HHS awarded $37.6M for Colony Stimulating Factors, with a per-unit cost 20% above benchmark

Contract Overview

Contract Amount: $37,626,711 ($37.6M)

Contractor: Partner Therapeutics, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2016-09-30

End Date: 2021-09-29

Contract Duration: 1,825 days

Daily Burn Rate: $20.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF FOR OTHER FUNCTIONS PROJECT: ACQUISITION OF COLONY STIMULATING FACTOR(S) (G-CSF OR GM-CSF) FOR MITIGATION OF NEUTROPENIA ARISING FROM EXPOSURE TO IONIZING RADIATION (RTOR-CSF-0003)

Place of Performance

Location: BRIDGEWATER, SOMERSET County, NEW JERSEY, 08807

State: New Jersey Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $37.6 million to PARTNER THERAPEUTICS, INC. for work described as: IGF::OT::IGF FOR OTHER FUNCTIONS PROJECT: ACQUISITION OF COLONY STIMULATING FACTOR(S) (G-CSF OR GM-CSF) FOR MITIGATION OF NEUTROPENIA ARISING FROM EXPOSURE TO IONIZING RADIATION (RTOR-CSF-0003) Key points: 1. The contract's value is substantial, addressing a critical need for radiation exposure mitigation. 2. Competition was robust, suggesting potential for competitive pricing, though unit costs indicate otherwise. 3. The fixed-price contract type offers cost certainty but may limit flexibility for evolving needs. 4. Performance duration is significant, requiring sustained delivery and quality assurance. 5. The product category is specialized, with limited direct market comparables for pricing. 6. The contractor has a track record, but specific performance on this contract needs scrutiny. 7. Geographic impact is national, with a focus on New Jersey for manufacturing.

Value Assessment

Rating: fair

The contract's total value of $37.6 million over five years is significant for a specialized biological product. However, the reported per-unit cost of $206,170 is notably higher than the benchmark of $171,805, representing a 20% premium. This suggests potential overpricing or unique manufacturing challenges. While the firm-fixed-price structure provides budget certainty, the elevated unit cost warrants further investigation into the drivers of this difference compared to market rates or similar government procurements.

Cost Per Unit: $206,170 per unit, which is 20% above the benchmark of $171,805.

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of two bidders suggests a degree of market interest and competition. However, the fact that the awarded price is above the benchmark, despite competition, raises questions about the effectiveness of the competition in driving down costs or the specific technical requirements that may have limited the number of truly competitive offers.

Taxpayer Impact: Taxpayers may be paying a premium for this critical medical countermeasure due to factors that limited the competitive advantage, despite the initial broad solicitation.

Public Impact

The primary beneficiaries are individuals potentially exposed to ionizing radiation, ensuring availability of treatments to mitigate neutropenia. The contract ensures the supply of Colony Stimulating Factors (G-CSF or GM-CSF), vital for medical countermeasures. The geographic impact is national in terms of strategic preparedness, with manufacturing operations based in New Jersey. Workforce implications include specialized roles in biological product manufacturing and quality control within the pharmaceutical sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Per-unit cost significantly exceeds benchmark, indicating potential value-for-money concerns.
Limited number of bidders (two) despite full and open competition may suggest market concentration or high barriers to entry.
Long contract duration (five years) increases risk of price escalation or obsolescence if not managed proactively.
Specialized nature of the product could lead to limited alternative sources in future procurements.

Positive Signals

Awarded under full and open competition, maximizing the initial pool of potential offerors.
Firm-fixed-price contract provides cost certainty for the government.
Contract addresses a critical national health security need, ensuring availability of a vital countermeasure.
Contractor is based in New Jersey, potentially supporting regional economic activity and specialized manufacturing.

Sector Analysis

The procurement falls within the broader 'Biological Product (except Diagnostic) Manufacturing' sector, a highly specialized area within the pharmaceutical and biotechnology industry. This sector is characterized by significant R&D investment, stringent regulatory requirements (FDA), and often high barriers to entry. The market size for specific countermeasures like G-CSF/GM-CSF for radiation exposure is niche but critical for national biodefense. Comparable spending benchmarks are difficult to establish due to the specialized nature, but government contracts in this area often reflect the high cost of development, manufacturing, and maintaining readiness for such products.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false. There is no explicit information regarding subcontracting plans for small businesses. Given the specialized nature of biological product manufacturing, it is possible that the prime contractor is a large entity, and opportunities for small businesses might be limited to specific support services rather than core manufacturing. Further analysis of subcontracting reports would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS), specifically the Office of the Assistant Secretary for Preparedness and Response (ASPR). The firm-fixed-price structure provides a degree of financial oversight. Transparency is generally maintained through contract databases like FPDS. Accountability measures would involve performance monitoring against delivery schedules and quality standards. The Inspector General of HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Biomedical Advanced Research and Development Authority (BARDA) procurements
Strategic National Stockpile acquisitions
Department of Defense medical countermeasure contracts
National Institutes of Health (NIH) research grants for infectious diseases

Risk Flags

High per-unit cost compared to benchmark.
Potential for limited competition despite full and open solicitation.
Long contract duration increases risk exposure.
Single-source award for critical supply may impact resilience.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $37.6 million to PARTNER THERAPEUTICS, INC.. IGF::OT::IGF FOR OTHER FUNCTIONS PROJECT: ACQUISITION OF COLONY STIMULATING FACTOR(S) (G-CSF OR GM-CSF) FOR MITIGATION OF NEUTROPENIA ARISING FROM EXPOSURE TO IONIZING RADIATION (RTOR-CSF-0003)

Who is the contractor on this award?

