HHS awards $185M contract to Cerus Corporation for pathogen reduction technology development

Contract Overview

Contract Amount: $185,466,764 ($185.5M)

Contractor: Cerus Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2016-06-17

End Date: 2026-09-30

Contract Duration: 3,757 days

Daily Burn Rate: $49.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: R&D

Official Description: CERUS - DEVELOPMENT AND IMPLEMENTATION OF PATHOGEN REDUCTION TECHNOLOGY (PRT). IGF::OT::IGF

Place of Performance

Location: CONCORD, CONTRA COSTA County, CALIFORNIA, 94520

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $185.5 million to CERUS CORPORATION for work described as: CERUS - DEVELOPMENT AND IMPLEMENTATION OF PATHOGEN REDUCTION TECHNOLOGY (PRT). IGF::OT::IGF Key points: 1. Contract value of $185.5 million over 10 years suggests significant investment in advanced technology. 2. Full and open competition was utilized, indicating a potentially competitive bidding process. 3. The contract type is a definitive contract, often used for complex or long-term projects. 4. Research and Development in Biotechnology is the primary NAICS code, aligning with the contract's purpose. 5. The contract's duration of over 10 years points to a long-term strategic objective. 6. The 'Cost No Fee' (Cost-Reimbursement) contract type may indicate inherent risks or uncertainties in the R&D process.

Value Assessment

Rating: fair

The contract value of $185.5 million over approximately 10 years is substantial for R&D in biotechnology. Benchmarking this against similar long-term R&D contracts is challenging without more specific data on the technology's maturity and scope. The 'Cost No Fee' structure suggests that the government bears the financial risk if the project encounters unforeseen challenges or fails to meet objectives, which could impact overall value for money if not managed closely. However, it also allows for flexibility in R&D.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The number of bidders is not specified, but this procurement method generally promotes price discovery and allows the government to select the most advantageous offer. The use of full and open competition is a positive indicator for achieving fair market pricing.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and the assurance that the government sought the best available solution through an open process.

Public Impact

The primary beneficiary is the Department of Health and Human Services (HHS), specifically the Office of Assistant Secretary for Preparedness and Response (ASPR), in enhancing public health preparedness. The contract aims to develop and implement pathogen reduction technology (PRT), which could improve the safety of blood supply or other medical products. The geographic impact is national, as improved public health technologies benefit the entire U.S. population. Workforce implications may include specialized R&D roles within Cerus Corporation and potentially related scientific and technical fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Cost No Fee' contract type places the financial risk on the government, which could lead to cost overruns if R&D is not managed effectively.
Long-term R&D contracts can be subject to changing technological landscapes and scientific breakthroughs, potentially impacting the relevance of the developed technology over time.
The specific details of the pathogen reduction technology and its application are not fully elaborated, making it difficult to assess its ultimate impact and value.
The duration of the contract (over 10 years) requires sustained oversight to ensure continued progress and alignment with evolving public health needs.

Positive Signals

The contract is awarded through full and open competition, indicating a potentially robust selection process.
The investment in pathogen reduction technology addresses a critical area of public health preparedness.
The long-term nature of the contract allows for sustained development and implementation of a potentially groundbreaking technology.
Cerus Corporation is a known entity in the field of pathogen reduction technology, suggesting existing expertise.

Sector Analysis

The contract falls within the Research and Development in Biotechnology sector, a critical area for public health and national security. This sector is characterized by high innovation, significant investment, and long development cycles. Spending in this area is often driven by government initiatives to address emerging threats and improve healthcare outcomes. Comparable spending benchmarks would depend on the specific type of PRT and its intended application, but significant government investment in biodefense and public health R&D is common.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a primary focus for this specific contract award. There is no indication of small business set-asides or subcontracting requirements. This suggests that the prime contractor, Cerus Corporation, is likely a large business, and the nature of the R&D may not lend itself to extensive subcontracting with small businesses. The impact on the small business ecosystem is likely minimal for this particular award.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services (HHS), likely through the Office of Assistant Secretary for Preparedness and Response (ASPR). Accountability measures would be embedded in the contract's performance work statement and reporting requirements. Transparency is facilitated by the contract award notice, but detailed project progress and financial expenditures would typically be subject to internal HHS review and potentially Inspector General audits, especially given the significant federal investment.

Related Government Programs

Biotechnology Research and Development
Public Health Preparedness Programs
Medical Countermeasures Initiatives
Advanced Medical Technology Development

Risk Flags

Cost Reimbursement Risk
Long-Term R&D Uncertainty
Technological Obsolescence Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $185.5 million to CERUS CORPORATION. CERUS - DEVELOPMENT AND IMPLEMENTATION OF PATHOGEN REDUCTION TECHNOLOGY (PRT). IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is CERUS CORPORATION.

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 $185.5 million.

What is the period of performance?

Start: 2016-06-17. End: 2026-09-30.

What is Cerus Corporation's track record with government contracts, particularly in R&D?

Cerus Corporation has a history of engaging with government entities, particularly in the defense and health sectors. While specific details of past government contracts are not provided in this data snippet, their focus on pathogen reduction technology suggests a specialization that aligns with government needs for public health and biodefense. A deeper dive into federal procurement databases would reveal the extent of their prior contract history, including performance ratings, past performance on similar R&D projects, and any issues encountered. Understanding their experience with cost-reimbursement contracts and long-term R&D endeavors would be crucial for assessing their capability to successfully execute this $185 million award.

How does the $185.5 million contract value compare to similar R&D investments in pathogen reduction technology?

Benchmarking the $185.5 million contract value requires understanding the specific scope and maturity of the pathogen reduction technology (PRT) being developed. Investments in advanced R&D, especially for novel technologies with potential public health or biodefense applications, can range widely. Contracts for early-stage research might be in the millions, while development and implementation of mature technologies could reach hundreds of millions. Without knowing the specific PRT application (e.g., blood safety, medical device sterilization, food safety), it's difficult to provide precise comparisons. However, the scale of this award suggests a significant, long-term commitment by HHS to advance this particular technology, likely indicating its strategic importance and the anticipated complexity of its development and integration.

What are the primary risks associated with a 'Cost No Fee' contract for R&D in biotechnology?

The 'Cost No Fee' (Cost-Reimbursement) contract type, while allowing flexibility for R&D, carries inherent risks, primarily for the government. The government agrees to pay the contractor's allowable costs, regardless of whether the project achieves its objectives, and without a fixed profit margin. Key risks include potential cost overruns if the R&D proves more complex or expensive than anticipated, and the possibility that the technology may not achieve the desired outcomes or become obsolete before completion. Effective oversight, clear milestones, and robust cost controls are essential to mitigate these risks and ensure value for taxpayer money. The absence of a 'fee' suggests the contractor's primary motivation is cost recovery and potentially future follow-on work, rather than profit on this specific R&D phase.

What is the expected effectiveness and impact of the pathogen reduction technology (PRT) being developed under this contract?

The effectiveness and impact of the pathogen reduction technology (PRT) are central to the justification of this $185.5 million investment. While the specific PRT is not detailed, such technologies generally aim to inactivate or remove harmful pathogens (like bacteria, viruses, or parasites) from biological materials or medical products. Potential applications include enhancing the safety of blood transfusions, reducing infection risks from medical devices, or ensuring the safety of other biological products. The expected impact is a significant improvement in public health safety, reduced healthcare-associated infections, and enhanced preparedness against biological threats. The long-term nature of the contract implies a belief in the technology's potential for substantial, lasting benefits.

How has HHS spending in biotechnology R&D evolved over the past five years?

HHS spending in biotechnology R&D has generally seen a consistent or increasing trend over the past five years, driven by national priorities in public health, biodefense, and medical innovation. Agencies like the National Institutes of Health (NIH) and the Biomedical Advanced Research and Development Authority (BARDA), within ASPR, are major contributors to this spending. Factors influencing this trend include emerging infectious diseases (like COVID-19), advancements in genetic engineering, personalized medicine, and the need for countermeasures against bioterrorism. The $185.5 million awarded to Cerus Corporation for PRT development is indicative of this ongoing strategic investment in cutting-edge biotechnology aimed at bolstering national health security and preparedness.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in Biotechnology

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: BAA16100SOL00001

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 2550 STANWELL DR, CONCORD, CA, 94520

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

Financial Breakdown

Contract Ceiling: $282,450,109

Exercised Options: $197,755,677

Current Obligation: $185,466,764

Actual Outlays: $87,868,333

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline