Sunday, November 13, 2011

The hits... they just keep coming


Remember when they told us that if we voted for McCain it would mean just four more years of blatant cronyism and unchecked practices of favortism? Well, they were right.

Solyndra, Lightsquared, Fast and Furious and now... Siga Technologies Inc.?

From the L.A. Times no less (headline sub headline):

Cost, need questioned in $433-million smallpox drug deal

A company controlled by a longtime political donor gets a no-bid contract to supply an experimental remedy for a threat that may not exist.

Over the last year, the Obama administration has aggressively pushed a $433-million plan to buy an experimental smallpox drug, despite uncertainty over whether it is needed or will work.

Senior officials have taken unusual steps to secure the contract for New York-based Siga Technologies Inc., whose controlling shareholder is billionaire Ronald O. Perelman, one of the world's richest men and a longtime Democratic Party donor.

When Siga complained that contracting specialists at the Department of Health and Human Services were resisting the company's financial demands, senior officials replaced the government's lead negotiator for the deal, interviews and documents show.

When Siga was in danger of losing its grip on the contract a year ago, the officials blocked other firms from competing.

Siga was awarded the final contract in May through a "sole-source" procurement in which it was the only company asked to submit a proposal. The contract calls for Siga to deliver 1.7 million doses of the drug for the nation's biodefense stockpile. The price of approximately $255 per dose is well above what the government's specialists had earlier said was reasonable, according to internal documents and interviews.

Our existing stockpile of small pox vaccine which can cover the entire U.S. population and prevent death if given within 4 days of exposure goes for $3 a pop.

The government's pursuit of Siga's product raises the question: Should the U.S. buy an unproven drug for such a nebulous threat?

"We've got a vaccine that I hope we never have to use — how much more do we need?" said Dr. Donald A. "D.A." Henderson, the epidemiologist who led the global eradication of smallpox for the World Health Organization and later helped organize U.S. biodefense efforts under President George W. Bush. "The bottom line is, we've got a limited amount of money."

Dr. Thomas M. Mack, an epidemiologist at USC's Keck School of Medicine, battled smallpox outbreaks in Pakistan and has advised the Food and Drug Administration on the virus. He called the plan to stockpile Siga's drug "a waste of time and a waste of money."

And don't like how negotiations are going? Go to the bullpen.

Negotiations over the price of the drug and Siga's profit margin were contentious. In an internal memo in March, Dr. Richard J. Hatchett, chief medical officer for HHS' biodefense preparedness unit, said Siga's projected profit at that point was 180%, which he called "outrageous."

In an email earlier the same day, a department colleague told Hatchett that no government contracting officer "would sign a 3 digit profit percentage."

In April, after Siga's chief executive, Dr. Eric A. Rose, complained in writing about the department's "approach to profit," Lurie assured him that the "most senior procurement official" would be taking over the negotiations.

"I trust this will be satisfactory to you," Lurie wrote Rose in a letter.

And here's some more of that transparency we've been hearing so much about.

Neither the HHS spokeswoman nor the Siga representatives would disclose the agreed-upon profit margin or the per-treatment price. Siga has cited terms of the contract in its public financial statements — but without those financial details.

We're not experts in this field but we remain confident that non-disclosure of the financial details of government contracts runs afoul of Federal Aquisition Regulations and certainly that of the practice of good governance.

And just to make you Obama apologists feel a little bit better about this, the effort to stockpile super vaccines such as the one Siga has successfully peddled in the name of counter-terrorism started during the Bush administration lending more evidence to our contention that O > W.

One last goodie: for all that, Siga's vaccine, ST-246, only has a shelf-life of 38 months. Just over 3 years for those of you in Placentia, California. The government had intended in non-competing the replenishment contract but dropped the exclusivity provision after one of the potential contractors lodged a formal protest. Though disappointed, Siga accepted this mere compliance with the rules not wanting to seek "any negative publicity." Probably a little too late for that.

Go to the link for more of the details regarding just how it was the existing system for competing government contracts was rigged, ignored and otherwise gamed to the exclusive benefit of one contractor whose controlling shareholder is a long-time/big-time Democratic and Obama supporter and donor.

Team O: raising crony capitalism to a true art form.

P.S. The Washington Post had finally started covering the unfolding Solyndra scandal and the L.A. Times has been on Fast and Furious and, now, this apparent Son of Solyndra in this Siga vaccine mess. There just might be some hope yet for the 4th estate.


Anonymous said...

don't hold your breath. WaPo had a blurb about FnF last week. Two paragraphs in, the story changed to why automatic weapons should be banned.

Doo Doo Econ said...

Bending the cost curve, Chicago style.

Dean said...

drozz, I was afraid of that.

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