HHS awarded $8.6M for biotech R&D, but competition was limited, raising value questions

Contract Overview

Contract Amount: $8,601,629 ($8.6M)

Contractor: Regeneron Pharmaceuticals Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2016-08-09

End Date: 2022-09-30

Contract Duration: 2,243 days

Daily Burn Rate: $3.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF

Place of Performance

Location: TARRYTOWN, WESTCHESTER County, NEW YORK, 10591

State: New York Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $8.6 million to REGENERON PHARMACEUTICALS INC for work described as: IGF::OT::IGF Key points: 1. The contract's value proposition is unclear due to limited competition and a cost-plus-fixed-fee structure. 2. Sole-source procurement limits price discovery and potentially inflates costs for taxpayers. 3. The long duration (2243 days) and cost-plus structure may indicate inherent project uncertainty or scope creep. 4. Performance context is limited, making it difficult to assess the contractor's effectiveness. 5. Biotechnology R&D is a high-risk, high-reward sector, necessitating robust oversight. 6. The contract's focus on R&D in biotechnology positions it within a critical but complex federal spending area.

Value Assessment

Rating: questionable

Benchmarking the value of this $8.6 million contract is challenging due to the lack of comparable sole-source awards in the public domain for similar R&D efforts. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher costs compared to fixed-price contracts if not managed tightly. Without detailed performance metrics and cost breakdowns, it's difficult to definitively assess if the government received excellent value for its investment. The absence of competition further complicates a fair price assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, REGENERON PHARMACEUTICALS INC, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified for unique capabilities or urgent needs, they significantly reduce price competition and may lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from a competitive bidding environment. This can result in a less efficient use of public funds.

Public Impact

The primary beneficiaries are likely the researchers and developers at REGENERON PHARMACEUTICALS INC, who receive funding for their work. The contract supports research and development in biotechnology, potentially leading to advancements in medical countermeasures or treatments. The geographic impact is concentrated in New York, where the contractor is located. Workforce implications include the employment of scientists, technicians, and support staff involved in the R&D activities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price discovery and potentially increases costs.
Cost-plus-fixed-fee structure can incentivize higher spending if not rigorously managed.
Long contract duration may indicate scope creep or unforeseen project complexities.
Limited public data makes independent value assessment difficult.

Positive Signals

Supports critical R&D in the biotechnology sector.
Contractor is a known entity in the pharmaceutical industry.
Fixed fee component provides some cost certainty for the contractor's effort.

Sector Analysis

The biotechnology R&D sector is characterized by high innovation, significant investment, and long development cycles. Federal spending in this area often supports basic research, drug development, and the creation of medical countermeasures. Comparable spending benchmarks are difficult to establish due to the specialized nature of R&D and the variability in project scope and outcomes. This contract fits within the broader federal investment in life sciences and public health preparedness.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large corporation, it does not directly contribute to the small business ecosystem or provide opportunities for small business set-asides. The focus is on the prime contractor's capabilities.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) monitoring performance and expenditures. Transparency is limited due to the sole-source nature and the proprietary aspects of R&D. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected. The effectiveness of oversight depends heavily on the diligence of the agency's contracting and technical staff.

Related Government Programs

Biotechnology Research and Development
Medical Countermeasures
Public Health Preparedness
Pharmaceutical Research Grants

Risk Flags

Limited Competition
Cost-Plus Contract Type
Long Contract Duration
Lack of Public Performance Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $8.6 million to REGENERON PHARMACEUTICALS INC. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is REGENERON PHARMACEUTICALS INC.

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 $8.6 million.

What is the period of performance?

Start: 2016-08-09. End: 2022-09-30.

What specific research objectives was this contract intended to achieve?

The provided data does not specify the exact research objectives for this $8.6 million contract awarded to REGENERON PHARMACEUTICALS INC. However, given the agency (HHS, specifically ASPR) and the NAICS code (541711 - Research and Development in Biotechnology), the contract likely supported the development of novel biotechnologies, potentially related to disease prevention, treatment, or public health emergencies. ASPR's mission often involves preparing for and responding to health threats, suggesting the R&D could have focused on areas like vaccine development, antiviral therapies, or diagnostic tools.

How does the cost-plus-fixed-fee structure compare to other R&D contracts in biotechnology?

Cost-plus-fixed-fee (CPFF) contracts are common in R&D because the final costs are often uncertain at the outset. This structure allows the contractor to recover allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF can offer less price certainty for the buyer but provides flexibility for evolving research needs. Benchmarking against similar sole-source CPFF R&D contracts is difficult without access to detailed contract terms and performance data. However, the fixed fee component aims to provide some incentive for the contractor to manage costs efficiently, as the fee does not increase with actual costs incurred.

What is the track record of REGENERON PHARMACEUTICALS INC with federal contracts?

REGENERON PHARMACEUTICALS INC has a history of receiving federal contracts, particularly from agencies like the Department of Health and Human Services (HHS) and the Department of Defense. Their work often involves significant research and development in areas such as infectious diseases, oncology, and immunology. While specific performance details for all contracts are not publicly available, their involvement in major public health initiatives, including vaccine and therapeutic development, suggests a substantial capacity and experience in the biotechnology sector. Analyzing past contract performance, including any awards or penalties, would require a deeper dive into federal procurement databases.

What are the potential risks associated with a sole-source award for R&D?

The primary risk of a sole-source award for R&D is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved through a competitive process. This can result in a less efficient use of taxpayer funds. Additionally, without the vetting process inherent in competition, there's a risk that the chosen contractor may not be the most innovative or cost-effective solution available. Sole-source awards can also raise concerns about fairness and equal opportunity for other qualified vendors. Justification for sole-source procurement typically requires demonstrating that only one responsible source can provide the required product or service.

How does the $8.6 million award compare to overall federal spending on biotechnology R&D?

An $8.6 million award is relatively modest within the broader context of federal spending on biotechnology R&D. Agencies like the National Institutes of Health (NIH), the Department of Defense, and the Department of Energy allocate billions of dollars annually to research in life sciences and biotechnology. This specific contract, awarded by HHS's ASPR, likely represents a targeted investment in a particular area of R&D, possibly related to specific public health threats or preparedness initiatives. While significant for the specific project, it is a small fraction of the total federal R&D budget in this sector.

What oversight is in place for a contract of this nature and duration?

For a contract like this, oversight typically involves a Contracting Officer's Representative (COR) who monitors the contractor's technical progress, ensures compliance with contract terms, and reviews invoices. Given the CPFF structure and long duration (2243 days, approx. 6 years), rigorous oversight is crucial. This would include regular progress reports from the contractor, site visits, and potentially independent technical reviews. The COR works closely with the contracting officer to manage the contract and ensure funds are being used appropriately for the stated R&D objectives. Audits by agency offices or the Government Accountability Office (GAO) could also occur.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in Biotechnology

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: BAA16100SOL00002

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 777 OLD SAW MILL RIVER RD, TARRYTOWN, NY, 10591

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

Financial Breakdown

Contract Ceiling: $10,760,115

Exercised Options: $8,601,629

Current Obligation: $8,601,629

Actual Outlays: $104,954

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline