HHS awards $86.6M contract for burn wound imaging tech development to Spectral MD, Inc

Contract Overview

Contract Amount: $86,574,404 ($86.6M)

Contractor: Spectral MD, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2023-09-30

End Date: 2030-09-30

Contract Duration: 2,557 days

Daily Burn Rate: $33.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: DEVELOPMENT OF A BURN WOUND IMAGING TECHNOLOGY DEVICE

Place of Performance

Location: DALLAS, DALLAS County, TEXAS, 75201

State: Texas Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $86.6 million to SPECTRAL MD, INC. for work described as: DEVELOPMENT OF A BURN WOUND IMAGING TECHNOLOGY DEVICE Key points: 1. Contract aims to advance burn wound imaging technology, potentially improving patient outcomes and reducing healthcare costs. 2. The award represents a significant investment in novel medical technology development within the biotechnology sector. 3. Performance period extends over 7 years, suggesting a long-term commitment to technology maturation and validation. 4. The contract's cost-plus-fixed-fee structure incentivizes efficient cost management while ensuring contractor effort. 5. Research and Development in Biotechnology is a critical area for national health security and preparedness. 6. The geographic location of the contractor in Texas may have implications for regional economic development and specialized workforce.

Value Assessment

Rating: good

The contract value of $86.6 million over approximately 7 years for the development of a novel burn wound imaging technology appears reasonable given the R&D nature of the work. Benchmarking is difficult without specific details on comparable technologies in development, but the investment aligns with significant R&D efforts in advanced medical devices. The cost-plus-fixed-fee (CPFF) pricing structure is common for research and development where costs can be uncertain, allowing for flexibility while providing a defined profit margin for the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. With 3 bidders, the competition level suggests a healthy interest in this technological area. This level of competition is generally favorable for price discovery and ensuring the government receives competitive proposals, although the specific nature of R&D can sometimes limit the number of highly specialized bidders.

Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by fostering a competitive environment that drives down costs and encourages innovation.

Public Impact

The primary beneficiaries are expected to be patients suffering from burn wounds, who could receive more accurate and timely diagnoses leading to better treatment outcomes. The contract will deliver a developed and validated burn wound imaging technology device. The geographic impact is primarily focused on Texas, where the contractor is located, potentially creating specialized jobs and contributing to the local economy. Workforce implications include the potential for highly skilled jobs in biotechnology research, development, and engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The long performance period (7 years) could introduce risks related to technological obsolescence or shifts in medical needs.
Cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not closely monitored, despite the fixed fee component.
The specialized nature of biotechnology R&D means that success is not guaranteed, and the technology may not reach commercial viability.

Positive Signals

The award to a single contractor suggests a focused effort on a specific, potentially high-impact technology.
The use of full and open competition indicates a robust selection process and potential for innovation.
The contract duration allows for thorough development and testing, increasing the likelihood of a successful outcome.

Sector Analysis

This contract falls within the Biotechnology (except Nanobiotechnology) sector, a rapidly evolving field focused on leveraging biological systems and organisms to develop or create different products. The market for advanced medical imaging and diagnostic tools is substantial, driven by the need for more precise and less invasive diagnostic methods. This contract represents a specific investment in a niche but critical area of medical technology, aiming to address a significant unmet need in burn care.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. The focus on specialized biotechnology R&D may naturally lead to larger prime contractors, but opportunities for small businesses could exist in specific component development, testing services, or as suppliers to the prime contractor if they engage in broader subcontracting.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). The contract type (Cost Plus Fixed Fee) necessitates close monitoring of costs and progress to ensure adherence to the research and development plan. Transparency will depend on HHS's reporting practices and any public disclosures made regarding the technology's development milestones and outcomes.

Related Government Programs

Biotechnology Research and Development
Medical Device Development
Advanced Imaging Technologies
Health Security Technologies
Department of Health and Human Services Contracts

Risk Flags

Long contract duration may increase risk of technological obsolescence.
Cost-plus-fixed-fee contracts require diligent oversight to manage costs.
Success of R&D is inherently uncertain.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $86.6 million to SPECTRAL MD, INC.. DEVELOPMENT OF A BURN WOUND IMAGING TECHNOLOGY DEVICE

Who is the contractor on this award?

The obligated recipient is SPECTRAL MD, 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 $86.6 million.

What is the period of performance?

Start: 2023-09-30. End: 2030-09-30.

What is the specific technological innovation Spectral MD, Inc. is developing under this contract?

Spectral MD, Inc. is developing a novel burn wound imaging technology device. While specific technical details are not provided in the summary data, the company's focus is generally on using advanced imaging techniques, potentially including hyperspectral imaging, to assess wound depth, perfusion, and bacterial presence. This technology aims to provide clinicians with objective, real-time data to guide treatment decisions, differentiate between viable and non-viable tissue, and monitor healing progress more effectively than traditional visual inspection or subjective assessments.

How does the $86.6 million contract value compare to typical R&D investments in similar medical technologies?

The $86.6 million contract value over approximately seven years is a substantial investment, but it is not unusual for advanced medical technology R&D, particularly for novel diagnostic devices with significant potential impact. Comparable investments can range widely depending on the complexity, stage of development, and market potential. Early-stage research might be funded in the millions, while later-stage clinical trials and regulatory approval processes for complex devices can easily reach tens or hundreds of millions. This contract appears to cover a significant portion of the development lifecycle, from initial R&D through to potential validation.

What are the primary risks associated with the development of this burn wound imaging technology?

The primary risks include technological feasibility (whether the imaging technology can reliably and accurately assess burn wounds under clinical conditions), regulatory hurdles (gaining FDA approval or equivalent), market adoption (clinicians and healthcare systems integrating the new technology), and competition (other companies developing similar or alternative diagnostic solutions). Furthermore, the long development timeline introduces risks of technological obsolescence or shifts in medical best practices. The cost-plus-fixed-fee structure also carries a risk of potential cost overruns if not managed diligently.

What is the expected impact of this technology on patient care and healthcare costs?

The expected impact is significant. By providing objective, data-driven assessments of burn wounds, the technology could lead to more accurate diagnoses, reducing unnecessary debridements or skin grafts and optimizing treatment plans. This could shorten healing times, reduce hospital stays, and minimize complications, thereby lowering overall healthcare costs. Improved diagnostic accuracy may also lead to better patient outcomes and reduced long-term morbidity associated with severe burns. The technology could also facilitate remote monitoring and telehealth applications for burn care.

What is Spectral MD, Inc.'s track record in developing and commercializing medical technologies?

Spectral MD, Inc. is a company focused on developing advanced medical imaging technologies. While the provided data does not detail their full commercialization history, their focus on burn wound imaging suggests prior expertise or a strategic direction in this area. Companies in this space often have a history of seeking significant R&D funding, including government grants and contracts, to advance their technologies through development and clinical validation phases. Further investigation into their patent portfolio, previous funding rounds, and any existing product lines would provide a clearer picture of their commercialization track record.

How does this contract align with broader HHS goals for health security and innovation?

This contract strongly aligns with HHS's broader goals for health security and innovation. By investing in advanced medical technologies like novel wound imaging, HHS aims to enhance the nation's preparedness for public health emergencies, including mass casualty events where burn injuries could be prevalent. Furthermore, fostering innovation in medical diagnostics and treatments is a key objective to improve the quality and efficiency of healthcare delivery. This contract supports the development of cutting-edge solutions that could ultimately save lives, improve patient outcomes, and potentially reduce the burden of disease.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 75A50123R00002

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Spectral MD Inc.

Address: 2515 MCKINNEY AVE, DALLAS, TX, 75201

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

Financial Breakdown

Contract Ceiling: $127,769,126

Exercised Options: $86,574,404

Current Obligation: $86,574,404

Actual Outlays: $50,586,167

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline