Gov't Contracts Of The Month: Weapons, 5G, Virus Treatments

By Alyssa Aquino
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Law360 (October 30, 2020, 6:41 PM EDT) -- The Trump administration approved controversial arms sales worth a total of more than $14 billion with Taiwan and the United Arab Emirates in October. The Pentagon also agreed to $600 million of 5G testing despite bipartisan criticism, and the administration bought experimental COVID-19 treatments for $861 million, including a drug no longer given to hospitalized patients.

Here are Law360's top picks for government contracting in October:

Defense Firms Fall Into Beijing's Crosshairs With $4.2B Taiwanese Arms Sales

The U.S. Department of State greenlit Taiwan's request to buy $1.8 billion worth of rocket launchers, land attack missile response systems and other military equipment on Oct. 21.

The approval spurred Beijing's retaliation on Oct. 26, when Chinese Foreign Ministry spokesperson Zhao Lijian announced sanctions against the prime contractors on the agreements: Lockheed Martin Corporation, Boeing Defense, Space & Security and Raytheon Co. Beijing was also sanctioning the "U.S. individuals and entities who played an egregious role in the process," Zhao said. Zhao didn't specify at the time what the sanctions were.

"Once again we urge the United States to strictly observe the one-China principle and the three China-U.S. joint communiques, and stop selling weapons to Taiwan or having any military ties with it," Zhao said.

However, future action may be on the horizon. Shortly after China sanctioned the defense firms, the State Department approved a separate $2.4 billion arms deal with Taiwan.

Under the agreement, the U.S. will sell 100 Harpoon Coastal Defense Systems to the Taiwanese government. Boeing is the prime contractor on the deal.

The Chinese Foreign Ministry swiftly urged the U.S. to cancel the sale in an Oct. 27 statement promising "legitimate and necessary actions" should the harpoon defense deal move forward.

Should Boeing face further blowback, it'll join Lockheed Martin as a two-time target of Beijing's ire. In July, China sanctioned Lockheed Martin over a $620 million arms deal with Taiwan.

State Dept. Pushes $10B UAE Arms Sale Over Congressional Concerns

The State Department recently notified Congress that it was moving forward with the plans to sell up to 50 F-35 fighter jets to the United Arab Emirates in a potential $10 billion deal, according to the House Committee on Foreign Affairs.

The moved spurred committee chairman Rep. Eliot Engel, D-N.Y., to introduce a bill on Oct. 30 that would limit the Trump administration's power to sell certain weapons systems to Middle Eastern countries other than Israel.

"It's up to Congress to consider the ramifications of allowing new partners to purchase the F-35 and other advanced systems. We need to know that such weapons will be used properly and in a way aligned with our security interests, which include protecting Israel's qualitative military edge and ensuring adversaries can't get their hands on American technology," he said.

Currently, Israel is the only Middle Eastern country with Lockheed Martin's F-35 fighter jets.

Democratic lawmakers have aired their concerns with the proposed sale since September, when the White House flagged the possible arms deal.

Pentagon Gives 5G Testing $600M Amid Backlash

This month, the U.S. Department of Defense provided $600 million to support 5G experimentation and testing at American military sites, "the largest full-scale 5G tests for dual-use applications in the world," according to an Oct. 8 statement.

The contracts were handed out to several companies, including corporate giants AT&T, Booz Allen Hamilton, GE, General Dynamics and Deloitte. The companies will roll out 5G testing in five military sites, with some of the projects delving into 5G-enabled virtual reality capability, smart warehouses and spectrum-sharing, according to the statement.

The move "demonstrates the department's commitment to exploring the vast potential applications and dual-use opportunities that can be built upon next-generation networks," said Michael Kratsios, Acting Under Secretary of Defense for Research and Engineering.

However, the awards came amid backlash to the U.S. government's rumored proposal to operate its own 5G network.

On Sept. 30, Democrats at the Federal Communications Commission and 19 Republican senators criticized the Pentagon's recent inquiry into spectrum-sharing, signaling their belief that the Pentagon is wrongly looking to create a nationwide 5G network. Lawmakers across the political aisle further moved to stop the effort on Oct. 7 with separate bills in the House and Senate that would block a government-run 5G network.

Feds Spend $861M for Two COVID-19 Treatments

On Oct. 28, the U.S. Department of Health and Human Services and the U.S. Department of Defense said they would purchase $375 million worth of Eli Lilly and Co.'s experimental COVID-19 treatment.

The announcement came down two days after the company said it would stop treating hospitalized patients with the antibody drug after federal researchers determined that the drug — named bamlanivimab — was unlikely to help patients recover from an advanced stage of illness.

"We remain confident based on data from Lilly's BLAZE-1 study that bamlanivimab monotherapy may prevent progression of disease for those earlier in the course of COVID-19," the company said when it ended the clinical trial.

The U.S. will buy 300,000 doses of the Eli Lilly treatment under the agreement. However, it can spend an extra $812.5 million to buy "up to 650,000 additional doses through the end of June 2021," the government said.

The government also inked a $486 million deal earlier this month to acquire 100,000 doses of AstraZeneca's experimental antibody cocktail.

AstraZeneca's treatment, which is known as AZD7442, has the potential to be given to individuals at high risk of COVID-19-related complications, including those receiving medical treatments that would prevent them from using an eventual vaccine, according to the DOD.

Both agreements were finalized after President Donald Trump publicly praised Regeneron's antibody treatment as helping him recover from COVID-19.

--Additional reporting by Daniel Wilson, Jennifer Doherty, Kelcee Griffis and Adam Lidgett. Editing by Alanna Weissman.

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