Following the terrorist attacks of 2001, the federal government determined that it would need new medical countermeasures (e.g., 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 perceives little economic incentive to invest the millions of dollars required to bring treatments to market. 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). This act has three main provisions. It provides the Department of Health and Human Services (HHS) expedited procedures for CBRN terrorism-related spending, including procuring products, hiring experts, and awarding research grants. It creates a government-market guarantee by allowing the HHS Secretary to obligate funds to purchase countermeasures while they still need several more years of development. It also authorizes the HHS Secretary to temporarily allow the emergency use of countermeasures that lack Food and Drug Administration (FDA) approval. The act relaxes procedures under the Federal Acquisition Regulation for 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 increases the maximum amount, from $100 thousand to $25 million, for contracts awarded under simplified acquisition procedures. It also allows these purchases using other than full and open competition. According to the Government Accountability Office (GAO), HHS has used the simplified acquisitions procedure authority for only five contracts. These contracts were all executed between 2004 and 2005 totaled approximately $30 million. HHS has stated that it has not used its authority to use other than full and open competition. The Project BioShield Act authorizes the HHS Secretary to use an expedited 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. This authority is limited to awards of $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 will reduce research quality. The normal peer review process is designed to provide proposals with greater scientific merit a higher probability of receiving funding, a factor potentially lost in an expedited process. According to the most recent data available from HHS, it awarded 14 grants through this expedited peer review process between July 2004 through July 2007. The National Institutes of Allergy and Infectious Diseases (NIAID) awarded these grants within three to five months after the application deadline. All these awards supported research on medical countermeasures to be used following radiation exposure. 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, a company was to be paid 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 its 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[s] a reasonable conclusion that the product will qualify for approval or 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. To reduce the government's financial risk associated with this provision, the act allows HHS to write contracts so that unapproved products may be purchased at lower cost than approved products. HHS used some of these authorities when structuring each of the Project BioShield contracts discussed below (" Acquisitions "). The FDA and HHS approval and licensing processes are designed 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 HHS. To exercise this authority, the HHS Secretary must conclude that: (1) the agent for which the countermeasure is designed can cause serious or life-threatening disease; (2) the product may reasonably be believed to be effective in detecting, diagnosing, treating, or preventing the disease; (3) the known and potential benefits of the product outweigh its known and potential risks; (4) no adequate alternative to the product is approved and available; and (5) any other criteria prescribed in regulation are met. Such emergency use authorizations (EUA) remain in effect for one year unless terminated earlier by the Secretary. The Secretary may renew expiring authorizations. The HHS Secretary has issued several EUAs. Currently, five countermeasures to the 2009 H1N1 "swine" influenza outbreak are permitted to be used under EUA: the antiviral influenza treatments Tamiflu (oseltamivir) and Relenza (zananivir), N95 respirators, and two diagnostic kits to help identify cases of this disease. The other active EUA allows the distribution of antibiotic kits containing doxycycline hyclate to certain people participating in the Cities Readiness Initiative. In January 2005, the HHS Secretary used this authority to allow the vaccination of Department of Defense (DOD) personnel with a specified type of anthrax vaccine. This EUA expired in January 2006. The Project BioShield Act of 2004 requires the HHS Secretary to report annually to Congress the use of some of the authorities granted by this law. The reports must summarize each instance that the Department used the expedited procurement and grant procedures and allowed the emergency use of unapproved products. The reports must explain why HHS needed to use these authorities. The HHS has produced two such reports to date: one covering activities from July 2004 through July 2006 and another covering August 2006 to July 2007. This act also requires the Government Accountability Office (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 report recommends that HHS improve some of its internal controls implemented for the expedited contracting procedures (see " Expedited Procedures " above). The second report determined that HHS has 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 countermeasures procurement from FY2004 through FY2013. The Department of Homeland Security Appropriations Act, 2004 ( P.L. 108-90 ) appropriated this amount into a special reserve fund with explicit time windows in which the money could be obligated. P.L. 108-90 specified that $3.418 billion was available for obligation for 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 these funds are only for the procurement of CBRN countermeasures using the Project BioShield authorities and may not be used for other purposes, such as for grants to support countermeasure development or program administration. Congress advance-appropriated the 10-year program but retained the power to annually increase or decrease the amount in the special reserve fund. Congress removed $25 million from this account through rescissions in the Consolidated Appropriations Act, 2004 ( P.L. 108-199 ) and the Consolidated Appropriations Act, 2005 ( P.L. 108-447 ). See Table 1 . The Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) transferred $412 million from the special reserve fund to HHS. Of this amount, $275 million went to fund countermeasure advanced research and development through the Biodefense Advanced Research and Development Authority (BARDA, see below), and $137 million went to help respond to and prepare for pandemic influenza. For FY2010, the Obama Administration has requested a transfer of $305 million from the BioShield special reserve fund to fund countermeasure advanced development through BARDA. See Table 2 . The Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2010 ( H.R. 3293 ), which passed the House on July 24, 2009, would transfer $305 million to BARDA for advanced development activities. This act would also transfer $500 million from the BioShield special reserve fund to the National Institute of Allergy and Infectious Disease for basic research activities.