HHS awards $4.8B to Leidos for R&D Facilities Support, a sole-source contract nearing completion

Contract Overview

Contract Amount: $4,813,063,025 ($4.8B)

Contractor: Leidos Biomedical Research Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2008-09-26

End Date: 2024-09-06

Contract Duration: 5,824 days

Daily Burn Rate: $826.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: TAS::75 0849::TAS OPER OF GOVT R&D GOCO FACILITIES

Place of Performance

Location: FREDERICK, FREDERICK County, MARYLAND, 21702

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $4.81 billion to LEIDOS BIOMEDICAL RESEARCH INC for work described as: TAS::75 0849::TAS OPER OF GOVT R&D GOCO FACILITIES Key points: 1. Significant long-term award to a single vendor for critical R&D infrastructure. 2. Sole-source nature raises questions about price discovery and potential for higher costs. 3. Contract duration and value indicate a high degree of reliance on Leidos. 4. Focus on facilities support for R&D suggests a specialized, potentially competitive market.

Value Assessment

Rating: questionable

The contract's Cost Plus Award Fee (CPAF) structure can incentivize performance but also lead to cost overruns if not managed tightly. Without competitive benchmarking, assessing the value for money is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and may result in higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition for a contract of this magnitude raises concerns about potential overspending and inefficient use of taxpayer funds.

Public Impact

Taxpayers are funding critical research facilities through a long-term, non-competitive agreement. The extended duration suggests a stable, but potentially less innovative, service provider. Potential for cost increases due to the absence of competitive pressure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Cost-plus contract type
Lack of small business participation

Positive Signals

Supports critical R&D infrastructure
Long-term stability for research operations

Sector Analysis

This contract falls under Facilities Support Services for Research and Development Government-Owned Contractor-Operated (GOCO) facilities. Spending in this niche sector is often driven by specific agency needs and can involve long-term, specialized service agreements.

Small Business Impact

The data indicates no small business participation in this contract. This suggests that the prime contractor, Leidos, is handling all aspects of the work, potentially missing opportunities to leverage specialized small business capabilities.

Oversight & Accountability

The long duration and sole-source nature of this contract warrant close oversight to ensure cost control and performance standards are met. Regular reviews of the award fee structure and contractor performance are crucial for accountability.

Related Government Programs

Facilities Support Services
Department of Health and Human Services Contracting
National Institutes of Health Programs

Risk Flags

Sole-source award limits competition and price discovery.
Long contract duration increases risk of cost escalation and vendor lock-in.
Cost-plus contract type can incentivize spending.
Lack of small business participation may indicate missed opportunities.
High contract value requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $4.81 billion to LEIDOS BIOMEDICAL RESEARCH INC. TAS::75 0849::TAS OPER OF GOVT R&D GOCO FACILITIES

Who is the contractor on this award?

The obligated recipient is LEIDOS BIOMEDICAL RESEARCH 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 $4.81 billion.

What is the period of performance?

Start: 2008-09-26. End: 2024-09-06.

What was the justification for awarding this contract on a sole-source basis, and have alternative competitive strategies been considered for future renewals or similar contracts?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For R&D facilities, this might be due to unique expertise, proprietary technology, or existing infrastructure integration. Agencies should document this justification thoroughly and explore competitive options for future procurements to ensure best value and taxpayer savings.

How is the 'award fee' component structured, and what metrics are used to determine contractor performance and fee allocation to ensure alignment with government objectives?

The award fee structure is critical in a CPAF contract. It should clearly define performance objectives, metrics, and the associated fee ranges. The government must actively monitor performance against these metrics and objectively determine the fee, ensuring it reflects actual value received and incentivizes desired outcomes without excessive cost.

What is the government's strategy for managing potential cost growth over the contract's extended period, especially given the lack of competitive pressure?

Managing cost growth requires robust government oversight, including detailed cost analysis, regular performance reviews, and strict adherence to the contract's limitations on cost and fee. The government should proactively identify potential risks and implement mitigation strategies, potentially including negotiating cost-saving initiatives or exploring competitive re-procurement if feasible.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N01CO8240192

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leidos Holdings, Inc.

Address: MILLER DR BLDG 428, FREDERICK, MD, 21702

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $70,988,409,497

Exercised Options: $20,219,122,313

Current Obligation: $4,813,063,025

Actual Outlays: $4,445,108

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline