DoD's $3.8M medicinal manufacturing contract awarded to Amerisourcebergen Drug Corp

Contract Overview

Contract Amount: $3,779,606 ($3.8M)

Contractor: Amerisourcebergen Drug Corp

Awarding Agency: Department of Defense

Start Date: 2026-01-05

End Date: 2026-01-06

Contract Duration: 1 days

Daily Burn Rate: $3.8M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 4570392618!PV PHARM BRANCH, VENDOR, CAGE 0U9U0

Place of Performance

Location: CONSHOHOCKEN, MONTGOMERY County, PENNSYLVANIA, 19428

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $3.8 million to AMERISOURCEBERGEN DRUG CORP for work described as: 4570392618!PV PHARM BRANCH, VENDOR, CAGE 0U9U0 Key points: 1. Contract value represents a significant investment in pharmaceutical supply chain resilience. 2. Full and open competition suggests a potentially competitive bidding environment. 3. Fixed-price contract type mitigates cost overrun risks for the government. 4. Short duration indicates a specific, time-bound need for these medicinal products. 5. The contract falls within the broader scope of defense healthcare logistics. 6. Vendor's CAGE code 0U9U0 identifies a specific entity within the pharmaceutical sector.

Value Assessment

Rating: good

The contract value of approximately $3.8 million for a one-year period appears reasonable for specialized medicinal and botanical manufacturing. Benchmarking against similar contracts for pharmaceutical supplies to the Department of Defense would provide a more precise value-for-money assessment. The firm fixed-price structure is a positive indicator for cost control. Without specific product details, a direct per-unit cost comparison is challenging, but the overall award seems aligned with typical government procurement for such goods.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, which can lead to better pricing and quality for the government. The number of bidders is not specified, but the method itself suggests a deliberate effort to maximize competition and ensure fair market pricing for these essential medicinal products.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of securing goods and services at the most competitive prices, thereby optimizing the use of public funds.

Public Impact

Military personnel and their families will benefit from the reliable supply of necessary pharmaceuticals. The contract ensures the availability of medicinal and botanical products crucial for healthcare operations within the Department of Defense. The geographic impact is primarily national, supporting DoD facilities across various locations. This contract supports jobs within the pharmaceutical manufacturing and distribution sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions if the vendor faces production or distribution issues.
Reliance on a single vendor for a critical supply could pose a risk.
Ensuring consistent quality and efficacy of manufactured products requires robust oversight.

Positive Signals

Firm fixed-price contract minimizes the risk of cost escalation for the government.
Full and open competition suggests a robust market offering for this product category.
The vendor's established presence (indicated by CAGE code) may imply reliability.

Sector Analysis

This contract falls within the pharmaceutical manufacturing sector, a critical component of the broader healthcare industry. The market for government pharmaceutical procurement is substantial, driven by the needs of military health systems and other federal agencies. Amerisourcebergen Drug Corp. is a known entity in pharmaceutical distribution and manufacturing. Comparable spending benchmarks would involve analyzing other DoD contracts for similar medicinal supplies, which often run into millions of dollars annually to ensure adequate stock levels.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. Therefore, there is no direct indication of small business participation through a set-aside. However, the prime contractor, Amerisourcebergen Drug Corp., may engage small businesses as subcontractors. Further analysis would be needed to determine subcontracting plans and their impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA), which is responsible for ensuring the contractor meets all performance, quality, and delivery requirements. Accountability measures are embedded in the firm fixed-price contract terms, with penalties for non-performance. Transparency is facilitated through contract databases like FPDS, where award details are publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

DoD Pharmaceutical Procurement
Defense Health Agency Contracts
Medical Materiel and Supplies
Federal Drug Administration Regulated Products
Government Pharmaceutical Supply Chain

Risk Flags

Short contract duration may impact long-term investment and require frequent re-competition.
Lack of specific product details makes detailed value-for-money assessment difficult.
Potential for supply chain disruption if vendor faces unforeseen issues.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.8 million to AMERISOURCEBERGEN DRUG CORP. 4570392618!PV PHARM BRANCH, VENDOR, CAGE 0U9U0

Who is the contractor on this award?

The obligated recipient is AMERISOURCEBERGEN DRUG CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $3.8 million.

What is the period of performance?

Start: 2026-01-05. End: 2026-01-06.

What is the historical spending pattern for similar medicinal and botanical manufacturing contracts by the Defense Logistics Agency?

Analyzing historical spending patterns for similar contracts by the Defense Logistics Agency (DLA) is crucial for understanding long-term trends and value. While specific data for 'Medicinal and Botanical Manufacturing' under NAICS code 325411 is not provided here, DLA consistently procures a vast array of pharmaceutical products to support military health. Past awards for drug manufacturing and distribution often range from hundreds of thousands to tens of millions of dollars annually, depending on the specific product, volume, and contract duration. Trends may show shifts towards specific therapeutic areas, increased emphasis on domestic manufacturing capabilities, or adjustments based on global health events. Understanding these patterns helps assess if the current $3.8 million award is consistent with historical investment levels or represents a significant deviation, potentially indicating a new strategic focus or a response to changing supply chain dynamics.

How does the per-unit cost of the awarded items compare to market rates for similar pharmaceuticals?

A direct comparison of the per-unit cost for the items under this $3.8 million contract against prevailing market rates is challenging without knowing the specific pharmaceuticals being procured. The contract is for 'Medicinal and Botanical Manufacturing,' a broad category. However, government contracts, especially those awarded through full and open competition with a firm fixed-price structure, are generally expected to achieve competitive pricing. The Defense Logistics Agency (DLA) often leverages its significant purchasing power to negotiate favorable rates. To perform a precise benchmark, one would need to identify the specific National Stock Numbers (NSNs) or product descriptions within the contract and compare their unit prices to those available through commercial distributors or other government contracts. If the unit costs are significantly higher than market averages, it could indicate specialized formulations, stringent quality requirements, or potential inefficiencies in the procurement process that warrant further investigation.

What is Amerisourcebergen Drug Corp.'s track record with federal contracts, particularly within the Department of Defense?

Amerisourcebergen Drug Corp. (CAGE 0U9U0) has a substantial track record with federal contracts, primarily as a major pharmaceutical distributor. They are a key player in the government's supply chain for pharmaceuticals, including contracts with the Department of Defense (DoD) and the Department of Veterans Affairs (VA). Their history often involves large-scale distribution agreements and providing a wide range of medications. While this specific contract is for manufacturing, Amerisourcebergen's extensive experience in handling, storing, and distributing pharmaceuticals suggests a strong understanding of regulatory compliance, quality control, and logistical demands relevant to federal healthcare needs. Past performance reviews and contract compliance data would be essential to fully assess their reliability and effectiveness in fulfilling this specific manufacturing requirement, looking for any history of delivery failures, quality issues, or significant contract disputes.

What are the potential risks associated with the short duration (one year) of this contract?

The short duration of this contract, spanning just over one year (from Jan 5, 2026, to Jan 6, 2026, which appears to be a typo and likely means a one-year period), presents several potential risks. Firstly, it may limit the contractor's incentive to invest in long-term process improvements or specialized manufacturing capabilities, as the return on investment is constrained. Secondly, it necessitates a quicker procurement cycle for follow-on contracts, potentially leading to periods of uncertainty or even supply gaps if the subsequent competition is delayed or encounters issues. For the government, a short duration means more frequent contract administration efforts and repeated competition costs. While it allows for flexibility to adapt to changing needs or market conditions, it can also disrupt supply chain stability if not managed proactively with timely re-solicitation.

How does this contract align with the Defense Logistics Agency's broader strategy for pharmaceutical supply chain management?

This contract for medicinal and botanical manufacturing aligns with the Defense Logistics Agency's (DLA) fundamental mission to provide comprehensive logistics support, including pharmaceuticals, to the U.S. military. DLA's strategy typically emphasizes ensuring a resilient, secure, and cost-effective supply chain. Awarding contracts through full and open competition, as seen here, supports the goal of achieving competitive pricing and accessing a broad base of suppliers. The firm fixed-price nature of the contract also aligns with strategies aimed at mitigating financial risk and ensuring budget predictability. The specific focus on manufacturing, rather than just distribution, could indicate a strategic effort to bolster domestic production capabilities or secure supply lines for particular essential medicines, thereby enhancing overall supply chain security and reducing reliance on potentially vulnerable international sources.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Medicinal and Botanical Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Amerisourcebergen Corporation

Address: 1 W 1ST AVE, CONSHOHOCKEN, PA, 19428

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

Financial Breakdown

Contract Ceiling: $3,779,606

Exercised Options: $3,779,606

Current Obligation: $3,779,606

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE2DX22D0049

IDV Type: IDC

Timeline