REDACTED 20200623 1047 FAR 6_302-2 Urgent and Compelling-GRAM _Redacted.pdf

For Official Use Only (See FAR 2.101 and 3.104-4)

Control Number: JA-20-NAT-413

MANUFACTURE AND DISTRIBUTION OF VACCINES IN SUPPORT OF OPERATION WARP SPEED

IN RESPONSE TO THE COVID-19 PANDEMIC

Justification and Approval FAR 6.302-2 Other than Full and Open Competition

Urgent and Compelling for COVID-19

1. Contracting Activity: Army Contracting Command - Aberdeen Proving Ground (ACC-APG), Natick Contracting Division, General Greene Ave, Natick, MA 01760

2. Description of Action: This is a request for approval to award a contract on the basis of other than full and open competition using procedures at FAR 6.302-2 Unusual and Compelling Urgency, to Grand River Aseptic Manufacturing (GRAM), 140 Front Ave SW, Grand Rapids, MI. The anticipated contract type is Firm Fixed Price for services and Cost or Cost Sharing for acquisition of facility equipment.

The Requirement and Funding are from Health and Human Services, as part of Operation Warp Speed. This effort is an assisted acquisition under Economy Act by DoD and ACC-APG on behalf of Biomedical Advanced Research and Development Authority (BARDA). ACC-APG Natick Contracting Division (NCD) is assigned as the contracting office for this effort.

3. Description of Supplies/Services: Services to be provided under this contract include reservation of fill/finish manufacturing capacity to secure availability of domestic capacity to perform fill/finish services at biosafety level 2 (BSL 2) for a USG-selected COVID-19 vaccine (live virus vaccine) for the USG and the US population. The USG requires reservation of GRAM’s available fill/finish manufacturing capacity, approximately 3 million 2R vials/month, from for the period August 2020-July 2021, totaling 36 million 2R vials.

This capacity is currently under qualification at the BSL1 level. Through this contract, GRAM will expand its fill/finish capability to BSL2, provide fill/finish services for a selected COVID-19 vaccine, and return the capability to BSL1 after the urgent need has passed. Based on the Independent Government Cost Estimate (IGCE), the anticipated cost for accelerating delivery and securing 100% capacity of a new aseptic fill and finish filling line is estimated to be ~$128M. These costs include $7.5M for the purchase of equipment to maximize capacity, $4M for surge staffing and employee retention programs, $10M for business disruption (reallocated customers, limits on securing new business, conversion to BSL2 operation and back), $50K for program management, and ~$105M for aseptic filling capacity. The breakdown of the $105M capacity costs are $400k per day (operation costs plus profits for 24 hour fill), operating at 5 days per week, for a total of $2M per week for 52 weeks.

3. Authority Cited: 10 USC 2304 (c)(2), as implemented by FAR 6.302-2, Unusual and compelling urgency.

4. Reason for Authority Cited:

a. 10 USC 2304 (c)(2) “The head of an agency may use procedures other than competitive procedures only when - the agency's need for the property or services is of such an unusual and compelling urgency that the United States would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals”.

b. The President of the United States made an emergency nationwide determination on

13 March, 2020, declaring that “the ongoing Coronavirus Disease 2019 (COVID-19) pandemic is of sufficient severity and magnitude to warrant an emergency determination under section 501(b) of the Robert T. Stafford Disaster Relief and emergency Assistance Act, 42-USC 5121-5207 (the “Stafford Act”)”, which included authorization for “…the Department of Health and Human Services (HHS) and its components…to take the necessary steps ‘to prevent the introduction, transmission, or spread of communicable diseases from foreign countries into the States or possessions, or from one State or possession into any other State or possession…’”

c. It is anticipated that two (2) of the most viable COVID-19 vaccine candidates will be a live virus vaccine, which will require a BSL2 fill/finish capability. Live virus manufacturing platforms are often implemented for new unknown emerging infectious disease organisms due to their ability to be rapidly implemented and their general effectiveness. This trend towards Live Virus manufacturing was noted in the recent Ebola and Zika vaccine development response efforts.

d. There is a significant lack of commercial scale contract manufacturing aseptic BSL2 fill/finish capability available domestically in the US. The majority of licensed vaccines that are live virus and require BSL2 filling are included as routine childhood vaccination schedule and have long sustaining annual supply requirements. For such vaccines, the manufacturer typically has a dedicated BSL2 filling line internal to that organization. The sustained annual volumes that require multiple production runs each year, and possibly continuous runs for the entire year, help justify dedicating a filling line to that specific BSL2 product. Some Contract Manufacturing Organizations (CMOs) can support small scale filling for BSL2 products but this scale of often 30,000 units per batch or less is typically used only for clinical trials or commercial products of smaller volume demand.

For pandemic situations such as COVID19 where mass production at commercial scale is required in a short period of time, there are no dedicated existing large scale lines for the newly developed viral products.

It is estimated that commercial BSL2 capacity within the US comprises less than 1% of the total contract manufacturing domestic fill/finish capacity. All BSL2 facilities, for both bulk manufacturing and fill finish activities, require extra, costly and time consuming clearance and changeover procedures before another product can be run on that same equipment. The extensive clearance process is necessary to demonstrate that all virus has been decontaminated and none remaining which could inadvertently contaminate the next product manufactured. This requirement and the few number of live virus vaccines that are developed annually, are dis-incentives for the Contract Management Organization (CMO) business whose model is to process multiple products in a facility over a given time period. Processing a BSL2 product will not allow for the quick changeovers, daily or even weekly, paramount to a multi-product operation.

The current large number of vaccines and therapeutics being developed for COVID19 will manifest in an increased demand for fill/finish services as part of the response. This demand will occur in the near term, simultaneous with initiation of clinical trials. The increased demand is further impacted by foreign governments, international and domestic drug manufacturers for non-COVID19 life-saving medicines continuing their development and manufacturing. The rapid consumption of existing fill finish capacity requires that the USG undertake drastic and urgent action to reserve available capacity now in order to meet the needs of the USG in providing a vaccine to the US population by January 2021 as committed by Operation Warp Speed.

e. USG failure to secure BSL2 fill/finish capacity domestically will undermine the USG ability to provide a domestic response to the COVID-19 pandemic, once large scale manufacturing of vaccines and therapeutic products has begun. Failure to approve this J&A will result in a delay in securing the capacity on this line, and in the inability for the Contractor to perform necessary activities (procedure revisions, additional equipment purchases and qualifications, etc.) to convert the line to BSL2 due to lead time limitations. This would result in the delay to provide a potential vaccine and subsequent continued spread of COVID19, thus placing the health of civilian and military personnel at risk of COVID19 infection.

f. The specific capacity at GRAM’s current fill/finish facility is a new filling line that is coming on-line at the precise time that the USG requires it, and use of GRAM’s facilities will not require GRAM to deviate from its regular long-term business model. As a new facility, this new filling line at GRAM currently has no existing customers. While currently designed at the BSL1 level, a BSL2 line can be set up now (prior to production of other drugs for other customers), then converted back to BSL1 upon completion of the USG COVID-19 response activity- after completing the required clearance process.

The urgency to engage in a contract comes from the work up front that GRAM must do to convert the line to BSL2 and begin technology transfer of the filling process and procedures from the product developer. Those activities and discussions must start in June 2020 in order to have the line and product-specific process qualified to run cGMP batches upon product availability. This is anticipated to begin in September 2020. In order to meet that target timeline, material, change parts, visual inspection equipment and other long lead-time items need to be purchased immediately.

g. It is more cost advantageous to convert a new fill/finish facility from BSL1 to BSL2 and back again to BSL1, than to convert a mature BSL1 line. Such a strategy requires greater effort to clean in order to convert to BSL2, significantly disrupting existing commercial customers for a number of years, and adversely impacting the entity’s long-term commercial revenue streams. The disruption to existing customers on a mature line may result in less confidence by those clients that they will not be “bumped” from the schedule again in the future. Knowledge that a BSL2 product was processed on the same manufacturing line may also result in less confidence by those clients that their products are not at risk for contamination. For this reason, many commercial agreements stipulate that no Live Virus is permitted to be manufactured on shared manufacturing equipment. This last point is notable in that for this reason, most CMOs maintain their fill/finish lines as BSL1 and will not ever convert them to BSL2.

5. Efforts to Obtain Competition: Due to the unprecedented threat, urgency, criticality, and nature of the COVID-19 pandemic competition for this effort has been limited. Market research was conducted to assess the capabilities of the most reputable fill finish CMOs with domestic facilities. This research revealed that at this time there is no large scale commercial BSL2 capable filling lines that could meet the government’s requirement for availability in August/September 2020. Small scale BSL2 filling capacity is available in a limited number of companies, however that would not meet the time frame needed and also would be inefficient as many small scale CMOs would be needed to meet a large scale need. This would require multiple technology transfers and comparability studies, unnecessarily taxing the resources of the product developer. The notice required at FAR

5.201 will not be published. The proposed contract action is made under the conditions described in 6.302-2 and the Government would be seriously injured if the agency complies with the time periods specified in 5.203.

6. Actions to Increase Competition:

BARDA is in the process of identifying and securing fill/finish capacity from approximately 10 firms (constituting the entire known set of viable large scale fill/finish manufacturers with excess capacity) for up to 143 million vials. These efforts may be competed through a Commercial Solutions Opening (CSO) solicitation, may be competed through some other solicitation, or may be sole sourced. The ultimate USG objective is to secure as much US fill/finish large scale capacity as quickly as possible, from all domestic sources that have available capacity.

At this time there are no contemplated actions to increase competition for this particular requirement, which constitutes approximately 14% of the available domestic commercial fill/finish capacity. As discussed above, GRAM is uniquely situated for the USG to take advantage of their fill/finish capabilities as soon as possible to meet a small portion of the total USG fill/finish urgent requirement. For an older or existing filling lines where there are existing customers on a BSL1 filling line, the CMO company will not convert that line to BSL2 as they would lose all those existing customers. This conversion to BSL2 works and can be done by GRAM because it is a new line and they do not have to displace any previous or existing customers. Similarly, it is not possible for another CMO to add a new line at this time. The lead time for ordering and installing a new filling line is 18 -24 months. The equipment lead time alone can be 12-18 months. Depending on the building, infrastructure construction can also be 12 months as well. Once installed, equipment and facility qualification is typically another 6 months. So installing a new line is a strategic capital investment that a company will usually plan for 2-3 years in advance. No other company is in this current situation, and therefore, competing this particular requirement is not feasible.

7. Market Research:

BARDA has conducted extensive and continuous market research (see below) into the commercial domestic marketplace for fill/finish manufacturing sources at all BSL levels. It should be noted that given the long-term nature of capability development, and the capitally intensive nature of the fill/finish segment within the pharmaceutical manufacturing industry, the overall landscape of companies does not change rapidly. Companies do not frequently enter or exit this market segment. The pharmaceutical sterile filling industry is highly regulated, requires highly skilled staff, expensive equipment, and involves typically very expensive high risk products and medicines. The product owners have invested years into the research and development of their product so if outsourcing the fill finish manufacturing steps is necessary, these product owners will contract with well-established and proven CMOs that most likely they have worked with previously and had a positive experience. It is very difficult for new companies to enter this industrial segment and secure an adequate client base to sustain their business. The overall marketplace is quite stable, and is well suited to a non-crisis situation where supply and demand are near unity. Consequently, market research efforts conducted beyond one-year should be considered as “recent”, as required by FAR 10 Market Research.

Specific to this contract effort, the following market research activities have been conducted, which established and refined a concise list of domestic fill/finish manufacturers and their current amount of unfilled capacity (from which reservation could be considered):

BARDA issued Request for Information (RFI) 18-BARDA-CDMO-RFI-001 via FedBizOpps on 17 August 2018. BARDA requested white papers for submission on 16 November 2018 regarding commercial fill/finish sources interested in working with BARDA.

(Attachment 1).

a. BARDA hosted an Industry Day Event on 29-30 October 2018 and presented briefing topics regarding its desire for information regarding the commercial

Control Number: JA-20-NAT-413

MANUFACTURE AND DISTRIBUTION OF VACCINES IN SUPPORT OF OPERATION WARP SPEED

IN RESPONSE TO THE COVID-19 PANDEMIC

Approval

Based on the foregoing justification, I hereby approve the reservation of domestic aseptic fill and finish manufacturing capacity for critical vaccines and therapeutics in response to the COVID-19 pandemic from GRAM at a value of $130M on an other than full and open competition basis pursuant to the authority of 10 U.S.C.2304(c)(2) Unusual and Compelling Urgency, subject to availability of funds, and provided that the services and property herein described have otherwise been authorized for acquisition.

Signature:

Title: __ _____________________

Attachment 1: Base Notice: REQUEST FOR INFORMATION - CONTRACT

DEVELOPMENT AND MANUFACTURING ORGANIZATION (CDMO) PARTNERSHIPS -

18-BARDA-CDMO-RFI-001

Attachment 2: Fill Finish Capacity Analysis