HHS awards $175.7M contract for biotechnology R&D, with 4032 days duration

Contract Overview

Contract Amount: $175,744,128 ($175.7M)

Contractor: Hoffmann-La Roche Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2016-09-15

End Date: 2027-09-30

Contract Duration: 4,032 days

Daily Burn Rate: $43.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: R&D

Official Description: IGF::OT::IGF HOFFMANN-LAROCHE INC.

Place of Performance

Location: LITTLE FALLS, PASSAIC County, NEW JERSEY, 07424

State: New Jersey Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $175.7 million to HOFFMANN-LA ROCHE INC. for work described as: IGF::OT::IGF HOFFMANN-LAROCHE INC. Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. Long contract duration of 4032 days (over 11 years) indicates a long-term strategic investment. 3. Cost-plus-no-fee contract type may incentivize cost escalation without direct profit linkage. 4. Research and Development in Biotechnology is a critical sector for public health preparedness. 5. Contractor is Hoffmann-La Roche Inc., a major player in the pharmaceutical and biotech industry. 6. Awarded by the Office of Assistant Secretary for Preparedness and Response (ASPR), highlighting its alignment with emergency preparedness goals.

Value Assessment

Rating: fair

The contract value of $175.7 million over more than 11 years averages to approximately $15.5 million per year. Without specific deliverables or benchmarks for the R&D, it is difficult to assess value for money. The 'Cost-No-Fee' (Cost Plus Fixed Fee is more common) contract type is unusual and warrants further investigation into how costs are managed and whether there is sufficient incentive for efficiency. Benchmarking this against similar long-term, high-risk R&D contracts in biotechnology is challenging due to the unique nature of such investments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete. This suggests a healthy market for the services or research required. The number of bidders is not specified, but the open competition is a positive sign for price discovery and potentially achieving a fair market price for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and innovative solutions.

Public Impact

The primary beneficiaries are likely the public, through advancements in biotechnology relevant to health preparedness and response. The contract supports research and development activities, the specific outcomes of which will determine the services delivered. The geographic impact is centered in New Jersey, where Hoffmann-La Roche Inc. is located. Workforce implications may include employment opportunities for scientists, researchers, and support staff within the biotechnology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Cost-No-Fee' contract type is atypical and could potentially lead to less cost control compared to fixed-fee or incentive-fee structures.
The long duration of the contract (over 11 years) requires sustained oversight to ensure continued relevance and progress.
Assessing the true value for money is difficult without clear, measurable R&D milestones and outcomes.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
The contractor, Hoffmann-La Roche Inc., is a well-established entity in the biotechnology field, suggesting expertise.
The contract aligns with the mission of ASPR for preparedness and response, indicating strategic importance.

Sector Analysis

This contract falls within the Research and Development in Biotechnology sector, a rapidly evolving field crucial for public health, national security, and economic growth. The market is characterized by high innovation, significant investment, and long development cycles. Comparable spending benchmarks are difficult to establish for specific R&D efforts due to their unique nature, but overall federal investment in biomedical R&D is substantial, often involving partnerships with private industry and academic institutions.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information on subcontracting plans. Given the nature of the contractor (a large pharmaceutical company) and the R&D focus, it is possible that smaller, specialized firms could be involved as subcontractors, but this is not explicitly stated. The impact on the small business ecosystem would depend on whether subcontracting opportunities are pursued.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) and program managers within HHS/ASPR. Accountability measures would be tied to the research milestones and deliverables outlined in the contract. Transparency is generally facilitated through contract databases, but the specifics of R&D progress may be proprietary. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Biotechnology Research Programs
National Institutes of Health (NIH) Grants
Department of Defense (DoD) Medical Research
Advanced Research Projects Agency for Health (ARPA-H)

Risk Flags

Cost-No-Fee contract type may reduce contractor incentive for efficiency.
Long contract duration requires sustained oversight and adaptability.
R&D outcomes are inherently uncertain, posing a risk to investment.
Lack of specific performance metrics in summary data hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $175.7 million to HOFFMANN-LA ROCHE INC.. IGF::OT::IGF HOFFMANN-LAROCHE INC.

Who is the contractor on this award?

The obligated recipient is HOFFMANN-LA ROCHE 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 $175.7 million.

What is the period of performance?

Start: 2016-09-15. End: 2027-09-30.

What specific research areas or technologies does this contract aim to advance within biotechnology for preparedness?

The provided data does not specify the exact research areas or technologies. However, given the awarding agency (ASPR) and the sector (Biotechnology R&D), the contract likely focuses on developing novel countermeasures, diagnostics, therapeutics, or platform technologies relevant to emerging infectious diseases, chemical, biological, radiological, or nuclear (CBRN) threats, or other public health emergencies. ASPR's mission is to lead coordinated preparedness for the nation's health security, so the R&D would align with identifying and mitigating such threats. Further details would typically be found in the contract's statement of work or performance work statement.

How does the 'Cost-No-Fee' contract type compare to standard R&D contract structures, and what are its implications?

The 'Cost-No-Fee' (CNF) contract type is highly unusual, especially for R&D. Standard contract types for R&D often include Cost-Plus-Fixed-Fee (CPFF), Cost-Plus-Incentive-Fee (CPIF), or Firm-Fixed-Price (FFP) if the scope is well-defined. A CNF contract means the government reimburses the contractor for all allowable costs but provides no additional fee or profit. This structure typically incentivizes the contractor to minimize costs, as their profit is not tied to the cost incurred. However, for R&D, where innovation and achieving specific technical goals are paramount, this structure might disincentivize risk-taking or extensive exploration if it leads to higher costs without a corresponding fee. It could also raise questions about contractor motivation beyond cost reimbursement.

What is the track record of Hoffmann-La Roche Inc. in securing and executing large federal R&D contracts, particularly with HHS/ASPR?

Hoffmann-La Roche Inc. (Roche) is a global leader in pharmaceuticals and diagnostics, with a significant history of research and development. While specific data on their federal R&D contract awards is not detailed here, Roche has historically collaborated with government agencies, including NIH and BARDA (now part of ASPR), on various health initiatives and research projects. Their extensive experience in drug discovery, development, and manufacturing suggests a strong capability to undertake complex R&D efforts. However, the scale and specific nature of federal contracts can vary, and a deeper analysis would require examining their complete federal contracting history, including performance reviews and past project outcomes.

Given the 11+ year duration, how will the government ensure the R&D remains relevant and aligned with evolving public health threats?

The long duration of this contract necessitates robust oversight and flexibility. The government, through HHS/ASPR, would typically employ several mechanisms. These include regular performance reviews, milestone-based funding tranches, and contract modification clauses that allow for adjustments based on scientific advancements or changes in threat landscapes. The contract's statement of work would likely include provisions for periodic reviews of research direction and potential pivots. Furthermore, ASPR's strategic planning and threat assessments would inform ongoing dialogue with the contractor to ensure the R&D efforts remain aligned with national preparedness priorities throughout the contract's lifecycle.

What are the potential risks associated with a 'Cost-No-Fee' R&D contract of this magnitude and duration?

Several risks are associated with a 'Cost-No-Fee' R&D contract of this scale. Firstly, the lack of a fee might reduce the contractor's motivation to innovate aggressively or pursue high-risk, high-reward research avenues, as their compensation is solely based on cost reimbursement. Secondly, without a profit motive tied to successful outcomes, there could be less incentive for efficient resource utilization, potentially leading to cost overruns if not tightly managed. Thirdly, the government bears the full financial risk of the R&D's success or failure. Finally, the unusual contract type might attract scrutiny regarding fair pricing and contractor motivation, potentially impacting future procurements if not managed transparently and effectively.

How does this contract's value compare to other federal investments in biotechnology R&D for preparedness?

The $175.7 million award over approximately 11 years represents a significant, long-term investment in biotechnology R&D for preparedness. While it's difficult to make direct comparisons without knowing the specific R&D scope, this figure is substantial. For context, federal agencies like NIH and BARDA (now part of ASPR) manage portfolios of R&D investments that can range from smaller grants for early-stage research to multi-billion dollar programs for vaccine and therapeutic development. This contract appears to be a major commitment to a specific R&D effort, likely aimed at developing advanced capabilities or countermeasures. Its value should be assessed against the potential impact and strategic importance of the anticipated R&D outcomes.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Solicitation ID: BARDACBRNBAA16100SOL

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 340 KINGSLAND ST, NUTLEY, NJ, 07110

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

Financial Breakdown

Contract Ceiling: $251,744,128

Exercised Options: $175,744,128

Current Obligation: $175,744,128

Actual Outlays: $94,871,200

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline