Gov't Contracts Of The Month: Vaccines, Jets And Sanctions

By Alyssa Aquino
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Law360 (July 31, 2020, 7:24 PM EDT) -- The U.S. sped up efforts to find a vaccine for COVID-19, pouring $6 billion into four options in July. Other megadeals announced in the last month include Boeing's $22 billion agreement for a jet the Air Force didn't ask for and a $620 million deal that barred Lockheed Martin from China.

Here are Law360's top picks for government deal-making in July:

Feds Pour $6B into Four Coronavirus Vaccines

The Trump administration agreed to boost Sanofi SA and GlaxoSmithKline PLC's coronavirus vaccine development by $2.1 billion. The administration revealed the deal on Friday, ending a month of deliberations that saw four experimental treatments receive a cumulative $6 billion in federal funding.

On July 7, the government agreed to pay $1.6 billion for 100 million doses of Novavax Inc.'s vaccine candidate. The deal signaled the government's confidence in Novavax, a rookie drugmaker that has yet to produce a market-ready drug.

The administration followed that up by inking a $1.9 billion deal with Pfizer Inc. on July 22. Pfizer's experimental vaccine has been in the works since March and is pending emergency use authorization by the U.S. Food and Drug Administration.

Lastly, Moderna Inc. nabbed $472 million in government funding to support the late-stage clinical development of its own experimental vaccine, a near doubling of what it first received in April, according to a company statement.

Photography Cos. Get Government Cash for Drug Production

Fujifilm Diosynth Biotechnologies, the pharmaceutical arm of the Japanese photography company, scored $265 million to produce Novavax's vaccine in large quantities, according to a company statement.

Eastman Kodak Co., the one-time photography giant and former Fujifilm rival, also scored $765 million in government funding to support the creation of Kodak's own pharmaceutical manufacturing wing.

Trump called the agreement "one of the most important deals" in U.S. pharmaceutical history, saying in a Tuesday press conference that Kodak's new division would help wean America off of foreign pharmaceutical production.

Currently, 90% of American drug prescriptions are for generic drugs, but the U.S. only produces 10% of the active ingredients needed for the medicines, according to Trump's remarks.

"Once [Kodak's] new division is fully operational, in addition to all of the other plants that we've opened ... it will produce as much as 25% of all active ingredients needed to make generic drugs in the USA," Trump said.

The administration used the Defense Production Act to provide the loan.

Lockheed Nabs $15B in Gov't Funding, but Falls into China's Crosshairs

On July 17, the U.S. Department of Defense gave Lockheed Martin Corp. $15 billion to upgrade the C-130J Super Hercules transport aircraft, with the company receiving an initial $3 billion to fill aircraft orders between 2021 and 2025, according to a company statement.

The megadeal came a week after Lockheed fell into China's crosshairs over the U.S.'s $620 million foreign arms sale to Taiwan. A Chinese Foreign Ministry spokesperson called the deal, which is fairly routine within U.S.-Taiwan relations, an affront to the One China policy and a potential disruptor in the Taiwan Strait.

"In order to safeguard our national interests, China has decided to take necessary measures and impose sanctions on the prime contractor for this sale Lockheed Martin," the spokesperson said.

Lockheed likely isn't losing sleep over the sanctions — "considerably less than 1%" of its revenue comes from China, a company spokesperson told Law360.

TRANSCOM Won't Budge on Contested $7.2B Shipping Contract Winner

On June 29, U.S. Transportation Command doubled down on its original decision to award a $7.2 billion military shipping contract to American Roll-On Roll-Off Carrier Group Inc., or ARC, according to a company statement.

TRANSCOM had pulled back the April award for review in early June, saying it would reconsider the contract in light of two companies' allegations that ARC had failed to disclose its parent company's guilty plea to fraud and antitrust violations.

But TRANSCOM concluded that no corrective action was necessary, finding that the two protesters had misidentified ARC's true parent company. The two companies launched new separate bid protests in mid-July challenging  TRANSCOM'S latest decision.

The contract requires the award winner to centralize the military's global network of moving companies, a feat that will "fundamentally restructure" the Pentagon's system for relocating personnel, according to a government statement.

NASA Moves Ahead with $6B Deal After Defense Withdraws DPA Awards

NASA announced on July 26 that it had inked agreements with four companies and one research organization for an estimated $6 billion spending cap. According to the presolicitation, the contractors will provide aircraft development, shipment and launch services.

The deals came the same month that the Defense Department cancelled small launch contracts awarded to six companies under the Defense Production Act.

"The government received several responses to the DPA Title III Funded Rideshare Services NOCA," a notice on a government website reads. "After review of the information, the government is reevaluating its strategy on how best to proceed with this action."

The Pentagon wielded its DPA authority to award the contracts on June 16, saying the funding would ensure the stable production of small launch technology, an industry sector wracked by the coronavirus financial downturn. According to the presolicitation, the contracts were awarded without competition.

Boeing Scores $22.9B to Build Disfavored Fighter Jet

On July 13, the Boeing Co. struck a $22.9 billion deal with the U.S. Air Force covering the production of 144 F-15 fighter jets.

"F-15EX brings together benefits of digital engineering, open missions systems and agile software development to keep it affordable and upgradable for decades to come," Boeing's F-15 program manager Prat Kumar said.

The F-15EX is the same jet that U.S. Air Force officials, including former Air Force Secretary Heather Wilson, publicly described in early 2019 as a jet they didn't ask for and didn't want.

The jet was also a major factor in the ethics probe into former acting Defense Secretary, Patrick Shanahan, who allegedly "prodded" the Pentagon into including the F-15 in its fiscal year 2020 budget request.

The department's internal watchdog, however, cleared Shanahan of the accusations.

--Additional reporting by Jennifer Doherty, Sarah Martinson and Daniel Wilson. Editing by Adam LoBelia.

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