NIH awards $41M contract for R&D services, with a significant portion allocated to a single vendor

Contract Overview

Contract Amount: $40,997,503 ($41.0M)

Contractor: Integrated Laboratory Systems, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2015-05-05

End Date: 2025-11-04

Contract Duration: 3,836 days

Daily Burn Rate: $10.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::CL,CT::IGF

Place of Performance

Location: DURHAM, DURHAM County, NORTH CAROLINA, 27709

State: North Carolina Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $41.0 million to INTEGRATED LABORATORY SYSTEMS, LLC for work described as: IGF::CL,CT::IGF Key points: 1. Contract awarded through full and open competition after exclusion of sources, indicating a competitive process with specific justifications. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not closely managed. 3. Performance period spans over 10 years, suggesting a long-term need for the services provided. 4. The contract is not set aside for small businesses, potentially limiting opportunities for smaller firms. 5. The primary place of performance is North Carolina, indicating a concentration of federal spending in that state. 6. Research and Development in Physical, Engineering, and Life Sciences (except Biotechnology) is the core service area.

Value Assessment

Rating: fair

The contract's value of $41 million over approximately 10 years for R&D services requires careful benchmarking against similar NIH contracts. The Cost Plus Fixed Fee (CPFF) structure necessitates robust oversight to ensure cost efficiency. Without specific details on deliverables and comparable market rates for the specialized R&D, a definitive value-for-money assessment is challenging. However, the duration suggests a sustained need and potentially a competitive pricing structure established during the initial award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while the initial solicitation was open, certain sources were excluded, suggesting a specific rationale or requirement that narrowed the competitive pool. The presence of two bids implies some level of competition, but the exclusion of other potential bidders may have limited the breadth of price discovery and innovation.

Taxpayer Impact: The limited competition, despite an initial open process, means taxpayers may not have benefited from the lowest possible price that a broader competition might have yielded. The justification for excluding sources needs to be thoroughly reviewed to ensure fairness and optimal use of funds.

Public Impact

The primary beneficiaries are likely researchers and institutions within the NIH ecosystem requiring specialized R&D support. Services delivered encompass Research and Development in the Physical, Engineering, and Life Sciences, excluding biotechnology. The geographic impact is concentrated in North Carolina, where the primary place of performance is located. Workforce implications include the creation or sustainment of jobs for scientists, researchers, and support staff in North Carolina.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type carries inherent risks of cost escalation if not managed diligently.
The 'exclusion of sources' in an otherwise 'full and open competition' raises questions about the breadth of competition and potential missed opportunities for cost savings.
Long contract duration (over 10 years) increases the risk of scope creep or misalignment with evolving research needs if not actively managed.

Positive Signals

Awarded under a 'full and open competition' framework, suggesting an attempt to solicit a wide range of offers initially.
The contract has a defined place of performance in North Carolina, potentially supporting regional economic development.
The specific NAICS code (541712) indicates a focus on specialized R&D, aligning with NIH's mission.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences (excluding biotechnology). The R&D sector is a critical component of federal spending, driving innovation and scientific advancement. Comparable spending benchmarks would involve analyzing other NIH or federal agency contracts for similar R&D services, considering the specialized nature of the work and the required expertise. The market size for such specialized R&D services is substantial, driven by government funding and private sector investment.

Small Business Impact

This contract was not set aside for small businesses, as indicated by 'ss: false' and 'sb: false'. This means that large businesses were eligible to compete and potentially win the award without specific requirements for subcontracting to small businesses. The absence of a small business set-aside or subcontracting plan may limit the direct participation of small businesses in this specific contract, although they might be involved indirectly through the prime contractor's supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program officials within the National Institutes of Health (NIH). Accountability measures are embedded in the Cost Plus Fixed Fee (CPFF) structure, requiring detailed cost reporting and justification. Transparency is generally maintained through contract databases and reporting requirements, though specific performance metrics and oversight activities may not be publicly detailed. The Inspector General's office for the Department of Health and Human Services would have jurisdiction over potential fraud, waste, or abuse.

Related Government Programs

NIH Research Grants
National Science Foundation (NSF) Research Programs
Department of Defense (DoD) R&D Contracts
Biomedical Research Initiatives

Risk Flags

Potential for cost overruns due to CPFF structure.
Limited competition may impact price discovery.
Long contract duration requires sustained oversight.
Justification for 'exclusion of sources' needs scrutiny.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $41.0 million to INTEGRATED LABORATORY SYSTEMS, LLC. IGF::CL,CT::IGF

Who is the contractor on this award?

The obligated recipient is INTEGRATED LABORATORY SYSTEMS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $41.0 million.

What is the period of performance?

Start: 2015-05-05. End: 2025-11-04.

What is the specific nature of the R&D services provided under this contract?

The contract, NAICS code 541712, covers 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology).' While the data does not specify the exact research areas, it implies work in fields such as physics, chemistry, materials science, various engineering disciplines, and biological sciences excluding direct biotechnology applications. The services likely involve hypothesis testing, experimentation, data analysis, and reporting to advance scientific knowledge and potentially develop new technologies or methodologies relevant to the NIH's mission. The Cost Plus Fixed Fee structure suggests that the scope might be complex or evolving, requiring flexibility in research direction.

How does the pricing structure (Cost Plus Fixed Fee) compare to other R&D contracts at NIH?

Cost Plus Fixed Fee (CPFF) contracts are common for R&D where the scope of work is not precisely defined at the outset, allowing for flexibility as research progresses. Compared to fixed-price contracts, CPFF offers less price certainty for the government but can be advantageous when dealing with uncertain R&D outcomes. Benchmarking requires comparing the fixed fee percentage and the estimated cost base against similar CPFF R&D contracts awarded by NIH or other agencies. A higher fixed fee or significantly higher estimated costs than comparable contracts could indicate potential value concerns, necessitating close monitoring of the contractor's cost management and efficiency.

What are the key performance indicators (KPIs) and how is performance being measured?

Specific Key Performance Indicators (KPIs) and performance measurement details are not provided in the summary data. However, for a CPFF R&D contract, performance is typically measured against milestones, deliverables, scientific merit of the research conducted, adherence to budget, and timely reporting. The contracting officer's representative (COR) would likely be responsible for monitoring progress, reviewing interim reports, and ensuring the research aligns with the contract's objectives. The fixed fee is contingent upon satisfactory performance, incentivizing the contractor to meet agreed-upon standards.

What is the track record of INTEGRATED LABORATORY SYSTEMS, LLC with federal contracts, particularly with NIH?

INTEGRATED LABORATORY SYSTEMS, LLC has a history of federal contracting, as indicated by this award. To assess their track record, one would need to examine their past performance on similar contracts, including their ability to meet cost, schedule, and performance requirements. Data on past performance ratings, any contract disputes, or awards/incentives would provide further insight. Their success in winning this significant, long-term contract with NIH suggests a positive past performance history, but a deeper dive into contract databases and performance reviews is necessary for a comprehensive evaluation.

What is the significance of 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' for this contract?

This award clause indicates that the solicitation was initially intended to be open to all responsible sources. However, specific sources were subsequently excluded from consideration. This exclusion must be justified, often due to reasons like proprietary data, unique capabilities, or specific national security concerns. While it allows for competition among the remaining eligible bidders, it inherently limits the pool compared to true 'full and open' competition. The justification for exclusion is critical for understanding if the government secured the best possible value and if the process was fair and transparent.

How does the $41 million award compare to historical spending on similar R&D services by NIH?

The $41 million award over approximately 10 years represents an average annual spend of roughly $4.1 million. To assess its comparability, one would need to analyze NIH's historical spending on contracts with NAICS code 541712 and similar contract types (CPFF). This involves looking at the number of similar contracts awarded, their average values, durations, and the range of spending. If this contract's total value or annual average falls within the typical range for similar R&D services, it suggests consistent spending patterns. Significant deviations might warrant further investigation into the specific scope or market conditions.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: NIHES201400003

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Inotiv, Inc

Address: 601 KEYSTONE PARK DR STE 200, MORRISVILLE, NC, 27560

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Small Business, Special Designations, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $40,997,503

Exercised Options: $40,997,503

Current Obligation: $40,997,503

Actual Outlays: $19,343,738

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline