding excess inventory or paying for a product with diminished utility. Secondly, the long-term commitment might discourage the development or procurement of alternative treatments, potentially limiting future options. Lastly, if the contractor faces production issues or supply chain disruptions, the government's reliance on this single, long-term contract could exacerbate shortages.

What is the track record of GlaxoSmithKline, LLC in supplying pharmaceuticals to the U.S. government, particularly for pandemic response?

GlaxoSmithKline (GSK) is a major global pharmaceutical company with a long history of supplying various medications and vaccines to government agencies worldwide, including the U.S. government. Their track record in pandemic response includes significant contributions during the COVID-19 pandemic, involving the development and supply of vaccines and therapeutics. While this specific contract is for Sotrovimab, GSK has been involved in other government contracts related to infectious diseases and public health. Assessing their overall track record would involve reviewing their performance on past contracts, including delivery timeliness, quality compliance, and responsiveness to government needs, particularly during public health emergencies.

How does this $1.6 billion expenditure fit within the broader context of U.S. government spending on COVID-19 countermeasures?

This $1.6 billion contract represents a significant, but not isolated, investment within the vast U.S. government spending on COVID-19 countermeasures. The total federal expenditure on vaccines, therapeutics, testing, personal protective equipment, and research and development has reached hundreds of billions of dollars. This specific award for Sotrovimab falls under the therapeutics category, highlighting the government's strategy to procure a diverse portfolio of treatments to combat the virus. Its proportion relative to the total COVID-19 spending package indicates a focused investment in a particular class of drugs deemed essential during the pandemic's progression.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Glaxosmithkline PLC

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: $2,853,184,716

Exercised Options: $1,597,461,996

Current Obligation: $1,597,461,996

Actual Outlays: $344,700,711

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $10,000,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline