HHS awards $1.1B contract to McKesson for vaccine distribution over 5 years

Contract Overview

Contract Amount: $1,095,821,732 ($1.1B)

Contractor: Mckesson Specialty Distribution LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2017-02-03

End Date: 2022-07-31

Contract Duration: 2,004 days

Daily Burn Rate: $546.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 2017 VACCINE DISTRIBUTION

Place of Performance

Location: MEMPHIS, SHELBY County, TENNESSEE, 38115

State: Tennessee Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $1.10 billion to MCKESSON SPECIALTY DISTRIBUTION LLC for work described as: 2017 VACCINE DISTRIBUTION Key points: 1. Significant contract value highlights the importance of vaccine supply chain management. 2. McKesson's established presence in pharmaceutical distribution suggests strong market position. 3. Potential risks include supply chain disruptions and price fluctuations for refrigerated storage. 4. The IT sector is indirectly impacted through the need for robust tracking and inventory systems.

Value Assessment

Rating: good

The contract value of $1.1 billion over five years appears reasonable for a large-scale national vaccine distribution program. Benchmarking against similar logistics and cold chain management contracts would provide further validation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process that likely drove price discovery. This method aims to secure the best value for the government.

Taxpayer Impact: The competitive nature of the award is intended to ensure taxpayer funds are used efficiently for essential vaccine distribution services.

Public Impact

Ensures availability of critical vaccines to the public. Supports national public health initiatives and emergency preparedness. Maintains the integrity and efficacy of vaccines through proper cold chain management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Dependence on a single contractor for a critical national service.
Potential for price increases in future contract renewals.
Vulnerability of the supply chain to unforeseen events (e.g., pandemics, natural disasters).

Positive Signals

Established contractor with proven experience in pharmaceutical logistics.
Long-term contract provides stability for vaccine supply.
Firm fixed price contract limits cost overruns.

Sector Analysis

This contract falls under logistics and supply chain management, crucial for the healthcare sector's operational efficiency. Spending benchmarks for similar distribution services indicate that large contracts are common for national health programs.

Small Business Impact

The data does not indicate specific subcontracting opportunities for small businesses. Large-scale distribution contracts often involve prime contractors with established infrastructure, potentially limiting direct small business participation.

Oversight & Accountability

The Centers for Disease Control and Prevention (CDC) is responsible for overseeing this contract. Robust oversight is essential to ensure compliance with delivery schedules, storage requirements, and quality standards.

Related Government Programs

Refrigerated Warehousing and Storage
Department of Health and Human Services Contracting
Centers for Disease Control and Prevention Programs

Risk Flags

Supply chain vulnerability
Contractor performance risk
Price escalation risk
Dependence on single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $1.10 billion to MCKESSON SPECIALTY DISTRIBUTION LLC. 2017 VACCINE DISTRIBUTION

Who is the contractor on this award?

The obligated recipient is MCKESSON SPECIALTY DISTRIBUTION 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 $1.10 billion.

What is the period of performance?

Start: 2017-02-03. End: 2022-07-31.

What is the projected cost per vaccine dose distributed under this contract?

The provided data does not break down the contract value to a per-dose cost. Calculating this would require knowing the total number of vaccine doses anticipated to be distributed over the contract period. This metric is crucial for assessing the efficiency and value for money of the distribution service.

What are the specific performance metrics and penalties outlined in the contract to ensure timely and safe vaccine delivery?

The contract details likely include specific performance standards related to delivery timelines, temperature maintenance, and inventory accuracy. Penalties for non-compliance would be stipulated to incentivize adherence to these critical requirements, safeguarding vaccine integrity and public health.

How does McKesson's pricing compare to other major pharmaceutical distributors for similar services?

While the contract was awarded through full and open competition, a direct comparison of McKesson's pricing against competitors for this specific large-scale vaccine distribution is not publicly available. Benchmarking would typically involve analyzing historical pricing data and market rates for comparable logistics and cold chain services.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › Refrigerated Warehousing and Storage

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › ADMINISTRATIVE SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 2016-N-17727

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Mckesson Corporation

Address: 4100 QUEST WAY, MEMPHIS, TN, 38115

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,322,250,056

Exercised Options: $1,445,821,497

Current Obligation: $1,095,821,732

Actual Outlays: $927,398,334

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline