HHS awards $236M contract to Merck for Biotechnology R&D, spanning 10 years

Contract Overview

Contract Amount: $236,307,634 ($236.3M)

Contractor: Merck Sharp & Dohme LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2017-09-28

End Date: 2027-09-27

Contract Duration: 3,651 days

Daily Burn Rate: $64.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF

Place of Performance

Location: WHITEHOUSE STATION, HUNTERDON County, NEW JERSEY, 08889

State: New Jersey Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $236.3 million to MERCK SHARP & DOHME LLC for work described as: IGF::OT::IGF Key points: 1. Significant investment in biotechnology R&D. 2. Merck Sharp & Dohme LLC is a major player in the pharmaceutical industry. 3. Long-term contract duration suggests critical, ongoing research needs. 4. Potential for significant advancements in public health outcomes.

Value Assessment

Rating: fair

The contract value of $236.3 million over 10 years averages to $23.6 million annually. Without specific benchmarks for similar large-scale biotechnology R&D contracts, a precise pricing assessment is difficult. However, the duration and scope suggest a substantial, but potentially justified, investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This method is generally expected to foster competitive pricing and ensure the government receives the best value.

Taxpayer Impact: Taxpayer funds are being allocated to critical research and development, with the potential for significant public health benefits that could outweigh the initial investment.

Public Impact

Supports advanced research in biotechnology with potential for new treatments or vaccines. Long-term commitment signals a strategic focus on a specific area of health security. Contract awarded to a well-established pharmaceutical company, potentially leveraging existing expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not closely monitored.
Long contract duration may not adapt well to rapidly evolving scientific landscapes.
Lack of specific performance metrics in provided data makes outcome assessment challenging.

Positive Signals

Full and open competition suggests a competitive bidding process.
Award to a reputable firm like Merck indicates a focus on quality and expertise.
Significant investment in R&D aligns with national health priorities.

Sector Analysis

This contract falls within the Research and Development in Biotechnology sector, a field characterized by high innovation, long development cycles, and substantial investment. Benchmarks for R&D contracts vary widely based on scope and phase, but this award represents a significant commitment.

Small Business Impact

The data indicates this contract was not set aside for small businesses and was awarded to Merck Sharp & Dohme LLC, a large corporation. There is no indication of small business participation in this specific award.

Oversight & Accountability

Oversight will be crucial to ensure Merck adheres to the research objectives and manages costs effectively under the cost-plus-fixed-fee structure. Regular reporting and milestone reviews by the Office of Assistant Secretary for Preparedness and Response are expected.

Related Government Programs

Research and Development in Biotechnology
Department of Health and Human Services Contracting
Office of Assistant Secretary for Preparedness and Response Programs

Risk Flags

Cost-plus-fixed-fee contract type requires diligent oversight to manage costs.
Long contract duration (10 years) may pose risks if research objectives become outdated.
Lack of specific R&D focus makes it difficult to assess direct public health impact.
No indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $236.3 million to MERCK SHARP & DOHME LLC. IGF::OT::IGF

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 $236.3 million.

What is the period of performance?

Start: 2017-09-28. End: 2027-09-27.

What specific biotechnology areas are being researched, and how do they align with current public health threats or opportunities?

The provided data does not specify the exact biotechnology areas under research. However, given the awarding agency (ASPR), it is likely focused on areas critical to national health security, such as infectious disease countermeasures, pandemic preparedness, or novel therapeutic development. Further details would be needed to assess the strategic alignment with current public health priorities and emerging threats.

How will the effectiveness of the R&D outcomes be measured, particularly given the long-term nature of the contract?

Effectiveness measurement for long-term R&D contracts typically involves a series of predefined milestones, deliverables, and key performance indicators (KPIs) tied to scientific progress and potential application. The ASPR would likely establish a rigorous review process to assess the achievement of these benchmarks throughout the contract's 10-year duration, ensuring accountability and progress towards desired outcomes.

What is the government's strategy for intellectual property rights and potential commercialization of any breakthroughs resulting from this contract?

Government contracts for R&D often include clauses addressing intellectual property (IP). The government typically negotiates rights to use, and potentially license, any discoveries or inventions arising from federally funded research. Specific terms would be detailed in the contract, aiming to balance incentivizing the contractor's innovation with ensuring public benefit and access to resulting technologies.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 17100SOL00013

Offers Received: 2

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $291,370,929

Exercised Options: $236,307,634

Current Obligation: $236,307,634

Actual Outlays: $165,875,765

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline