HHS Has Taken Some Steps to Implement New Authority to Speed Medical Countermeasure Innovation (GAO-20-601R)

Summary

A GAO report, GAO-20-601R, dated July 29, 2020, addressed to the leaders of the Senate Committee on Health Education Labor and Pensions and the House Committee on Energy & Commerce, on public health preparedness. It concerns a new authority for the Department of Health and Human Services (HHS) to speed medical countermeasure innovation. It defines medical countermeasures as drugs, vaccines and devices to diagnose, treat, prevent or mitigate potential health effects of exposure to chemical, biological, radiological and nuclear (CBRN) agents and emerging infectious diseases. Its title states that HHS has taken some steps to implement the new authority.

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441 G St. N.W.
Washington, DC 20548

July 29, 2020

The Honorable Lamar Alexander
Chairman
The Honorable Patty Murray
Ranking Member
Committee on Health Education Labor and Pensions
United States Senate

The Honorable Frank Pallone Jr.
Chairman
The Honorable Greg Walden
Republican Leader
Committee on Energy & Commerce
House of Representatives

Public Health Preparedness: HHS Has Taken Some Steps to Implement New Authority to
Speed Medical Countermeasure Innovation

The Coronavirus Disease 2019 (COVID-19) pandemic as well as past infectious disease
outbreaks such as the 2015 Middle East Respiratory Syndrome outbreak raise concerns about
our nation’s vulnerability and capacity to prevent or mitigate potential health effects from
exposure to such threats. Medical countermeasures are drugs, vaccines, and devices to
diagnose, treat, prevent, or mitigate potential health effects of exposure to chemical, biological,
radiological, and nuclear (CBRN) agents and emerging infectious diseases, such as influenza
pandemics. 1 Our prior work has noted that responding to the ever-changing nature and broad
array of CBRN threats often entails developing new technologies and approaches, while the
process of researching and developing medical countermeasures is lengthy, complex, and
expensive. 2 Further, several challenges, including low profitability, intellectual property rights,
and the general lack of a commercial market for some medical countermeasures may reduce
incentives for pharmaceutical and medical device manufacturers to invest time and money to
develop these products instead of others that may be more profitable. 3

Several federal departments and agencies have responsibilities for assessing, developing, and
procuring medical countermeasures to address CBRN priority threats. The Department of

1We use the term medical countermeasures to also include technologies that might assist the development or use of

medical countermeasures. CBRN agents can be natural, accidental, or intentional in origin.
2GAO, National Biodefense Strategy: Additional Efforts Would Enhance Likelihood of Effective Implementation, GAO-

20-273 (Washington, D.C.: Feb. 19, 2020); and GAO, Biological Defense: DOD Has Strengthened Coordination on
Medical Countermeasures but Can Improve Its Process for Threat Prioritization, GAO-14-442 (Washington, D.C.:
May 15, 2014).
3See GAO, National Preparedness: HHS Is Monitoring the Progress of Its Medical Countermeasure Efforts but Has

Not Provided Previously Recommended Spending Estimates, GAO-14-90 (Washington, D.C.: Dec. 27, 2013); and
GAO, Biological Defense: Additional Information That Congress May Find Useful as It Considers DOD’s Advanced
Development and Manufacturing Capability, GAO-17-701 (Washington, D.C.: July 17, 2017).

Page 1 GAO-20-601R Medical Countermeasure Partner
Health and Human Services (HHS) leads the federal government in identifying needed medical
countermeasures and for engaging with industry to develop and procure them (see fig. 1).
Within HHS, the Office of the Assistant Secretary for Preparedness and Response (ASPR)
leads federal medical and public health preparedness and response coordination, which
includes providing support for developing, procuring, and planning for the effective use of
medical countermeasures. ASPR is also responsible for managing the Strategic National
Stockpile. 4 In addition to HHS agencies, the Department of Homeland Security and Department
of Defense (DOD) also have responsibilities for addressing CBRN threats. 5

Figure 1: HHS’s Responsibilities for Medical Countermeasure Assessment, Development,
Procurement, and Distribution

a
ASPR leads the Public Health Emergency Medical Countermeasures Enterprise, a federal interagency body that is responsible for
providing recommendations on medical countermeasure priorities and development and procurement activities.
b
BARDA, an agency within ASPR, supports the advanced development and procurement of drugs, vaccines, and other medical
countermeasure products. In some cases, BARDA also funds earlier stage research and development for medical
countermeasures. It carries out this mission through public-private partnerships with industry and others.

In 2016, Congress passed and the President signed into law the 21st Century Cures Act to,
among other things, help accelerate medical product development and innovations, including
support for development of medical countermeasures. 6 Specifically, the Act authorized ASPR’s
Biomedical Advanced Research and Development Authority (BARDA) to establish a public-
private partnership to foster and accelerate the development of medical countermeasures. 7
Under this authority, BARDA may enter into an agreement with an independent, nonprofit entity
to foster and accelerate the development and innovation of medical countermeasures and
technologies, including through the use of venture capital practices and methods. 8 To

4The Strategic National Stockpile contains pharmaceuticals and medical supplies for use in a public health

emergency severe enough to cause local supplies to run out.
5The Department of Homeland Security also supports federal efforts to prepare for and respond to CBRN threats by

assessing threat risks and coordinating response efforts. In addition, the DOD has responsibility for research,
development, and acquisition of medical countermeasures for armed forces personnel.
6Pub. L. No. 114-255, 130 Stat. 1033 (2016).

7Pub. L. No. 114-255, § 3084, 130 Stat. at 1141 (codified, as amended, at 42 U.S.C. § 247d-7e(c)(4)(E)). BARDA

supports the advanced development and procurement of needed medical countermeasures by providing technical
assistance, grants, other funding, and engagement with industry through public-private partnerships. This includes
technical assistance for regulatory approval and support for manufacturing toward the goal of inclusion of new
medical countermeasures in the Strategic National Stockpile.
8The authority expires on September 30, 2023.

Page 2 GAO-20-601R Medical Countermeasure Partner
implement this authority, BARDA will need to identify, select, and enter into a public-private
partnership with such an entity, known as a medical countermeasures innovation partner
(innovation partner) under the 21st Century Cures Act. 9 BARDA had not entered into a
partnership with a nonprofit entity as of June 2020.

BARDA enters into other public-private partnerships to accomplish its mission, such as by
providing funding to support a university’s or company’s efforts to develop countermeasures,
(e.g. vaccines and therapeutics that bolster pandemic preparedness and response) and helping
to accelerate development, while also sharing cost and risk with the private entity. However,
according to HHS officials, the agency has not previously partnered with an entity that can use
venture capital practices and methods—that is, make investments in companies developing
promising, innovative products. 10 The Central Intelligence Agency (CIA) and DOD’s Department
of the Army (Army) have each partnered with nonfederal, nonprofit entities that use venture
capital practices and methods to invest federal funds to meet strategic government needs, but
such partnerships are uncommon in the federal government. 11

The 21st Century Cures Act includes a provision for us to review activities conducted under the
medical countermeasures innovation partner authority. 12 This report describes the status of
BARDA’s implementation of the innovation partner authority.

To describe the status of BARDA’s implementation of the innovation partner authority, we
reviewed relevant statutes and BARDA documentation regarding its plans for implementation,
and actions taken to implement, this authority. We reviewed information BARDA collected in its
two requests for information (RFI) from venture capital industry and other stakeholders. We
reviewed the responses to identify stakeholder reported comments and whether respondents
stated they could meet the innovation partner eligibility requirements set forth in the 21st
Century Cures Act. 13 We interviewed officials from BARDA to learn about the agency’s efforts to
implement the authority, key information the agency obtained from interviews with its
stakeholders, and the remaining steps and time frame for entering into an agreement with an
innovation partner. We also reviewed documentation about two other federal partnerships with

9BARDA refers to the medical countermeasures innovation partner as the Managing Entity. We use the term

innovation partner in this report to refer to this entity.
10BARDA officials defined venture capital as private, equity-based financing. BARDA officials told us they anticipate

that the innovation partner will employ all methods commonly used in venture capital to carry out its objectives.
11We identified two partnerships between federal agencies and nonfederal nonprofit entities using venture capital

practices that were similar to the partnership authorized by the 21st Century Cures Act and active at the time of our
review. First, the CIA partnered with In-Q-Tel, a nonprofit company, in 1999 to invest in intelligence and other
innovation. Since it was established, In-Q-Tel has used venture capital practices to invest federal funds for several
federal partners. Second, the Army partnered with nonprofit OnPoint Technologies in 2003 to establish its Army
Venture Capital Initiative to invest in priorities for the Army. In addition to these two active partnerships, the National
Aeronautics and Space Administration partnered with a nonprofit venture capital company, Red Planet Capital, in
2006, but the partnership was terminated in 2007. See Congressional Research Service, Agency-Related Nonprofit
Research Foundations and Corporations, R46901 (December 9, 2019), and Timothy Webb et al., Venture Capital
and Strategic Investment for Developing Government Mission Capabilities, (Santa Monica, CA: RAND Corporation,
2014).

12Pub. L. No. 114-255, § 3084, 130 Stat. at 1143.

13In addition to being an independent nonprofit entity not within HHS, the 21st Century Cares Act outlined other

eligibility requirements, including that the innovation partner has experience creating linkages between innovators
and investors and experience related to technical and regulatory considerations for medical countermeasure
development.

Page 3 GAO-20-601R Medical Countermeasure Partner
nonprofit nonfederal entities that have used venture capital practices to make strategic
investments and that were in operation at the time of our review. Finally, we interviewed
relevant officials from the Army to understand their experiences establishing their venture
capital partnership. 14

We conducted this performance audit from November 2019 to July 2020 in accordance with
generally accepted government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our finding and conclusion based on our audit objective.

Status of BARDA’s Implementation of the Medical Countermeasures Innovation Partner
Authority

BARDA has taken steps to implement the medical countermeasures innovation partner
authority, but as of June 2020, the agency had not selected the innovation partner that would
use federal funding and venture capital practices and methods to invest in companies
developing medical countermeasures. In an effort to implement the authority, BARDA has
developed a vision for the innovation partner, staffed a division to manage the authority,
determined an initial amount of funding for the partnership, solicited and considered feedback
from knowledgeable stakeholders, and developed preliminary plans for structuring the
partnership. Officials explained this partnership approach requires due diligence to fully develop
because it is new to the agency. BARDA officials noted that they had intended to release a
request for proposals to solicit a potential innovation partner by the end of February 2020 and
select a partner by the end of September 2020. However, they told us that, mainly due to the
agency’s responsibilities for developing and procuring medical countermeasures in response to
the COVID-19 pandemic, these steps have been delayed. 15

Vision for the innovation partner. BARDA officials said they envisioned the innovation partner
would invest in potentially transformative medical countermeasures and technologies with broad
use, operating quickly and flexibly to make promising investments—including investments in
companies that might not typically partner with government. The goal of these investments is to
affect the rapid development of tools and technologies to improve the nation’s preparedness
posture against known and unknown threats, such as COVID-19. For example, according to
agency officials, the innovation partner could, on BARDA’s behalf, seek out and invest in
companies that are developing energy sources to power personal wearable technologies that
detect if an individual has an infection resulting from a biological threat, such as a viral infection.
BARDA officials also discussed other examples of countermeasures the innovation partner
might invest in, such as improvements to drug administration methods from intravenous to oral
administration, reducing the needed amount of trained staff and supplies.

According to BARDA officials, BARDA will not prescribe the products in which it wants the
innovation partner to invest; rather, the agency will regularly provide the partner with a
description of strategic priorities and allow the innovation partner the autonomy to make

14We did not interview CIA officials during the course of this review.

15BARDA officials told us they have focused their efforts on COVID-19 response activities since February 2020,
including through funding announcements to support diagnostics and other countermeasures. Officials told us that
based on their COVID-19 work to date, they thought the innovation partner, once awarded, could help to advance
new medical countermeasures for COVID-19 or future pandemics.

Page 4 GAO-20-601R Medical Countermeasure Partner
investments relative to those priorities. This is in contrast to some of BARDA’s other public-
private partnerships that are used to develop specific medical countermeasures, such as
providing funds to develop diagnostic tests or vaccines for COVID-19 or combat antibiotic-
resistant bacteria. 16

According to BARDA officials, the compensation model for the innovation partner must be
consistent with Internal Revenue Service rules regarding reasonable compensation for nonprofit
corporations and will be finalized once an award is made. However, officials noted that models
include reimbursing the innovation partner for administrative costs, or establishing a pre-
determined reimbursement rate. 17 Officials stated that they intend to maximize this public-
private partnership’s benefit to the government by putting as much funding as possible towards
investments and minimizing administrative costs.

BARDA expected the innovation partner to make its best effort to maximize the amount of the
government’s total initial investments, according to agency documents describing plans for the
innovation partner. The agency plans for the innovation partner to do this by attracting private
investors that share BARDA’s vision and goals to match government funds on a one-to-one
ratio. For example, officials said if BARDA provides the innovation partner with $10 million to
invest, the innovation partner will be encouraged to find other partners who will collectively
invest $10 million or more in matching funds. According to officials, this larger pool of funds
would allow the innovation partner to share both the costs and risks associated with investments
with the private sector while improving the chances that products will have commercial and
strategic success.

Staffing and funding actions. BARDA staffed a division to manage the innovation partnership
and determined an initial amount of funding for the partnership. Specifically, newly added staff in
BARDA’s Division of Research, Innovation, and Ventures (DRIVe) will manage the innovation
partner’s investments. 18 (See text box.) According to officials, BARDA hired knowledgeable
staff, including contractors, who have experience with venture capital practices to help the
agency assess the qualifications and capabilities of entities interested in competing to be the
innovation partner. BARDA officials told us that these new staff have both the expertise to assist
in evaluating strategic investment decisions based on the market research and analyses
conducted by the innovation partner and the ability to ensure that BARDA’s interests are
protected.

16For example, as of May 2020, BARDA had made 33 awards to develop a variety of products and manufacturing

mechanisms to address COVID-19, such as diagnostic tests, vaccines, therapeutics, and manufacturing capabilities
through two funding announcements. The funding announcements indicated that academic institutions, non-profit
organizations, non-governmental organizations, government laboratories, and private sector organizations were
eligible for the awards. In addition, BARDA awarded grants to multiple entities through the Combating Antibiotic-
Resistant Bacteria Biopharmaceutical Accelerator (CARB-X) program for the development of antibiotics, diagnostics,
vaccines and other products to combat drug-resistant bacteria. CARB-X requires grantees to share in the costs of
research and development by contributing at least 30 percent of the cost of the project.
17Venture capital entities, like the innovation partner, can be compensated in different ways. Providing a set annual

base salary for work performed in addition to a percentage of future proceeds from successful investments—i.e.,
investments later sold—is one option, according to BARDA officials.
18BARDA established DRIVe in 2018.

Page 5 GAO-20-601R Medical Countermeasure Partner
Division of Research, Innovation, and Ventures (DRIVe)

According to the Biomedical Advanced Research and Development Authority (BARDA), DRIVe will leverage
public-private partnerships to bring together ideas from the medical, scientific, and venture capital
communities. DRIVe is made up of four components using different mechanisms to invest in medical
countermeasure development:
• DRIVe Ventures–will manage BARDA’s medical countermeasures innovation partner authority, whereby
BARDA will partner with a nonprofit to invest in promising products using venture capital practices.
• DRIVe-X–will provide funding to companies, universities, or others for medical countermeasure
development in targeted areas.
• DRIVe Accelerators–will identify innovation for further investment and provide support services.
• DRIVe Launch–will address gaps that require nontraditional approaches to medical countermeasure
development.

Source: BARDA | GAO-20-601R

BARDA plans to award the innovation partner a minimum of $10 million per year. 19 The
President’s budget proposal for fiscal year 2021 has requested $36 million for DRIVe. 20
According to BARDA officials, this includes up to $20 million for the innovation partner to
support investments. 21 With the federal investment and the matching funds the innovation
partner will be encouraged to identify through other nonfederal sources, BARDA officials said
they planned for the innovation partner to make some successful early investments that will
garner additional support and funding from private investors. In the long-term, the ultimate goal
will be to reinvest BARDA’s revenues generated from investments rather than using additional
appropriations.

Stakeholder feedback. To engage potentially interested partners and solicit feedback on
development of the innovation partnership from venture capital entities and other stakeholders,
BARDA issued two RFIs and met with over 60 stakeholders, organizations, accelerators, and
interested parties. 22 For example, BARDA officials told us they met with officials familiar with the
Army Venture Capital Initiative and the CIA’s venture capital partnership with In-Q-Tel, as well
as federal officials familiar with other federal public-private partnerships. 23 Through this

19The 21st Century Cures Act, which authorized BARDA to enter into an agreement with an innovation partner, did

not provide an appropriation for the innovation partnership.
20Department of Health and Human Services, Fiscal Year 2021 Public Health and Social Services Emergency Fund:

Justification of Estimates for Appropriations Committee. Each year, the President submits a fiscal year budget
request to Congress providing detailed estimates of the financial operations of federal agencies and programs.
21Depending on the maturity of the projects selected for investment, BARDA officials told us that they anticipated that

the innovation partner could make three or four investments with $10 million in government funding each year.
22BARDA received more than a dozen responses to the first RFI—issued in January 2019—wherein respondents

indicated an interest in becoming the innovation partner, demonstrated their eligibility and qualifications for the
innovation partner by outlining how they meet the eligibility requirements set forth in the 21st Century Cures Act, and
provided examples of previous investment and partnership successes. BARDA received more than two dozen
responses to the second notice—issued in October 2019—wherein respondents provided questions, comments,
suggestions, and concerns related to BARDA’s draft solicitation and requirements for the innovation partner.
23The Army is in partnership with OnPoint Technologies to manage its Army Venture Capital Initiative to invest in

priorities for the Army. The CIA is in partnership with In-Q-Tel to invest in intelligence and other innovation.

Page 6 GAO-20-601R Medical Countermeasure Partner
engagement with stakeholders, federal officials, and others, BARDA officials identified
suggestions for how to develop their own partnership and best practices. According to
documents from BARDA regarding their plans to implement the authority, officials used the RFI
responses and their meetings with stakeholders to understand venture capital options to fulfill
the innovation partner authority.

According to our review of the RFI responses, stakeholders made suggestions for and
comments about aspects of the innovation partnership, including the structure of the
partnership, the eligibility requirements for the innovation partner, and general venture capital
practices related to funding and investment. 24 Stakeholders also identified a number of
concerns regarding aspects of the agency’s plans for the innovation partner, which stakeholders
indicated could hinder BARDA’s implementation of the authority and ability to find an innovation
partner. BARDA officials told us they were assessing options for mitigating the three main
concerns they identified:

• There is a statutory limit on the amount of annual salary, including for those paid through
a grant or other extramural mechanism, that can be paid to an individual from HHS’s
annual appropriation, not to exceed that of an Executive Level II salary. 25 Several
stakeholder comments indicated that this limit is too low to attract an individual or entity
to manage the innovation partner venture capital fund. BARDA officials were interested
in how stakeholders would address this challenge. In their second RFI, BARDA
requested that respondents provide financial models and projections, including how
salaries and other fees would be paid. BARDA officials noted they were confident there
were highly qualified entities interested in the innovation partnership despite the salary
restriction.
• The 21st Century Cures Act requires, among other things, that the innovation partner be
a nonprofit entity, which some stakeholders reported could exclude some entities from
the partnership. 26 Further, BARDA officials told us the innovation partner, as a nonprofit
entity, would be required to reinvest BARDA’s share of any returns it makes into future
investments made through the partnership. 27 According to BARDA officials, some
stakeholders noted that they would not be interested in partnering with BARDA because,
as a venture capital firm, their goal is to maximize returns on investments. BARDA
officials stated that while they understood that the nonprofit requirement might disqualify
some interested entities, it is required by statute. They noted there are many entities that
also invest returns in additional technologies that benefit the fund’s stated mission,
instead of paying proceeds to investors.

24In total, BARDA received over 150 questions, comments, suggestions, and concerns from stakeholders to their RFI

notices regarding the innovation partnership.
25The salary cap for fiscal year 2020 was $197,300. Such a salary cap is typically included in HHS annual

appropriations. See, e.g., Pub. L. No. 116-94, div. A, tit. II, § 202, 133 Stat, 2534, 2577 (2019); Pub. L. No. 115–245,
div. B, tit. II, § 202, 132 Stat. 2981, 3089 (2018); Pub. L. No. 115-141, div. H, tit. II, § 202, 132 Stat. 348, 735 (2018).
BARDA officials noted that the CIA does not have a similar salary cap for their venture capital partner; Army officials
also told us they do not have a similar salary cap for their venture capital partner.
26BARDA officials told us they had also decided, based on their stakeholder research, that only entities with an

established nonprofit entity will be eligible to become the innovation partner.
27According to BARDA officials, traditional venture capital funds return proceeds of the fund to investors. In contrast,

the innovation partner will not return proceeds to the government but will reinvest them in perpetuity. Officials said
they expected the proceeds on the government investments would be reinvested into further investments.

Page 7 GAO-20-601R Medical Countermeasure Partner
• Some stakeholders expressed concerns regarding the uncertainty of federal funding
streams. BARDA officials also noted stakeholder concerns regarding being able to find
other venture capital firms with which to partner because of the tie to the government. To
the extent the innovation partner’s funding depends on annual appropriations,
uncertainty about the availability of federal funding in future years may present an
obstacle to BARDA to invest in promising technologies. To address this concern,
BARDA officials said they were considering a suggestion from some RFI respondents
and stakeholders on a way to alleviate the risk associated with the uncertainty of future
federal funding. Specifically, the innovation partner could set up a reserve fund each
year using its award and distribute the funds from year to year for the life of the
investments made using the specific reserve fund. This would allow the innovation
partner to create a reserve for each year it receives federal funding that it could use to
support the life of a funded project without reliance on consistent federal funding. 28
However, BARDA officials stated that such an approach will need to be determined with
the innovation partner once an award is made.

Preliminary planned structure and oversight. BARDA officials have developed preliminary
plans for structuring and overseeing the agreement with the innovation partner, which officials
say will be finalized when the agency makes the award. According to documentation from
BARDA regarding its plans to implement the innovation partner authority, the agency will use a
type of agreement known as an “other transaction” agreement to structure the innovation
partner agreement with the innovation partner entity. As we have previously reported, other
transaction agreements are generally not subject to federal laws and regulations applicable to
federal contracts or financial assistance. 29 As a result, officials from multiple agencies have told
us this approach provided them flexibility to develop customized agreements with entities and
accomplish projects that they could not have been achieved using traditional contracting
mechanisms. 30 According to BARDA officials, the innovation partner agreement would establish
mechanisms to ensure oversight of the partner, such as a Joint Oversight Committee, which
would make strategic decisions related to the partnership and include staff from both BARDA
and the innovation partner. In our previous work, HHS officials told us that such a committee
allowed the agency to play a more active role in a project than it would have had under a
traditional contract. 31 BARDA officials also told us they envisioned establishing a charter

28For the initial award, BARDA plans to use funds from its fiscal year 2020 advanced research and development

appropriation, which the agency must obligate within two years, according to officials. The awardee’s use of funds will
be governed by the agreement with BARDA.
29While other transactions allow for a more flexible, customized agreement between agency and contractor, the

agency is expected to ensure the other transaction agreement is designed to align with the government’s overall
mission and needs and with consideration of the best interests of the government. We and others have previously
reported that agencies’ use of other transactions has resulted in reduced accountability and transparency, in part,
because such agreements may be exempt from the federal acquisition regulation and government cost accounting
standards. GAO, Federal Acquisitions: Use of Other Transaction Agreements Limited and Mostly for Research and
Development Activities, GAO-16-209 (Washington, D.C.: Jan. 2016); GAO, Intellectual Property: Information on the
Federal Framework and DOD’s Other Transaction Authority, GAO-01-980T (Washington, D.C. July 17, 2001); and
Congressional Research Service, Department of Defense Use of Other Transaction Authority: Background, Analysis,
and Issues for Congress, R45521 (Washington, D.C.: February 22, 2019).
30Agency officials that reported such flexibilities included officials from HHS and DOD. See GAO-16-209 and GAO-

01-980T.
31See GAO-16-209.

Page 8 GAO-20-601R Medical Countermeasure Partner
agreement, which would provide BARDA and the government with additional protections and
oversight. 32

Further, BARDA officials explained that the agency plans to use what it learned from other
federal agencies and their venture capital practices in structuring the innovation partnership.
Specifically, officials stated that certain BARDA staff would have daily interaction with the
innovation partner to provide regular input into and oversight of investments and other decision
making. In contrast, Army officials we interviewed noted that the agency’s oversight of its
venture partner was too far removed, which Army officials said was problematic, because the
Army was not involved enough to ensure that its partner was investing in technology that was
beneficial to the government. According to an Army official, the Army is considering terminating
its Army Venture Capital Initiative, in part, for this reason. As noted, BARDA plans to have
regular interaction with the innovation partner, which could address some of these lessons.

Agency Comments

We provided a draft of this report to HHS and DOD for comment. HHS did not provide
comments on this report and DOD provided technical comments that we incorporated as
appropriate.

-----

We are sending copies of this report to the appropriate congressional committees, and to the
Secretaries of Health and Human Services and Defense. In addition, the report is available at
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If you or your staff members have any questions about this report, please contact me at (202)
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(Analyst in Charge), and Atiya Siddiqi. Also contributing were Laurie Pachter, Vikki Porter,
Jennifer Whitworth, Yesook Merrill, and Robert Marek.

Mary Denigan-Macauley
Director, Health Care

(103969)

32BARDA officials explained the charter agreement is necessary because BARDA’s agreement with the innovation

partner will not extend to entities the innovation partner invests or partners with on investments—that is, BARDA will
not enter into a contractual relationship with the other investment partners or invested companies—which is different
from BARDA’s prior other transaction agreements. Additionally, BARDA officials told that as a nonprofit entity, the
innovation partner will be committed to the ensuring its investments were focused on BARDA’s goals as outlined in its
incorporating documents.

Page 9 GAO-20-601R Medical Countermeasure Partner
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Our copy: gao-20-601r.pdf
Original: www.gao.gov