Early Briefing: The FDA And Its PR Problem

Staff writer Robert O'Harrow takes a look today at how the FDA handled a contract award to a local PR contract. Here's the start of his piece:

The U.S. Food and Drug Administration had an image problem. For months last year the agency had been pummeled by Congress for poor inspections of tainted vegetables, drugs and other products.

FDA leaders decided to hire a contractor for a public relations campaign that would "create and foster a lasting positive public image of the agency for the American public," according to agency documents.

A competition, as prescribed by government policy, was not held to get the lowest bid for the $300,000 contract. Instead, FDA officials came up with a plan to ensure the work would go to Qorvis Communications, a Washington public relations firm with ties to the FDA official arranging the deal.

The plan used a circuitous route around the standard government contracting procedures. The contract was awarded in July to Alaska Newspapers Inc., a firm owned by an Alaska Native corporation that does not have to compete for federal work because it qualifies for special set-asides. The idea was for ANI to hand over the work to Qorvis, documents show.

After being made aware of The Post's findings, FDA deputy commissioner John Dyer said this week that he had suspended the contract and ordered an independent investigation.

In other news:

* Developers formally proposed the most ambitious overhaul of downtown Columbia in its history yesterday, hoping to transform the four-decade-old planned community into a collection of modern, walkable, environmentally friendly neighborhoods with a new downtown.

General Growth Properties submitted a plan to Howard County officials that calls for 5,500 new townhouses and apartments and the construction of 1 million square feet of retail space over the next three decades in neighborhoods surrounding Columbia Town Center.

* A Rockville biotech will remain the government's sole anthrax vaccine supplier until new doses, based on more modern technologies, can be procured.

Emergent BioSolutions announced Wednesday that it had signed a contract with the Department of Health and Human Services to supply the Strategic National Stockpile with an additional 14.5 million doses of BioThrax for $364 million, with the potential to receive as much as $404 million.

The possible increase is tied to the company's ability to extend BioThrax's three-year shelf life to four years. Emergent has submitted an application to the Food and Drug Administration demonstrating BioThrax's stability in hopes of lengthening that expiration date, said company spokeswoman Kim Root.

* The Federal Agricultural Mortgage Corp. appointed a new acting chief executive and raised $65 million to replenish capital and satisfy regulatory requirements. Farmer Mac, as the DC-based government-sponsored enterprise is known, named Michael A. Gerber acting president and chief executive, replacing Henry D. Edelman.

* CarMax said it was laying off 600 employees, or about 4 percent of its workforce, as it tries to cut costs as car and truck sales decline. The Richmond company said the reductions are in its service departments at a majority of its production superstores, where it reconditions vehicles. The production superstores make up 60 of the company's 99 retail locations.

Employees were notified Wednesday and were offered severance packages, said CarMax spokeswoman Trina Lee. The company, which has about 15,250 employees, said it expected about $7 million in severance costs to be included in its results for the third quarter, which ends Nov. 30.

* McLean-based Gannett, the largest U.S. newspaper publisher, said it drew on a revolving credit line to ensure it has funds to repay its commercial paper. Companies sell commercial paper, which matures in nine months or less, to help pay for day-to-day expenses, including payroll and rent. The action was taken in response to credit-market disruption, Gannett said. The publisher of USA Today said it has significant credit available under a $3.9 billion revolving credit line, in excess of its $2 billion in commercial paper outstanding.

Standard & Poor's said it may lower Gannett's BBB+ corporate credit rating, the eighth-highest investment grade, and its A-2 commercial paper rating. The ratings company cited the worsening decline in newspaper advertising.

* Pharmacy benefits manager HealthExtras changed its name to Catalyst Health Solutions, adopting the name of its largest subsidiary.

The Rockville company said it gets almost all its revenue from the Catalyst Rx PBM, which covers more than 5 million members in the United States and Puerto Rico. The company's stocker ticker changed to CHSI from HLEX.

By Dan Beyers  |  October 2, 2008; 9:00 AM ET
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