HHS awarded $25.9M for biological product manufacturing, with AKORN, INC. as the sole contractor

Contract Overview

Contract Amount: $25,939,600 ($25.9M)

Contractor: Akorn, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2005-12-30

End Date: 2015-09-19

Contract Duration: 3,550 days

Daily Burn Rate: $7.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: TAS::75 0140::TAS DRUGS AND BIOLOGICALS

Place of Performance

Location: BUFFALO GROVE, LAKE County, ILLINOIS, 60089, UNITED STATES OF AMERICA

State: Illinois Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $25.9 million to AKORN, INC. for work described as: TAS::75 0140::TAS DRUGS AND BIOLOGICALS Key points: 1. The contract's value of $25.9 million over its duration suggests a significant investment in biological product manufacturing. 2. As a sole-source award, the absence of competition may have limited price discovery and potentially increased costs. 3. The long contract duration of 3550 days (approximately 9.7 years) indicates a sustained need for these biological products. 4. The firm-fixed-price contract type aims to control costs by establishing a set price for the goods or services. 5. The contract was awarded by the Office of Assistant Secretary for Preparedness and Response (ASPR), highlighting its potential relevance to public health emergencies. 6. The contractor, AKORN, INC., has a history in pharmaceutical and biological product manufacturing, suggesting relevant experience.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the biological products and their market prices. However, a nearly $26 million award over almost a decade for manufacturing services indicates a substantial commitment. The lack of competition means a direct comparison to similar competitively awarded contracts is not feasible, making it difficult to definitively assess value for money. The firm-fixed-price structure provides some cost certainty, but the absence of competitive pressure could have led to a higher price than might have been achieved in an open market.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, AKORN, INC., was solicited. This approach is typically used when only one source is capable of meeting the government's needs, often due to proprietary technology, unique capabilities, or urgent requirements. The absence of multiple bidders means there was no competitive process to drive down prices or encourage innovative solutions. This limits the government's ability to ensure it received the best possible pricing and terms.

Taxpayer Impact: Taxpayers may have paid a premium for this contract due to the lack of competitive bidding. Without competing the requirement, the government could not leverage market forces to secure the most cost-effective solution.

Public Impact

The primary beneficiaries are likely government agencies requiring specific biological products for public health initiatives or emergency preparedness. The contract supports the manufacturing of biological products, which could include vaccines, therapeutics, or diagnostic components. The geographic impact is primarily linked to the contractor's manufacturing facilities in Illinois, though the end-use of the products could be nationwide or global. The contract implies a need for a skilled workforce in biological product manufacturing, potentially supporting jobs in the pharmaceutical and biotechnology sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value for money.
Long contract duration may not align with evolving technological needs in biological manufacturing.
Lack of transparency in the sole-source justification could obscure potential alternatives.
Performance risks associated with a single supplier for critical biological products.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Contractor's established presence in biological product manufacturing suggests relevant expertise.
Award by ASPR indicates alignment with critical public health or preparedness missions.

Sector Analysis

The contract falls within the broader pharmaceutical and biotechnology sector, specifically focusing on the manufacturing of biological products. This sector is characterized by high research and development costs, stringent regulatory requirements, and significant market potential, particularly for products related to public health and defense. The market size for biological products is substantial and growing, driven by advancements in medicine and increasing demand for specialized treatments and preventative measures. This contract represents a specific government procurement within this dynamic industry.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor, AKORN, INC., is a large business. There is no explicit information regarding subcontracting plans for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, and there's no indication of opportunities for small business participation through subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified products at an agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to any investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

HHS Pharmaceutical and Biological Product Procurement
ASPR Emergency Preparedness Contracts
Biological Product Manufacturing Services
Federal Drug and Vaccine Supply Chain

Risk Flags

Sole-source award
Long contract duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $25.9 million to AKORN, INC.. TAS::75 0140::TAS DRUGS AND BIOLOGICALS

Who is the contractor on this award?

The obligated recipient is AKORN, 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 $25.9 million.

What is the period of performance?

Start: 2005-12-30. End: 2015-09-19.

What specific biological products were manufactured under this contract, and what was their intended use?

The provided data indicates the contract was for 'Biological Product (except Diagnostic) Manufacturing' under TAS 75 0140 (DRUGS AND BIOLOGICALS). However, the specific types of biological products manufactured (e.g., vaccines, therapeutic proteins, antibodies) are not detailed. The awarding agency, the Office of Assistant Secretary for Preparedness and Response (ASPR), suggests the products were likely intended for public health initiatives, emergency preparedness, or stockpiling purposes, potentially related to disease outbreaks or national security threats. Without further documentation, the precise nature and application of these biological products remain unspecified.

Can the $25.9 million contract value be benchmarked against similar competitively awarded contracts for biological product manufacturing?

Benchmarking this $25.9 million contract against similar competitively awarded contracts is difficult due to its sole-source nature and the lack of specificity regarding the exact biological products. Competitively awarded contracts allow for direct price comparisons based on market rates for similar goods or services. In a competitive scenario, multiple bidders would vie for the contract, driving prices down and providing a clearer indication of fair market value. As this was a sole-source award to AKORN, INC., it bypasses this competitive discovery process, making it challenging to determine if the price was optimal or if it represents a premium due to the lack of competition.

What are the potential risks associated with awarding a nearly decade-long contract for biological product manufacturing on a sole-source basis?

Awarding a long-term, sole-source contract for biological product manufacturing carries several risks. Firstly, the lack of competition can lead to inflated prices and reduced incentive for the contractor to innovate or improve efficiency over the contract's lifespan. Secondly, the government becomes heavily reliant on a single supplier, creating vulnerability in the supply chain should the contractor face production issues, financial instability, or quality control problems. Thirdly, the rapidly evolving nature of biotechnology means that a fixed, long-term contract might not adapt well to new technologies or changing market demands, potentially resulting in the procurement of outdated or less effective products compared to what could be sourced competitively later.

What is the track record of AKORN, INC. in fulfilling government contracts, particularly for biological products?

AKORN, INC. has a history of engaging with government contracts, including those related to pharmaceutical and biological products. While specific details of their past performance on federal contracts are not provided in this data snippet, their involvement suggests they possess the necessary infrastructure and expertise for manufacturing. However, like many large pharmaceutical manufacturers, they may have faced regulatory scrutiny or product recalls in the past, which could be relevant to assessing their reliability. A comprehensive review would require examining their contract performance history, any past disputes, and their compliance record with regulatory bodies like the FDA.

How does the $25.9 million spending on biological product manufacturing compare to overall HHS or ASPR spending in this category over the contract period?

To compare the $25.9 million spending on this contract to overall HHS or ASPR spending, one would need to analyze historical budget data for the relevant period (approximately 2005-2015) and identify specific allocations for biological product manufacturing or related categories. This contract represents a significant, but likely not dominant, portion of ASPR's budget, given ASPR's broad mandate for preparedness and response, which includes various types of medical countermeasures and infrastructure. A detailed comparison would involve accessing HHS/ASPR budget reports and procurement databases to aggregate total spending in this domain and contextualize this single award.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Biological Product (except Diagnostic) Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: RFPDHHSDDA0510

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1925 W FIELD CT STE 300, LAKE FOREST, IL, 60045

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

Financial Breakdown

Contract Ceiling: $93,744,000

Exercised Options: $93,744,000

Current Obligation: $25,939,600

Timeline