DoD Awards $41.2M for Cepheid GeneXpert Systems and COVID-19 Assays Amidst Pandemic
Contract Overview
Contract Amount: $41,236,580 ($41.2M)
Contractor: Cepheid
Awarding Agency: Department of Defense
Start Date: 2020-04-05
End Date: 2021-06-30
Contract Duration: 451 days
Daily Burn Rate: $91.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: PURCHASE OF CEPHEID GENEXPERT SYSTEMS AND COVID-19 ASSAYS
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $41.2 million to CEPHEID for work described as: PURCHASE OF CEPHEID GENEXPERT SYSTEMS AND COVID-19 ASSAYS Key points: 1. Significant investment in critical diagnostic technology during a public health crisis. 2. Sole reliance on Cepheid raises questions about long-term supply chain resilience and potential price gouging. 3. The firm fixed-price contract structure provides cost certainty but may limit negotiation flexibility. 4. This purchase falls under the Analytical Laboratory Instrument Manufacturing sector.
Value Assessment
Rating: questionable
The contract value of $41.2M for GeneXpert systems and assays appears substantial. Without specific per-unit cost data or benchmarks for similar pandemic-related diagnostic procurements, it's difficult to definitively assess value for money. The lack of competition further complicates this assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award to Cepheid. This approach was likely driven by the urgent need for COVID-19 testing capabilities during the pandemic. However, the absence of competition limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding, especially given the critical nature of the purchase during the pandemic.
Public Impact
Ensured critical COVID-19 testing capacity for the Department of Defense. Potential for increased diagnostic capabilities across military healthcare facilities. Highlights reliance on single vendors for essential medical equipment during emergencies.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price negotiation.
- Lack of transparency on per-unit costs makes value assessment difficult.
- Potential for overpayment due to urgent, non-competitive procurement.
Positive Signals
- Rapid procurement to meet critical pandemic needs.
- Acquisition of essential diagnostic technology.
Sector Analysis
The purchase of analytical laboratory instruments, specifically diagnostic systems like GeneXpert, falls within the broader IT and Healthcare sectors, with a specific NAICS code for Analytical Laboratory Instrument Manufacturing. Spending in this area surged globally during the pandemic to meet testing demands.
Small Business Impact
The contract was awarded to Cepheid, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific procurement, which is common for specialized equipment manufacturers.
Oversight & Accountability
The sole-source nature of this award warrants scrutiny regarding the justification for not seeking competitive bids. Post-award oversight should focus on ensuring fair pricing and efficient utilization of the acquired systems.
Related Government Programs
- Analytical Laboratory Instrument Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award.
- Lack of competitive bidding.
- Potential for inflated pricing.
- Limited transparency on cost-effectiveness.
Tags
analytical-laboratory-instrument-manufac, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $41.2 million to CEPHEID. PURCHASE OF CEPHEID GENEXPERT SYSTEMS AND COVID-19 ASSAYS
Who is the contractor on this award?
The obligated recipient is CEPHEID.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $41.2 million.
What is the period of performance?
Start: 2020-04-05. End: 2021-06-30.
What was the specific justification for awarding this contract on a sole-source basis, given the urgency of the pandemic?
The justification for a sole-source award typically rests on factors such as urgency, unique capabilities, or the unavailability of alternatives. In the context of the COVID-19 pandemic, the rapid need for diagnostic testing likely led the Department of Defense to identify Cepheid's GeneXpert system as the most immediate and viable solution, potentially bypassing standard competitive procedures due to time constraints and the critical nature of the public health emergency.
How does the per-unit cost of these GeneXpert systems and assays compare to similar contracts awarded to other entities or through competitive processes?
Without access to detailed pricing breakdowns and comparative data from other contracts, it is challenging to benchmark the per-unit cost effectively. The absence of competition for this $41.2M award means there's no direct price comparison point. Future analysis should seek to obtain this data to assess if the government secured a fair price relative to market rates or other pandemic-related procurements.
What is the long-term strategic value of investing heavily in a single vendor's diagnostic platform for pandemic preparedness?
Investing heavily in a single vendor's platform can ensure immediate operational capability but poses long-term risks related to supply chain dependency, potential price increases, and vendor lock-in. While effective for immediate needs, a diversified approach to diagnostic technologies might offer greater resilience and cost-effectiveness for future public health crises, mitigating risks associated with reliance on one supplier.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Analytical Laboratory Instrument Manufacturing
Product/Service Code: INSTRUMENTS AND LABORATORY EQPT
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: Danaher Corporation (UEI: 024744476)
Address: 904 CARIBBEAN DR, SUNNYVALE, CA, 94089
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: $41,236,580
Exercised Options: $41,236,580
Current Obligation: $41,236,580
Actual Outlays: $164,220
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Timeline
Start Date: 2020-04-05
Current End Date: 2021-06-30
Potential End Date: 2021-06-30 00:00:00
Last Modified: 2020-09-11
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