HHS awards $135.6M contract to Velico Medical for point-of-care plasma product development

Contract Overview

Contract Amount: $135,607,236 ($135.6M)

Contractor: Velico Medical, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2021-08-02

End Date: 2029-11-30

Contract Duration: 3,042 days

Daily Burn Rate: $44.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Official Description: THE OVERALL OBJECTIVE OF THIS CONTRACT IS TO ADVANCE THE DEVELOPMENT OF THE FRONTLINEODP(TM) SYSTEM FOR PRODUCING A POINT OF CARE PLASMA PRODUCT FOR TRANSFUSION. THE SCOPE IS DEFINED IN THE SOW BELOW.

Place of Performance

Location: BEVERLY, ESSEX County, MASSACHUSETTS, 01915

State: Massachusetts Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $135.6 million to VELICO MEDICAL, INC. for work described as: THE OVERALL OBJECTIVE OF THIS CONTRACT IS TO ADVANCE THE DEVELOPMENT OF THE FRONTLINEODP(TM) SYSTEM FOR PRODUCING A POINT OF CARE PLASMA PRODUCT FOR TRANSFUSION. THE SCOPE IS DEFINED IN THE SOW BELOW. Key points: 1. Contract aims to advance development of a critical point-of-care plasma product for transfusion. 2. Velico Medical, Inc. secured this definitive contract valued at over $135 million. 3. The contract spans nearly 8.5 years, indicating a long-term commitment to product development. 4. Awarded under full and open competition, suggesting a robust bidding process. 5. The contract type is Cost Plus Fixed Fee, which can incentivize cost control while allowing for flexibility. 6. The product's intended use for transfusion highlights its potential public health significance.

Value Assessment

Rating: good

The contract's value of $135.6 million over approximately 8.5 years suggests a significant investment in developing a novel medical product. Benchmarking this against similar R&D contracts for advanced medical devices or biologics is challenging without more specific details on the technology's maturity and development phase. However, the Cost Plus Fixed Fee structure implies that costs will be reimbursed, plus a fixed fee, which can be a reasonable approach for research and development where final costs are uncertain. The pricing will ultimately depend on the actual costs incurred and the negotiated fixed fee.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. This process typically fosters a competitive environment, potentially leading to better pricing and innovative solutions. The number of bidders is not specified, but the open competition suggests that multiple companies likely vied for this significant award, which is a positive sign for price discovery and value for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by promoting a more competitive bidding environment, which can drive down costs and encourage the selection of the most capable contractor at a fair price.

Public Impact

The primary beneficiaries are patients requiring plasma products for transfusion, potentially gaining access to a more readily available point-of-care solution. The contract will deliver advancements in the development of the FrontlineODP(TM) system. The geographic impact is national, focusing on improving healthcare infrastructure and product availability. Workforce implications may include specialized roles in medical device development, manufacturing, and regulatory affairs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee structure requires careful monitoring to ensure cost efficiency and prevent potential overruns.
Long-term development contracts can be subject to shifts in technological feasibility or market demand.
Reliance on a single contractor for a critical product development phase necessitates robust oversight.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that likely yielded a strong candidate.
The contract's duration of over 8 years indicates a strategic, long-term investment by HHS in a critical area.
The focus on a point-of-care product addresses a potential need for faster, more accessible medical solutions.

Sector Analysis

This contract falls within the 'Other Measuring and Controlling Device Manufacturing' sector, specifically related to advanced medical technologies. The market for point-of-care medical devices and diagnostic tools is rapidly growing, driven by the need for faster diagnoses and treatments. This contract represents a significant investment in a specialized niche within the broader healthcare and medical device industry, aiming to develop a product that could potentially improve transfusion medicine.

Small Business Impact

The data indicates this contract was awarded under 'full and open competition' and does not specify any small business set-aside provisions (ss: false, sb: false). Therefore, there is no direct analysis of small business set-asides for this specific award. However, the prime contractor, Velico Medical, Inc., may engage small businesses as subcontractors, which would be a positive development for the small business ecosystem. Further investigation into subcontracting plans would be necessary to assess the full impact on small businesses.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring are crucial to ensure that costs are reasonable and that development milestones are met. Transparency will be maintained through regular reporting requirements from the contractor and potential reviews by HHS program officials and possibly the HHS Office of Inspector General, depending on the scope and nature of any audits.

Related Government Programs

Biomedical Advanced Research and Development Authority (BARDA) programs
Medical Countermeasures Development
Plasma Derivatives and Blood Products Research
Advanced Medical Device Manufacturing

Risk Flags

Long-term R&D project risks
Potential for technological obsolescence
Market and regulatory uncertainty
Contractor performance and viability over extended period

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $135.6 million to VELICO MEDICAL, INC.. THE OVERALL OBJECTIVE OF THIS CONTRACT IS TO ADVANCE THE DEVELOPMENT OF THE FRONTLINEODP(TM) SYSTEM FOR PRODUCING A POINT OF CARE PLASMA PRODUCT FOR TRANSFUSION. THE SCOPE IS DEFINED IN THE SOW BELOW.

Who is the contractor on this award?

The obligated recipient is VELICO MEDICAL, 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 $135.6 million.

What is the period of performance?

Start: 2021-08-02. End: 2029-11-30.

What is the specific technological innovation behind the FrontlineODP(TM) system, and what are its key advantages over existing plasma production methods?

The FrontlineODP(TM) system is designed to enable the production of a point-of-care plasma product for transfusion. While specific technical details are proprietary, the key advantage lies in its 'point-of-care' capability. This suggests the system aims to allow for the rapid processing or preparation of plasma closer to the patient, potentially reducing the time from collection or processing to transfusion. Traditional plasma production often involves centralized facilities and complex logistics. A point-of-care system could offer benefits such as increased availability, reduced spoilage, and faster response times in emergency situations or remote locations. The contract's objective is to advance the development of this system, implying it is still in a developmental or early-stage manufacturing phase, and its ultimate advantages will be realized upon successful completion and deployment.

How does the Cost Plus Fixed Fee (CPFF) contract structure compare to other contract types for R&D in the medical device sector, and what are its implications for cost control?

The Cost Plus Fixed Fee (CPFF) contract structure is commonly used for research and development (R&D) projects where the scope of work is not precisely defined, or the costs are highly uncertain. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This differs from fixed-price contracts, where the price is set regardless of costs, or cost-plus-incentive-fee contracts, which tie profit more closely to performance metrics. For R&D in the medical device sector, CPFF offers flexibility, allowing the project to adapt to unforeseen technical challenges. However, it places a greater burden on the government to meticulously monitor costs to ensure they are reasonable and allocable. The 'fixed fee' component provides some incentive for the contractor to manage costs efficiently, as the fee does not increase with higher costs, but the primary cost control mechanism relies on robust government oversight and auditing of expenditures.

What is Velico Medical, Inc.'s track record with government contracts, particularly within the Department of Health and Human Services?

Information regarding Velico Medical, Inc.'s specific track record with government contracts, especially within the Department of Health and Human Services (HHS), is not detailed in the provided data. A comprehensive assessment would require reviewing contract databases (like SAM.gov or FPDS) for past awards, performance evaluations, and any history of contract modifications or disputes. Without this specific data, it's difficult to definitively assess their past performance. However, securing a definitive contract of this magnitude ($135.6 million) from HHS under full and open competition suggests they possess the necessary qualifications, capacity, and potentially a positive prior relationship or demonstrated capability that made them the selected awardee. Further due diligence would involve examining their contract history for similar projects, their financial stability, and any publicly available performance reviews.

What are the potential risks associated with the long duration (over 8 years) of this contract for the development of a point-of-care plasma product?

The long duration of this contract (over 8 years) presents several potential risks for the development of the FrontlineODP(TM) system. Firstly, technological obsolescence is a significant concern; advancements in medical technology could render the developed system outdated before it even reaches full market deployment. Secondly, market dynamics can shift; changes in transfusion medicine needs, regulatory landscapes (e.g., FDA approval processes), or the emergence of competing technologies could impact the product's viability or demand. Thirdly, contractor viability is a risk; over such a long period, the financial health or strategic direction of Velico Medical, Inc. could change, potentially impacting their ability to complete the contract. Finally, sustained government funding and programmatic priorities within HHS could also shift, although the 'definitive contract' nature suggests a strong initial commitment. Mitigating these risks requires continuous monitoring of technological trends, market needs, and contractor performance.

How does the $135.6 million contract value compare to historical spending on similar advanced medical product development initiatives by HHS or other federal agencies?

The $135.6 million contract value represents a substantial investment in a specific advanced medical product. To benchmark this effectively, one would need to compare it to similar contracts awarded by HHS's Biomedical Advanced Research and Development Authority (BARDA) or other agencies like the Department of Defense (DoD) for the development of novel medical countermeasures, diagnostics, or therapeutic platforms. For instance, BARDA has awarded large contracts for vaccine development, antiviral research, and advanced manufacturing capabilities, some of which have reached hundreds of millions of dollars over several years. Contracts for developing complex medical devices or biologics with significant R&D components often fall into this multi-million dollar range. Without knowing the exact stage of development (e.g., early research vs. late-stage clinical trials vs. manufacturing scale-up), a precise comparison is difficult. However, the amount suggests a significant commitment to a technology deemed critical for public health preparedness or medical advancement.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Other Measuring and Controlling Device Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › N – Health R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: BAA-18-100-SOL-0003

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 100 CUMMINGS CTR STE 436H, BEVERLY, MA, 01915

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

Financial Breakdown

Contract Ceiling: $153,332,263

Exercised Options: $135,607,236

Current Obligation: $135,607,236

Actual Outlays: $97,346,284

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline