HHS awarded a $1.7M purchase order for pharmaceutical preparations, with no competition

Contract Overview

Contract Amount: $171,500 ($171.5K)

Contractor: Advanced Accelerator Applications USA Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2019-12-31

End Date: 2020-09-30

Contract Duration: 274 days

Daily Burn Rate: $626/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ADVANCED ACCELERATOR APPLICATIONS USA, INC.:1308250 [20-002108]

Place of Performance

Location: MILLBURN, ESSEX County, NEW JERSEY, 07041

State: New Jersey Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $171,500 to ADVANCED ACCELERATOR APPLICATIONS USA INC for work described as: ADVANCED ACCELERATOR APPLICATIONS USA, INC.:1308250 [20-002108] Key points: 1. The contract was awarded using a firm-fixed-price structure, indicating clear cost expectations. 2. The award was a purchase order, typically used for simpler, lower-value acquisitions. 3. The contract duration was 274 days, suggesting a short-term need. 4. The contractor, Advanced Accelerator Applications USA, Inc., is based in New Jersey. 5. The North American Industry Classification System (NAICS) code 325412 points to pharmaceutical preparation manufacturing. 6. The contract was not competed, raising questions about potential cost savings and market engagement.

Value Assessment

Rating: questionable

The contract value of $1.715 million for pharmaceutical preparation manufacturing is difficult to benchmark without specific product details. However, the lack of competition suggests that the government may not have secured the best possible price. The firm-fixed-price contract type provides cost certainty, but the absence of competitive bidding limits the ability to assess value-for-money against market alternatives. Further analysis would require understanding the specific pharmaceutical preparations procured and their market pricing.

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 among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in urgent situations. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to a higher price than might have been achieved otherwise.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, it's harder to ensure that the price reflects fair market value.

Public Impact

The primary beneficiaries are likely researchers or healthcare providers within the National Institutes of Health (NIH) or other HHS entities requiring specialized pharmaceutical preparations. The services delivered involve the manufacturing of pharmaceutical preparations, crucial for medical research and potentially clinical applications. The geographic impact is primarily within New Jersey, where the contractor is located, and at the federal agency receiving the products. Workforce implications are likely concentrated within the contractor's facilities in New Jersey, supporting specialized manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in a higher price than a competed award.
Limited transparency into the justification for a sole-source award.
Potential missed opportunity to engage a broader range of suppliers and foster market innovation.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a specific company suggests a targeted need that this vendor could meet.
Purchase order format indicates a potentially straightforward acquisition process.

Sector Analysis

The pharmaceutical preparation manufacturing sector is highly specialized, involving complex regulatory compliance and advanced scientific expertise. Contracts in this area often involve significant research and development costs. Benchmarking this contract's value is challenging without knowing the specific nature of the preparations, but spending in pharmaceutical manufacturing by federal agencies can range from millions to billions depending on the scale and type of products required, often supporting critical research initiatives.

Small Business Impact

This contract was not competed and there is no indication of a small business set-aside or subcontracting plan. Therefore, it does not appear to directly benefit the small business ecosystem through this specific award. The focus was on fulfilling a specific requirement with a particular vendor, rather than on broader small business engagement.

Oversight & Accountability

Oversight for this contract would fall under the Department of Health and Human Services, specifically the National Institutes of Health. As a purchase order, it likely underwent internal agency review and approval processes. Transparency regarding the justification for the sole-source award would be key to assessing accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Pharmaceutical Research and Development
Medical Supplies and Equipment Manufacturing
Biotechnology Research
Drug Manufacturing

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Market Research
Transparency Concerns regarding Sole-Source Justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $171,500 to ADVANCED ACCELERATOR APPLICATIONS USA INC. ADVANCED ACCELERATOR APPLICATIONS USA, INC.:1308250 [20-002108]

Who is the contractor on this award?

The obligated recipient is ADVANCED ACCELERATOR APPLICATIONS USA INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $171,500.

What is the period of performance?

Start: 2019-12-31. End: 2020-09-30.

What specific pharmaceutical preparations were procured under this contract?

The provided data does not specify the exact pharmaceutical preparations procured. The NAICS code 325412 indicates 'Pharmaceutical Preparation Manufacturing,' which is a broad category. To understand the value and impact, detailed information on the specific drugs, compounds, or formulations would be necessary. This could range from active pharmaceutical ingredients (APIs) to finished dosage forms for research purposes. Without this specificity, it's challenging to assess the criticality or uniqueness of the items purchased.

What was the justification for awarding this contract on a sole-source basis?

The data indicates the contract was 'NOT COMPETED,' implying a sole-source or limited-source justification. Common reasons for sole-source awards include unique capabilities of a single contractor, urgent and compelling needs where competition is impractical, or when only one source is capable of meeting the requirement. Without access to the specific justification documentation (e.g., a Justification and Approval document), the precise reason remains unknown. This lack of competition is a key area for scrutiny regarding potential value for taxpayer money.

How does the $1.715 million contract value compare to similar pharmaceutical preparation contracts awarded by HHS or NIH?

Comparing this $1.715 million contract value requires access to a broader dataset of similar pharmaceutical preparation contracts. Given the sole-source nature and the specific NAICS code, this award might represent a niche requirement or a specific phase of research. Without comparative data on contract size, duration, and scope for similar preparations, it's difficult to definitively state if this represents a high or low value. However, the absence of competition inherently limits the ability to benchmark against potentially lower prices achievable through bidding.

What is the track record of Advanced Accelerator Applications USA, Inc. with federal contracts?

The provided data only shows this single contract award to Advanced Accelerator Applications USA, Inc. by HHS/NIH. To assess their track record, a comprehensive search of federal procurement databases (like FPDS or USASpending) would be necessary to identify any prior or subsequent contracts, their values, agencies involved, performance history, and any issues encountered. A limited history with federal contracts might explain why a sole-source award was considered, or conversely, a robust history could provide more context for the decision.

What are the potential risks associated with a sole-source award for pharmaceutical preparations?

Sole-source awards for pharmaceutical preparations carry several risks. Primarily, there's the risk of paying a non-competitive price, potentially exceeding fair market value. Secondly, it limits the government's access to innovation and alternative solutions that other qualified vendors might offer. There's also a risk if the sole-source provider experiences production issues, supply chain disruptions, or quality control problems, as there are fewer immediate alternatives. Finally, it can create a perception of favoritism or lack of due diligence if the justification isn't robust and transparent.

What is the significance of the 'PURCHASE ORDER' contract type in this context?

A 'PURCHASE ORDER' (PO) is typically used for simpler acquisitions of supplies or services below certain dollar thresholds, often processed through simplified acquisition procedures. While this PO is for $1.715 million, which is substantial, its designation suggests the procurement might have been viewed as less complex than a formal contract, potentially streamlining the process. However, the 'NOT COMPETED' status alongside the PO type raises questions about why simplified procedures were used for a non-competitive award of this magnitude.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 20-002108

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 57 E WILLOW ST, MILLBURN, NJ, 07041

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $171,500

Exercised Options: $171,500

Current Obligation: $171,500

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline