HHS awards $624M for smallpox antiviral development, with SIGA Technologies Inc. as the sole awardee

Contract Overview

Contract Amount: $624,438,549 ($624.4M)

Contractor: Siga Technologies, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2018-09-10

End Date: 2029-08-30

Contract Duration: 4,007 days

Daily Burn Rate: $155.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: R&D

Official Description: PROCUREMENT AND LATE-STAGE DEVELOPMENT OF SMALLPOX ANTIVIRAL DRUG(S) IGF::OT::IGF

Place of Performance

Location: CORVALLIS, BENTON County, OREGON, 97333

State: Oregon Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $624.4 million to SIGA TECHNOLOGIES, INC. for work described as: PROCUREMENT AND LATE-STAGE DEVELOPMENT OF SMALLPOX ANTIVIRAL DRUG(S) IGF::OT::IGF Key points: 1. Contract value of $624.4M over 11 years suggests significant investment in a critical public health need. 2. The award to SIGA Technologies, Inc. for late-stage development indicates a focus on a specific, proven solution. 3. A long contract duration (through 2029) points to the complex and lengthy nature of drug development and potential scaling. 4. The firm fixed-price contract type aims to provide cost certainty for the government. 5. While the contract is for R&D, its ultimate goal is the procurement of a vital medical countermeasure. 6. The absence of small business set-asides is noted, given the specialized nature of the R&D.

Value Assessment

Rating: good

The total award of $624.4M over nearly 11 years for the procurement and late-stage development of a smallpox antiviral drug appears to be a substantial investment. Benchmarking this against other late-stage pharmaceutical development contracts is challenging without more specific data on the stage of development and the scope of work. However, the long duration and significant funding suggest a comprehensive effort. The firm fixed-price nature of the contract provides a degree of cost predictability for the government, assuming the contractor can meet milestones within the agreed-upon price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, the data specifies SIGA Technologies, Inc. as the awardee, and further details on the number of bids received or the competitive process are not provided. Full and open competition is generally preferred as it maximizes the pool of potential offerors and can lead to better pricing and innovation.

Taxpayer Impact: A full and open competition process, even if resulting in a single awardee, suggests that the government sought the best value from the market, potentially leading to more favorable terms for taxpayers compared to a sole-source award.

Public Impact

The primary beneficiaries are the U.S. public, who will have access to a critical antiviral medication in the event of a smallpox outbreak. The contract supports the development and potential procurement of a life-saving drug, enhancing national biodefense capabilities. The geographic impact is national, ensuring a supply of the drug for the entire United States. Workforce implications may include employment in research, development, manufacturing, and quality control within the pharmaceutical sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the number of bidders limits the assessment of the competitive landscape.
The long contract duration could introduce risks related to changing market conditions or scientific advancements.
The firm fixed-price nature requires careful monitoring to ensure the contractor meets all performance obligations.

Positive Signals

Awarded under full and open competition, suggesting a broad market search.
Firm fixed-price contract provides cost certainty for the government.
Focus on late-stage development implies a product nearing market readiness.
Long-term contract ensures sustained availability of a critical medical countermeasure.

Sector Analysis

This contract falls within the Biotechnology Research and Development sector, specifically focusing on pharmaceutical development for biodefense applications. The market for antivirals, particularly for rare or potential biothreat agents like smallpox, is specialized. Government investment plays a crucial role in incentivizing the development of such countermeasures, as the commercial market may not adequately support the high costs and uncertain demand. Comparable spending benchmarks would typically involve analyzing other government contracts for late-stage drug development or procurement of medical countermeasures.

Small Business Impact

The contract data indicates that small business set-asides were not utilized (ss: false, sb: false). This is common for large-scale, late-stage R&D contracts in the pharmaceutical sector, which often require significant infrastructure, specialized expertise, and substantial capital investment that may be beyond the capacity of many small businesses. The prime contractor, SIGA Technologies, Inc., is not explicitly identified as a small business in the provided data. There is no direct indication of subcontracting plans for small businesses within this award.

Oversight & Accountability

Oversight for this contract would likely be managed by 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 from the contractor, milestone reviews, and financial audits. The firm fixed-price nature of the contract provides a degree of accountability, as payment is tied to performance. Transparency would be facilitated through contract award databases and potentially public reports on the drug's development progress, though specific details of proprietary research may be protected.

Related Government Programs

Project BioShield
Strategic National Stockpile
Biomedical Advanced Research and Development Authority (BARDA) contracts
Antiviral drug development programs
Public health emergency preparedness

Risk Flags

Long contract duration may increase exposure to evolving scientific or market conditions.
Firm Fixed Price requires careful monitoring of contractor performance against milestones.
Sole awardee in a competitive process warrants scrutiny of the bidding landscape.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $624.4 million to SIGA TECHNOLOGIES, INC.. PROCUREMENT AND LATE-STAGE DEVELOPMENT OF SMALLPOX ANTIVIRAL DRUG(S) IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is SIGA TECHNOLOGIES, 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 $624.4 million.

What is the period of performance?

Start: 2018-09-10. End: 2029-08-30.

What is the track record of SIGA Technologies, Inc. in developing and delivering pharmaceutical products, particularly antivirals?

SIGA Technologies, Inc. has a notable history with smallpox antivirals, most prominently with their drug tecovirimat (TPOXX). This drug received FDA approval in 2018 for the treatment of human smallpox disease. The development of TPOXX was supported by significant government funding and contracts, including those from the Biomedical Advanced Research and Development Authority (BARDA). SIGA has experience navigating the regulatory pathways for drug approval and has been involved in supplying the Strategic National Stockpile. Their expertise lies in the research, development, and commercialization of medical countermeasures against bioterrorism threats. This contract likely builds upon that established relationship and technical capability.

How does the total contract value of $624.4 million compare to other government investments in late-stage antiviral drug development?

The $624.4 million awarded to SIGA Technologies over approximately 11 years is a substantial investment, reflecting the high costs associated with late-stage pharmaceutical development, clinical trials, and potential manufacturing scale-up for a critical medical countermeasure. Government investments in this area can vary widely depending on the specific disease target, the stage of development, and the number of potential candidates. Contracts for developing vaccines or therapeutics for emerging infectious diseases or biothreats can range from tens of millions to billions of dollars over their lifecycle. This particular award appears to be on the higher end for a single drug development program, underscoring the perceived importance of a robust smallpox antiviral supply.

What are the primary risks associated with a long-term contract (nearly 11 years) for drug development, and how are they mitigated?

Long-term drug development contracts carry several risks. Scientific risk is inherent, as research may not yield the desired results, or efficacy/safety issues could emerge during late-stage trials. Market risk exists, as the threat landscape or public health priorities could shift. Technological risk involves the possibility of newer, more effective treatments being developed by competitors. Contractual risks include potential cost overruns (though mitigated by firm fixed-price) or contractor performance issues. Mitigation strategies employed by the government typically include phased funding tied to specific milestones, rigorous performance monitoring, regular scientific and technical reviews, and contractual clauses allowing for termination if performance falters or if the drug proves unviable. The firm fixed-price structure also incentivizes the contractor to manage costs effectively.

What is the significance of the 'Research and Development in Biotechnology' (NAICS 541714) classification for this contract?

The NAICS code 541714, 'Research and Development in Biotechnology (except Nanobiotechnology),' signifies that the core activity funded by this contract is scientific research and experimental development in the fields of biotechnology. This includes activities like genetic engineering, pharmaceutical development, and the creation of biological products. For this specific contract, it means the funds are allocated towards the scientific investigation, testing, and refinement of smallpox antiviral drugs, likely involving laboratory work, preclinical studies, and clinical trials. This classification highlights the contract's focus on innovation and the advancement of scientific knowledge leading to a tangible product, rather than the simple procurement of an existing item.

Given the $624.4M award, what is the implied value or cost per year of this contract, and how does it relate to the overall R&D budget for biodefense?

The total award of $624.4 million spread over approximately 4007 days (from Sept 10, 2018, to Aug 30, 2029) equates to roughly $155,837 per day, or approximately $56.9 million per year. This annual figure represents a significant portion of the overall U.S. government's investment in biodefense R&D. Agencies like BARDA, within HHS, and the Department of Defense manage substantial portfolios of research and development contracts. While specific annual R&D budgets fluctuate, an award of this magnitude suggests a high priority placed on ensuring a robust supply of smallpox antivirals, potentially consuming a notable percentage of the budget allocated to specific therapeutic areas within the broader biodefense strategy.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in Biotechnology (except Nanobiotechnology)

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: 18100SOL00011

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 27 E 62ND ST, NEW YORK, NY, 10065

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: $624,438,549

Exercised Options: $624,438,549

Current Obligation: $624,438,549

Actual Outlays: $430,434,691

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline