HHS awarded $356.6M for biological product manufacturing, with Solvay Pharmaceuticals as the primary contractor

Contract Overview

Contract Amount: $35,661,214 ($35.7M)

Contractor: Solvay Pharmaceuticals, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2006-05-01

End Date: 2017-12-07

Contract Duration: 4,238 days

Daily Burn Rate: $8.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Official Description: DRUGS AND BIOLOGICALS

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30062

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $35.7 million to SOLVAY PHARMACEUTICALS, INC. for work described as: DRUGS AND BIOLOGICALS Key points: 1. The contract's value of $356.6 million over its duration suggests significant investment in biological product manufacturing. 2. Competition dynamics for this contract were 'FULL AND OPEN COMPETITION', indicating a potentially robust bidding process. 3. The contract type 'COST PLUS FIXED FEE' can introduce cost escalation risks if not closely managed. 4. Performance context is tied to biological product manufacturing, a critical sector for public health. 5. The contract falls within the 'DRUGS AND BIOLOGICALS' category, highlighting its focus on pharmaceutical and biotech products. 6. The duration of 4238 days (approximately 11.6 years) indicates a long-term strategic need for these services.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contracts for biological product manufacturing over such an extended period. The 'COST PLUS FIXED FEE' structure, while allowing flexibility, can sometimes lead to higher overall costs compared to fixed-price contracts if cost controls are not stringent. The total award amount of $356.6 million spread over nearly 12 years averages to approximately $30.7 million annually, which needs to be assessed against the specific products and quantities delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION', suggesting that multiple vendors had the opportunity to bid. The presence of 8 bidders (no) indicates a competitive landscape for this type of manufacturing. A high number of bidders generally supports price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: A fully competed contract like this is generally beneficial for taxpayers as it increases the likelihood of obtaining services at a competitive market rate, preventing potential overpayment.

Public Impact

The primary beneficiaries are likely the Department of Health and Human Services (HHS) and potentially the public through the availability of essential biological products. The services delivered involve the manufacturing of biological products, crucial for public health initiatives and medical countermeasures. The contract's geographic impact is noted as Georgia (GA), indicating manufacturing activities or facilities located within the state. Workforce implications could include job creation in the biotechnology and pharmaceutical manufacturing sectors within Georgia.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus contracts can incentivize higher spending if not managed with strict oversight.
The long duration of the contract (over 11 years) increases the risk of scope creep or evolving requirements not being adequately addressed.
Reliance on a single primary contractor (Solvay Pharmaceuticals) for such a critical function could pose supply chain risks if not diversified.
The specific nature of 'Biological Product (except Diagnostic) Manufacturing' can involve complex regulatory hurdles and potential delays.

Positive Signals

Full and open competition suggests a strong market response and potential for competitive pricing.
The contract's focus on biological product manufacturing aligns with critical public health needs.
The award to a known entity like Solvay Pharmaceuticals may indicate a track record of capability in this specialized field.
The long-term nature of the contract suggests a sustained and strategic requirement by the agency.

Sector Analysis

The contract falls within the 'DRUGS AND BIOLOGICALS' sector, a vital part of the healthcare and life sciences industry. This sector is characterized by high R&D investment, stringent regulatory oversight (FDA), and significant market value. The biological product manufacturing segment specifically deals with complex processes for producing vaccines, therapeutic proteins, and other biological agents. Comparable spending benchmarks would typically involve looking at other large-scale manufacturing contracts for pharmaceuticals or biologics awarded by government agencies, considering factors like scale, complexity, and duration.

Small Business Impact

There is no indication from the provided data that this contract included specific small business set-asides (ss: false, sb: false). The primary contractor is Solvay Pharmaceuticals, Inc., a large entity. This suggests that small businesses were likely not directly targeted for the prime contract award. However, opportunities may have existed for small businesses to participate as subcontractors to Solvay, depending on the subcontracting plan and the nature of the manufacturing processes involved. The impact on the small business ecosystem would be indirect, primarily through potential subcontracting roles.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). As a definitive contract, it would be subject to standard federal procurement regulations and oversight mechanisms. Transparency would depend on the public availability of contract modifications, performance reports, and audit findings. Inspector General jurisdiction would likely reside with the HHS Office of Inspector General (OIG), which investigates fraud, waste, and abuse in HHS programs.

Related Government Programs

Biologics and Pharmaceuticals Manufacturing
Public Health Preparedness
Medical Countermeasures
HHS Procurement
Life Sciences Sector Contracts

Risk Flags

Cost Overrun Risk (Cost-Plus Contract)
Long-Term Contract Adaptability
Supply Chain Dependency
Regulatory Compliance Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $35.7 million to SOLVAY PHARMACEUTICALS, INC.. DRUGS AND BIOLOGICALS

Who is the contractor on this award?

The obligated recipient is SOLVAY PHARMACEUTICALS, 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 $35.7 million.

What is the period of performance?

Start: 2006-05-01. End: 2017-12-07.

What is the track record of Solvay Pharmaceuticals, Inc. in fulfilling government contracts, particularly in biological product manufacturing?

Solvay Pharmaceuticals, Inc. has a history of engaging in government contracting. While specific details on their performance for this particular $356.6 million contract are not provided in the summary data, their involvement suggests they possess the necessary capabilities and certifications for biological product manufacturing. A deeper dive would involve reviewing past performance evaluations, any contract disputes or awards, and their overall experience with cost-plus fixed-fee contracts. Understanding their historical success rate in delivering complex biological products on time and within budget would be crucial for assessing future performance risks. Their established presence in the pharmaceutical industry generally implies a degree of reliability, but specific contract performance data is needed for a definitive assessment.

How does the average annual value of this contract compare to other large-scale biological product manufacturing contracts?

The average annual value of this contract is approximately $30.7 million ($356.6 million / 11.6 years). To benchmark this, one would need to identify comparable government contracts for the manufacturing of biological products, considering factors such as the type of product (e.g., vaccines, therapeutics), production scale, complexity of manufacturing processes, and contract duration. For instance, contracts awarded by agencies like the Department of Defense (DoD) or the Biomedical Advanced Research and Development Authority (BARDA) for similar manufacturing needs could serve as benchmarks. Without access to a comprehensive database of such contracts and their specific terms, a precise comparison is difficult. However, $30.7 million annually for specialized manufacturing suggests a significant, but potentially standard, investment for critical biological product needs.

What are the primary risks associated with a 'Cost Plus Fixed Fee' contract for biological product manufacturing?

The primary risks associated with a 'Cost Plus Fixed Fee' (CPFF) contract for biological product manufacturing revolve around cost control and potential for overruns. In a CPFF structure, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This can incentivize the contractor to incur higher costs, as their profit margin remains constant regardless of the actual expenses. For the government, this means less predictability in the total contract cost. In the context of biological manufacturing, which is often complex and subject to unforeseen technical challenges or regulatory changes, the 'cost-plus' element can lead to significant budget increases. Effective oversight, stringent cost accounting standards, and clear definition of allowable costs are critical to mitigate these risks and ensure value for money.

How effective is 'Full and Open Competition' in ensuring competitive pricing for specialized manufacturing services like biological products?

Full and Open Competition is generally considered the most effective method for ensuring competitive pricing for specialized manufacturing services. By allowing all responsible sources to submit offers, it maximizes the pool of potential bidders, thereby increasing the likelihood of receiving competitive proposals. The presence of 8 bidders in this specific contract indicates a healthy level of interest and competition. This competitive pressure encourages bidders to offer their best pricing and technical solutions to win the contract. While the 'Cost Plus Fixed Fee' structure introduces some cost uncertainty, the initial competition helps establish a baseline for fair pricing of both the costs and the fixed fee. The effectiveness is further enhanced when the government clearly defines its requirements and evaluation criteria.

What are the implications of the contract's long duration (over 11 years) on program effectiveness and adaptability?

A contract duration of over 11 years for biological product manufacturing has significant implications for program effectiveness and adaptability. On the positive side, it provides stability and allows for long-term planning, investment in specialized facilities, and development of a skilled workforce by the contractor. This can lead to consistent quality and reliable supply. However, such a long duration also poses risks. The scientific and technological landscape in biological manufacturing can evolve rapidly; requirements may change due to new health threats, scientific discoveries, or shifts in public health strategy. A rigid, long-term contract may struggle to adapt to these changes without costly modifications or renegotiations. Ensuring flexibility through well-defined options, regular performance reviews, and mechanisms for adapting to evolving needs is crucial to maintain program effectiveness over its extended lifespan.

What is the historical spending pattern for biological product manufacturing by HHS or similar agencies?

Historical spending patterns for biological product manufacturing by HHS and similar agencies typically show significant and often increasing investment, particularly in areas related to public health preparedness, vaccine development, and therapeutic countermeasures. Agencies like HHS (through ASPR, CDC, NIH) and DoD (through BARDA, DTRA) frequently award large, long-term contracts for the manufacturing of critical biological agents. Spending in this area is often driven by national security concerns, pandemic preparedness initiatives, and the need for a robust domestic supply chain for essential medicines and vaccines. The total dollar amounts can range from tens of millions to billions of dollars over several years, reflecting the high cost and complexity of biological manufacturing. Analyzing past awards provides context for the $356.6 million awarded in this instance, suggesting it falls within the expected scale for strategic biological product needs.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: DHHSORDCVB0504

Offers Received: 8

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Abbott Laboratories (UEI: 001307602)

Address: 901 SAWYER RD, MARIETTA, GA, 30062

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $35,661,214

Exercised Options: $35,661,214

Current Obligation: $35,661,214

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline