HHS Spends $336M on COVID-19 Ventilators from Datex-Ohmeda, Inc. in 91 Days

Contract Overview

Contract Amount: $336,000,000 ($336.0M)

Contractor: Datex-Ohmeda, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2020-04-13

End Date: 2020-07-13

Contract Duration: 91 days

Daily Burn Rate: $3.7M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: COVID -19 VENTILATORS

Place of Performance

Location: ATLANTA, DEKALB County, GEORGIA, 30341

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $336.0 million to DATEX-OHMEDA, INC. for work described as: COVID -19 VENTILATORS Key points: 1. Significant expenditure of $336 million for essential COVID-19 medical equipment. 2. Sole-source procurement raises questions about price discovery and competition. 3. Short contract duration (91 days) suggests urgent response to pandemic needs. 4. Focus on Surgical and Medical Instrument Manufacturing sector for critical supplies.

Value Assessment

Rating: questionable

The contract's value of $336 million for 91 days, with a reported benchmark of $3.69 million, indicates a potentially inflated price. Without competitive bidding, it's difficult to ascertain fair market value.

Cost Per Unit: $100,000 per unit (estimated)

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This method bypasses competitive price discovery, potentially leading to higher costs for taxpayers.

Taxpayer Impact: The lack of competition likely resulted in a higher price than if multiple vendors had bid, impacting taxpayer funds negatively.

Public Impact

Ensured critical supply of ventilators during a national health emergency. Rapid procurement highlights the urgency of the COVID-19 pandemic response. Potential for overpayment due to non-competitive award affects public funds.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potentially high price
Urgent need may have led to rushed decision-making

Positive Signals

Fulfilled critical need during pandemic
Rapid deployment of resources

Sector Analysis

The Surgical and Medical Instrument Manufacturing sector is crucial for healthcare infrastructure, especially during crises. Benchmarks for similar emergency procurements are scarce, making direct comparisons difficult.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was awarded to a single, likely large, supplier.

Oversight & Accountability

The non-competitive nature of this award warrants scrutiny regarding the justification for sole-source procurement and the process for price negotiation.

Related Government Programs

Surgical and Medical Instrument Manufacturing
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Sole-source award
Potential overpricing
Lack of transparency in price negotiation
Limited opportunity for small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $336.0 million to DATEX-OHMEDA, INC.. COVID -19 VENTILATORS

Who is the contractor on this award?

The obligated recipient is DATEX-OHMEDA, 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 $336.0 million.

What is the period of performance?

Start: 2020-04-13. End: 2020-07-13.

Was the sole-source justification thoroughly documented and validated?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'DEFINITIVE CONTRACT'. While the urgency of the COVID-19 pandemic is acknowledged, a detailed justification for bypassing competitive procedures would be necessary to validate the sole-source award. This would typically involve demonstrating that only one source could meet the requirement or that extreme urgency precluded competition.

What was the basis for the $3.69 million benchmark (br)?

The benchmark figure of $3,692,308 (br) appears significantly lower than the total contract value of $336,000,000. Clarification is needed on what this benchmark represents – perhaps a target price, a previous contract value, or an estimated cost for a smaller quantity. Without this context, it's hard to definitively assess value for money.

How effective was the rapid procurement in meeting the actual demand for ventilators?

The contract duration of 91 days and the substantial quantity suggest a rapid response to an immediate need. However, the effectiveness hinges on whether these ventilators were deployed efficiently to areas of greatest need and if they adequately addressed the ventilator shortage during the peak of the pandemic. Post-contract analysis of utilization would be key.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Surgical and Medical Instrument Manufacturing

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: General Electric Company (UEI: 001367960)

Address: 3030 OHMEDA DR, MADISON, WI, 53718

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: $336,000,000

Exercised Options: $336,000,000

Current Obligation: $336,000,000

Actual Outlays: $336,000,000

Contract Characteristics

Commercial Item: SUPPLIES OR SERVICES PURSUANT TO FAR 12.102(F)

Cost or Pricing Data: NO

Timeline