HHS awards $1.37B contract for childhood vaccines to Merck Sharp & Dohme LLC

Contract Overview

Contract Amount: $1,372,607,194 ($1.4B)

Contractor: Merck Sharp & Dohme LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2013-04-01

End Date: 2014-03-31

Contract Duration: 364 days

Daily Burn Rate: $3.8M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: VACCINE FOR CHILDREN 2013

Place of Performance

Location: WEST POINT, MONTGOMERY County, PENNSYLVANIA, 19486

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $1.37 billion to MERCK SHARP & DOHME LLC for work described as: VACCINE FOR CHILDREN 2013 Key points: 1. The contract value of $1.37 billion for childhood vaccines represents a significant investment in public health. 2. Merck Sharp & Dohme LLC, a major pharmaceutical manufacturer, is the sole awardee, indicating potential market concentration. 3. The firm fixed-price contract type suggests price certainty but may limit flexibility for unforeseen circumstances. 4. The pharmaceutical preparation manufacturing sector is highly regulated and critical for national health security.

Value Assessment

Rating: good

The contract value of $1.37 billion for a 364-day period appears substantial for vaccine procurement. Benchmarking against similar large-scale vaccine contracts would be necessary for a precise assessment, but the scale suggests a significant volume purchase.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is ideal for price discovery and ensuring the government receives competitive pricing. The specific details of the bidding process and the number of bidders would further clarify the effectiveness of this competition.

Taxpayer Impact: The significant investment in childhood vaccines aims to ensure broad public health coverage, potentially reducing long-term healthcare costs associated with preventable diseases.

Public Impact

Ensures availability of critical childhood vaccines, supporting herd immunity and disease prevention. Supports the ongoing health and well-being of children across the nation. Contributes to the stability of the pharmaceutical supply chain for essential medicines.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for single-source reliance on Merck for this specific vaccine.
Contract duration is relatively short (364 days), requiring frequent re-competition or extension.
Lack of specific unit cost data makes detailed value analysis challenging.

Positive Signals

Awarded under full and open competition.
Firm fixed-price contract provides cost certainty.
Significant investment in a critical public health area.

Sector Analysis

The pharmaceutical preparation manufacturing sector is characterized by high R&D costs, stringent regulatory oversight, and significant market concentration among a few large players. Spending in this sector is driven by public health needs, disease outbreaks, and government procurement programs.

Small Business Impact

This contract appears to be awarded to a large prime contractor, Merck Sharp & Dohme LLC. There is no explicit information provided regarding subcontracting opportunities for small businesses within this award.

Oversight & Accountability

The Centers for Disease Control and Prevention (CDC) is responsible for procuring vaccines. Oversight would involve monitoring contract performance, ensuring timely delivery, and verifying vaccine quality and efficacy according to established standards.

Related Government Programs

Pharmaceutical Preparation Manufacturing
Department of Health and Human Services Contracting
Centers for Disease Control and Prevention Programs

Risk Flags

Market concentration in vaccine manufacturing.
Potential for price increases in future contract renewals.
Dependence on a single supplier for a critical public health need.
Limited contract duration necessitates ongoing procurement efforts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $1.37 billion to MERCK SHARP & DOHME LLC. VACCINE FOR CHILDREN 2013

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 (Centers for Disease Control and Prevention).

What is the total obligated amount?

The obligated amount is $1.37 billion.

What is the period of performance?

Start: 2013-04-01. End: 2014-03-31.

What is the historical pricing trend for this specific vaccine or similar childhood vaccines procured by the government?

Historical pricing data for this specific vaccine or comparable childhood vaccines would provide crucial context for evaluating the current contract's value. Analyzing trends over time, considering factors like inflation, manufacturing costs, and market competition, can reveal whether the $1.37 billion award represents a fair and reasonable price or if there are opportunities for cost savings in future procurements.

What were the key performance indicators (KPIs) and quality assurance measures stipulated in the contract to ensure vaccine efficacy and safety?

The contract likely includes specific KPIs related to delivery schedules, vaccine potency, and adherence to storage and handling protocols. Robust quality assurance measures, including inspections and testing, are essential to guarantee the safety and efficacy of the vaccines. The CDC's oversight would focus on ensuring Merck meets these stringent requirements throughout the contract period.

How does the awarded price compare to the estimated value or budget allocated for this vaccine procurement?

Comparing the awarded price of $1.37 billion to the government's initial budget or estimated value for this procurement is vital for assessing fiscal responsibility. If the award is significantly lower than the estimate, it suggests successful competition and potential savings. Conversely, an award exceeding the estimate might warrant further investigation into the bidding process and market conditions.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Merck & CO., Inc. (UEI: 054554290)

Address: ONE MERCK DRIVE, WHITEHOUSE STATION, NJ, 08889

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: $1,372,607,194

Exercised Options: $1,372,607,194

Current Obligation: $1,372,607,194

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline