HHS awards $102M to Merck for Biological Product Manufacturing to address COVID-19 pandemic

Contract Overview

Contract Amount: $102,299,549 ($102.3M)

Contractor: Merck Sharp & Dohme LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2021-03-01

End Date: 2022-02-28

Contract Duration: 364 days

Daily Burn Rate: $281.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ADDRESSING THE COVID-19 PANDEMIC: URGENT PRIORITIES

Place of Performance

Location: DURHAM, DURHAM County, NORTH CAROLINA, 27712

State: North Carolina Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $102.3 million to MERCK SHARP & DOHME LLC for work described as: ADDRESSING THE COVID-19 PANDEMIC: URGENT PRIORITIES Key points: 1. Significant award to a major pharmaceutical company for critical pandemic response. 2. Sole-source procurement raises questions about price discovery and competition. 3. Contract duration of one year with a firm-fixed-price structure. 4. Focus on biological product manufacturing highlights supply chain importance.

Value Assessment

Rating: fair

The $102.3 million award is for biological product manufacturing. Without comparable contracts or detailed cost breakdowns, assessing its value against similar procurements is difficult. The firm-fixed-price structure aims to control costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs compared to a competitive process. The urgency of the pandemic likely influenced this decision.

Taxpayer Impact: Taxpayer funds are used for a critical pandemic response. The lack of competition may result in a less optimal price for the government.

Public Impact

Ensures supply of essential biological products for pandemic response. Supports a key pharmaceutical manufacturer in meeting urgent national needs. Potential for increased costs due to sole-source nature of the award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement
Lack of transparency on cost justification

Positive Signals

Addresses urgent pandemic need
Supports critical manufacturing capability

Sector Analysis

The healthcare sector, particularly biological product manufacturing, is crucial for public health. Spending in this area surged during the pandemic. This award falls within the typical range for specialized manufacturing contracts.

Small Business Impact

This contract was awarded to Merck Sharp & Dohme LLC, a large pharmaceutical company. There is no indication of small business participation in this specific award.

Oversight & Accountability

The Office of Assistant Secretary for Preparedness and Response (ASPR) within HHS is responsible for this award. Oversight should focus on ensuring the delivered products meet specifications and that future procurements explore competitive options where feasible.

Related Government Programs

Biological Product (except Diagnostic) Manufacturing
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Sole-source award limits competition.
Potential for inflated pricing due to lack of competition.
Urgency may have bypassed standard vetting processes.
Lack of detailed cost breakdown hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $102.3 million to MERCK SHARP & DOHME LLC. ADDRESSING THE COVID-19 PANDEMIC: URGENT PRIORITIES

Who is the contractor on this award?

The obligated recipient is MERCK SHARP & DOHME LLC.

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 $102.3 million.

What is the period of performance?

Start: 2021-03-01. End: 2022-02-28.

What is the specific biological product being manufactured and its criticality to the COVID-19 response?

The data does not specify the exact biological product. However, given the context of addressing the COVID-19 pandemic, it is likely related to vaccines, therapeutics, or diagnostic components. Its criticality is implied by the urgent, sole-source nature of the award, suggesting it's essential for immediate public health needs.

What justification was provided for the sole-source award, and were alternatives considered?

The justification for the sole-source award is not detailed in the provided data. Typically, sole-source contracts are justified by factors such as urgency, unique capabilities of the vendor, or lack of viable alternatives. Further investigation into ASPR's procurement records would be needed to understand the specific rationale and alternatives assessed.

How will the effectiveness of this contract be measured to ensure taxpayer value?

Effectiveness will likely be measured by the timely delivery of the specified biological products meeting quality standards. Taxpayer value is harder to assess without a competitive benchmark, but monitoring delivery schedules, product quality, and any cost-saving measures implemented by Merck will be key indicators.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Biological Product (except Diagnostic) Manufacturing

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

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: Merck & CO., Inc.

Address: 2000 GALLOPING HILL RD, KENILWORTH, NJ, 07033

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: $102,299,549

Exercised Options: $102,299,549

Current Obligation: $102,299,549

Actual Outlays: $102,299,549

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline