HHS awards $56.6M to Janssen for R&D in Biotechnology, spanning over 7 years

Contract Overview

Contract Amount: $56,599,309 ($56.6M)

Contractor: Janssen Research & Development, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2018-09-21

End Date: 2025-12-31

Contract Duration: 2,658 days

Daily Burn Rate: $21.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST SHARING

Sector: R&D

Official Description: JANSSEN - TPOM OT AGREEMENT

Place of Performance

Location: RARITAN, SOMERSET County, NEW JERSEY, 08869

State: New Jersey Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $56.6 million to JANSSEN RESEARCH & DEVELOPMENT, LLC for work described as: JANSSEN - TPOM OT AGREEMENT Key points: 1. Contract value represents a significant investment in biotechnology research. 2. Full and open competition suggests a robust bidding process. 3. Long contract duration (over 7 years) indicates a sustained research effort. 4. Cost-sharing arrangement implies shared financial risk and commitment. 5. The contract aligns with national priorities in health preparedness and response. 6. Biotechnology R&D is a critical sector for future medical advancements.

Value Assessment

Rating: good

The contract value of $56.6 million over approximately 7.5 years suggests a substantial but not excessive investment for a definitive contract in biotechnology R&D. Benchmarking against similar large-scale R&D agreements in the biotech sector would be necessary for a precise value-for-money assessment. However, the cost-sharing nature of the contract indicates a degree of financial prudence, as the government's expenditure is supplemented by the contractor's contribution. The duration also suggests a phased approach to research, potentially allowing for adjustments based on interim findings.

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 a bid. This process is generally expected to foster competitive pricing and encourage innovation. The number of bidders is not specified, but the 'full and open' designation implies a market that was accessible to multiple potential contractors. This level of competition is favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it increases the likelihood of securing the best possible value by allowing a wide range of qualified contractors to compete, potentially driving down costs and improving service quality.

Public Impact

Janssen Research & Development, LLC, the primary beneficiary, will conduct critical R&D activities. The services delivered are focused on advancing biotechnology, likely contributing to public health preparedness and response capabilities. The geographic impact is centered in New Jersey, where Janssen's operations are located. The contract supports a specialized workforce within the biotechnology R&D sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term nature of the contract could lead to cost overruns if research objectives are not met efficiently.
Reliance on a single contractor for a significant R&D effort may limit broader market engagement.
The specific R&D outcomes are inherently uncertain, posing a risk to the return on investment.

Positive Signals

Full and open competition suggests a strong initial vetting of potential contractors.
Cost-sharing model demonstrates contractor commitment and shared risk.
The contract's alignment with the Office of Assistant Secretary for Preparedness and Response (ASPR) indicates strategic importance.
Long duration allows for in-depth research and development.

Sector Analysis

This contract falls within the Biotechnology R&D sector, a rapidly evolving field critical for advancements in medicine, diagnostics, and therapeutics. The market for biotechnology research is characterized by high innovation, significant investment, and long development cycles. This contract, awarded by HHS, likely supports efforts related to public health preparedness and response, a key area for government investment. Comparable spending benchmarks would typically involve other large-scale R&D grants or contracts awarded to major pharmaceutical and biotech firms for similar research objectives.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale R&D agreement with a major pharmaceutical entity, it is unlikely to involve significant subcontracting opportunities for small businesses unless specifically mandated or if Janssen opts to engage them for specialized services. The primary impact is on the large prime contractor, with limited direct implications for the broader small business ecosystem in this specific award.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). Mechanisms likely include regular progress reports, milestone reviews, and financial audits to ensure adherence to the contract terms and efficient use of funds. Transparency is generally maintained through contract award databases, though specific research details may be proprietary. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Biotechnology Research and Development Grants
Public Health Emergency Preparedness Programs
Medical Countermeasures Development
Pharmaceutical Research Contracts

Risk Flags

Long contract duration may increase exposure to changing research landscapes or priorities.
Biotechnology R&D is inherently high-risk, with uncertain outcomes.
Potential for cost overruns exists in long-term research projects.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $56.6 million to JANSSEN RESEARCH & DEVELOPMENT, LLC. JANSSEN - TPOM OT AGREEMENT

Who is the contractor on this award?

The obligated recipient is JANSSEN RESEARCH & DEVELOPMENT, LLC.

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 $56.6 million.

What is the period of performance?

Start: 2018-09-21. End: 2025-12-31.

What is the track record of Janssen Research & Development, LLC with government contracts, particularly with HHS?

Janssen Research & Development, LLC, a subsidiary of Johnson & Johnson, has a history of engaging with government agencies, including HHS, on various research and development initiatives. While specific details of past performance on similar definitive contracts are not provided in this data snippet, their status as a major pharmaceutical and biotechnology company suggests extensive experience in navigating complex R&D projects and government contracting requirements. A thorough review would involve examining their past award history, performance evaluations (if publicly available), and any documented instances of successful or problematic contract execution with federal entities to assess their reliability and capability for this specific agreement.

How does the $56.6 million value compare to similar biotechnology R&D contracts awarded by HHS or other agencies?

The $56.6 million contract value over approximately 7.5 years for biotechnology R&D is substantial, reflecting the high costs associated with drug discovery and development. To benchmark this value, one would compare it to other definitive contracts or grants awarded by HHS, NIH, BARDA, or DoD to large pharmaceutical companies for similar research areas, such as vaccine development, antiviral research, or novel therapeutic platforms. Factors like the specific research scope, duration, and inclusion of cost-sharing would influence comparisons. Without access to a comprehensive database of comparable contracts, it's difficult to definitively state if this represents excellent or fair value, but it aligns with the significant investments typically seen in this sector.

What are the primary risks associated with this long-term biotechnology R&D contract?

The primary risks associated with this long-term biotechnology R&D contract include scientific uncertainty, as research outcomes are inherently unpredictable, potentially leading to delays or failure to achieve objectives. There's also a financial risk of cost overruns if research proves more complex or expensive than initially projected, despite the cost-sharing mechanism. Furthermore, market or regulatory changes could impact the relevance or viability of the research findings during the contract's extended duration. Contractor performance risk, though mitigated by competition and oversight, remains a factor, as does the potential for shifts in government priorities or funding availability over the 7.5-year period.

How effective is the 'full and open competition' process in ensuring value for taxpayer money in R&D contracts of this nature?

The 'full and open competition' process is generally considered highly effective in ensuring value for taxpayer money, especially for R&D contracts. By allowing all responsible sources to compete, it fosters a competitive environment that encourages contractors to offer their best technical solutions and pricing. This broad participation increases the likelihood that the government will select the most capable contractor at a reasonable price. For R&D, it also promotes innovation by bringing diverse approaches to the table. While R&D outcomes are uncertain, the competitive process helps ensure that the government is investing in well-vetted proposals from qualified entities, maximizing the potential for a positive return on investment.

What are the implications of the 'cost sharing' (PT: COST SHARING) aspect of this contract for the government and the contractor?

The 'cost sharing' aspect of this contract implies that both the government and Janssen Research & Development, LLC will bear a portion of the research costs. This arrangement serves multiple purposes: it demonstrates the contractor's commitment and belief in the project's potential, aligning their financial interests with the government's. For the government, it can reduce the direct financial outlay, potentially allowing funds to be stretched further or allocated to other priorities. It also acts as a risk-mitigation tool, as the contractor shares in the financial downside if the research does not yield the expected results. The specific cost-sharing ratio would be detailed in the contract, defining the exact financial responsibilities.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in Biotechnology (except Nanobiotechnology)

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: BAA18100SOL00003

Offers Received: 1

Pricing Type: COST SHARING (T)

Evaluated Preference: NONE

Contractor Details

Parent Company: Johnson & Johnson

Address: 920 US HWY 202, RARITAN, NJ, 08869

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

Financial Breakdown

Contract Ceiling: $226,435,186

Exercised Options: $56,599,309

Current Obligation: $56,599,309

Actual Outlays: $29,670,608

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline