Anthrax Contract Raises Questions For PharmAthene And Others

(MoneyWatch)  Government contracts are generally awarded through competition--but not always. The exceptions are when contracts or small or when there are few suppliers to start with.

But on January 28, when the U.S. Navy awarded a sole-source contract to Red Rover Technologies to develop a social network for their members, eyebrows went up. Many companies, after all, do this kind of work--Ning hosts Govloop.com--and Navy personnel use many existing social networking platforms. In an about-face, the Navy is now putting the job up to bid.

A larger and more important contract that has brought this issue to the forefront was the recent award of a contract to Maryland's PharmAthene for $78 million to continue research on their anthrax vaccine. This was a continuation of a contract that they won in 2003 which so far has garnered the biotech company more than $200 million in Federal money. The award is interesting as it was actually awarded instead of a planned RFP that replaced one canceled in 2006.

The company also has strong ties to people appointed by the Obama Administration and to the late Congressman John Murtha (D-PA), who was being investigated by the House of Representatives Ethics Committee for his enthusiastic use of earmarks and how they might have related to campaign contributions. The person who was appointed to head the Department of Health and Human Services effort related to developing these vaccines, Tara O'Toole, was previously an executive with a group that lobbied for more investment in these vaccines. O'Toole also led the Center for Biosecurity at the University of Pittsburgh, an organization that often benefited from Murtha's earmarks.
In this case, sole-sourcing might have made sense if the product could only be further developed by PharmAthene, or if it was not cost-effective for another company to do the work. Unfortunately, any time a contract of this scale is awarded without competition it will lead to questions, not least from those companies who did not get a chance to bid. That is why such decisions need to be documented and explained. The Republican candidate, Bill Russell, who was running against Murtha in this year's election, but now will face an unknown Democratic candidate is certainly asking questions about PharmAthene and its relationships to Democratic politicians.

To find out what happened in this case would take either a protest by a losing company or a Congressional inquiry. Chances of either happening are low, but the contract illustrates why sole sourcing should be a last resort.

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