How Operation Warp Speed's Big Vaccine Contracts Could Stay Secret

Sep 29, 2020
Originally published on September 30, 2020 9:52 am

The Trump administration has compared Operation Warp Speed's crash program to develop a COVID-19 vaccine to the Manhattan Project. And like the notoriously secretive government project to make the first atomic bomb, the details of Operation Warp Speed's work may take a long time to unravel.

One reason is that Operation Warp Speed is issuing billions of dollars' worth of coronavirus vaccine contracts to companies through a nongovernment intermediary, bypassing the regulatory oversight and transparency of traditional federal contracting mechanisms, NPR has learned.

Instead of entering into contracts directly with vaccine makers, more than $6 billion in Operation Warp Speed funding has been routed through a defense contract management firm called Advanced Technologies International, Inc. ATI then awarded contracts to companies working on COVID-19 vaccines.

As a result, the contracts between the pharmaceutical companies and ATI may not be available through public records requests, and additional documents are exempt from public disclosure for five years.

Vaccine contracts awarded this way include $1.6 billion for Novavax, $1.95 billion for Pfizer, $1.79 billion for Sanofi and $1 billion for Johnson & Johnson.

NPR first looked into Operation Warp Speed's approach when our request for one of the contracts under the federal Freedom of Information Act came up empty.

A senior administration official tells NPR the government chose to use the intermediary for Operation Warp Speed contracts "to take advantage of certain acquisition authorities provided by Congress that are available to address situations like the coronavirus pandemic."

Generally, these kinds of agreements allow the government to be more nimble.

Simplifying government bureaucracy during a crisis isn't necessarily a bad thing, says Robin Feldman, a professor at the University of California Hastings College of the Law, who focuses on the pharmaceutical industry and drug policy. But there's a tradeoff when it comes to accountability. "We have to be careful about what we throw out in that process," she says.

Throwing out the contracting bible

Most government contracts are governed by a set of rules called the Federal Acquisition Regulation, or FAR.

"It's really a bible that the government and contractors are supposed to follow with respect to a given acquisition," says attorney Franklin Turner, a partner at McCarter and English, who has been involved with thousands of government contracts in his career. "It is supposed to establish the process from soup to nuts, right from the beginning to the very end of a procurement."

The acquisition regulations contain everything Congress stipulates should "govern the expenditure of taxpayer dollars," from anti-human-trafficking clauses to ethics and company conduct requirements, Turner says. But the resulting process can be time-consuming. Sometimes, it can stretch for years, especially if competitive bidding is involved or a losing company challenges an award through a formal protest process.

So, in special cases, the government has been turning to an alternative mechanism, called an Other Transaction Agreement, or OTA. These agreements got their start in the late 1950s, when NASA was created. The goal was to streamline the contracting process and attract newer, smaller companies and inventors to work with the government that otherwise might not have the resources or willingness to do so.

"I don't think that they operate to relieve liability," Turner says. "They operate, if anything, to streamline the process for a variety of reasons, depending on the acquisition at issue."

But there can be a downside to these agreements.

"A number of analysts warn that along with the potential benefits come significant risks, including potentially diminished oversight and exemption from laws and regulations designed to protect government and taxpayer interests," the Congressional Research Service wrote in a 2019 report about the rising use of OTAs by the Department of Defense. The report also noted that it was unclear whether OTAs are faster than traditional government contracts, because the Department of Defense hasn't tracked that information.

Kathryn Ardizzone, a lawyer at Knowledge Ecology International, examined a handful of early Operation Warp Speed research and development contracts obtained through public records requests to HHS that didn't go through an intermediary. KEI is a nonprofit group that focuses on intellectual property policy.

Many were OTAs that weakened or excluded Bayh-Dole clauses, which, among other things, allow the government to "march in" and take control of a drug or vaccine if a manufacturer that received federal funding engages in price gouging, for example.

Ardizzone and NPR have both, separately, tried to get copies of the later (and larger) procurement contracts through public records requests and so far have been unsuccessful. We requested contracts between the federal government and the pharmaceutical companies — not the intermediary, Advanced Technology International.

In response to NPR's request, HHS said it had "no records" for the $1.6 billion contract with Novavax, indicating that the department leading the way on Operation Warp Speed doesn't have a copy of the contract. NPR has since made the same request of the Department of Defense and is awaiting the response.

"It's not clear that using the Freedom of Information Act, we can access agreements that are maintained by a private entity," Ardizzone says. In that case, we don't know what taxpayer protections the contracts may have left out.

"The stakes are as high as you could ever imagine," Ardizzone says. If the government doesn't have a copy of these records, something she called "shocking but not impossible," it would "add a layer of complexity" to whether the contracts can be disclosed under a public records request.

Repurposing a Defense Department consortium

Advance Technology International manages contracts and facilitates dealings with the government for several consortia of academics, companies and more, using OTAs.

In March and early April, the Department of Defense talked with ATI about a consortium of academics and companies that it manages called the Medical CBRN Defense Consortium, which is tasked with developing medical countermeasures to threats against the military. The Department of Defense, a partner in Operation Warp Speed, already had an overarching OTA with ATI concerning this group. To expand it for the COVID-19 response was a matter of adding more money and issuing a request for proposals concerning coronavirus vaccines and other COVID-19 items.

"The federal government came to me and said, you know, you already have all the members ... all the industrial organizations that we would want to complete this work with," ATI former Chief Operating Officer Robert Tuohy tells NPR. He stayed on as a consultant since stepping down as COO in 2019. (The Medical CBRN Defense Consortium added Pfizer and Novavax to its membership, according to an August notice in the Federal Register.)

In a bureaucratic twist, ATI was never explicitly told it was helping with Operation Warp Speed, Tuohy says, calling that fact "invisible" to the nonprofit.

"So the government then asks us to actually run a competition very similar to what the government would run within the membership of the consortia," he says, adding that it saves the government time and resources. ATI's job is to put out a request for proposals, collect the essential information (which is typically less than what's required in FAR-based contracts), make sure they're all in the same format and send them to the federal government for evaluation. Once the federal government makes its decision, ATI issues its own OTAs to the chosen members.

"Then they hand us the money and ask us to award essentially a sub-OTA to the team that they have selected within the membership of the consortium," says Tuohy.

The Medical CBRN Defense Consortium was set up about four years ago to do contract work concerning chemical, biological, radiological and nuclear defense "as related to enhancing the mission effectiveness of military personnel." As a result, Ardizzone wonders if it's operating too far outside its original scope. This, she says, could be a sign the intermediary arrangement is "to just avoid the procedures and regulations that protect the American public in the government contracting process."

Tuohy says the consortium was established with a flexible mission, adding that OTAs often get a bad rap, but they don't deserve it. Even if the contracts don't include things like the Bayh-Dole protections, he says they often have similar replacement language. When asked about whether these contracts could be disclosed to the public under public records requests, he said it was up to the government. ATI couldn't point to an example of one of its contracts to consortium members being disclosed this way, but this may have happened without it being made aware.

Reporters asked Operation Warp Speed officials about when the contracts would be released to the public during a press briefing on Sept. 16.

"With respect to the contracts, the contracts are between ourselves, the United States government and private entities, and they are releasable to an extent. Obviously everything cannot be released, but they are releasable to an extent and they will be made available at some point in time," said Lt. Gen. Paul Ostrowski, who directs Operation Warp Speed's efforts on supply, production and distribution. "And I will tell you that they entail information that allows us to all know that we paid a fair and reasonable price for each one of these vaccines as we went forward."

Feldman, of UC Hastings, says the administration's comparison of Operation Warp Speed to the Manhattan Project is troubling.

"I think that's completely the wrong image," she says. "The right analogy, I think, for Operation Warp Speed is the penicillin effort in World War II. So there, the nation mobilized to create the entire penicillin industry. It changed how we treat disease. It ushered in the era of mass-produced pharmaceuticals. That's what I think as the best you could do here. But it's a completely different image than Manhattan Project."

She says the penicillin effort is proof that public-private partnerships can produce great work.

"We can do a lot of good together, but we have to make sure pharma companies aren't taking advantage of the crisis," she says. "And we know from history that some will try. We know from history — current and past — that some will try."

You can contact NPR pharmaceuticals correspondent Sydney Lupkin at slupkin@npr.org.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

ARI SHAPIRO, HOST:

The Trump administration compares its crash program to develop a coronavirus vaccine to the Manhattan Project. And like the secretive atomic bomb initiative, details about Operation Warp Speed's work may take years to fully unravel. NPR pharmaceuticals correspondent Sydney Lupkin reports.

SYDNEY LUPKIN, BYLINE: Operation Warp Speed has announced vaccine contracts worth billions of dollars to pharmaceutical companies. But NPR has learned that many of the deals have been issued through a nongovernment intermediary. This approach allows Operation Warp Speed to award the money quickly but can weaken the oversight and transparency of traditional government contracting. A senior administration official tells NPR that the government took this approach to address the pandemic.

Robin Feldman, a professor at the University of California, Hastings College of the Law, says it makes some sense to cut through red tape during a crisis, but there's a trade-off.

ROBIN FELDMAN: We have to be on a wartime footing. We have to operate in a different way. However, we have to be careful about what we throw out in that process.

LUPKIN: Most government contracts have to follow a set of rules called the Federal Acquisition Regulation. Franklin Turner, a lawyer who works on government contracts, says the rules include everything from an anti-human-trafficking clause to requirements about ethics and company conduct.

FRANKLIN TURNER: It's really a Bible that the government and contractors are supposed to follow with respect to a given acquisition.

LUPKIN: But the standard contracting process can take months or years. So the government allowed an alternative called an other transaction agreement, or OTA. This approach was intended to attract companies that otherwise wouldn't be willing to contract with the federal government. But these alternative agreements come with a risk for the government and taxpayers. They don't include some standard protections. Typical contracts would allow the government to take control of a drug or vaccine if, for example, the drugmaker engages in price gouging. Leaving that out worries people like Kathryn Ardizzone, a lawyer at Knowledge Ecology International, a nonprofit focused on intellectual property policy.

KATHRYN ARDIZZONE: All of the regulations that are in a traditional government contract are there to protect ordinary, everyday Americans. And it's very concerning that they're left out here.

LUPKIN: Four vaccine contracts worth more than $6 billion went through an intermediary called Advanced Technology International. It manages a lot of these non-traditional contracts for consortia of companies, academics and nonprofits. The Defense Department spoke with Advanced Technology International in the spring about something called the Medical CBRN Defense Consortium. Its members included pharmaceutical companies already working on COVID-19 vaccines. And the organization already had a standing contract with the government regarding this consortium.

Robert Tuohy is Advanced Technology International's former chief operating officer. He said it collected vaccine proposals from consortium members and passed them along to the federal government to make a decision.

ROBERT TUOHY: Then they hand us the money and ask us to award essentially a sub-OTA to the team that they have selected within the membership of the consortium.

LUPKIN: The Defense Department never told Tuohy's team that they were doing work for Operation Warp Speed. He called that information invisible to his organization. Because these OTAs were issued through a third party, it might be impossible to get copies of the contracts under public records laws. Ardizzone and I separately filed public records requests for large vaccine procurement contracts that HHS has announced. Here's Ardizzone again.

ARDIZZONE: The stakes are as high as you could ever imagine. And now we don't know what's in the agreements.

LUPKIN: So far, neither of us have gotten the records we asked for.

Sydney Lupkin, NPR News. Transcript provided by NPR, Copyright NPR.