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DHS contractsDHS termination of bio-detection contract questioned

Published 4 March 2015

In February 2014, six months before Silicon Valley startup NVS delivered the first prototypes of its polymerase chain reaction (PCR) pathogen detector to DHS, the department sent NVS’s chief executive Hans Fuernkranz a notice terminating the project. According to a 26 November 2014 draft audit report by DHS’s inspector general’s office, the decision was improperly made by a single agency official without supporting evidence and “against S&T [DHS Science & Technology Directorate] subject matter expert advice.”The official who made the decision to cancel the project had expressed concerns about the cost associated with the NVS contract, and said the contract was terminated because existing technologies could better meet the agency’s needs for confronting bio-threats. The auditors say, however, that they “did not identify evidence to substantiate any of the concerns.”

In May 2010 Silicon Valley startup NVS Technologies was awarded an $18 million contract from DHS to develop a cheap and simpler way to test for pathogens and other bio-threat agents. The bio-defense research industry has spent billions of dollars to produce about a dozen devices to detect anthrax spores and other pathogens using polymerase chain reaction (PCR), sometimes called “molecular photocopying,” as it detects potentially threatening organisms by replicating their genetic material. While most of the products available on the market are costly and tend to require a highly skilled lab technician to operate, NVS’s proposed device uses PCR technology in a much cheaper, faster, and easier way.

The device, according to government scientists, can test at least five times as many types of microbes as other comparable devices and complete the test within an hour, compared to the one to three days required by other devices. Its ease of use was equal to “the level of technical expertise of a home pregnancy test,” said one government scientist. “This was really fantastic, a quantum leap,” said another government scientist familiar with the proposed device. “It allowed you to do things that could never be done before.”

In February 2014, six months before NVS delivered its first prototypes to DHS, the department sent NVS’s chief executive Hans Fuernkranz a notice terminating the project. The notice did not give a reason, but according to a 26 November 2014 draft audit report by DHS’s inspector general’s office, the decision was improperly made by a single agency official without supporting evidence and “against S&T subject matter expert advice.”

The official had expressed concerns about the cost of NVS, and said that NVS’s contract was terminated because existing technologies could better meet the agency’s needs for confronting bio-threats. Auditors “did not identify evidence to substantiate any of the concerns,” the audit stated. Just one month before the contract was terminated, a DHS review “revealed there was substantial data showing the NVS technology worked” and that S&T employees “acknowledged a continued need for the technology.”

“His proposal was clearly above the others,” said a senior government scientist familiar with the project. “There was nothing on the market that could do what he was proposing to do, not even anything in anybody’s head.”

The Pittsburgh Tribune-Review reports that the contract’s cancellation has raised concerns about other contracts administered by the science and technology directorate (S&T), a DHS agency responsible for managing nearly $350 million in federal research and development contracts. The audit faults the directorate for its poor oversight of the NVS contract and its termination, saying a lack of “adequate policies and procedures governing contract management” could prevent the agency from “making well-informed decisions on all of its contracts.” The audit recommends that the science directorate develop better procedures for reviewing, overseeing, and terminating contracts.

DHS spokeswoman Ginette Magana said last Thursday that the agency agrees with the audit’s recommendations regarding the NVS contract. “It is our fundamental responsibility to manage the Department of Homeland Security efficiently, and sound management is critical to our ability to execute our mission,” Magana said, adding that DHS chief Jeh Johnson “has made reforming the manner in which this department conducts business a top priority.”

Today Fuernkranz is engaged in settlement negotiations with DHS and is trying to get private financing for his device. “What I was developing was faster and much cheaper and easier to use than anything out there,” he said. “The whole world would have benefited from it.”

In June 2013, DHS raised the value of NVS’s contract to $30 million. S&T was planning to deploy a finished product for use by the Centers for Disease Control and Prevention, government laboratories, the Transportation Security Administration, and the Secret Service — which had provided about 20 percent of the project’s funding. “We had everything ready to go, and then boom, this whole thing just evaporated in front of us,” said another government scientist.