DoD's $25.9M pharmaceutical contract with Meridian Medical Technologies awarded under full and open competition

Contract Overview

Contract Amount: $25,927,856 ($25.9M)

Contractor: Meridian Medical Technologies, LLC

Awarding Agency: Department of Defense

Start Date: 2007-06-07

End Date: 2019-08-29

Contract Duration: 4,466 days

Daily Burn Rate: $5.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Healthcare

Official Description: DEVELOPMENT AND DELIVERY OF FDA APPROVED

Place of Performance

Location: COLUMBIA, HOWARD County, MARYLAND, 21046

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $25.9 million to MERIDIAN MEDICAL TECHNOLOGIES, LLC for work described as: DEVELOPMENT AND DELIVERY OF FDA APPROVED Key points: 1. Contract awarded for development and delivery of FDA-approved pharmaceuticals. 2. Long contract duration of over 12 years suggests a sustained need for these pharmaceutical products. 3. The contract was awarded under a Cost Plus Incentive Fee (CPIF) pricing structure, which can incentivize cost control but also carries inherent risks if not managed carefully. 4. The relatively low number of offers (2) for a full and open competition may warrant further investigation into market dynamics or barriers to entry. 5. The contract's significant duration and value indicate a substantial commitment by the Department of Defense. 6. The specific pharmaceutical product is not detailed, limiting a precise value-for-money assessment without further context.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without knowing the specific pharmaceutical product and its market price. The CPIF structure means the final cost is variable and dependent on performance and cost control. Comparing it to similar contracts for FDA-approved pharmaceuticals would require detailed product specifications and market analysis. The total value of $25.9 million over more than 12 years averages to approximately $2.1 million per year, which could be reasonable or excessive depending on the product's criticality and market demand.

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 offers. However, only two offers were received. This limited number of bidders, despite the broad solicitation, could suggest a niche market, high barriers to entry for potential competitors, or perhaps that the solicitation was not widely disseminated or attractive to a broader range of firms. The limited competition may have impacted price discovery, potentially leading to a higher price than if more bidders had participated.

Taxpayer Impact: For taxpayers, limited competition, even from a full and open solicitation, can mean less downward pressure on pricing. While the contract was competed, the small number of bids suggests that the government may not have achieved the most competitive pricing possible.

Public Impact

The primary beneficiaries are likely military personnel and potentially other government entities requiring these specific FDA-approved pharmaceuticals. The contract ensures the continued availability of critical pharmaceutical supplies for defense operations. The geographic impact is primarily national, supporting the Department of Defense's supply chain, with potential distribution to various military installations. Workforce implications include jobs in pharmaceutical manufacturing, quality control, logistics, and administration at Meridian Medical Technologies and its suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (2) in a full and open competition raises questions about market competitiveness and potential price inflation.
Cost Plus Incentive Fee (CPIF) contract type introduces risk if cost overruns are not effectively managed and incentivized.
Long contract duration (over 12 years) increases exposure to potential market shifts, technological obsolescence, or changes in pharmaceutical needs.

Positive Signals

Awarded under full and open competition, adhering to principles of broad market access.
Contract ensures a critical supply of FDA-approved pharmaceuticals for defense needs.
The contractor, Meridian Medical Technologies, LLC, has a track record in pharmaceutical manufacturing, suggesting relevant expertise.

Sector Analysis

The pharmaceutical preparation manufacturing sector is highly regulated and characterized by significant research and development costs, stringent quality control, and complex supply chains. This contract falls within the broader healthcare and defense industrial base, where reliable access to specialized medical supplies is paramount. The market size for specific FDA-approved pharmaceuticals can vary widely, from niche products for rare conditions to widely used medications. Benchmarking this contract's value against industry standards would require detailed knowledge of the specific drug, its therapeutic class, and the competitive landscape for its production.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Meridian Medical Technologies, LLC, is likely a large business given the contract's value and duration. There is no explicit information on subcontracting plans for small businesses within this award. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contractors often utilize small businesses for various support services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense's contracting and program management offices. The CPIF structure necessitates close monitoring of costs and performance to ensure incentives are met and costs are controlled. Transparency is generally provided through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse. The long duration implies ongoing oversight and contract administration.

Related Government Programs

Department of Defense Pharmaceutical Procurement
Medical Materiel and Supplies
FDA Regulated Product Manufacturing
Cost-Plus Contracts
Long-Term Supply Agreements

Risk Flags

Limited Competition
Long Contract Duration
CPIF Pricing Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.9 million to MERIDIAN MEDICAL TECHNOLOGIES, LLC. DEVELOPMENT AND DELIVERY OF FDA APPROVED

Who is the contractor on this award?

