DoD awards $37.6M for COVID-19 diagnostics, with Celltrion USA Inc. securing the contract

Contract Overview

Contract Amount: $37,584,000 ($37.6M)

Contractor: Celltrion USA Inc

Awarding Agency: Department of Defense

Start Date: 2021-10-20

End Date: 2022-09-30

Contract Duration: 345 days

Daily Burn Rate: $108.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 8508632011!CELLTRION DIATRUST COVID-19

Place of Performance

Location: JERSEY CITY, HUDSON County, NEW JERSEY, 07302

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $37.6 million to CELLTRION USA INC for work described as: 8508632011!CELLTRION DIATRUST COVID-19 Key points: 1. The contract value represents a significant investment in critical health supplies. 2. Competition dynamics suggest a focused procurement process for specialized goods. 3. The fixed-price contract structure aims to control costs and provide predictability. 4. Performance will be measured against delivery timelines and product specifications. 5. This falls within the broader pharmaceutical manufacturing sector supporting defense readiness. 6. The award highlights the government's reliance on established manufacturers for essential medical products.

Value Assessment

Rating: good

The contract value of $37.6 million for pharmaceutical preparations appears reasonable given the context of a national health emergency and the specialized nature of diagnostic products. Benchmarking against similar large-scale procurements for medical supplies during the pandemic would provide a more precise value-for-money assessment. However, the firm fixed-price structure suggests an effort to manage costs effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, specific reasons led to the exclusion of certain potential bidders. This suggests a targeted approach, possibly due to specific product requirements, existing relationships, or the urgency of the need. The limited competition may have implications for price negotiation.

Taxpayer Impact: While not fully open, the process aimed for competitive bids. Taxpayers benefit from a structured procurement, but the exclusion of sources warrants scrutiny to ensure the best possible pricing was achieved.

Public Impact

The primary beneficiaries are military personnel and potentially their families, ensuring access to critical COVID-19 testing. The services delivered include the provision of pharmaceutical diagnostic preparations essential for disease detection. The geographic impact is national, supporting the Department of Defense's health security across its installations. Workforce implications are indirect, supporting jobs within the pharmaceutical manufacturing sector and supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited price negotiation due to exclusion of sources.
Dependence on a single contractor for a critical supply chain item.

Positive Signals

Firm fixed-price contract provides cost certainty.
Award to an established manufacturer suggests product reliability.
Contract addresses a critical public health need during a pandemic.

Sector Analysis

This contract falls within the Pharmaceutical Preparation Manufacturing industry (NAICS 325412), a sector critical for national health security and defense readiness. The market is characterized by high regulatory standards, significant R&D investment, and a need for specialized production capabilities. Government spending in this area often surges during public health crises, as seen with COVID-19 related procurements.

Small Business Impact

The contract was not specifically set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a larger entity, and the direct impact on the small business ecosystem may be minimal unless Celltrion USA Inc. engages them for supply chain support.

Oversight & Accountability

Oversight will likely be managed by the Defense Logistics Agency (DLA) and the Department of Defense, focusing on contract performance, delivery schedules, and product quality. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

COVID-19 Testing Supplies
Pharmaceutical Manufacturing Contracts
Defense Health Agency Procurements
Medical Countermeasure Contracts

Risk Flags

Limited competition may impact price.
Supply chain vulnerability for critical medical items.
Potential for quality control issues with pharmaceutical products.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.6 million to CELLTRION USA INC. 8508632011!CELLTRION DIATRUST COVID-19

Who is the contractor on this award?

The obligated recipient is CELLTRION USA INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.6 million.

What is the period of performance?

Start: 2021-10-20. End: 2022-09-30.

What is Celltrion USA Inc.'s track record with government contracts, particularly for pharmaceutical products?

Celltrion USA Inc. has a history of engaging with government contracts, particularly in the healthcare and pharmaceutical sectors. While this specific award is for COVID-19 diagnostics, their broader portfolio may include other medical supplies or related services. Analyzing their past performance on similar contracts, including delivery timeliness, quality adherence, and any past disputes or issues, would provide a clearer picture of their reliability as a government supplier. Information from contract databases and past performance reviews can offer insights into their capabilities and consistency in meeting federal requirements.

How does the $37.6 million award compare to other government spending on COVID-19 diagnostics?

The $37.6 million award to Celltrion USA Inc. for COVID-19 diagnostics is a significant but not unprecedented sum within the context of federal pandemic response spending. Numerous contracts were awarded across various agencies (HHS, DoD, VA) for testing kits, reagents, and related supplies, often in the tens or hundreds of millions of dollars. To benchmark this specific award, one would compare its per-unit cost and total value against other contracts for similar diagnostic technologies (e.g., PCR tests, antigen tests) awarded around the same timeframe. Factors like volume, specific technology, and urgency influenced these values, making direct comparisons complex but essential for assessing value for money.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks include potential supply chain disruptions, product quality issues, or delays in delivery, especially given the urgency of pandemic response. The 'limited' competition structure could also pose a risk if it led to suboptimal pricing. Mitigation strategies likely involve robust quality assurance protocols mandated in the contract, clear delivery schedules with penalties for delays, and potentially contingency planning for alternative suppliers if feasible. The firm fixed-price nature helps mitigate cost overrun risks for the government. The Defense Logistics Agency's oversight is crucial for monitoring and addressing these risks proactively.

How effective has the Department of Defense been in procuring essential medical supplies during the COVID-19 pandemic?

The Department of Defense (DoD) played a significant role in procuring essential medical supplies during the COVID-19 pandemic, often leveraging its logistical capabilities and contracting expertise. Effectiveness varied across different phases and types of supplies. While the DoD successfully secured large volumes of critical items like PPE, ventilators, and diagnostics, challenges such as initial supply shortages, price volatility, and ensuring equitable distribution were present. Contracts like the one awarded to Celltrion USA Inc. demonstrate the DoD's commitment to acquiring necessary health resources, but a comprehensive assessment would require analyzing the overall success rate, cost-efficiency, and timeliness across its entire pandemic-related procurement portfolio.

What are the historical spending patterns for pharmaceutical preparation manufacturing by the Department of Defense?

Historical spending by the Department of Defense (DoD) on pharmaceutical preparation manufacturing has generally been consistent, focusing on maintaining readiness and supporting military health. However, this spending pattern saw a notable surge during the COVID-19 pandemic, with increased awards for diagnostics, therapeutics, and vaccines. Prior to the pandemic, spending would typically be allocated towards routine medical supplies, specialized medications for service members, and research and development. Analyzing historical data reveals a baseline level of procurement for operational needs, punctuated by significant increases during national health emergencies requiring rapid acquisition of large quantities of specific pharmaceutical products.

Industry Classification

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

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 EVERTRUST PLZ STE 1207, JERSEY CITY, NJ, 07302

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

Financial Breakdown

Contract Ceiling: $37,584,000

Exercised Options: $37,584,000

Current Obligation: $37,584,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE2DE21D0052

IDV Type: IDC

Timeline