DoD awards $37.8M for COVID tests and diagnostic systems, a sole-source contract for analytical instruments

Contract Overview

Contract Amount: $37,827,685 ($37.8M)

Contractor: Cepheid

Awarding Agency: Department of Defense

Start Date: 2022-01-22

End Date: 2022-01-22

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: COVID TESTS, DIAGNOSTIC SYSTEMS AND SERVICE AGREEMENTS.

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $37.8 million to CEPHEID for work described as: COVID TESTS, DIAGNOSTIC SYSTEMS AND SERVICE AGREEMENTS. Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition and value. 2. Focus on analytical laboratory instrument manufacturing suggests a specialized need, potentially limiting broader competition. 3. The contract's value of $37.8M warrants scrutiny for cost-effectiveness given the lack of competitive bidding. 4. Performance context is limited as this is a single delivery order, not a multi-year program. 5. Sector positioning within analytical laboratory instrument manufacturing indicates a niche but critical area for diagnostics. 6. Risk indicators include the sole-source nature and potential for price inflation without competitive pressure.

Value Assessment

Rating: questionable

The contract value of $37.8M for diagnostic systems and service agreements was awarded on a sole-source basis. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition suggests potential for overpayment. Further analysis would be needed to determine if the price reflects fair market value for the specific analytical laboratory instruments and services procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium for these diagnostic systems and services due to the absence of competitive pricing. The sole-source award means there was no opportunity to compare bids and ensure the most cost-effective solution was selected.

Public Impact

The Department of Defense benefits from the acquisition of critical COVID testing and diagnostic systems. Services delivered include the provision of analytical laboratory instruments, essential for diagnostic capabilities. The geographic impact is primarily within the Department of the Army's operational areas. Workforce implications are related to the personnel required to operate and maintain these diagnostic systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition raises concerns about the government receiving the best value.
Limited performance data available for this single delivery order makes assessing effectiveness challenging.

Positive Signals

Procurement addresses a critical need for COVID-related diagnostic capabilities.
Contract awarded to a specific manufacturer, potentially indicating specialized or proprietary technology.
Delivery order format suggests a focused and immediate requirement.

Sector Analysis

The contract falls within the Analytical Laboratory Instrument Manufacturing sector, a specialized area focused on producing equipment used for scientific analysis. This sector is crucial for public health, research, and defense applications, particularly in diagnostic testing. The market size for such instruments can vary significantly based on technological advancements and demand, such as during a pandemic. Benchmarking spending in this niche requires comparison with similar specialized instrument procurements by government agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the provided information. The sole-source nature of the award further suggests that the primary contractor was directly selected without a competitive process that might typically include small business participation goals.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. As a sole-source award, it may undergo specific review processes to justify the lack of competition. Transparency is limited by the non-competitive nature, and accountability rests with the contracting officers to ensure the procured goods and services meet requirements and are priced appropriately, though benchmarking is difficult.

Related Government Programs

COVID-19 Testing Supplies
Diagnostic Equipment Procurement
Department of Defense Medical Supplies
Analytical Instruments

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited performance data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.8 million to CEPHEID. COVID TESTS, DIAGNOSTIC SYSTEMS AND SERVICE AGREEMENTS.

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 $37.8 million.

What is the period of performance?

Start: 2022-01-22. End: 2022-01-22.

What is the track record of CEPHEID in supplying diagnostic systems to the federal government?

Information regarding CEPHEID's specific track record with the federal government is not detailed in the provided data snippet. However, as a sole-source awardee for this $37.8M contract, it implies a pre-existing relationship or a recognized capability to meet the Department of the Army's needs for COVID tests and diagnostic systems. Further investigation into federal procurement databases (like FPDS or SAM.gov) would be necessary to ascertain the full extent of their past federal contracts, performance history, and any reported issues or successes. Understanding their history with similar sole-source awards or competitive contracts would provide valuable context for assessing the current procurement's value and risk.

How does the $37.8M contract value compare to similar procurements for diagnostic systems?

Direct comparison of the $37.8M contract value is challenging without knowing the specific type and quantity of diagnostic systems and services procured. As this was a sole-source award, there are no competing bids to establish a market price. To benchmark, one would need to identify similar contracts for comparable analytical laboratory instruments and diagnostic services awarded competitively by agencies like the Department of Defense, Department of Health and Human Services, or Veterans Affairs. Analyzing the per-unit cost, if identifiable, against industry averages or other government contracts would be crucial. The lack of competitive data makes it difficult to definitively state if $37.8M represents a fair market price.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of $37.8M are significant. Firstly, the lack of competition means the government likely did not secure the lowest possible price, potentially leading to overpayment and inefficient use of taxpayer funds. Secondly, without multiple vendors vying for the contract, there's a reduced incentive for the sole provider to offer superior quality or innovative solutions. Thirdly, the government's negotiating power is diminished. Finally, there's a risk of vendor lock-in, where the government becomes dependent on a single supplier, making future procurements potentially more expensive or difficult if the vendor's pricing or terms change unfavorably.

What is the expected program effectiveness given this is a single delivery order?

Assessing the program effectiveness based solely on a single delivery order is inherently limited. A delivery order typically represents a specific, immediate need rather than a long-term program. The effectiveness will depend on whether the procured COVID tests and diagnostic systems meet the Department of the Army's operational requirements, are delivered on time, and function as intended. Without further details on performance metrics, usage, and outcomes, it's impossible to gauge the broader program's success. The sole-source nature also means effectiveness is tied to the capabilities of the single awarded vendor, CEPHEID.

What are the historical spending patterns for analytical laboratory instruments by the Department of Defense?

Historical spending patterns for analytical laboratory instruments by the Department of Defense are not detailed in the provided data. However, the DoD consistently procures a wide range of scientific and diagnostic equipment to support military health, research, and operational readiness. Spending in this category can fluctuate based on global health crises (like COVID-19), advancements in technology, and specific military requirements. Analyzing historical data from sources like the Federal Procurement Data System (FPDS) would reveal trends in spending volume, types of instruments purchased, and the prevalence of competitive versus sole-source awards within this category over time.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT COMPETED' and has a 'sole-source' (st: 'CA') designation. While the specific justification is not detailed, common reasons for sole-source awards include: urgency of need where only one vendor can meet the requirement in time, unique capabilities or proprietary technology possessed by only one source, or when a previous competitive process failed to yield adequate results. For analytical laboratory instruments, it might be due to specialized technology or a need for compatibility with existing DoD systems. A formal Justification for Other than Full and Open Competition (JOFOC) would typically be required and publicly available for such awards.

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

Solicitation ID: W911QY21R0004

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Danaher Corporation

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: $37,827,685

Exercised Options: $37,827,685

Current Obligation: $37,827,685

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W911QY21D0014

IDV Type: IDC

Timeline