The obligated recipient is MERIDIAN MEDICAL TECHNOLOGIES, 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 $25.9 million.

What is the period of performance?

Start: 2007-06-07. End: 2019-08-29.

What is the specific pharmaceutical product being developed and delivered under this contract, and what is its intended use within the Department of Defense?

The provided data does not specify the exact pharmaceutical product. The description 'DEVELOPMENT AND DELIVERY OF FDA APPROVED' is generic. The intended use within the Department of Defense could range from battlefield medical support, treatment of specific service-member health conditions, to general medical readiness. Without this information, a precise assessment of the contract's necessity, criticality, and value-for-money is significantly hampered. Further investigation would require accessing the contract details or related documentation that specifies the drug's name, its therapeutic class, and its strategic importance to military health services.

How does the pricing structure (Cost Plus Incentive Fee) compare to other similar pharmaceutical contracts awarded by the DoD or other agencies?

Cost Plus Incentive Fee (CPIF) contracts are common when the final costs are uncertain but can be reasonably estimated, and the government wants to incentivize contractor efficiency. In the pharmaceutical sector, CPIF can be used for development or manufacturing where R&D costs or production efficiencies are key variables. Compared to fixed-price contracts, CPIF offers more flexibility but requires robust oversight to manage costs. Other agencies and the DoD also use fixed-price (FP) and cost-plus-fixed-fee (CPFF) contracts. The choice of CPIF here suggests a focus on achieving specific performance targets or cost efficiencies, but it shifts some financial risk to the government. A direct comparison would involve analyzing the incentive targets, fee structures, and actual performance outcomes of similar CPIF contracts for comparable pharmaceutical products.

What are the key performance indicators (KPIs) and incentive targets associated with the Cost Plus Incentive Fee structure for this contract?

The provided data does not detail the specific Key Performance Indicators (KPIs) or incentive targets for this CPIF contract. Typically, for pharmaceutical development and delivery, KPIs could include adherence to production schedules, meeting quality control standards (e.g., purity, potency), successful FDA regulatory compliance milestones, delivery timelines, and cost control targets. The incentive fee would be adjusted based on the contractor's performance against these pre-defined metrics. Without access to the contract's Statement of Work (SOW) and the specific incentive clauses, it's impossible to quantify the potential fee adjustments or the precise nature of the performance goals.

Given the long duration (over 12 years), what measures are in place to mitigate risks related to pharmaceutical obsolescence or changes in medical needs?

Long-duration contracts, especially in rapidly evolving fields like pharmaceuticals, inherently carry risks of obsolescence or changing needs. Mitigation strategies typically include contract clauses that allow for modifications, reviews, or termination if technology advances render the product obsolete or if military medical requirements shift significantly. Periodic reviews of the contract's necessity and alignment with current DoD medical strategies are crucial. Furthermore, the CPIF structure might allow for adjustments if the contractor needs to adapt the product or process due to external factors, though this would depend heavily on the specific contract language. The government also retains the option to exercise or not exercise future option periods, providing some flexibility.

What is Meridian Medical Technologies, LLC's track record with government contracts, particularly in pharmaceutical manufacturing and FDA-approved product delivery?

Meridian Medical Technologies, LLC, has a history of government contracting, including work related to pharmaceutical preparation manufacturing. While the provided data confirms this specific contract award, a comprehensive assessment of their track record would involve reviewing their performance on other federal contracts, including past performance evaluations, any contract disputes, and their history of delivering FDA-approved products. Their ability to secure a long-term, high-value contract with the DoD suggests a level of established capability and reliability. However, a deeper dive into their contract history, including any awards or penalties, would provide a more complete picture of their performance reliability.

What is the market size and competitive landscape for the specific type of FDA-approved pharmaceutical this contract addresses?

The market size and competitive landscape are unknown because the specific pharmaceutical product is not identified. The market for FDA-approved pharmaceuticals is vast and diverse, ranging from blockbuster drugs with multiple manufacturers to highly specialized niche products. If this contract is for a common medication, the limited number of bidders (2) in a full and open competition would be highly unusual and suggest potential market consolidation, high barriers to entry (e.g., patents, complex manufacturing processes), or specific government requirements that limit the pool of qualified suppliers. If it's for a rare or highly specialized drug, a smaller number of bidders might be expected.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W9113M06R0022

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Meridian Medical Technologies LLC

Address: 6350 STEVENS FOREST ROAD, COLUMBIA, MD, 21046

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $41,936,533

Exercised Options: $27,153,458

Current Obligation: $25,927,856

Actual Outlays: $55,886

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline