HHS awards $280M+ to Regeneron for biotech R&D, with a 5-year performance period

Contract Overview

Contract Amount: $279,610,568 ($279.6M)

Contractor: Regeneron Pharmaceuticals Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2017-09-21

End Date: 2027-09-24

Contract Duration: 3,655 days

Daily Burn Rate: $76.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST SHARING

Sector: R&D

Official Description: IGF::OT::IGF - REGENERON OTHER TRANSACTION AUTHORITY (OTA) AWARD

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 $279.6 million to REGENERON PHARMACEUTICALS INC for work described as: IGF::OT::IGF - REGENERON OTHER TRANSACTION AUTHORITY (OTA) AWARD Key points: 1. Contract value exceeds $279M, indicating significant investment in biotechnology research. 2. Awarded under Full and Open Competition, suggesting a broad market search. 3. Performance period spans over 9 years, allowing for long-term research objectives. 4. The contract type is a Definitive Contract, typically used for established requirements. 5. Focus on Research and Development in Biotechnology (NAICS 541711) aligns with national health priorities. 6. Cost Sharing payment type may indicate shared risk and reward between government and contractor.

Value Assessment

Rating: good

The contract value of over $279 million for biotechnology R&D is substantial. Benchmarking this against similar large-scale research initiatives is challenging without more specific project details. However, the Cost Sharing payment type suggests a potential for value if Regeneron also invests significant resources. The 9-year performance period allows for sustained development, which can be cost-effective for complex research projects.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under Full and Open Competition, indicating that the government sought proposals from all responsible sources. The number of bidders is not specified, but this approach generally fosters competitive pricing and innovation. The open competition suggests that Regeneron's proposal was deemed the most advantageous based on the evaluation criteria.

Taxpayer Impact: A full and open competition process is generally favorable for taxpayers as it aims to secure the best value by considering a wide range of potential providers and encouraging competitive offers.

Public Impact

This contract directly benefits Regeneron Pharmaceuticals Inc. by providing significant funding for their research and development activities. The services delivered are focused on advancing biotechnology research, potentially leading to new medical treatments or diagnostic tools. The geographic impact is primarily in New York (ST), where Regeneron is headquartered and likely conducts its research. Workforce implications may include job creation and retention within Regeneron's research and development divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long performance period (over 9 years) could lead to cost overruns if project scope changes or milestones are not met.
Cost Sharing payment type requires careful monitoring to ensure Regeneron's contribution is substantial and aligned with project goals.
The specific R&D objectives are not detailed, making it difficult to assess the likelihood of successful outcomes and return on investment.
Reliance on a single contractor for such a large award warrants scrutiny of their track record and capacity.

Positive Signals

Awarded through Full and Open Competition, suggesting a competitive process that likely secured favorable terms.
Significant government investment signals commitment to advancing critical biotechnology research.
The long performance period allows for the pursuit of complex, long-term research goals that may not be feasible with shorter contracts.
Cost Sharing model can incentivize contractor performance and efficient resource utilization.

Sector Analysis

This contract falls within the Biotechnology Research and Development sector, a rapidly growing and critical area for public health and economic development. The market is characterized by high innovation, significant R&D investment, and a mix of large pharmaceutical companies and smaller biotech firms. Government funding plays a crucial role in de-risking early-stage research and accelerating the development of novel therapies. Comparable spending benchmarks would depend on the specific therapeutic area or technology being researched, but awards of this magnitude are typical for advanced R&D projects.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large award to a major pharmaceutical company, the primary impact on small businesses would likely be indirect, potentially through subcontracting opportunities if Regeneron engages smaller specialized firms. However, without specific subcontracting plans detailed in the award, the direct impact on the small business ecosystem is likely minimal.

Oversight & Accountability

Oversight for this contract would likely fall under the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). Mechanisms would include regular progress reports, financial audits, and milestone reviews. Transparency is generally maintained through contract award databases, though specific project details may be proprietary. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Biotechnology Research Grants
Advanced Medical Research Programs
National Institutes of Health (NIH) Funding
Department of Defense (DoD) R&D Contracts
Biopharmaceutical Development Initiatives

Risk Flags

Long-term R&D projects carry inherent uncertainty regarding successful outcomes.
Cost sharing requires careful monitoring to ensure contractor's financial commitment.
Potential for technological shifts to impact research relevance over 9 years.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $279.6 million to REGENERON PHARMACEUTICALS INC. IGF::OT::IGF - REGENERON OTHER TRANSACTION AUTHORITY (OTA) AWARD

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 $279.6 million.

What is the period of performance?

Start: 2017-09-21. End: 2027-09-24.

What is Regeneron's track record with government R&D contracts, particularly those of similar scale and scope?

Regeneron Pharmaceuticals Inc. has a history of engaging with government agencies, including significant work with the National Institutes of Health (NIH) and the Biomedical Advanced Research and Development Authority (BARDA), a division within HHS. Their involvement often centers on developing therapeutics for infectious diseases and other public health threats. While specific contract values and performance details are often proprietary, their role in developing treatments during public health crises, such as COVID-19, demonstrates their capacity for large-scale R&D projects. This particular contract, valued at over $279 million and spanning nearly a decade, represents a substantial commitment, suggesting a strong prior relationship or a highly competitive bid process based on their established expertise and infrastructure in biotechnology.

How does the $279.6 million award compare to typical government spending on biotechnology R&D?

The $279.6 million award to Regeneron is a significant investment, placing it among the larger government contracts for biotechnology research and development. Government spending in this sector is substantial, with agencies like NIH, BARDA, and DoD frequently awarding contracts in the tens to hundreds of millions of dollars for promising research. For instance, NIH alone awards billions annually across various research areas. This specific award, however, is notable due to its long performance period (over 9 years) and its focus under ASPR, which often targets preparedness and response capabilities. Compared to typical grants or smaller research projects, this award signifies a strategic, long-term commitment to a specific area of biotechnology development, likely aimed at addressing critical national health security or medical advancement goals.

What are the primary risks associated with a long-term (9+ year) R&D contract of this magnitude?

The primary risks associated with a long-term R&D contract of this magnitude include scope creep, technological obsolescence, and potential shifts in research priorities or funding availability. For a 9+ year project, the scientific landscape can change dramatically, potentially rendering the initial research objectives less relevant or superseded by new discoveries. There's also the risk that the contractor may not achieve the desired breakthroughs within the projected timeline, leading to cost overruns or the need for contract modifications. Furthermore, government funding priorities can evolve, especially in response to emerging threats or policy changes, which could impact the sustained commitment to the project. Robust oversight, clear milestone definitions, and flexible contract management are crucial to mitigate these risks.

What does the 'Cost Sharing' payment type imply for the government and Regeneron?

The 'Cost Sharing' payment type implies that both the government and Regeneron Pharmaceuticals Inc. will bear a portion of the project's costs. This model is often used in R&D to align incentives and distribute risk. The government typically agrees to pay for a certain percentage of allowable costs, while Regeneron is responsible for the remainder. This arrangement can encourage Regeneron to manage costs effectively and pursue the research diligently, as they have a direct financial stake in the project's success. For the government, it can be a way to leverage private sector investment and expertise, potentially achieving research goals that might be too costly or risky to undertake solely with public funds. The exact cost-sharing ratio would be defined in the contract terms.

How does this contract fit into the broader strategy of the Office of Assistant Secretary for Preparedness and Response (ASPR)?

This contract aligns directly with the mission of the Office of Assistant Secretary for Preparedness and Response (ASPR), which focuses on preparing the nation for the health effects of public health emergencies. By funding advanced biotechnology R&D, ASPR aims to develop novel medical countermeasures, diagnostics, and treatments that can be rapidly deployed during crises, such as pandemics or bioterrorism events. The significant investment and long-term nature of the award suggest a strategic focus on building or enhancing capabilities in a specific area of biotechnology deemed critical for national health security. This proactive approach allows the government to foster innovation and ensure the availability of cutting-edge medical solutions before they are urgently needed.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: BAA16100SOL00002

Offers Received: 1

Pricing Type: COST SHARING (T)

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: $360,378,154

Exercised Options: $279,610,568

Current Obligation: $279,610,568

Actual Outlays: $236,209,507

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline