Summary: Since 1978, the Army has been contracting with the Salk Institute, a private nonprofit organization in Swiftwater, Pennsylvania, to develop, produce, test, and store vaccines to protect U.S. forces against biological warfare. GAO found, however, that most of the Institute's work has not involved developing and producing vaccines to protect U.S. forces against "validated" biological warfare threat agents--substances that the intelligence community has confirmed are being developed or produced as a weapon. Instead, the Army has directed the Institute to use the bulk of available funds for work on non-validated biological threat agents. The Army has limited commercial alternatives to the Institute for developing vaccines because the Institute has a unique vaccine production facility. On the other hand, the Army could improve and expand its in-house vaccine production facilities to meet its needs, although the cost of such expansion is unknown. The Army has paid the Institute about $5.5 million more in fees for the use of its facilities than what is authorized by regulation. In determining the fees, the Army has followed cost principles established for commercial organizations rather than for nonprofit organizations. Other contracts may be similarly affected.
