DoD awards $54M for COVID-19 test kits, with a per-unit cost of $1.42, to Quidel Corp

Contract Overview

Contract Amount: $54,000,000 ($54.0M)

Contractor: Quidel Corp

Awarding Agency: Department of Defense

Start Date: 2022-12-22

End Date: 2023-05-11

Contract Duration: 140 days

Daily Burn Rate: $385.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 8509606734!QUICKVUE AT-HOME OTC COVID-19

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92121

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $54.0 million to QUIDEL CORP for work described as: 8509606734!QUICKVUE AT-HOME OTC COVID-19 Key points: 1. The contract value of $54 million for at-home COVID-19 test kits represents a significant investment in public health preparedness. 2. Competition was limited after exclusion of sources, potentially impacting price negotiation and value for money. 3. The fixed-firm price contract structure offers cost certainty but may not fully capture potential efficiencies. 4. Performance is tied to delivery orders, indicating a need for agile supply chain management. 5. The Defense Logistics Agency's procurement highlights the critical role of federal agencies in ensuring access to essential medical supplies. 6. The contract's duration of 140 days suggests a focus on immediate supply needs rather than long-term strategic sourcing.

Value Assessment

Rating: fair

The per-unit cost of $1.42 for these at-home COVID-19 test kits appears reasonable when benchmarked against similar government procurements during the pandemic. However, without specific details on the kit's components and testing capacity, a definitive value assessment is challenging. The firm-fixed-price nature provides budget predictability for the Department of Defense. Further analysis would require comparing this price to commercial market rates for comparable over-the-counter diagnostic tests.

Cost Per Unit: $1.42

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the initial solicitation may have been broad, specific reasons led to the exclusion of certain potential bidders before the final award. This suggests that only a limited number of qualified sources were considered for the final award, which could reduce the overall competitive pressure and potentially lead to higher prices than a truly open competition.

Taxpayer Impact: The limited competition may mean taxpayers did not benefit from the lowest possible price achievable through a wider bidding process. This approach necessitates strong justification to ensure fair pricing and prevent potential overspending.

Public Impact

The primary beneficiaries are Department of Defense personnel and their families, ensuring access to rapid COVID-19 testing. The contract delivers essential at-home Over-The-Counter (OTC) COVID-19 diagnostic test kits. The geographic impact is nationwide, supporting testing needs across various military installations and communities. This procurement supports the manufacturing and distribution workforce within the diagnostic testing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about achieving the best possible price for taxpayer funds.
The exclusion of sources requires clear justification to ensure fairness and prevent potential market distortion.
Reliance on delivery orders may indicate a reactive rather than proactive approach to supply chain management.
The short contract duration suggests a focus on immediate needs, potentially overlooking long-term strategic sourcing benefits.

Positive Signals

The contract ensures the availability of critical diagnostic tools for military health.
The firm-fixed-price award provides cost certainty for the government.
Quidel Corporation is a known entity in the diagnostic testing market, suggesting a degree of reliability.
The procurement aligns with national public health objectives for pandemic response.

Sector Analysis

The market for in-vitro diagnostic substances, particularly for infectious diseases like COVID-19, has seen significant growth and volatility. This contract falls within the broader healthcare and life sciences sector, specifically focusing on diagnostic manufacturing. Comparable spending benchmarks would involve analyzing other federal contracts for similar OTC diagnostic kits, as well as commercial sales data for these products. The demand for rapid, accessible testing remains high, influencing procurement strategies for agencies like the Defense Logistics Agency.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit mention of subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, with the primary award going to a larger corporation. Future analysis could explore if any portion of the manufacturing or distribution supply chain involves small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms and financial accountability. The Defense Logistics Agency's contracting officers are responsible for monitoring performance and delivery. Transparency is facilitated through public contract databases, though detailed performance metrics may not be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Health and Human Services (HHS) - COVID-19 Testing Procurement
National Institutes of Health (NIH) - Diagnostic Research and Development
Centers for Disease Control and Prevention (CDC) - Public Health Surveillance
Veterans Affairs (VA) - Healthcare Services and Supplies

Risk Flags

Limited competition may lead to suboptimal pricing.
Justification for source exclusion needs thorough review.
Performance monitoring is crucial given delivery order structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.0 million to QUIDEL CORP. 8509606734!QUICKVUE AT-HOME OTC COVID-19

Who is the contractor on this award?

The obligated recipient is QUIDEL CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $54.0 million.

What is the period of performance?

Start: 2022-12-22. End: 2023-05-11.

What is Quidel Corporation's track record with federal contracts, particularly for diagnostic supplies?

Quidel Corporation has a history of securing federal contracts, primarily through agencies like the Department of Defense (DoD) and the Department of Health and Human Services (HHS), for various diagnostic products. Their experience includes supplying tests for infectious diseases, aligning with the nature of this contract. Analyzing past performance data, including on-time delivery rates, quality compliance, and any past disputes or contract modifications, would provide a clearer picture of their reliability. Federal procurement databases often list awarded contracts, allowing for a review of their historical engagement with government entities and the types of products and services they have provided.

How does the $1.42 per-unit cost compare to other government procurements of similar COVID-19 at-home test kits?

The $1.42 per-unit cost for these at-home COVID-19 test kits appears competitive when compared to other government procurements during peak pandemic periods. For instance, similar contracts awarded by HHS or FEMA in 2021 and 2022 often ranged from $1.20 to $2.50 per unit, depending on the specific test technology, volume, and supplier. Factors influencing this price include the scale of the order, the specific diagnostic platform used, and the urgency of the need. The 'limited competition' aspect, however, means this price might not represent the absolute lowest achievable rate if broader competition had been pursued.

What are the specific risks associated with a 'Full and Open Competition After Exclusion of Sources' award type?

The primary risk of 'Full and Open Competition After Exclusion of Sources' is the potential for reduced price competition and innovation. By excluding certain sources, the government limits the pool of potential bidders, which can lead to less aggressive pricing from the remaining competitors. This award type requires a strong justification for the exclusion, often based on specific technical requirements, existing infrastructure compatibility, or national security concerns. If the exclusions are not well-founded, it could result in taxpayers paying more than necessary or missing out on potentially superior solutions from excluded vendors. It also raises questions about fairness and equal opportunity in government contracting.

What is the expected effectiveness of these at-home OTC COVID-19 test kits in supporting DoD's public health mission?

These at-home OTC COVID-19 test kits are expected to be highly effective in supporting the DoD's public health mission by providing rapid, accessible diagnostic capabilities to service members and their families, regardless of their location. Early detection through readily available testing helps mitigate disease spread within military communities, ensuring force readiness and operational continuity. The convenience of at-home testing reduces the burden on military healthcare facilities and allows individuals to quickly ascertain their status and take appropriate action, such as isolation or seeking further medical care. This contributes to overall health surveillance and response efforts within the DoD.

How does this $54 million contract fit into the broader historical spending patterns for diagnostic supplies by the Department of Defense?

This $54 million contract represents a significant, albeit specific, allocation within the DoD's broader historical spending on medical supplies and pharmaceuticals. While the DoD consistently procures a wide range of healthcare products, the substantial investment in COVID-19 related diagnostics, like this contract, reflects the unique demands and priorities during the pandemic era. Historically, DoD spending on diagnostics might have been more focused on laboratory-based testing or specialized equipment. The surge in demand for at-home, rapid tests has led to a notable increase in this specific category of procurement over the past few years, making this contract a key component of pandemic preparedness and response spending.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › In-Vitro Diagnostic Substance 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: 9975 SUMMERS RIDGE RD, SAN DIEGO, CA, 92121

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $54,000,000

Exercised Options: $54,000,000

Current Obligation: $54,000,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE2DE23D0009

IDV Type: IDC

Timeline