HHS awards $24.6M contract for anthrax therapeutic development to Hawaii Biotech, Inc

Contract Overview

Contract Amount: $24,625,516 ($24.6M)

Contractor: Hawaii Biotech, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2018-09-20

End Date: 2025-07-22

Contract Duration: 2,497 days

Daily Burn Rate: $9.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 24

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF - "DEVELOPMENT OF A SMALL MOLECULE DRUG ANTI-TOXIN THERAPEUTIC TO TREAT ANTHRAX IN HUMANS."

Place of Performance

Location: HONOLULU, HONOLULU County, HAWAII, 96817

State: Hawaii Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $24.6 million to HAWAII BIOTECH, INC. for work described as: IGF::OT::IGF - "DEVELOPMENT OF A SMALL MOLECULE DRUG ANTI-TOXIN THERAPEUTIC TO TREAT ANTHRAX IN HUMANS." Key points: 1. Contract focuses on critical biodefense research and development. 2. Competition was full and open, suggesting a robust market. 3. Contract duration is substantial, indicating a long-term R&D effort. 4. Performance risk is inherent in early-stage drug development. 5. This contract aligns with national biosecurity priorities. 6. The fixed-fee structure provides some cost control for the government.

Value Assessment

Rating: fair

The contract value of $24.6 million for a definitive contract over approximately 7 years appears within a reasonable range for advanced biotechnology research and development. However, without specific benchmarks for similar small molecule drug anti-toxin therapeutic development contracts, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) pricing structure means the government pays allowable costs plus a fixed fee, which can incentivize efficiency but also carries some risk if costs escalate beyond initial projections. The total obligated amount is $24,625,516.

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 bidders had the opportunity to submit proposals. The presence of 24 bidders suggests a competitive environment for this type of research and development. This level of competition is generally favorable for price discovery and ensuring the government selects the most capable and cost-effective solution.

Taxpayer Impact: Full and open competition helps ensure that taxpayer funds are used efficiently by driving down prices and encouraging innovation among potential contractors.

Public Impact

The primary beneficiaries are the U.S. population, through the development of a critical medical countermeasure against anthrax. The service delivered is the research and development of a small molecule drug anti-toxin therapeutic. The geographic impact is national, focusing on biodefense preparedness. Workforce implications include specialized scientific and technical jobs in the biotechnology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Drug development is inherently risky, with high failure rates in clinical trials.
The long contract duration increases the potential for cost overruns or scope creep.
Reliance on a single contractor for this critical countermeasure could pose supply chain risks if not managed proactively.

Positive Signals

Focus on a critical biodefense need addresses a significant public health and national security threat.
Full and open competition suggests a strong market exists for this type of R&D.
The definitive contract structure provides a framework for a long-term, focused effort.

Sector Analysis

This contract falls within the Biotechnology Research and Development sector, a rapidly growing area driven by advancements in life sciences and increasing demand for novel therapeutics and medical countermeasures. The market for biodefense-related R&D is significant, supported by government funding aimed at addressing national security threats. Comparable spending benchmarks are difficult to pinpoint without more specific details on the drug's development stage and therapeutic class, but R&D contracts of this magnitude are common in the pharmaceutical and biotechnology industries.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of biotechnology R&D, the primary contractor, Hawaii Biotech, Inc., is likely a small business itself, but the contract was not specifically set aside for small businesses. There is no explicit information on subcontracting plans for small businesses within the provided data, which could represent an opportunity for small business participation in specific research tasks or support services.

Oversight & Accountability

Oversight for this contract is likely managed by the National Institutes of Health (NIH) program officials and contracting officers. The contract type (Cost Plus Fixed Fee) necessitates close monitoring of costs and progress. While specific Inspector General (IG) jurisdiction is not detailed, the HHS Office of Inspector General would typically have oversight authority for federal contracts to ensure efficiency and prevent fraud, waste, and abuse. Transparency is facilitated through contract award databases, but detailed programmatic progress reports are usually internal.

Related Government Programs

Biodefense Advanced Research Projects Agency (BARDA) programs
National Institute of Allergy and Infectious Diseases (NIAID) research grants
Department of Defense chemical and biological defense programs
Food and Drug Administration (FDA) drug approval processes

Risk Flags

Long contract duration increases risk of cost escalation.
High inherent risk in early-stage drug development.
Potential for regulatory delays impacting timeline.
Dependence on a single contractor for a critical countermeasure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $24.6 million to HAWAII BIOTECH, INC.. IGF::OT::IGF - "DEVELOPMENT OF A SMALL MOLECULE DRUG ANTI-TOXIN THERAPEUTIC TO TREAT ANTHRAX IN HUMANS."

Who is the contractor on this award?

The obligated recipient is HAWAII BIOTECH, INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $24.6 million.

What is the period of performance?

Start: 2018-09-20. End: 2025-07-22.

What is the track record of Hawaii Biotech, Inc. in developing similar therapeutics?

Hawaii Biotech, Inc. has a history of working on biodefense-related projects, including research into vaccines and therapeutics for infectious diseases and bioterrorism agents. Their work has often involved collaborations with government agencies like the NIH and the Department of Defense. While specific details on their success rate in bringing similar small molecule drugs through the entire development pipeline to market are not readily available in this summary, their focus on biodefense aligns with the contract's objective. Further investigation into their portfolio, previous contract performance, and published research would be necessary for a comprehensive assessment of their track record in this specific area.

How does the $24.6 million contract value compare to similar R&D efforts for anthrax therapeutics?

Benchmarking the $24.6 million contract value for anthrax therapeutic development is challenging without access to proprietary data on similar R&D efforts. However, the development of novel therapeutics, especially for biodefense applications, is a complex and lengthy process that can span many years and involve significant investment. Early-stage research and development contracts, particularly those involving small molecule drug discovery, can range from a few million to tens of millions of dollars, depending on the stage of research, the specific targets, and the complexity of the scientific approach. The duration of this contract (approximately 7 years) suggests it covers a substantial portion of the R&D lifecycle, making the total value appear reasonable within the context of high-risk, high-reward biopharmaceutical R&D.

What are the primary risks associated with this contract, beyond standard R&D failure?

Beyond the inherent risk of R&D failure (i.e., the drug not proving effective or safe), this contract carries specific risks. The long duration (nearly 7 years) increases the potential for cost escalation, even with a fixed fee component, if unforeseen scientific challenges arise or if inflation impacts material and labor costs. There's also a risk related to the specific technology chosen (small molecule drug) if alternative approaches, like biologics, prove more effective or faster to develop. Furthermore, reliance on a single contractor for a critical countermeasure could pose supply chain vulnerabilities if the company faces operational issues or if demand surges unexpectedly. Regulatory hurdles with the FDA, even if not directly part of the contract scope, represent another significant risk factor.

How effective is the Cost Plus Fixed Fee (CPFF) contract type for managing R&D projects like this?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development efforts where the scope of work is not precisely defined at the outset, and costs are difficult to estimate accurately. It allows the government to reimburse the contractor for all allowable costs incurred while performing the work, plus a predetermined fixed fee representing the contractor's profit. This structure incentivizes the contractor to control costs, as the fee remains constant regardless of the final cost. However, it requires robust government oversight to ensure costs are reasonable and allocable. For R&D, CPFF can facilitate innovation by allowing flexibility, but it places a greater burden on the government to monitor expenditures and progress compared to fixed-price contracts.

What is the historical spending pattern for anthrax countermeasure development by HHS/NIH?

Historical spending by HHS, particularly through the National Institutes of Health (NIH) and the Biomedical Advanced Research and Development Authority (BARDA), on anthrax countermeasures has been significant over the past two decades, especially following the 2001 anthrax attacks. Funding has supported a range of activities, including basic research, preclinical studies, clinical trials, and manufacturing scale-up for vaccines and therapeutics. While specific figures for anthrax therapeutic development alone are not easily isolated from broader biodefense R&D budgets, agencies like NIAID and BARDA consistently allocate substantial resources to address bioterror threats. This $24.6 million contract represents a continuation of that historical investment in critical medical preparedness.

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: BASIC RESEARCH

Solicitation ID: HHSNIHNIAIDBAA20171

Offers Received: 24

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 650 IWILEI RD STE 204, HONOLULU, HI, 96817

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

Financial Breakdown

Contract Ceiling: $40,360,613

Exercised Options: $24,625,516

Current Obligation: $24,625,516

Actual Outlays: $6,536,677

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $2,539,333

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline