HHS awards $693M contract to Regeneron for R&D in Biotechnology

Contract Overview

Contract Amount: $693,056,927 ($693.1M)

Contractor: Regeneron Pharmaceuticals Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2017-09-30

End Date: 2027-09-29

Contract Duration: 3,651 days

Daily Burn Rate: $189.8K/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: TARRYTOWN, WESTCHESTER County, NEW YORK, 10591

State: New York Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $693.1 million to REGENERON PHARMACEUTICALS INC for work described as: IGF::OT::IGF Key points: 1. Significant investment in biotechnology R&D, potentially driving innovation. 2. Sole awardee suggests limited competition, raising questions about price discovery. 3. Long-term contract (10 years) indicates a sustained need for these services. 4. Focus on R&D in biotechnology aligns with national health priorities.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed tightly. The awarded amount is substantial, and without comparable contracts, assessing its value is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Despite being awarded as a definitive contract, the 'full and open competition' designation needs further scrutiny given the single awardee. This could indicate a specialized need or a lack of sufficient bidders.

Taxpayer Impact: The substantial value of this contract means taxpayers are funding significant R&D efforts. Ensuring cost-effectiveness and successful outcomes is crucial for maximizing taxpayer return.

Public Impact

Potential for groundbreaking medical advancements and treatments. Impact on public health preparedness and response capabilities. Economic implications for the biotechnology sector and related industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of clear competition despite 'full and open' designation.
Cost Plus Fixed Fee contract type can incentivize higher costs.
Long contract duration may not adapt to evolving R&D needs.

Positive Signals

Addresses critical R&D needs in biotechnology.
Potential for significant public health benefits.
Long-term commitment ensures sustained research effort.

Sector Analysis

This contract falls under Research and Development in Biotechnology, a sector critical for medical advancements and public health. Spending benchmarks in this area are highly variable due to the nature of innovation and discovery.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this contract. The nature of large-scale biotechnology R&D may favor established firms.

Oversight & Accountability

Oversight will be critical to ensure that the Cost Plus Fixed Fee structure does not lead to excessive costs and that the research objectives are met efficiently. Regular reviews by the Department of Health and Human Services 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

Potential for cost overruns due to CPFF structure.
Limited transparency on competition effectiveness.
Long-term commitment may lack flexibility for evolving R&D.
Significant taxpayer investment requires rigorous performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $693.1 million to REGENERON PHARMACEUTICALS INC. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is REGENERON PHARMACEUTICALS INC.

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 $693.1 million.

What is the period of performance?

Start: 2017-09-30. End: 2027-09-29.

How effectively will the Cost Plus Fixed Fee structure incentivize Regeneron to control costs and achieve research milestones within budget?

The CPFF structure provides a fixed fee to the contractor, which is intended to incentivize efficiency. However, the cost-reimbursement aspect means the government bears the direct costs of research. Effective oversight, clear performance metrics, and regular progress reviews are essential to ensure Regeneron remains focused on cost control and achieving the defined research objectives without unnecessary expenditure.

What specific biotechnology advancements or public health outcomes is this $693 million contract expected to deliver over its 10-year duration?

The contract's objective is Research and Development in Biotechnology. Specific deliverables are likely detailed in the contract's statement of work, but generally, such contracts aim to advance scientific understanding, develop new therapeutic agents, diagnostic tools, or medical countermeasures. The long duration suggests a focus on complex, long-term research projects with the potential for significant public health impact, such as developing vaccines or treatments for emerging diseases.

Given the 'full and open competition' designation, why was the award made to a single entity, and what was the process for ensuring fair pricing?

While designated 'full and open,' the award to a single entity suggests that either only one firm possessed the unique capabilities required, or the competition process resulted in a single best value offer. The government likely conducted a thorough evaluation of proposals based on technical merit and price. Ensuring fair pricing in R&D contracts, especially with CPFF, relies heavily on robust negotiation, benchmarking against similar (though often proprietary) R&D efforts, and stringent cost auditing.

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: 17100SOL00014

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 777 OLD SAW MILL RIVER RD, TARRYTOWN, NY, 10591

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: $756,418,675

Exercised Options: $693,056,927

Current Obligation: $693,056,927

Actual Outlays: $205,871,772

Subaward Activity

Number of Subawards: 69

Total Subaward Amount: $15,860,361

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline