Merck Sharp & Dohme received $23.2M for adult vaccines in 2013, a definitive contract awarded by CDC

Contract Overview

Contract Amount: $23,219,458 ($23.2M)

Contractor: Merck Sharp & Dohme LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2013-07-01

End Date: 2014-06-30

Contract Duration: 364 days

Daily Burn Rate: $63.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: VACCINE FOR ADULT 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 $23.2 million to MERCK SHARP & DOHME LLC for work described as: VACCINE FOR ADULT 2013 Key points: 1. The contract value of $23.2 million for a single year of vaccine supply suggests a significant investment in public health. 2. Awarded under full and open competition, this contract indicates a market where multiple suppliers could potentially bid. 3. The firm fixed-price nature of the contract provides cost certainty for the government, mitigating risks of cost overruns. 4. The duration of 364 days aligns with typical annual procurement cycles for essential medical supplies. 5. The contract's focus on adult vaccines highlights a specific public health need within the broader immunization landscape. 6. The geographic location of the awardee in Pennsylvania may have implications for distribution and logistics.

Value Assessment

Rating: good

The contract value of $23.2 million for a year's supply of adult vaccines appears reasonable given the critical nature of immunization programs. Benchmarking against similar large-scale vaccine procurements would provide further context on value for money. The firm fixed-price structure suggests a negotiated price that the government deemed acceptable, likely after considering market rates for pharmaceutical preparations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that the Centers for Disease Control and Prevention (CDC) solicited bids from all responsible sources. The presence of 6 bidders indicates a competitive marketplace for this type of vaccine. This level of competition is generally favorable for price discovery and ensuring the government obtains the best possible value.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging innovation among suppliers.

Public Impact

Adults across the United States benefit from access to essential vaccines, contributing to disease prevention and public health. The contract ensures the supply of specific adult vaccines, supporting national immunization goals. The geographic impact is national, aiming to provide vaccine availability across various regions. The pharmaceutical manufacturing sector, specifically companies like Merck Sharp & Dohme, benefits from this government procurement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single supplier for a specific vaccine could pose supply chain risks.
Ensuring equitable distribution of vaccines across all demographics and regions.

Positive Signals

Awarded through full and open competition, indicating a healthy market.
Firm fixed-price contract provides budget certainty.
Procurement supports critical public health objectives for adult immunization.

Sector Analysis

The pharmaceutical manufacturing sector is a significant part of the healthcare industry, characterized by high R&D investment and stringent regulatory oversight. Government contracts for vaccines are crucial for public health initiatives, often representing substantial portions of a company's revenue. This contract fits within the broader landscape of federal spending on pharmaceuticals and medical supplies, aiming to secure essential medicines for the population.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As a large-value procurement for a major pharmaceutical product, it is likely that the prime contractor, Merck Sharp & Dohme, is a large business. Further analysis would be needed to determine if small businesses were involved in the supply chain or as subcontractors.

Oversight & Accountability

The contract was awarded by the Centers for Disease Control and Prevention (CDC), an agency within the Department of Health and Human Services (HHS). Oversight would typically involve contract management by the contracting officer and program managers within the CDC. Transparency is generally maintained through contract award databases like FPDS. Inspector General oversight from HHS would also apply to ensure the integrity of the procurement process and contract performance.

Related Government Programs

Vaccine Procurement Programs
Public Health Services
Pharmaceutical Manufacturing Contracts
Centers for Disease Control and Prevention Acquisitions

Risk Flags

Potential for supply chain disruption
Ensuring equitable access to vaccines
Monitoring vaccine efficacy and safety post-distribution

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $23.2 million to MERCK SHARP & DOHME LLC. VACCINE FOR ADULT 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 $23.2 million.

What is the period of performance?

Start: 2013-07-01. End: 2014-06-30.

What is the historical spending trend for adult vaccines by the CDC?

Analyzing historical spending data for adult vaccines by the CDC would reveal trends in procurement volume, average prices, and the types of vaccines prioritized over time. For instance, comparing the $23.2 million awarded in 2013 to subsequent years could indicate shifts in public health priorities, the introduction of new vaccines, or changes in market dynamics. Understanding these patterns is crucial for forecasting future needs and budgeting effectively. It would also highlight whether spending has increased due to rising vaccine costs, expanded immunization recommendations, or increased demand. A detailed historical analysis would involve examining contract awards for similar vaccine categories over a multi-year period, looking for fluctuations and identifying the drivers behind them.

How does the price per unit for this vaccine compare to other similar adult vaccines procured by the government?

To assess the value for money, a comparison of the per-unit cost of the vaccine procured under this contract against similar adult vaccines acquired by the government is essential. This would involve identifying the specific vaccine type and its corresponding price. If the contract details included unit pricing or quantities, this analysis could be performed. Benchmarking against other CDC or Department of Defense vaccine procurements, or even state-level purchases, would provide context. A significantly higher per-unit cost for this contract, without clear justification (e.g., unique formulation, advanced delivery system), could indicate a less favorable price compared to market rates or other government contracts. Conversely, a competitive price would reinforce the effectiveness of the full and open competition.

What are the key performance indicators (KPIs) used to evaluate Merck Sharp & Dohme's performance under this contract?

Performance evaluation for a vaccine supply contract typically focuses on several critical areas. Key performance indicators (KPIs) would likely include on-time delivery rates, ensuring that the vaccines are supplied according to the agreed schedule to prevent shortages. Vaccine quality and efficacy, confirmed through adherence to specifications and potentially post-market surveillance, are paramount. Cold chain management, ensuring the vaccines are stored and transported under appropriate temperature conditions to maintain their potency, is another crucial KPI. Furthermore, compliance with all contractual terms and conditions, including reporting requirements and regulatory standards, would be monitored. The government would assess Merck Sharp & Dohme's ability to meet these KPIs to ensure the reliability and effectiveness of the vaccine supply chain.

What is the track record of Merck Sharp & Dohme in fulfilling government vaccine contracts?

Merck Sharp & Dohme (MSD) has a long-standing history as a major pharmaceutical manufacturer and has been a significant supplier of vaccines to government agencies, including the CDC, for many years. Their track record generally includes the successful delivery of numerous vaccines critical to public health initiatives. Historically, they have been awarded substantial contracts for various vaccines, demonstrating their capacity to meet large-scale demands. While specific contract performance details are often proprietary, MSD's continued participation in competitive bidding for government vaccine procurements suggests a generally positive performance history. Any past issues or significant deviations from contract terms would typically be reflected in contract performance ratings, which are not publicly detailed in this summary.

How does the $23.2 million contract value compare to the total federal spending on pharmaceuticals in 2013?

In 2013, total federal spending on pharmaceuticals was substantial, encompassing various programs like Medicare Part D, Medicaid, and direct procurements by agencies such as the Department of Defense and the Department of Veterans Affairs. While $23.2 million represents a significant sum for a single vaccine contract, it is a relatively small fraction of the overall federal pharmaceutical expenditure. For context, total federal spending on pharmaceuticals in fiscal year 2013 was estimated to be well over $100 billion. Therefore, this specific contract, while important for its targeted public health purpose, represents a modest component within the broader landscape of federal drug and vaccine purchasing.

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

Solicitation ID: 2013N15013

Offers Received: 6

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: $93,731,858

Exercised Options: $93,731,858

Current Obligation: $23,219,458

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline