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Sorrry if this is a dupe. I found this kind of interesting.

BioPort's Anthrax Vaccine Spending Questioned by Pentagon Audit

Washington, April 7 <A HREF= " aol://4344:30.bloombrg.389091.602536905 " >(Bloombe

rg)</A> -- BioPort Corp., the U.S. Defense Department's only maker of anthrax

vaccine, spent more than $2 million of government funds meant to improve

vaccine production on items such as an unrelated medical program, office

remodeling, furniture and parking lot repaving, according to the Pentagon's

Inspector General.

The money was part of some $48 million the Pentagon has advanced BioPort

since hiring it to produce the antidote to anthrax, the world's deadliest

biological agent. So far, BioPort hasn't produced one dose of usable vaccine,

putting at risk a U.S. commitment to inoculate virtually all its service men

and women.

The Defense Department says it will run out of vaccine in July unless the

Food and Drug Administration certifies that doses produced before hiring

BioPort are still safe and effective. The inoculations are protection against

anthrax weapons the U.S. believes could be produced by North Korea, Iraq or

Iran.

The audit -- which reports on only about half the money advanced to BioPort

-- ``paints a bleak picture of the financial integrity and security of the

anthrax program's only vaccine producer,'' said Walter , a North

Carolina Republican and House Armed Services Committee member who requested

the audit.

More Help Needed

The Inspector General's March 22 audit comes as the program already has been

criticized over management, efficacy and safety concerns, as well as the

Pentagon's reliance on a single manufacturer, the privately held company in

Lansing, Michigan.

``Some of BioPort's subsequent expenditures were not appropriate,'' says the

30-page audit, which hasn't been released. BioPort still needs ``substantial

additional assistance from the Department of Defense,'' the audit says.

An earlier report dated Feb. 4 by the Defense Contract Audit Agency is even

bleaker: ``There is substantial doubt that BioPort will be financially able

to continue performing its government contracts,'' it says.

BioPort executives said they just received a draft of the inspector general's

report and the company had little comment on its specifics. ``We can assure

you that BioPort has not made inappropriate expenditures,'' said

Rossman-McKinney, a company spokeswoman.

Signed Contracts

In addition to the $48 million the Pentagon has already paid BioPort, the

company has $35.1 million in signed contracts to produce vaccine once it

gains FDA approval of its plant and its vaccine. The Pentagon's payments to

date include at least $10 million for producing 2.2 million doses; the FDA

hasn't approved them so they can't be distributed.

About $25 million of the Pentagon payments came last year as ``extraordinary

contractual relief'' paid under a little-used federal law to help financially

troubled contractors.

As part of this relief, the Pentagon agreed to increase the price per dose to

an average of $10.64 from between $2.26 and $4.36, the audit said. The

company requested a price as high as $19.66.

The company said it's working to fulfill its contract. ``Our efforts are

focused on our relationship with the FDA and Defense Department to ensure we

will continue to meet BioPort's commitment to provide a safe, pure and

effective anthrax vaccine,'' Rossman- McKinney said.

FDA

The FDA is monitoring BioPort's progress. ``We are committed to working with

BioPort and the Department of Defense and we will accommodate any request for

re-inspection when they are ready,'' said Mark Elengold, an official at the

FDA's center for biological evaluation and research.

``I hope that's by the end of the year,'' said Marine Corps Maj. General

Randy West, the Pentagon's top official on anthrax vaccinations. He said the

FDA said BioPort officials ``have the right people working the problems in

the right way, and given time, they will satisfy all their deficiencies and

be able to produce good vaccine.''

West said the IG report didn't give BioPort adequate credit for improving the

production facility it bought two years ago. ``What we've gotten so far is a

new company that bought into a big project,'' and renovating the plant has

taken time, he said.

He said the company is making progress and ``the government will eventually

recoup the investment we are putting into that company.''

Over $6 Mln for Consultants

The Pentagon has advanced the company at least $13.9 million this year --

half of it to pay for consultants to work on getting FDA approvals, said

Pentagon spokeswoman Cheryl Irwin. BioPort also is in debt: The company says

it will run a cash shortfall of at least $18 million this year, the audit

said.

Representative and Representative Shays, a Connecticut

Republican who has completed a major critique of the anthrax program, have

asked the IG to review the latest $13.9 million payment.

About $1 million of this money went to renovate a plasma production

operation, a commercial venture unrelated to the anthrax program; and $1.1

million was spent on office remodeling and furniture, parking lot and road

paving -- $23,000 alone in furniture for the company's chief executive

officer, the IG audit said.

These and other renovations ``could have been postponed until BioPort was

more financially stable,'' said the audit.

Separately, the DCAA report said the company was incurring ``excessive travel

costs, excessive severance pay and unsubstantiated consulting costs.''

The company also has set aside another $1.28 million for senior management

bonuses in 2000 ``109 percent greater than the managers' base salary,'' said

the DCAA. ``BioPort's projected bonuses are ``unreasonable in light of its

current financial condition,'' the DCAA said.

West said BioPort made a commitment not to pay the bonuses until the FDA

approves the facility and vaccine production begins.

Apr/07/2000 14:42