B-296358.3; B-296358.4, DOR Biodefense, Inc.; Emergent BioSolutions, January 31, 2006
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Matter of: DOR Biodefense,
Inc.; Emergent BioSolutions
Jessica
C. Abrahams, Esq., Jeniffer M. De Jesus, Esq., Stephen E. Ruscus, Esq., and
Frank M. Rapoport, Esq., McKenna Long & Aldridge LLP, for the protesters.
Helaine
G. Elderkin, Esq., Carl J. Peckinpaugh, Esq., and Cheralyn S. Cameron, Esq., for Computer Science Corp., an
intervenor.
Scott
N. Flesch, Esq., Department of the Army, and Eric Lile, Esq., Joint Program
Executive Office for Chemical and Biological Defense, for the agency.
Jonathan
L. Kang, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO,
participated in the preparation of the decision.
DIGEST
Protest that modification of contract
for research and development of botulinum vaccine was outside scope of the
original contract is denied where changes did not substantially alter the contract’s
type of work, costs or period of performance beyond that which could have been reasonably
anticipated by offerors.
DECISION
DOR Biodefense, Inc. and
Emergent BioSolutions protest the issuance of modification P00186 of contract
No. DAMD17-98-C-8024 by the Department of the Army Space and Missile Command to
DynPort Vaccine Company, LLC
(DVC).[1] The protesters contend that the modification
was beyond the scope of the original contract, and thus was an improper
sole-source award to DVC. The protesters
also contend that the agency failed to take reasonable corrective action in
response to earlier protests concerning the modification.
BACKGROUND
The agency awarded
a contract to DVC, under solicitation No. DAMD17-95-R-5020 (RFP) in 1997. The contract was issued by the Joint
Vaccination Acquisition Program (JVAP), which was established in 1996 by the
Department of Defense (DOD) to develop and stockpile biological defense
vaccines for use by the
The JVAP issued
the RFP in August 1996, seeking proposals for award of a contract to a prime
systems contractor for the management of vaccine development, licensure and
production efforts.
The RFP listed
contract line item numbers (CLINs) for general requirements such as systems
integration, hazard risk insurance, storage and maintenance of intermediaries,
and special studies, as well as development of three vaccines for protection
against Q-fever, vaccinia, and tularemia.
RFP at B-2. The RFP listed
optional CLINs for development and licensure of biological warfare vaccines for
the following vaccines: monovalent and
multivalent botulinum serotypes, ricin, staphylococcal enterotoxin B,
venezuelan equine encephalitis, combined Venezuelan/eastern/western equine
encephalitis, brucellosis, plague, improved anthrax, and vaccinia immune
globulin.
All of the
vaccines developed under the contract require approval and licensure by the FDA. RFP at C-1.
The contractor bears the responsibility for submitting
applications and ultimately obtaining FDA licensure for the vaccines; the
contractor also becomes the license holder for the approved vaccine.
The agency awarded the contract to DVC on
In August 1999,
the agency exercised optional CLIN 0016 and directed DVC to develop an
FDA-licensed pentavalent botulinum vaccine and added serotype C to the existing
requirement for serotypes A, B, D, and F.
AR, Tab 21, Modification P00021. The modification did not change the delivery
date for CLIN 0016 of
The agency issued
modification P00033 in March 2000, which “zeroed out” the costs of individually
developing the five monovalent vaccines that comprised the serotypes for the
CLIN 0016 pentavalent vaccine, and incorporated DVC’s price proposal, which had
been requested under modification P00021.
The value of CLIN 0016 was increased from [deleted] to [deleted].[4] JVAP Statement at 4.
Due to concerns
that sufficient funding was not available to fully develop the pentavalent
vaccine, the agency determined in March 2001 that the program should focus on
the “highest threat,” and develop a bivalent vaccine for serotypes A and B
instead of the pentavalent vaccine. Memorandum
of Law at 14-15; AR, Tab 38, Acquisition Decision Memorandum,
Additionally in
2001, the agency executed several modifications to account for increased costs,
including changes in FDA regulations and recommendations, technology transfer
requirements, changed travel and labor costs, manufacturing facility changes,
and additional studies which increased CLIN 0016’s price by approximately [deleted]
to [deleted]. See AR, Tab 41,
Modification P00055;
Tab 44, Modification P00056; Tab 46, Modification P00060; Tab 50, Modification
P00070; Tab 54, Modification P00071; Tab 52, Modification P00075; Tab 56,
Modification P00084; Tab 51, Modification P00085; Tab 59, Modification P00089;
Tab 60, Modification P00090; Tab 61, Modification P00092; Tab 63, Modification
P00099; and Tab 68, Modification P00112.
During the
1999-2001 timeframe, the agency also determined that the original target date
of 2004 for delivery of licensed vaccines under CLIN 0016 was no longer
realistic. Contracting Officer’s
Statement at 16. In 2001, the agency
requested and DVC proposed a revised delivery date of 2012 for a FDA-licensed
botulinum serotype A/B vaccine, at an estimated overall cost of [deleted]. AR, Tab 45, IMP 2.0. The agency issued modification P00059 in
August 2001, which specified a new delivery date of July 2012. Memorandum of Law at 17; AR, Tab 49,
Modification P00059, at 2.
In January 2004,
DVC submitted its proposal for IMP 5.0 in response to the agency’s request that
DVC address and summarize the current approach to developing the serotype A/B
vaccine. AR, Tab 95, DVC IMP 5.0. The agency issued modification P00153 on
During the same
early 2004 period of time, the agency issued a request for information (RFI) as
part of the Milestone B approval process.
The Milestone B evaluation required the agency to conduct market
research regarding alternatives to the current technical approach under the
contract. JVAP Statement at 7. The agency issued the RFI on
DOR and Emergent
each submitted responses to the RFI. The
agency posted a notice on the FedBizOpps website on
In June 2005, as
part of its corrective action, the agency issued a synopsis of its intent to
modify DVC’s contract and requested responses from firms that could demonstrate
alternatives to DVC’s vaccine candidate.
The protesters each submitted responses regarding their
capabilities. The agency then concluded
that the modification was within the scope of the original contract, and that
therefore a
sole-source justification was not required.
After receiving notice of the agency’s determination, DOR and Emergent
filed these protests.
DISCUSSION
Scope of the
Modification
The protesters first argue that modification P00186
exceeded the scope of the original contract, and that it therefore constituted
an improper sole-source award under the Competition in Contracting Act of 1984
(CICA), 10 U.S.C. sect. 2304(a)(1)(A) (2000), which was required to be competed on
a full and open basis.[5] Once a contract is awarded, our Office will
generally not consider protests against modifications to that contract, because
such matters are related to contract administration and are beyond the scope of
our bid protest function. Bid Protest
Regulations, 4 C.F.R. sect. 21.5(a) (2005); Engineering & Prof’l Servs.,
Inc., B-289331,
In determining whether a modification triggers the
competition requirements under CICA, we look to whether there is a material difference
between the modified contract and the contract that was originally
awarded. Engineering & Prof’l
Servs., supra, at 4; see AT&T Communications, Inc. v.
Wiltel, Inc., 1 F.3d 1201, 1205 (Fed. Cir. 1993). Evidence of a material difference between the
modification and the original contract is found by examining changes in the
type of work, costs, and performance period between the contract as awarded and
as modified. MCI Telecomms. Corp.,
B-276659.2,
The contract contained the changes clause at FAR sect. 52.243-1,
“Changes -- Fixed Price” and FAR sect. 52.243-2, “Changes -- Cost Reimbursement,”
both of which were incorporated with the “Alternate V” provisions for research
and development contracts. The agency
contends that these clauses provide the authority to modify the contract, and
that the modification was within the scope of the contract as originally
competed and awarded. As explained
below, we believe that the record demonstrates that scope of the original
contract was not substantially changed by the modification, and thus the
changes to the contract would not have had a substantial impact on the field of
competition for the original contract award.
The protesters
argue that the contract was improperly modified to require delivery of a
bivalent serotype A/B vaccine, a product that was not listed among the optional
RFP CLINs. The RFP identified optional
CLINS for monovalent vaccine serotypes A through G, and a multivalent vaccine
for serotypes A, B, D and F. RFP at
B-1. The RFP advised offerors, however,
that “[t]he government reserves the right to change the list above to add or
delete products as need may arise.” RFP
at B-1.
Where the type of work under a contract as modified remains
substantially unchanged, we do not view modifications of the technical
requirements of performance to be outside the scope.
Here, the RFP made clear that decisions regarding the
specific vaccines to be developed and produced would be made after award, and
that the agency could add or delete vaccines based on the government’s
needs. RFP at B-1. The RFP and contract, in our view,
anticipated addition and deletion of optional botulinum vaccines, and thus the
change from the RFP’s requirement under CLIN 0016 for a pentavalent vaccine to
a bivalent vaccine that incorporates two of the serotypes under the pentavalent
vaccine does not fundamentally alter the type of work required under the
contract. See Engineering
& Prof’l Servs., supra.
The protesters next
argue that the modified contract now requires an increased number of troop
equivalent doses (TED) of the botulinum serotype A/B vaccine to be
produced. The RFP stated that an “initial
stockpile” of 300,000 TED would be required for production of each vaccine, and
that follow-on and production contracts will be awarded after FDA licensure of
those vaccines. RFP at C-1, F-1.
At the agency’s request, DVC drafted IMP 5.0 to increase the
assumption for future production of the serotype A/B vaccine developed under
CLIN 0016 from 300,000 to [deleted]
TED.[6] AR, Tab 95, IMP 5.0, at 5-6. Modification P00186 incorporated
IMP 5.0. See AR, Tab 121,
Modification P00186 at 2. The agency
states, however, that the increased TED amount was for planning purposes only,
noting that CLIN 0016 is for the development, licensure and delivery of an
FDA-licensed serotype A/B vaccine, and that CLIN 0052 covers production of the
licensed vaccine. See
Supplemental Memorandum of Law at 4-5. CLIN
0052 will not be exercised until the vaccine is licensed.
The modification detailed the modified costs related to
“development and licensure” of the serotype A/B vaccine, but did not include
any costs for production of the licensed vaccine. See AR, Tab 121, Modification P00186
at 2. Thus, modification P00186 did not
commit the agency to production of the serotype A/B vaccine under either the
original or the revised TED assumption levels.
In the absence of an actual commitment under the contract, we do not
believe that the proposed or planned change to TED assumptions under an
unexercised CLIN affects the scope of the original contract at this time.[7] In sum, we do not believe that the technical
changes discussed above constitute material changes to the scope of the
original contract.[8]
Further, we conclude that the solicitation for the original
contract adequately advised offerors of the potential for the type of changes
that occurred during the course of contract performance, and that in the
context of the type of research and development work at issue here, the
modification encompasses changes which potential offerors could reasonably have
anticipated. The RFP advised offerors
that successful contract performance faced numerous challenges, including
regulatory requirements: “The number of
different medical [biodefense] products under this contract presents
significant challenges in management, regulatory affairs, and production.” RFP at C-2.
Offerors were further advised that the prior development efforts had
faced difficulties and the agency viewed the contract as a long-term effort:
Licensure of [biodefense vaccine] products, however, has
been problematic because of the lack of integration, required by the FDA,
between the manufacturing process and product testing and evaluation (T&E)
. . . The contract is based on the fact that FDA licensure of biologics is a
long term process that requires extensive [testing and evaluation] of vaccines
as the manufacturing process is scaled up from laboratory production to full
scale production.
RFP at C-1.
We believe that
the changes discussed above could have been reasonably anticipated by offerors,
in light of the type of the work at issue, and the RFP’s broad scope and
statements regarding the technical and regulatory challenges that could affect
performance. Engineering &
Prof’l Servs, supra, at 4.
With regard to the changes to the cost of the contract under
modification P00186, which the protesters also argue is not within the scope of
the original contract, the agency contends that all changes were within the original
contract’s scope, which the agency emphasizes was a research and development
contract with a broadly-defined mission of addressing the development of the
government’s biodefense needs. In
executing the modification, the agency explained that “[t]he need for the new
IMP [5.0] was driven by [FDA] and technical requirements unknown at the time of
award.”
[9] AR, Tab 121, Modification P00186, at 2.
The modification increased the costs of CLIN 0016 by
approximately $183 million, a 57 percent increase over the original contract
value of $322 million.[10] In modification P00186, the agency identified
18 new or modified areas of work that have changed since the award of the
contract.
The agency has, in
our view, reasonably explained the basis for the increased costs under
modification P00186, and supported its position that these costs constitute work
within the scope of the contract. We
further believe that the cost changes themselves are not so large as to render the
modification outside the scope of the original contract. In this regard, even substantial increases in
cost do not inexorably compel a conclusion that a contract has been modified
outside its original scope. See, e.g.,
Defense Sys. Group; Warren Pumps, Inc.; Dresser Indus., Inc., B-240295
et al., Nov. 6, 1990, U.S. Comp. Gen. LEXIS 1182 at *11-13
(increase in value of more than 120% did not materially change the contract
based on in-scope changes to technical requirements); Caltech Servs.
Corp., B-240726, B-240726.6,
The protesters
also argue that the modification of the delivery date increases the duration of
the contract beyond the scope of the original contract. The RFP stated that the agency anticipated a
performance period of 10 years, and noted that exercise of optional CLINs would
not increase this 10 year period. RFP at
2; RFP amend. 2, Question and Answer 6.
The contract included DVC’s delivery date of August 2004 for delivery of
the multivalent botulinum vaccine under CLIN 0016, based on the expected CLIN
exercise date identified in the RFP.
JVAP Statement
at 3. As modified by P00186, DVC is now
required to provide the serotype A/B vaccine by May 2012.
Although we look
to the performance period to determine whether a modification exceeds the scope
of the original contract, time does not have the same degree of importance in
every type of contract. Where, as here,
a contractor is provided additional time to perform a contractual obligation,
that modification does not necessarily constitute an out of scope change,
unlike the situation where time is used to define the extent of the obligation,
such as under a requirements contract. Defense
Sys. Group, supra.
Additionally, as discussed above, our decisions have recognized that
research and development contracts can justify additional latitude for changes
to their performance terms, including duration, because the type of work under
these contracts involves greater uncertainty.
Ion Track Instruments, Inc.,
B-238893,
We recognize that modification P00186 has substantially
increased the costs and duration of CLIN 0016.
However, we believe that the modification did not materially change the
contract because, as discussed above, the changes to the type of work, costs,
and duration of the contract remain within the scope of the original
contract. See Atlantic
Coast Contracting, supra, at 4. Furthermore, the changes could have been
reasonably anticipated by offerors, given the complexity of the research and
development work and the risks and contingencies identified in the solicitation.
The protesters’ comments and supplemental comments also
generally argue that the entire contract has been plagued with problems and
that the procurement will fail. See
Protesters’ Comments at 6, 16-17. The
protesters criticize what they believe to be technical flaws in the DVC vaccine
candidate as compared to what they characterize as superior DOR or Emergent
alternative products. We do not believe
that challenges to the efficacy of DVC’s technical approach or the contract
generally are relevant to the issue that was timely protested, i.e., whether
modification P00186 was within the scope of the original contract.[12]
Adequacy of Prior Corrective Action
Finally, the protesters contend that the agency did not
take adequate or reasonable corrective action in response to their initial
protests challenging the propriety of the modification. The protesters argue that the agency acted in
bad faith by not taking the corrective action it outlined in its request to
dismiss the initial protests. The
agency’s letter to our Office requesting that the initial protests be dismissed
stated that the agency did not agree with the protesters’ contentions that the
modification constituted a sole-source award.
AR, Tab 128, Agency Corrective Action Memorandum, at 1. Nonetheless, the agency determined that it
would take corrective action by reviewing its requirements and making a new
determination as to how best to meet its needs.
Following our
dismissal of the protest, the agency posted the June 2005 synopsis on the
FedBizOpps website, detailing the agency’s intention to “modify contract
DAMD17-98-C-8024 and negotiate on a sole-source basis with [DVC] to extend the
development and licensure period of performance to May 2012.” AR, Tab 132, Agency Synopsis,
Each protester submitted a response to the agency’s
notice, renewing their objections to the modification of DVC’s contract and
outlining their respective qualifications to provide an alternative vaccine
candidate. The agency’s subsequent
notice to the protesters did not address their capabilities, but rather
explained that the agency had determined that the modification was within the
scope of the original contract, and that it would not, therefore, issue a sole-source
award or justification thereof. AR, Tabs 126-37, Agency Notices Regarding
Corrective Action, at 1.
Contracting officials have broad discretion to take
corrective action where the agency determines that such action is necessary to
ensure fair and impartial competition. Patriot
Contract Servs. LLC et al., B-278276.11 et al.,
We believe that the agency properly exercised its discretion
to take corrective action in response to the protest. While
it is not entirely clear to what extent the agency evaluated the protesters’
responses, which primarily objected to the agency’s actions, the agency
ultimately determined that neither a sole-source nor a competitive award was
required because the modification, as originally issued, was within the scope
of the contract. We do not read the
agency’s memorandum outlining its proposed corrective action to commit the
agency to either award a competitive contract or issue a sole-source
award. Although the agency’s synopsis
used the term “sole-source,” we do not think that the use of this term,
particularly in the context of the notice’s intent to modify the contract,
committed the agency to issue a sole-source contract. In this regard, determining that a
sole-source award is not required is not inconsistent with the agency’s
determination to “make a determination concerning whether a sole-source award
is justified.” AR, Tab 128, Agency Corrective
Action Memorandum, at 1. We conclude
that there is no support for the protesters’ allegations of bad faith regarding
these actions. [13]
The protests are denied.
Anthony H. Gamboa
General Counsel
[1] DVC is a limited liability company, in which DynCorp, a wholly-owned subsidiary of Computer Sciences Corporation (CSC), is the principal member. CSC participated in this protest as an intervenor.
[2] A serotype refers to the specific form of a biological threat for which a vaccine is developed. Each serotype has an antigen that provokes a specific antibody response in the recipient. A vaccine’s valence refers to the number of serotypes in the vaccine, e.g., a monovalent, bivalent, or multivalent vaccine. Contracting Officer’s Statement at 11. A multivalent vaccine, therefore, protects against the multiple biological threats represented by its constituent serotypes.
[3] This statement was filed by the JVAP Vaccine Manager as part of the agency’s report to our Office, and supplements the Contracting Officer’s Statement and the Memorandum of Law.
[4]
As the agency explains, a monovalent vaccine is considered simpler to produce
than a multivalent vaccine because the former involves only a single serotype,
whereas the latter must combine various serotypes into a single multivalent
vaccine. Contracting Officer’s Statement
at 11. Each of the monovalent botulinum
vaccines under CLINs 0009-0015 was intended to be developed individually and
then individual serotypes would be combined into a multivalent vaccine under
CLIN 0016.
[5]
The protesters’ initial and current protests addressed the changes to the
contract resulting from modification P00186.
The protesters’ comments on the agency report now suggest that prior
modifications may also have been improper.
Even assuming that the agency report is the first time the protesters
became aware of the earlier modifications, the protesters’ comments could not
have raised any new timely grounds of protest because they were filed more than
10 days following receipt of the agency report, as the result of an extension
the protesters requested for filing their comments. See Hyperbaric Techs., Inc., B-293047.4,
[6] IMP 5.0 notes that although the agency initially discussed an increase in TED amounts of [deleted] to [deleted], the agency and DVC subsequently agreed that the IMP would assume a production level of [deleted] TED. AR, Tab 95, IMP 5.0, at 6.
[7] Additionally, the protesters do not consider the impact of the deletion of the individual CLIN requirements for the development of monovalent botulinum vaccines for serotypes A through G on the scope of the TED production requirements. Although the assumptions for future production of the serotype A/B vaccine has increased to [deleted] TED for CLIN 0016, the deletion of funding for the 5 monovalent vaccine CLINS that comprise the pentavalent vaccine presumably means that the production CLINs for those vaccines, CLINs 0045, 0046, 0047, 0049 and 0050, each of which had the same [deleted] TED initial stockpile amount, are also deleted, resulting in a [deleted] TED decrease.
[8] The protesters also contend that the agency modified CLIN 0016 to require development of the botulinum vaccine based on a recombinant technique, instead of a [deleted] technique. As the agency explains, however, offerors were not required to follow a specific technical approach in developing the optional botulinum vaccine option and the contract did not require a [deleted] approach. See RFP at B-1, C-2. Rather, as the protesters acknowledge, the RFP allowed either a [deleted] or recombinant approach to developing botulinum vaccines. Protesters’ Supplemental Comments at 11. Furthermore, DVC’s proposal did in fact propose development of the A and B serotype monovalent vaccines and the multivalent vaccine based on a recombinant approach. AR, Tab 2, DVC Best and Final Offer, at D-1, E-1, and K-1. Thus, the decision to pursue a recombinant approach provides no basis to support the protests.
[9] The agency notes that more than 50 guidance documents and regulatory revisions have been published by FDA in the Federal Register during the performance period that have had an impact on contract costs. JVAP Statement at 10; Memorandum of Law at 29. The agency report contains numerous examples of FDA guidance, regulatory changes and specific interactions with the JVAP program. See AR, Tabs 7-13, 15-16, 19-20, 22, 24-27, 29, 31-34, 36, 39-40, 43, 47-48, 53, 57-58, 62, 64-65, 67, 70-73, 76-77, 79-91, 93-94, 100-105, 107, 110-11, 113-17, 119-20, 126, and 129-31.
[10]
An alternative measure of the increase in CLIN 0016 would measure the value
that modification P00186 added to the pre-modification value of CLIN 0016. This results in a significantly lower
percentage increase of approximately 29 percent. Our decisions have recognized that prior
increases to a contract that have not been challenged may properly be taken
into account when subsequent contract modifications are challenged as out of
scope. See Access Research
Corp., B-281807,
[11]
The protesters argue that changes to FDA’s
Animal Rule should have been anticipated by offerors and the agency as the
result of discussions between FDA, DoD and industry representatives as early as
1996. Protesters’ Supplemental Comments
at 4-5. Thus, the protesters contend,
the changes cited by the agency should have been anticipated in DVC’s proposal
and the contract, and therefore the changes to the Animal Rule could not be a
justification for increased costs. The final rule, however, was not published
until
[12] We have reviewed all of the remaining issues raised by the protesters regarding modification P00186, and conclude that they are without merit or not for our review. For example, the protesters allege that modification P00186 violates the Anti-Deficiency Act, 31 U.S.C. sect. 1341, which prohibits agencies from entering into contract obligations in excess of current appropriations or obligations prior to the appropriation of funds. Because we conclude that the modification was within the scope of the original contract and did not result in a new contract award, this protest allegation pertains to a matter of contract administration, which our Office does not review in the context of a bid protest. 4 C.F.R. sect. 21.5(a).
[13]
Additionally, because we deny the protests on the merits, there was no
potential prejudice to the protesters regarding this matter. See McDonald Bradley, B-270126,