HHS awarded AmerisourceBergen $52.3M for COVID-19 pharma distribution, a sole-source contract

Contract Overview

Contract Amount: $52,333,109 ($52.3M)

Contractor: Amerisourcebergen Drug Corp

Awarding Agency: Department of Health and Human Services

Start Date: 2020-10-30

End Date: 2022-04-29

Contract Duration: 546 days

Daily Burn Rate: $95.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: PHARMA DISTRIBUTION COVID-19

Place of Performance

Location: BUFORD, GWINNETT County, GEORGIA, 30518

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $52.3 million to AMERISOURCEBERGEN DRUG CORP for work described as: PHARMA DISTRIBUTION COVID-19 Key points: 1. Contract awarded without competition, raising questions about potential cost savings. 2. AmerisourceBergen, a major pharmaceutical distributor, is well-positioned in the sector. 3. The contract duration of 546 days suggests a significant, ongoing need. 4. Fixed-price contract type offers some cost certainty but may limit flexibility. 5. The geographic scope is limited to Georgia, indicating a localized distribution effort. 6. Performance was rated as highly successful, suggesting effective execution.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific focus on COVID-19 pharmaceutical distribution. Without competitive bids, it's difficult to ascertain if the $52.3 million represents optimal value for money. However, the contractor's performance rating of 'highly successful' suggests that the services delivered met expectations. The contract's fixed-price structure provides some predictability, but the lack of competition prevents a direct comparison to market rates for similar, competitively procured services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically used when only one responsible source is available or in cases of urgent and compelling need. The lack of competition means there were no other bidders to compare against, potentially limiting price discovery and the government's ability to negotiate the best possible price. The justification for sole-source procurement would need to be robust to ensure fair value.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there's a risk that the price was not as low as it could have been in a competitive environment.

Public Impact

The primary beneficiaries are patients and healthcare providers in Georgia who received essential pharmaceuticals. Services delivered include the refrigerated warehousing and storage of critical medications. The geographic impact is focused on the state of Georgia. Workforce implications include support for logistics and distribution personnel involved in the supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits transparency and potential cost savings.
Lack of competition may have resulted in a higher price than a competed contract.
Geographic limitation to Georgia might not reflect broader national needs.

Positive Signals

Contractor performance was rated as highly successful.
Fixed-price contract provides cost certainty for the government.
Contract addresses a critical need related to COVID-19 pharmaceutical distribution.

Sector Analysis

The pharmaceutical distribution sector is a critical component of the healthcare industry, involving complex logistics for storing and transporting medications. This contract falls within the broader healthcare logistics and supply chain management market. The value of this specific contract, while substantial at $52.3 million, represents a small fraction of the overall federal spending on healthcare and emergency preparedness. Comparable spending benchmarks are difficult to establish due to the unique circumstances of the COVID-19 pandemic and the sole-source nature of this award.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the nature of pharmaceutical distribution and the sole-source award to a large corporation like AmerisourceBergen, it is unlikely that small businesses were directly involved as prime contractors. Subcontracting opportunities for small businesses are not specified but would depend on AmerisourceBergen's internal practices and the specific needs of the distribution services.

Oversight & Accountability

Oversight for this contract would fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency is limited due to the sole-source nature. Accountability is primarily driven by the contractor's performance against the contract terms and the highly successful rating received. Inspector General jurisdiction would apply if any fraud or mismanagement were suspected.

Related Government Programs

COVID-19 Vaccine Distribution
Pharmaceutical Supply Chain Management
Emergency Preparedness Contracts
Strategic National Stockpile Logistics

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for inflated pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $52.3 million to AMERISOURCEBERGEN DRUG CORP. PHARMA DISTRIBUTION COVID-19

Who is the contractor on this award?

The obligated recipient is AMERISOURCEBERGEN DRUG CORP.

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 $52.3 million.

What is the period of performance?

Start: 2020-10-30. End: 2022-04-29.

What is AmerisourceBergen's track record with federal contracts, particularly in healthcare and logistics?

AmerisourceBergen Drug Corp has a significant history of federal contracting, primarily within the healthcare and pharmaceutical sectors. They are one of the largest pharmaceutical distributors in the United States and a key player in the supply chain for both commercial and government entities. Their federal contract history often involves large-scale distribution agreements, including those related to national health initiatives and emergency preparedness. While specific details on past performance ratings for all contracts are not publicly itemized in this format, their role as a major distributor suggests extensive experience. The 'highly successful' rating on this specific COVID-19 distribution contract indicates satisfactory performance in fulfilling critical supply chain needs during a national emergency.

How does the $52.3 million value compare to similar pharmaceutical distribution contracts awarded by the government?

Direct comparison of the $52.3 million value is difficult due to the sole-source nature of this contract and its specific focus on COVID-19 pharmaceutical distribution within Georgia. Competitively awarded contracts for large-scale pharmaceutical distribution can vary significantly based on volume, services required (e.g., cold chain, last-mile delivery), and contract duration. However, given AmerisourceBergen's market position and the critical nature of COVID-19 supplies, the awarded amount appears substantial but not necessarily outside the expected range for significant distribution efforts. Without competitive bids, it's impossible to definitively state if this represents optimal market value compared to what could have been achieved through a competitive process.

What are the primary risks associated with a sole-source award for critical supply chain services like pharmaceutical distribution?

The primary risks associated with a sole-source award for critical supply chain services include a lack of price competition, which can lead to higher costs for the government and taxpayers. It also reduces transparency in the procurement process and limits the government's ability to explore alternative solutions or vendors that might offer better value or innovation. Furthermore, reliance on a single source can create vulnerabilities if that contractor faces operational issues, financial instability, or fails to meet performance expectations, as there are no immediate backup options readily available through a competitive framework. Ensuring robust oversight and clear performance metrics becomes even more critical in sole-source situations.

How effective was this contract in ensuring the availability of COVID-19 related pharmaceuticals in Georgia?

The contract was rated as 'highly successful,' suggesting it was effective in ensuring the availability of COVID-19 related pharmaceuticals in Georgia. This rating implies that AmerisourceBergen met or exceeded the contract's performance requirements, which likely included timely delivery, proper storage (refrigerated warehousing), and maintaining the integrity of the pharmaceutical supply chain. Given the critical nature of these medications during the pandemic, a highly successful rating indicates that the contract contributed positively to the state's response efforts by ensuring necessary supplies reached their intended destinations.

What has been the historical federal spending on pharmaceutical distribution and logistics by HHS?

Federal spending on pharmaceutical distribution and logistics by the Department of Health and Human Services (HHS) has been substantial, particularly in recent years due to public health emergencies like the COVID-19 pandemic. HHS, through agencies like the Assistant Secretary for Preparedness and Response (ASPR) and the Centers for Disease Control and Prevention (CDC), manages complex supply chains for vaccines, therapeutics, and other critical medical supplies. While specific historical spending figures for pharmaceutical distribution alone are not readily available in a summarized format, overall federal spending on healthcare supply chain management and emergency preparedness runs into billions of dollars annually. Contracts like this one, focused on specific distribution needs, are part of a larger ecosystem of federal investments in ensuring medical supply chain resilience.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › Refrigerated Warehousing and Storage

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

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: Cencora, Inc.

Address: 1300 MORRIS DR STE 100, CHESTERBROOK, PA, 19087

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $74,933,109

Exercised Options: $52,333,109

Current Obligation: $52,333,109

Actual Outlays: $52,333,108

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline