HHS awards $1.17B contract for pharmaceutical preparation manufacturing to Bavarian Nordic A/S

Contract Overview

Contract Amount: $1,167,279,477 ($1.2B)

Contractor: Bavarian Nordic A/S

Awarding Agency: Department of Health and Human Services

Start Date: 2017-09-27

End Date: 2027-09-26

Contract Duration: 3,651 days

Daily Burn Rate: $319.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF

Plain-Language Summary

Department of Health and Human Services obligated $1.17 billion to BAVARIAN NORDIC A/S for work described as: IGF::OT::IGF Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Long contract duration of nearly 10 years suggests a strategic, long-term need. 3. Firm Fixed Price contract type offers cost certainty for the government. 4. The contract's value is substantial, indicating a significant investment in pharmaceutical preparedness. 5. Focus on pharmaceutical preparation manufacturing aligns with public health security objectives.

Value Assessment

Rating: fair

The contract value of $1.17 billion over nearly 10 years is significant. Without comparable sole-source contracts for similar pharmaceutical preparations, a direct value-for-money assessment is challenging. The firm fixed-price structure provides cost predictability, but the lack of competition may have led to a higher price than a competed contract. Benchmarking against market rates for similar manufacturing services would be necessary for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from competitive pricing, potentially leading to higher overall costs for this pharmaceutical preparation manufacturing.

Public Impact

The Department of Health and Human Services (HHS) benefits by securing a critical supply of pharmaceutical preparations. This contract supports the manufacturing of essential pharmaceutical products, likely for public health emergencies or strategic stockpiling. The geographic impact is national, ensuring availability of these preparations across the United States. Workforce implications may include job creation within Bavarian Nordic A/S and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing cost to taxpayers.
Long contract duration could lock in potentially suboptimal pricing if market conditions change.
Lack of transparency in pricing due to sole-source nature.

Positive Signals

Firm Fixed Price contract provides cost certainty.
Secures a long-term supply of critical pharmaceutical preparations.
Addresses a strategic need for public health preparedness.

Sector Analysis

The pharmaceutical preparation manufacturing sector is highly regulated and capital-intensive. This contract falls within the broader biopharmaceutical and life sciences industry, which is crucial for national health security. Spending in this area often involves significant R&D and manufacturing scale-up. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the pharmaceutical preparations, but large government contracts are common for strategic medical supplies.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss=false, sb=false). As a sole-source award to a large foreign entity (Bavarian Nordic A/S), there are likely limited direct subcontracting opportunities for U.S. small businesses unless specifically mandated or pursued by the prime contractor. This could mean a missed opportunity to leverage the small business industrial base for parts of the manufacturing process.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its relevant program offices, such as the Office of Assistant Secretary for Preparedness and Response (ASPR). The firm fixed-price nature simplifies some aspects of financial oversight. Transparency may be limited due to the sole-source award. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Biopharmaceutical Manufacturing Contracts
Strategic National Stockpile
Public Health Emergency Preparedness
Pharmaceutical Supply Chain Security

Risk Flags

Sole-source award raises concerns about potential lack of price competition.
Long contract duration requires careful monitoring for continued value.
Specific product details are not publicly disclosed, limiting full transparency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $1.17 billion to BAVARIAN NORDIC A/S. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is BAVARIAN NORDIC A/S.

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 $1.17 billion.

What is the period of performance?

Start: 2017-09-27. End: 2027-09-26.

What specific pharmaceutical preparations are being manufactured under this contract, and what is their intended use?

The provided data indicates the contract is for 'Pharmaceutical Preparation Manufacturing' (nd: Pharmaceutical Preparation Manufacturing) but does not specify the exact nature of the preparations. Given the awarding agency (HHS) and the office (ASPR), it is highly probable that these preparations are intended for public health emergencies, pandemic response, or to bolster the Strategic National Stockpile. These could range from vaccines and therapeutics to diagnostic reagents or other critical medical supplies. A detailed understanding of the specific product is crucial for assessing its strategic importance and potential market alternatives.

How does the pricing of this sole-source contract compare to potential market prices if it were competed?

Direct comparison is challenging due to the sole-source nature of the award. Typically, sole-source contracts may result in higher prices than competed contracts because the government cannot leverage competitive bidding to drive down costs. Without access to Bavarian Nordic A/S's cost structure or data from similar, competed contracts for comparable pharmaceutical preparations, it's impossible to definitively state the price difference. However, the absence of competition is a known factor that can lead to less favorable pricing for the government and, by extension, taxpayers.

What is Bavarian Nordic A/S's track record with government contracts, particularly with HHS?

Bavarian Nordic A/S is a global biotechnology company specializing in vaccines and therapeutics. While specific details of their prior U.S. federal contract history are not provided in this data snippet, their involvement in manufacturing critical pharmaceutical preparations suggests they possess the necessary expertise and regulatory compliance. A deeper dive into their contract performance history, including any past issues or successes with government agencies, would be necessary for a comprehensive assessment of their reliability and capability for this significant award.

What are the key performance indicators (KPIs) and deliverables expected under this contract?

The provided data does not detail the specific Key Performance Indicators (KPIs) or deliverables for this contract. However, for a pharmaceutical preparation manufacturing contract of this magnitude and duration, KPIs would likely include adherence to strict quality control standards (e.g., Good Manufacturing Practices - GMP), timely delivery schedules, production volume targets, and potentially specific efficacy or stability requirements for the manufactured products. Deliverables would encompass the finished pharmaceutical preparations themselves, along with associated documentation, quality assurance reports, and potentially manufacturing process validation data.

What is the historical spending trend for similar pharmaceutical preparation manufacturing contracts by HHS?

Historical spending trends for similar pharmaceutical preparation manufacturing contracts by HHS are not detailed in the provided data. However, government spending in this area has generally increased over the past decade, driven by heightened awareness of public health threats, pandemic preparedness initiatives, and the need to maintain robust stockpiles of essential medical countermeasures. Contracts can vary significantly in value depending on the specific product, quantity, and duration. Analyzing past HHS budgets and contract awards for biodefense and public health preparedness would provide context on the scale and frequency of such investments.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 17100SOL00023

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: HEJRESKOVVEJ 10A, KVISTGARD

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

Financial Breakdown

Contract Ceiling: $1,628,690,592

Exercised Options: $1,167,279,477

Current Obligation: $1,167,279,477

Actual Outlays: $704,612,496

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline