DoD's $106M advanced development contract for hemorrhagic fever treatments shows mixed value and limited competition

Contract Overview

Contract Amount: $106,393,196 ($106.4M)

Contractor: Sarepta Therapeutics, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-07-14

End Date: 2014-07-02

Contract Duration: 1,449 days

Daily Burn Rate: $73.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 10

Pricing Type: COST PLUS INCENTIVE FEE

Sector: R&D

Official Description: ADVANCED DEVELOPMENT OF HEMORRHAGIC

Place of Performance

Location: CORVALLIS, BENTON County, OREGON, 97333

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $106.4 million to SAREPTA THERAPEUTICS, INC. for work described as: ADVANCED DEVELOPMENT OF HEMORRHAGIC Key points: 1. Contract value appears high relative to the duration and the nature of advanced development. 2. Limited competition raises concerns about price discovery and potential overpayment. 3. The contractor has a track record in similar therapeutic development, but specific performance metrics are not detailed. 4. This contract falls within the biotechnology R&D sector, a high-risk, high-reward area. 5. The definitive contract structure suggests a long-term relationship for a complex development effort. 6. The contract's focus on hemorrhagic fever addresses a critical public health and defense need.

Value Assessment

Rating: fair

The contract's total value of over $106 million for a 1449-day period (approximately 4 years) suggests a significant investment in advanced development. Benchmarking this against similar R&D contracts in biotechnology is challenging due to the specialized nature of the work. However, the cost-plus incentive fee structure implies that costs could exceed initial estimates, and the final value may be higher. Without detailed performance data or cost breakdowns, a precise value-for-money assessment is difficult, but the scale of funding warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the initial solicitation was broad, specific sources were later excluded. This suggests a limited competitive environment, potentially due to specialized capabilities required or proprietary technology. With only 10 bidders initially considered and the final award details not fully transparent regarding the number of actual competing proposals, it's difficult to ascertain the full extent of competition. This limited competition could impact price negotiation and potentially lead to less favorable terms for the government.

Taxpayer Impact: The limited competition means taxpayers may not have benefited from the most aggressive pricing that a broader, more open competition could have yielded. This could translate to higher overall program costs.

Public Impact

The primary beneficiaries are the public and military personnel through the development of potential treatments for hemorrhagic fevers. The services delivered involve advanced research and development in biotechnology, specifically focusing on therapeutic solutions. The geographic impact is primarily national, with potential global implications for disease control and preparedness. Workforce implications include highly skilled jobs in scientific research, development, and clinical trials.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in higher costs for taxpayers.
The cost-plus incentive fee structure carries inherent risks of cost overruns.
Lack of detailed performance metrics makes it difficult to assess the true value delivered.
The specialized nature of the R&D may limit the pool of qualified contractors, impacting future competition.

Positive Signals

Addresses a critical need for treatments against dangerous hemorrhagic fevers.
The contractor is likely experienced in advanced biotechnology development.
The definitive contract structure provides stability for a long-term R&D effort.
The R&D focus has the potential for significant public health benefits.

Sector Analysis

This contract falls within the Biotechnology Research and Development sector, a segment of the broader pharmaceutical and life sciences industry. This sector is characterized by high innovation, significant investment, and long development cycles, often with substantial government funding due to national security or public health implications. The market size for advanced therapeutics is vast, but individual contracts for specific disease areas like hemorrhagic fevers are niche. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of the target diseases and the developmental stage.

Small Business Impact

The contract details do not indicate any specific small business set-asides. Given the advanced R&D nature and the specialized field, it is likely that the prime contractor is a large entity. Subcontracting opportunities for small businesses may exist in specific areas like specialized testing, manufacturing support, or data analysis, but these are not explicitly detailed in the provided information. The overall impact on the small business ecosystem for this specific contract appears minimal unless significant subcontracting plans are in place.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is often limited in advanced R&D contracts due to proprietary information and national security concerns. Accountability measures would be tied to the achievement of specific milestones and performance objectives outlined in the contract, particularly those related to the cost-plus incentive fee structure.

Related Government Programs

Biotechnology Research and Development Contracts
Department of Defense Advanced Medical Research
Hemorrhagic Fever Countermeasure Development
Cost-Plus Incentive Fee Contracts
Therapeutic Development Programs

Risk Flags

Limited competition
Cost-plus contract risks
Lack of detailed performance metrics
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $106.4 million to SAREPTA THERAPEUTICS, INC.. ADVANCED DEVELOPMENT OF HEMORRHAGIC

Who is the contractor on this award?

The obligated recipient is SAREPTA THERAPEUTICS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $106.4 million.

What is the period of performance?

Start: 2010-07-14. End: 2014-07-02.

What is Sarepta Therapeutics, Inc.'s track record with government contracts, particularly in advanced development?

Sarepta Therapeutics, Inc. is primarily known for its work in developing genetic therapies for rare diseases. While this contract focuses on hemorrhagic fevers, their experience in complex biological research and development, navigating regulatory pathways, and managing large-scale projects is relevant. Their history includes significant government funding and partnerships, particularly with agencies focused on health and defense. Assessing their specific track record on this particular DoD contract would require examining performance reports, milestone achievements, and any past performance evaluations. Generally, companies in this space require a strong scientific foundation and the ability to manage long-term, high-risk R&D endeavors, which Sarepta appears to possess.

How does the $106 million contract value compare to similar advanced development contracts in biotechnology for disease countermeasures?

The $106 million value for a nearly four-year advanced development contract in biotechnology is substantial but not entirely out of line for complex R&D targeting serious diseases. Contracts for vaccine or therapeutic development, especially those involving novel platforms or targeting emerging threats, can range from tens to hundreds of millions of dollars. However, the 'value for money' is contingent on the specific milestones achieved, the scientific breakthroughs made, and the ultimate utility of the developed countermeasures. Without detailed performance data and comparison to other contracts for similar stages of development (e.g., preclinical to Phase I/II trials), it's difficult to definitively benchmark. The cost-plus incentive fee structure also introduces variability, meaning the final cost could differ significantly from the initial estimate.

What are the primary risks associated with this cost-plus incentive fee (CPIF) contract structure for advanced development?

The primary risks with a CPIF contract structure for advanced development are twofold. Firstly, it inherently allows for cost overruns, as the government agrees to pay the contractor's allowable costs plus a negotiated fee, which is adjusted based on performance against targets. This means the final cost to the government can exceed initial projections. Secondly, while the incentive fee aims to motivate cost efficiency and performance, the complexity of advanced R&D can make defining and measuring objective performance targets challenging. This can lead to disputes over whether incentives were earned or if the targets were appropriate. For taxpayers, the risk is paying a higher price than anticipated if costs escalate or performance targets are not met efficiently.

What does the 'Full and Open Competition After Exclusion of Sources' designation imply about the procurement process and potential cost savings?

This designation implies a multi-stage procurement process. Initially, the solicitation was open to all responsible sources ('Full and Open Competition'). However, at some point, specific sources were excluded before the final award. This exclusion could be due to various reasons, such as the need for highly specialized technology, proprietary information, or specific security requirements that only a limited number of entities could meet. While the initial open competition phase aims to maximize the bidder pool, the subsequent exclusion narrows it down. This limitation can reduce competitive pressure, potentially leading to higher prices for the government compared to a scenario where all initially interested parties were allowed to compete through to the final award decision.

How does this contract align with broader Department of Defense (DoD) or Department of the Army R&D priorities?

This contract aligns with DoD and Army priorities related to biodefense and medical countermeasures. The development of treatments for hemorrhagic fevers is crucial for protecting military personnel deployed globally and for national security against potential biological threats. The DoD invests heavily in research and development to stay ahead of evolving threats, including infectious diseases that could impact readiness or civilian populations. Contracts like this support the strategic goal of maintaining a healthy and ready force, as well as contributing to global health security initiatives. The focus on advanced development indicates a commitment to pushing the boundaries of medical science to address high-priority health risks.

What are the potential long-term implications of this contract for the development of treatments against emerging infectious diseases?

This contract has significant potential long-term implications. By investing in the advanced development of treatments for hemorrhagic fevers, the government is not only addressing an immediate need but also building foundational knowledge and capabilities in virology, immunology, and therapeutic development. The research conducted and the technologies developed could be adaptable to other emerging infectious diseases. Furthermore, fostering relationships with specialized biotechnology firms like Sarepta strengthens the nation's overall capacity to respond to future pandemics or biological threats. This contract contributes to a pipeline of potential medical countermeasures, enhancing national preparedness and public health resilience.

Industry Classification

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

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W9113M09R0008

Offers Received: 10

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 4575 SW RESEARCH WAY STE 200, CORVALLIS, OR, 97333

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $260,814,992

Exercised Options: $106,393,196

Current Obligation: $106,393,196

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline