HHS Expands COVID-19 Testing Manufacturing Capacity by $56.7M, Transitioning from DoD Contract

Contract Overview

Contract Amount: $56,695,547 ($56.7M)

Contractor: Premix Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2022-05-05

End Date: 2025-10-30

Contract Duration: 1,274 days

Daily Burn Rate: $44.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 91

Pricing Type: FIRM FIXED PRICE

Sector: R&D

Official Description: MANUFACTURING CAPACITY EXPANSION OF COVID-19 DHHS TESTING AND DIAGNOSTICS CONTRACT TRANSITIONING FROM THE DOD/AF. DOD/AF CONTRACT FA8118-22-C-0007.

Place of Performance

Location: BELMONT, GASTON County, NORTH CAROLINA, 28012

State: North Carolina Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $56.7 million to PREMIX INC for work described as: MANUFACTURING CAPACITY EXPANSION OF COVID-19 DHHS TESTING AND DIAGNOSTICS CONTRACT TRANSITIONING FROM THE DOD/AF. DOD/AF CONTRACT FA8118-22-C-0007. Key points: 1. Significant investment in domestic COVID-19 testing and diagnostics manufacturing capacity. 2. Transition from DoD/AF contract suggests potential for improved efficiency or specialized focus. 3. Research and Development (R&D) in physical, engineering, and life sciences is a key sector. 4. The contract's duration and value indicate a substantial, long-term commitment to the objective.

Value Assessment

Rating: good

The contract value of $56.7 million for a 3.7-year period appears reasonable for expanding manufacturing capacity in a critical sector like diagnostics. Benchmarking against similar R&D and manufacturing expansion contracts would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating a robust price discovery process. This method is expected to yield competitive pricing for the government.

Taxpayer Impact: The investment aims to bolster domestic supply chains for essential health resources, potentially reducing reliance on foreign sources and ensuring greater availability during public health emergencies.

Public Impact

Increased domestic production of COVID-19 testing and diagnostic supplies. Strengthened national preparedness for future public health crises. Potential for job creation in the advanced manufacturing and R&D sectors. Ensured availability of critical medical supplies for the population.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Dependence on a single contract for critical manufacturing capacity.
Potential for cost overruns in R&D and manufacturing scale-up.
Long-term sustainability of expanded capacity post-pandemic.

Positive Signals

Proactive investment in pandemic preparedness.
Leveraging existing DoD infrastructure/contracts for efficiency.
Focus on domestic manufacturing capabilities.

Sector Analysis

This contract falls under Research and Development in the Physical, Engineering, and Life Sciences, specifically focusing on manufacturing capacity for testing and diagnostics. Spending in this area is crucial for national health security and technological advancement.

Small Business Impact

The data indicates the contract was not awarded to small businesses (sb: false). Efforts should be made to ensure subcontracting opportunities for small businesses within the manufacturing and R&D supply chain.

Oversight & Accountability

The contract is managed by the Department of Health and Human Services (HHS), Office of Assistant Secretary for Preparedness and Response (ASPR), which is responsible for leading the nation's preparedness for public health emergencies. Oversight will be critical to ensure timely delivery and quality.

Related Government Programs

Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Long contract duration (over 3 years) increases exposure to changing market conditions.
Reliance on a single large contract for a critical capability.
Potential for scope creep or cost overruns in R&D and manufacturing.
Ensuring long-term viability of expanded capacity post-pandemic.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $56.7 million to PREMIX INC. MANUFACTURING CAPACITY EXPANSION OF COVID-19 DHHS TESTING AND DIAGNOSTICS CONTRACT TRANSITIONING FROM THE DOD/AF. DOD/AF CONTRACT FA8118-22-C-0007.

Who is the contractor on this award?

The obligated recipient is PREMIX 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 $56.7 million.

What is the period of performance?

Start: 2022-05-05. End: 2025-10-30.

What is the projected impact of this manufacturing capacity expansion on the overall cost and availability of COVID-19 tests in the coming years?

The expansion is expected to stabilize and potentially lower the cost of tests by increasing domestic supply and competition. It should also ensure greater availability, reducing shortages during surges in demand or future outbreaks. The long-term impact depends on sustained demand and efficient production.

What are the key risks associated with transitioning this manufacturing capacity from the DoD/AF to HHS, and how are they being mitigated?

Risks include potential disruption during the transition, differing operational requirements between agencies, and ensuring continuity of operations. Mitigation likely involves detailed transition plans, clear communication channels, and dedicated project management teams to oversee the handover and ongoing operations.

How will the effectiveness of this $56.7 million investment be measured, particularly in terms of public health outcomes and national preparedness?

Effectiveness will be measured by metrics such as the volume and quality of tests produced, the speed of response to demand fluctuations, and the reduction in reliance on foreign suppliers. Public health outcomes will be assessed through disease surveillance data and the ability to control outbreaks. National preparedness will be gauged by the readiness of the domestic supply chain.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA811822R0001

Offers Received: 91

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 52A ERVIN STREET, BELMONT, NC, 28012

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $56,695,547

Exercised Options: $56,695,547

Current Obligation: $56,695,547

Actual Outlays: $56,695,547

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline