HHS awarded $30.4M for face shields, a sole-source contract during the early COVID-19 pandemic

Contract Overview

Contract Amount: $30,405,904 ($30.4M)

Contractor: Surewerx USA Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2020-04-04

End Date: 2020-10-02

Contract Duration: 181 days

Daily Burn Rate: $168.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PROCURE FACE SHIELDS

Place of Performance

Location: ATLANTA, DEKALB County, GEORGIA, 30341

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $30.4 million to SUREWERX USA INC for work described as: PROCURE FACE SHIELDS Key points: 1. The contract's value of $30.4 million for face shields highlights significant early pandemic demand. 2. As a sole-source award, the lack of competition may have impacted price efficiency. 3. The short performance period of 181 days suggests an urgent need for immediate supply. 4. This procurement falls under the Healthcare sector, specifically for medical supplies. 5. The contract was awarded to SUREWERX USA INC, indicating a specific supplier relationship. 6. The use of a Firm Fixed Price contract type aims to control costs for the government.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the unique circumstances of the early COVID-19 pandemic, which saw unprecedented demand and supply chain disruptions. However, the $30.4 million award for face shields, without competitive bidding, raises questions about whether the government secured the best possible price. While the urgency of the situation likely necessitated rapid procurement, the absence of competition means there's no direct comparison to assess if the pricing was aligned with market rates or if alternative suppliers could have offered better terms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, SUREWERX USA INC, was solicited. This approach was likely taken due to the extreme urgency and the need for immediate acquisition of critical personal protective equipment (PPE) at the onset of the COVID-19 pandemic. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids had been considered.

Taxpayer Impact: Taxpayers may have paid a premium for these face shields due to the sole-source nature of the award. Without competitive pressure, the government did not benefit from potential cost savings that could have been achieved through a bidding process.

Public Impact

Frontline healthcare workers and medical facilities across the nation benefited from the supply of essential face shields. The contract directly addressed the critical need for personal protective equipment (PPE) during the initial surge of the COVID-19 pandemic. The geographic impact is national, as the procured supplies were intended for distribution to healthcare providers throughout the United States. This procurement supported the healthcare workforce by ensuring they had necessary safety equipment to perform their duties.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to inflated pricing.
Sole-source awards can indicate potential single points of failure in supply chains.
Urgency-driven procurement might bypass thorough vetting of all available options.

Positive Signals

Contract fulfilled an urgent and critical need for PPE during a national health crisis.
Firm Fixed Price contract type provided cost certainty for the government.
Awarded to a specific vendor, potentially leveraging an existing relationship or specialized capability.

Sector Analysis

This contract falls within the broader healthcare sector, specifically concerning the procurement of medical supplies and personal protective equipment (PPE). The market for PPE experienced extreme volatility and demand spikes during the COVID-19 pandemic. Government spending in this area surged dramatically to meet national needs. Comparable spending benchmarks are difficult to establish due to the unique market conditions and the emergency nature of this procurement, which prioritized rapid acquisition over competitive pricing.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The sole-source nature of the award to SUREWERX USA INC suggests that the focus was on securing a large quantity of face shields rapidly, rather than on distributing opportunities within the small business ecosystem.

Oversight & Accountability

The oversight for this contract would typically fall under the Department of Health and Human Services (HHS) and its relevant program offices, such as the Office of Assistant Secretary for Preparedness and Response (ASPR). Given the emergency context of the COVID-19 pandemic, oversight may have been expedited. Transparency regarding sole-source justifications and the contract's performance would be key areas for scrutiny by internal auditors, the HHS Office of Inspector General, and potentially congressional oversight committees.

Related Government Programs

COVID-19 Pandemic Response
Personal Protective Equipment Procurement
Medical Supplies
Emergency Acquisitions
Strategic National Stockpile

Risk Flags

Sole-source award bypasses competitive pricing.
Lack of competition may indicate potential for overpayment.
Urgency-driven procurement might limit thorough due diligence.
Market volatility during COVID-19 impacts value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $30.4 million to SUREWERX USA INC. PROCURE FACE SHIELDS

Who is the contractor on this award?

The obligated recipient is SUREWERX USA INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of Assistant Secretary for Preparedness and Response).

What is the total obligated amount?

The obligated amount is $30.4 million.

What is the period of performance?

Start: 2020-04-04. End: 2020-10-02.

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

The contract was awarded on a sole-source basis likely due to the extreme urgency and the critical need for personal protective equipment (PPE) at the outset of the COVID-19 pandemic. Public health emergencies often necessitate rapid procurement to address immediate threats, and in such situations, agencies may invoke emergency acquisition authorities that allow for non-competitive awards when full and open competition is not feasible or not in the best interest of the government. The specific justification would typically be documented by the agency, detailing why only one source could meet the immediate requirements for face shields.

How does the per-unit cost of these face shields compare to market rates during the pandemic?

Determining the exact per-unit cost and comparing it to market rates is challenging without more detailed pricing information and specific market data for the period of April-October 2020. The early months of the pandemic saw significant price gouging and extreme volatility in the PPE market due to unprecedented demand and supply chain disruptions. As this was a sole-source contract, there is no direct competitive benchmark. However, given the market conditions and the lack of competition, it is plausible that the per-unit cost was higher than pre-pandemic rates or what might have been achieved through a competitive process.

What risks were associated with awarding a large contract for essential supplies without competition?

The primary risk associated with awarding a large contract without competition is the potential for paying inflated prices, as the government does not benefit from the cost-saving pressures of a competitive bidding process. Other risks include the possibility of receiving substandard quality if the vendor's capabilities were not thoroughly vetted against alternatives, and a lack of supply chain resilience if the sole source encounters production or delivery issues. Furthermore, sole-source awards can set precedents that may be questioned if not adequately justified.

What was the overall effectiveness of this contract in addressing the need for face shields?

The effectiveness of this contract can be assessed by its ability to deliver the required quantity of face shields within the specified timeframe to meet an urgent need. Given that the contract was awarded in April 2020 and completed by October 2020, it likely contributed to the supply of critical PPE during a crucial period of the pandemic. However, the 'effectiveness' in terms of value for money is less clear due to the sole-source nature. The contract's success hinges on whether the delivered product met quality standards and arrived in time to protect healthcare workers, thereby fulfilling its primary objective.

How does this contract fit into the broader federal spending on pandemic preparedness and response?

This $30.4 million contract for face shields represents a component of the massive federal spending surge directed towards pandemic preparedness and response efforts, particularly in the early stages of COVID-19. Agencies like HHS, through entities such as ASPR, were tasked with rapidly acquiring vast quantities of medical supplies. This specific award highlights the immediate need for basic PPE, contrasting with potentially larger, more complex contracts for vaccines, therapeutics, or advanced medical equipment. It underscores the foundational spending required to equip frontline responders.

What is the track record of SUREWERX USA INC in government contracting, particularly for medical supplies?

Information regarding SUREWERX USA INC's specific track record in government contracting, especially for medical supplies prior to or during the pandemic, is not detailed in the provided data. A comprehensive analysis would require examining their contract history, past performance reviews, and any prior experience with federal agencies. For a sole-source award, especially during an emergency, the agency likely relied on existing knowledge, urgent need justifications, or potentially rapid vetting processes to ensure the contractor could meet the demand, even if their prior federal contracting experience was limited.

Industry Classification

NAICS: Health Care and Social Assistance › General Medical and Surgical Hospitals › General Medical and Surgical Hospitals

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: Surewerx USA Inc.

Address: 300 COPORATE DR, ELGIN, IL, 60123

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $30,405,904

Exercised Options: $30,405,904

Current Obligation: $30,405,904

Actual Outlays: $30,405,904

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline