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Gov't Contracts Of The Month: Virus, Wall, Missile Defense

By Sarah Martinson
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Law360 (March 31, 2020, 7:17 PM EDT) -- The coronavirus has dominated headlines for all industries, including government contracts. Millions of dollars were awarded in March to Janssen, 3M and Honeywell to manufacture N95 masks and develop a COVID-19 vaccine, and Congress' $2 trillion stimulus package promises to funnel billions more into federal purchases.

Here are Law360's top picks for coronavirus-related contracts awarded in March, along with other notable technology and defense deals.

Battle Against COVID-19

The U.S. Department for Health and Human Services awarded four notable contracts last month for supplies to combat the coronavirus, according to the USAspending.gov database.

One of the biggest deals, worth $456 million, was awarded to Johnson & Johnson subsidiary Janssen Pharmaceutical to develop a COVID-19 vaccine. HHS awarded Janssen the funds on March 27 as part of a seven-year indefinite-delivery contract that began in August 2017, the database said.

HHS said in February that the agency would work with Janssen to advance treatments for the novel virus. On March 30, HHS said the pharmaceutical company was expected to start human clinical trials for a COVID-19 vaccine this fall so that a viable vaccine is available at the beginning of 2021.

"Delivering a safe and effective vaccine for a rapidly spreading disease like COVID-19 requires accelerated action with parallel development streams," Rick Bright, the director of HHS' Biomedical Advanced Research and Development Authority, said in a statement about the agency helping Janssen speed up its clinical trials.

Honeywell Safety Products USA Inc. and 3M Co. were both awarded multimillion-dollar contracts to manufacture N95 masks for HHS, according to the database. Honeywell was awarded a $148.5 million contract on March 21, and 3M got a $172.9 million deal on March 25, the database said.

HHS said on March 3 that it was seeking to buy 500 million N95 masks for the Strategic National Stockpile, the country's largest stockpile of medical supplies for severe national health emergencies.

Honeywell said in a statement that it will produce the masks at its Rhode Island facility, where the company manufactures other protective gear.

HHS also awarded a $456 million contract to ApiJect Systems America to manufacture hundreds of millions of prefilled syringes containing medicines and vaccines for the national stockpile in an initiative called Rapid Aseptic Packaging of Injectable Drugs, or RAPID, according to the agency.

HHS and other government agencies awarded dozens of government contracts in March to combat the coronavirus, and Congress' stimulus bill, the Coronavirus Aid, Relief and Economic Security Act, has earmarked $10.5 billion for defense spending and $1.45 billion for coronavirus response efforts, funds that will likely reach government contractors.

Raytheon Secures $2.1B Ballistic Missile Interceptor Deal

The Pentagon's Missile Defense Agency awarded Raytheon Missile Systems Co. a $2.1 billion fixed-price incentive contract to manufacture ballistic missile interceptors, according to the U.S. Department of Defense  website.

SM-3 Block IB interceptors are used by the U.S. Navy to destroy ballistic missiles with the force of collision instead of explosives, according to Raytheon's website. The interceptors can be used on land and at sea, according to the company.

Mitch Stevison, vice president of Raytheon Strategic and Naval Systems, said in a statement that the missile interceptor deal is beneficial for the government and the defense industry.

"Efficiencies gained from this contract will allow us to reduce costs, continue to improve the SM-3 and deliver an important capability to our military," Stevison said.

On March 26, the same day the DOD announced the deal, the U.S. Department of Justice simultaneously filed a lawsuit and proposed settlement in D.C. federal court requiring Raytheon to divest its airborne tactical radios business to move forward with its planned merger with United Technologies Corp. The settlement was approved by the federal court the next day.

Raytheon and UTC unveiled their plan to join forces in June, with an expectation that the tie-up would close in the first half of 2020. The companies have already received approval on the merger from European Union antitrust officials who made the same divestiture requirements.

General Dynamics, Northrop, Others Win $990M Data Deal

The DOD's Defense Intelligence Agency awarded a $990 million five-year, multiaward contract to seven companies for data management and technical support, according to the Pentagon's website.

The companies that landed the deal are Applied Research Associates, Booz Allen Hamilton Inc., CACI NSS Inc., Centauri LLC, General Dynamics Information Technology Inc., Northrop Grumman Systems Corp. and Radiant Geospatial Solutions, according to the DOD.

Each company will receive a $10,000 down payment and have the opportunity to compete for individual task orders, the defense department said.

HP, AMD Land $600M Energy Dept. Supercomputer Deal

The U.S. Department of Energy's National Nuclear Security Administration awarded Hewlett Packard Enterprise Co. and Advanced Micro Devices Inc. a $600 million contract to build a high-speed supercomputer that will be used to support the U.S. nuclear stockpile, HP announced.

HP said that the computer, named El Capitan, will be the world's fastest exascale-class supercomputer and can be used by researchers to model weapon stockpiles, conduct simulations and analyze data.

HP Senior Vice President and General Manager Peter Ungaro said in a statement that strengthening the U.S. nuclear stockpile is critical for national security and defense.

"The computing power and capabilities of this system represent a new era of innovation that will unlock solutions to society's most complex issues and answer questions we never thought were possible," Ungaro said.

AMD Senior Vice President and General Manager Forrest Norrod said in a statement that AMD is pleased to continue collaborating with HP to develop new technologies.

The computer is expected to be completed by 2023, HP said.

Border Wall Construction Continues Amid Litigation

The U.S. Army Corps of Engineers and U.S. Customs and Border Protection awarded two big contracts to Southwest Valley Constructors Co. for wall construction work at the U.S.-Mexico border in Starr County, Texas, and Tucson, Arizona.

Southwest Valley Constructors, which is based in Albuquerque, New Mexico, received a $179 million contract on March 2 to build roughly 15 miles of a new border wall in the CBP's Rio Grande Valley location, according to the agency.

"These projects will improve the RGV Sector's ability to impede and deny illegal border crossings and the drug and human smuggling activities of transnational criminal organizations," CBP said in a statement.

On March 23, the Corps awarded Southwest a $524 million contract modification for border wall repair in Tucson, according to the Department of Defense.

Southwest did not respond to a request for comment on Tuesday.

President Donald Trump tried to divert $3.6 billion in defense funds for more border wall construction by declaring a national emergency in 2019, but a California federal judge issued an injunction blocking the president from doing so. The Trump administration is currently challenging the order in the Ninth Circuit.

Runners-up for notable contracts this month include Lockheed Martin's $789 million deal from the U.S. Navy for combat ship maintenance and Science Applications International Corp.'s $950 million contract from the Defense Logistics Agency for supply management.

--Editing by Jill Coffey.



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