Following the terrorist attacks of 2001, both the Administration and Congress determined that the federal government needed new medical countermeasures (such as diagnostic tests, drugs, vaccines, and other treatments) to respond to an attack using chemical, biological, radiological, or nuclear (CBRN) agents. Representatives of the pharmaceutical industry attributed the paucity of CBRN agent countermeasures to the lack of a significant commercial market. They argued that, because these diseases and conditions occur infrequently, the private sector perceived little economic incentive to invest the millions of dollars required to bring treatments to market. In 2004, Congress passed the Project BioShield Act ( P.L. 108-276 ) to encourage the development of CBRN medical countermeasures. The 108 th Congress also appropriated $5.6 billion to acquire countermeasures through Project BioShield for FY2004 to FY2013. Subsequent Congresses have evaluated implementation of Project BioShield. In response to perceived problems with Project BioShield countermeasure procurement, the 109 th Congress created the Biomedical Advanced Research and Development Authority (BARDA) and the position of Assistant Secretary for Preparedness and Response in the Department of Health and Human Services (HHS) through the Pandemic and All-Hazards Preparedness Act ( P.L. 109-417 ). The 112 th Congress is considering several Project BioShield-related policy issues. These include whether to continue diverting Project BioShield acquisition funding to other purposes; whether to change the countermeasure development and acquisition process; how to replace stockpiled countermeasures as they expire; and whether to alter federal efforts to encourage the development of broad-spectrum countermeasures. To encourage the development of new CBRN countermeasures, President Bush proposed Project BioShield in his 2003 State of the Union address. The 108 th Congress considered this proposal and passed the Project BioShield Act of 2004 ( P.L. 108-276 , signed into law July 21, 2004). It has three main provisions. The first provision provides HHS expedited procedures for CBRN terrorism-related spending, including procuring products, hiring experts, and awarding research grants. The second provision creates a government-market guarantee by permitting the HHS Secretary to obligate funds to purchase countermeasures while they still need several more years of development. The third provision authorizes the HHS Secretary to temporarily allow the emergency use of countermeasures that lack Food and Drug Administration (FDA) approval. The act relaxes Federal Acquisition Regulation procedures HHS must follow when procuring property or services used in performing, administering, or supporting CBRN countermeasure research and development (R&D). These expedited procedures decrease both the amount of paperwork required for these expenditures and the potential for oversight. The act also increases the maximum amount, from $100 thousand to $25 million, for contracts awarded under simplified acquisition procedures, and allows these purchases using other than full and open competition. According to the Government Accountability Office (GAO), HHS used the simplified acquisitions procedure authority for five contracts. These contracts, all executed between 2004 and 2005 using funds from the National Institutes of Health (NIH), totaled approximately $30 million. Through December 2009, HHS had not exercised this authority to use other than full and open competition. The Project BioShield Act authorizes the HHS Secretary to use an expedited peer review award process for grants, contracts, and cooperative agreements related to CBRN countermeasure R&D, if the Secretary deems that a pressing need for an expedited award exists. The act limits this authority to awards worth $1.5 million or less. This expedited award process replaces the normal peer review process. Some scientists have expressed concerns that an expedited review process would reduce research quality. The normal peer review process can provide proposals with greater scientific merit a higher probability of receiving funding, a factor potentially lost in an expedited process. According to HHS, the National Institute of Allergy and Infectious Diseases (NIAID) awarded 5 contracts and 56 grants through this expedited peer review process through December 2009. According to NIAID, grants that go through the normal peer review process typically take 9 to 18 months to receive funding. Prior to 2009, NIAID awarded all of the expedited grants within 3 to 9 months after the application deadline. In 2009, NIAID awarded all 4 of its expedited grants between 18 and 20 months after the application deadline. The Project BioShield Act is designed to guarantee companies that the government will buy new, successfully developed CBRN countermeasures for the Strategic National Stockpile (SNS). The act allows the HHS Secretary, with the concurrence of the DHS Secretary and upon the approval of the President, to promise to buy a product up to eight years before it is reasonably expected to be delivered. Originally, HHS could pay a company only on the delivery of a substantial portion of the countermeasure. The Pandemic and All-Hazard Preparedness Act ( P.L. 109-417 ) modified the Project BioShield Act to allow for milestone-based payments of up to half of the total award before delivery. Therefore, this guarantee reduces the market risk for the company and the milestone payments partially reduce the company's exposure to development risk (i.e., the risk that the countermeasure will fail during testing and be undeliverable). The Project BioShield Act allows HHS to purchase unapproved and unlicensed countermeasures. It requires the HHS Secretary to determine that "sufficient and satisfactory clinical experience or research data ... support a reasonable conclusion that the product will qualify for [FDA] approval or [HHS] licensing ... within eight years." Because most drugs that begin these processes fail to become approved treatments, critics of this provision suggest that the government will end up purchasing countermeasures that may never be approved. Some of the countermeasures procured through Project BioShield lack FDA approval. See " Acquisitions ." To reduce the government's financial risk associated with this provision, the act allows HHS to write contracts in which unapproved products may be purchased at lower cost than approved products. The HHS has included provisions for milestone payments and for payments contingent on FDA approval in Project BioShield contracts. The FDA and HHS designed their approval and licensing processes to protect people from ineffective or dangerous treatments. The Project BioShield Act allows the HHS Secretary to temporarily authorize the emergency use of medical products that are not approved by the FDA or licensed by HHS. To exercise this authority, the HHS Secretary must conclude that: the agent for which the countermeasure is designed can cause serious or life-threatening disease; the product may reasonably be believed to be effective in detecting, diagnosing, treating, or preventing the disease; the known and potential benefits of the product outweigh its known and potential risks; no adequate alternative to the product is approved and available; and any other criteria prescribed in regulation are met. Such emergency use authorizations (EUAs) remain in effect for one year unless the Secretary terminates them earlier. The Secretary may renew expiring authorizations. The HHS Secretary has issued several EUAs. The HHS Secretary issued an EUA allowing the vaccination of Department of Defense (DOD) personnel with a specified type of anthrax vaccine. The HHS Secretary issued EUAs to permit use of certain countermeasures during the 2009 H1N1 "swine" influenza outbreak: the antiviral influenza treatments Tamiflu (oseltamivir), Relenza (zanamivir), and Peramivir; N95 respirators; and several diagnostic kits to help identify cases of this disease. The only EUA remaining active permits the distribution of antibiotic kits containing doxycycline hyclate to certain people participating in the Cities Readiness Initiative. The Project BioShield Act of 2004 requires the HHS Secretary to report annually to Congress on the use of some of the authorities granted by this law. The annual reports must summarize each instance that HHS used the expedited procurement and grant procedures and allowed the emergency use of unapproved products. The annual reports must explain why HHS needed to use these authorities. The HHS has produced four such reports to date. This act also required GAO to assess actions taken under authorities granted by the act, determine the effectiveness of the act, and recommend additional measures to address deficiencies. In July 2009, GAO published two reports in response to this requirement. The first recommended that HHS improve some internal controls for the expedited contracting procedures (see " Expedited Procedures " above). The second report described the manner in which HHS had used Project BioShield to support development and procurement of CBRN medical countermeasures. This report contained no recommendations for improving Project BioShield. The Project BioShield Act did not appropriate any funds. Instead, it authorized the appropriation of up to a total of $5.593 billion for procuring countermeasures from FY2004 through FY2013. The Department of Homeland Security Appropriations Act, 2004 ( P.L. 108-90 ) had previously appropriated this amount into a special reserve fund and provided explicit time windows during which the money could be obligated. P.L. 108-90 specified that $3.418 billion were available for obligation from FY2004 to FY2008. The balance of the advance appropriation plus unobligated funds remaining from FY2004 to FY2008 became available in FY2009 for obligation from FY2009 to FY2013. The Project BioShield Act specified that the funds in this DHS "Biodefense Countermeasures" account are only for the procurement of CBRN countermeasures using the Project BioShield authorities and may not be used for other purposes, such as countermeasure development grants or program administration. The 111 th Congress transferred the remaining balance in the DHS Biodefense Countermeasures account to the HHS Public Health and Social Services Emergency Fund account through the Consolidated Appropriations Act, 2010 ( P.L.