The obligated recipient is PARTNER THERAPEUTICS, 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 $37.6 million.

What is the period of performance?

Start: 2016-09-30. End: 2021-09-29.

What is the track record of Partner Therapeutics, Inc. with government contracts, particularly for similar biological products?

Partner Therapeutics, Inc. has secured government contracts, including this significant award from HHS. Information from contract databases indicates prior awards, though the scale and nature of these may vary. A deeper dive into their contract history would reveal performance metrics on previous government engagements, including on-time delivery, quality compliance, and any past disputes or contract modifications. Understanding their experience with similar complex biological products, especially those related to biodefense or public health emergencies, is crucial for assessing their capability and reliability in fulfilling this current contract. Without specific past performance data readily available, it's difficult to definitively assess their track record beyond the fact they were selected for this substantial award.

How does the $206,170 per-unit cost compare to other government procurements of G-CSF or GM-CSF for similar purposes?

The reported per-unit cost of $206,170 is 20% higher than the provided benchmark of $171,805. To provide a comprehensive comparison, one would need to analyze other government contracts for G-CSF or GM-CSF, particularly those awarded by agencies like the Department of Defense (DoD) or BARDA for strategic stockpiling or medical countermeasures. Factors such as contract volume, specific product formulation, delivery timelines, and the competitive landscape at the time of those awards would influence pricing. If other comparable government contracts show significantly lower per-unit costs for similar quantities and quality, it would strengthen the argument that this contract's pricing is unfavorable. Conversely, if similar specialized procurements also exhibit high unit costs due to unique manufacturing or regulatory hurdles, the current pricing might be more justifiable, albeit still high.

What are the specific risks associated with a five-year firm-fixed-price contract for a specialized biological product?

A five-year firm-fixed-price (FFP) contract for a specialized biological product like Colony Stimulating Factors presents several risks. Firstly, the FFP structure, while offering cost certainty, can lead to the government overpaying if market prices decrease or manufacturing efficiencies are realized during the contract period. Conversely, the contractor bears the risk of cost overruns, which could incentivize corner-cutting on quality or lead to requests for modification if unforeseen issues arise. For a specialized biological product, the five-year duration increases the risk of technological obsolescence or the emergence of superior alternatives. Furthermore, maintaining consistent quality and supply chain integrity over such a long period for a sensitive product requires robust oversight. The government also risks being locked into a potentially suboptimal price if market conditions change favorably for the buyer.

How effective is the 'full and open competition' strategy in ensuring competitive pricing for niche biodefense products?

The effectiveness of 'full and open competition' for niche biodefense products like Colony Stimulating Factors is often nuanced. While it theoretically maximizes the pool of potential bidders, the reality for highly specialized items is that the number of capable manufacturers may be limited due to high R&D costs, complex manufacturing processes, and stringent regulatory requirements. In this case, two bidders participated, suggesting some level of competition, but the resulting per-unit cost being above benchmark indicates that the competition may not have fully translated into optimal price discovery. Factors such as proprietary technology, existing government stockpiles, or the long lead times required for production could influence how effectively competition drives down prices in such specialized markets. Therefore, while 'full and open' is the preferred method, its effectiveness hinges on the actual market dynamics for the specific product.

What are the implications of the contract being awarded to a single entity for a five-year period regarding future supply chain resilience?

Awarding a five-year contract for a critical biodefense product to a single entity, Partner Therapeutics, Inc., raises concerns about supply chain resilience. If this contractor faces production issues, financial instability, or other disruptions, the government's ability to secure an alternative supply quickly could be compromised, especially given the specialized nature of the product and the time required to onboard a new manufacturer. This single-source reliance for an extended period could also stifle innovation and competition in the long run, as other potential suppliers may have fewer opportunities to enter the market or develop competing products. Building resilience might involve strategies like dual-sourcing, maintaining strategic reserves, or investing in R&D for alternative countermeasures, which are separate from the immediate contract award.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › N – Health R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 12100SOL00016

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ONE MARINA PARK DR, STE 900, BOSTON, MA, 02210

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $37,626,711

Exercised Options: $37,626,711

Current Obligation: $37,626,711

Actual Outlays: $90,896

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: SUPPLIES OR SERVICES PURSUANT TO FAR 12.102(F)

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HHSO100201300005I

IDV Type: IDC

Timeline