HHS awarded $77.9M R&D contract to Merck Sharp & Dohme for unspecified research, raising value-for-money questions

Contract Overview

Contract Amount: $77,918,518 ($77.9M)

Contractor: Merck Sharp & Dohme LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2014-12-19

End Date: 2019-06-30

Contract Duration: 1,654 days

Daily Burn Rate: $47.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF FOR OTHER FUNCTIONS

Place of Performance

Location: AMES, STORY County, IOWA, 50010

State: Iowa Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $77.9 million to MERCK SHARP & DOHME LLC for work described as: IGF::OT::IGF FOR OTHER FUNCTIONS Key points: 1. Contract awarded for Research and Development in the Social Sciences and Humanities, a broad category. 2. Significant funding allocated to a single contractor without clear deliverables outlined. 3. The contract's duration of over 5 years suggests a long-term commitment. 4. Awarded under a Cost Plus Fixed Fee (CPFF) structure, which can incentivize cost increases. 5. Lack of specific details on the research scope makes performance assessment challenging. 6. The contract was awarded through full and open competition, indicating a broad search for qualified bidders.

Value Assessment

Rating: questionable

The contract's value of $77.9 million over approximately 5.5 years, for 'Research and Development in the Social Sciences and Humanities,' lacks specific performance metrics or deliverables, making a direct value-for-money assessment difficult. Without knowing the precise research objectives and expected outcomes, it is challenging to benchmark this against similar contracts or market rates. The Cost Plus Fixed Fee (CPFF) pricing structure, while common in R&D, can sometimes lead to higher costs if not tightly managed, as the contractor is reimbursed for allowable costs plus a fixed fee. Further transparency on the research scope and achieved milestones is needed to confirm value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple sources were solicited and considered. However, the number of bidders and the specific evaluation criteria used are not detailed in the provided data. Full and open competition is generally expected to foster price discovery and encourage competitive pricing, but the broad nature of the R&D services may have limited the pool of highly qualified and specialized bidders.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing due to the open competition, but the lack of specific performance metrics makes it difficult to ensure funds are used efficiently for impactful research.

Public Impact

The primary beneficiary is likely the contractor, Merck Sharp & Dohme LLC, through research funding. The contract aims to support Research and Development in the Social Sciences and Humanities, with potential long-term societal benefits. The geographic impact is not specified but likely centers around the contractor's research facilities. Workforce implications could include employment for researchers and support staff at the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific, measurable deliverables makes it difficult to assess contractor performance and ensure accountability.
The broad categorization of 'Research and Development in the Social Sciences and Humanities' offers limited insight into the actual research being conducted.
The Cost Plus Fixed Fee (CPFF) contract type can potentially lead to cost overruns if not rigorously monitored.
The extended duration of the contract (over 5 years) requires sustained oversight to ensure continued relevance and value.

Positive Signals

Awarded through full and open competition, indicating an effort to solicit a wide range of potential offerors.
The contractor, Merck Sharp & Dohme LLC, is a known entity, suggesting a degree of established capability.
The contract falls under the purview of the Office of Assistant Secretary for Preparedness and Response (ASPR), implying a focus on potentially critical research areas.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically within the broad category of Social Sciences and Humanities. This sector is characterized by innovation, long-term investment, and often, a degree of uncertainty in outcomes. Government spending in R&D is crucial for advancing knowledge and developing solutions to societal challenges. Comparable spending benchmarks are difficult to establish without knowing the precise research focus, but significant government investments are common in areas deemed critical for national interest or public well-being.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The focus remains on large-scale R&D efforts potentially carried out by established entities.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer and program managers within the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR). Accountability measures would be tied to the terms of the Cost Plus Fixed Fee (CPFF) contract, including cost reporting and progress reviews. Transparency is limited by the lack of publicly available detailed research objectives and outcomes. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse related to the contract.

Related Government Programs

National Institutes of Health (NIH) Research Grants
Department of Defense (DoD) Basic Research Programs
National Science Foundation (NSF) Research Awards
Department of Energy (DOE) Science Programs

Risk Flags

Lack of specific deliverables
Broad research scope
CPFF pricing structure risk
Limited transparency on performance

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $77.9 million to MERCK SHARP & DOHME LLC. IGF::OT::IGF FOR OTHER FUNCTIONS

Who is the contractor on this award?

The obligated recipient is MERCK SHARP & DOHME LLC.

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 $77.9 million.

What is the period of performance?

Start: 2014-12-19. End: 2019-06-30.

What specific research objectives and expected outcomes were defined for this $77.9 million contract awarded to Merck Sharp & Dohme LLC?

The provided data classifies this contract under 'Research and Development in the Social Sciences and Humanities' (NAICS code 541720) and does not specify the precise research objectives or expected outcomes. This broad categorization makes it difficult to ascertain the specific goals of the $77.9 million award to Merck Sharp & Dohme LLC. Typically, R&D contracts, especially those of this magnitude and duration, would have detailed statements of work outlining research questions, methodologies, anticipated findings, and deliverables. The lack of such specificity in the available data hinders a thorough assessment of the contract's purpose and potential impact. Further investigation into the contract's statement of work or related documentation would be necessary to understand the intended research.

How does the Cost Plus Fixed Fee (CPFF) pricing structure for this contract potentially impact cost control and value for money?

The Cost Plus Fixed Fee (CPFF) pricing structure reimburses the contractor, Merck Sharp & Dohme LLC, for all allowable costs incurred during the research and development activities, plus a predetermined fixed fee. While CPFF is common for R&D where the scope of work can be uncertain and evolve, it carries inherent risks for cost control. The contractor has less financial incentive to minimize costs compared to fixed-price contracts, as their profit (the fixed fee) is not directly tied to cost savings. Effective oversight by the Department of Health and Human Services (HHS) is crucial to ensure that costs are reasonable, allocable, and allowable. Without robust monitoring and clear performance metrics, this structure could potentially lead to higher overall expenditures than anticipated, impacting the overall value for money achieved.

What is the track record of Merck Sharp & Dohme LLC in managing large federal R&D contracts, particularly in social sciences and humanities?

Merck Sharp & Dohme LLC, a subsidiary of Merck & Co., Inc., is a major pharmaceutical and healthcare company with a significant history of engaging in research and development. While their primary focus is typically in biomedical and pharmaceutical R&D, they do possess the infrastructure and expertise to conduct broader scientific research. Information regarding their specific track record with federal contracts in the 'Social Sciences and Humanities' is not detailed in the provided data. However, as a large, established entity, they likely have experience managing complex government contracts. A comprehensive assessment would require reviewing their past performance on similar federal awards, including adherence to timelines, budget management, and quality of research outcomes, which is beyond the scope of the current data.

Given the broad nature of the contract, what are the potential risks associated with the lack of clearly defined deliverables and performance metrics?

The primary risk associated with the lack of clearly defined deliverables and performance metrics for this contract is the difficulty in objectively measuring progress and success. This ambiguity can lead to challenges in holding the contractor accountable for achieving specific research outcomes. It increases the potential for scope creep, where the research activities may expand beyond the original intent without commensurate adjustments in cost or timeline. Furthermore, it complicates the government's ability to determine if the $77.9 million investment is yielding the desired results or contributing effectively to the stated goals of the Office of Assistant Secretary for Preparedness and Response (ASPR). This lack of clarity can also make it harder to justify future funding or to compare the effectiveness of this research against other initiatives.

How does this contract's spending compare to other federal investments in Research and Development within the Social Sciences and Humanities?

The provided data does not offer sufficient context to compare this $77.9 million contract to other federal investments in the Social Sciences and Humanities R&D. Federal R&D spending is distributed across numerous agencies (e.g., NSF, NIH, NEH, various DoD research arms) and encompasses a vast array of disciplines and projects. While $77.9 million is a substantial sum for a single contract, its relative significance depends on the specific sub-field of social sciences and humanities, the duration of the research, and the typical funding levels for comparable projects. Without data on the total federal outlays for this specific NAICS code (541720) or similar research areas, a meaningful comparison is not feasible. It is known that federal R&D funding is highly competitive and varies significantly by agency priorities and budget allocations.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Social Sciences and Humanities

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Merck & CO., Inc.

Address: ONE MERCK DRIVE, WHITEHOUSE STATION, NJ, 08889

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

Financial Breakdown

Contract Ceiling: $111,268,952

Exercised Options: $77,918,518

Current Obligation: $77,918,518

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline