Hazelwood residents thought their neighborhood was about to change for the better.
Since December, politicians and officials from the University of Pittsburgh Medical Center had been touting the hospital giant's plans to build a high-profile vaccine center at the nearby former LTV steel mill.
The project, community members were told, could cost between $600 million and $800 million to build. And while UPMC would have to bid on a federal contract to win the job, a successful offer could create roughly 1,000 jobs and help revitalize Hazelwood, a long-depressed neighborhood along the Monongahela River.
"[This] is very exciting," Jim Richter, executive director of the Hazelwood Initiative, wrote in a letter to his community group's members back in February. "[W]e want to make sure that the community gets the maximum benefit from this project."
On July 1, however, Hazelwood learned that there would be no project. In a press release, UPMC stated that it was dropping the project because of "differences in strategy and government delays."
The disappointment was palpable at a July 12 community meeting held in a Hazelwood senior center.
"You have no idea how this is being felt in the hearts of the people of Hazelwood," said Kris DiPietro, vice chair of the Hazelwood Initiative.
"We never said, ‘This is a done deal,'" Sean Logan, UPMC's vice president for community relations and a former state senator, explained to roughly 50 community members on hand. Still, he acknowledged, the community wanted to know, "Who dropped the ball?"
As it turns out, the federal government deserves the bulk of the blame. Changes and delays in government contract proposals created confusion and concern. So too did uncertainty about the federal government's financial situation, exacerbated by partisan sniping in Congress.
But while it said very little in public, UPMC has known its proposal faced a grim prognosis for nearly a year. And some wonder whether the hospital kept the neighborhood's hopes too high for too long.
UPMC's venture -- called "21st Century Biodefense" or "21 CB" -- would have built a facility to protect the country from bioterror attacks and naturally occurring flu epidemics. UPMC's partners included corporate giants Merck & Co., IBM and GE Healthcare.
"[UPMC] officials and others are ‘cautiously optimistic' that the federal government will accept the center's proposal to construct a … vaccine development and production center in Hazelwood," read the lead of a Jan. 21 Pittsburgh Post-Gazette story.
But even as that story was hitting the streets, UPMC officials had reason to doubt it would even submit a bid.
UPMC officials would say little about their decision-making process. But according to U.S. Rep. Mike Doyle (D-Forest Hills), UPMC increasingly came to see the project as a gamble.
By early 2011, the hospital had been working for four years to prepare its bid. Originally, UPMC anticipated that the center would be backed by two government agencies: the Department of Defense -- which sought new countermeasures to defend against bioterrorism -- and the Department of Health and Human Services, which needs flu vaccines for use during outbreaks.
Doyle, who worked with UPMC on the project for roughly a year and a half, says UPMC's primary interest lay in developing new vaccines for the Pentagon. Producing vaccines to handle flu epidemics was of less interest, he says.
But last year, the bidding process seemed to be moving in the opposite direction. Instead of building just one center, the government decided to create two: one for Health and Human Services, and the other for the Department of Defense. And so far, the Pentagon has yet to even issue a Request for Proposals -- an early step in the bidding process in which interested bidders submit their plans, credentials and cost estimates. When Health and Human Services released a draft of its Request for Proposals last September, meanwhile, Doyle says UPMC and its partners were "very upset."
The bid solicitation "was very heavy on the pandemic-flu side, but not [bioterrorism]," says Doyle. "[UPMC] didn't think it was going to be financially viable for a nonprofit" to develop commercial vaccines.
While a Pentagon research-and-development contract would be a steady source of income, making flu vaccines was a gamble. As the government made clear in a January statement to bidders, while the facility would have to be capable of producing 50 million doses of vaccine, the government "will not purchase that quantity unless there is a declaration of a public-health emergency."
In March, the Department of Health and Human Services issued a final version of its RFP. And again, there was no promise to buy any of the flu vaccines created by the facility. After reviewing the solicitation, Doyle says UPMC officials decided not to submit a proposal.
"We were pushing them to submit," he says. "But it's their money and their team."
Even then, Hazelwood's hopes weren't completely dead: UPMC and its partners were still waiting on the RFP from the Department of Defense. But misgivings mounted as the Department of Defense delayed putting its own project up for bids.
"The concern was that [the Pentagon proposal] might fall victim to budget cutting," says Doyle. "The money may not be there."
Eventually, he says, UPMC CEO Jeffrey Romoff decided to "pull the plug."
"We lobbied for them to at least wait for the Department of Defense [RFP] to come out," says Doyle. "But [Romoff] was reluctant to put money toward a project at a time when UPMC had a lot of other issues going on," including its highly publicized feud with insurer Highmark.
Cost was apparently also a factor. Doyle says UPMC had already invested about $20 million toward drawing up a proposal; continuing through the process would have cost another $10 million.
A UPMC spokesperson would neither confirm nor deny Doyle's figures. But the hospital giant's public statements largely support Doyle's account.
In the July 1 press release, UPMC's Robert J. Cindrich said that 21CB's "strategy was to create an innovative facility fully dedicated to the government's needs for non-commercial vaccines to protect the nation from bioterrorism and pandemic diseases.
"Unfortunately, the request for proposals recently released by the U.S. Department of Health and Human Services cannot be reconciled with that approach and would greatly increase the risks for UPMC."
Other bidders are still pursuing the project, and some say they're surprised by UPMC's withdrawal.
"UPMC has absolutely been a leader on this [project]," says W. Shawn Conway, executive vice president of sales, marketing and communication for Chemical, Manufacturing and Control LLC, an Indiana-based company still bidding on the contracts. "Why they dropped out, we don't know."
Others, however, say they understand why UPMC threw in the towel.
"It doesn't surprise me a bit," says James Talton, president and CEO of Nanotherapeutics Inc., a Florida-based company working with other groups on their proposal. "This is a risky [project]."
Talton says the government's unwillingness to guarantee vaccine purchases is "absolutely" a concern. "The government has put [bidders] in a really uncomfortable position," he says. "As a business, it's pretty difficult to see why I'm doing this."
Some Hazelwood residents, meanwhile, are struggling to understand why they didn't know the deal was in peril until this summer. Especially if UPMC had misgivings about the project as far back as September.
"I think [UPMC] should have shared as much information about the pros and cons [of the project] so as to keep us informed," says Richter, of the Hazelwood Initiative.
Richter says the community first learned that UPMC might build a vaccine facility back in November. Initially, word came from politicians including Doyle and state Rep. Dan Frankel (D-Squirrel Hill), and in December, UPMC representatives and politicians met with the community about their plans.
Richter says the discussion touched on a variety of topics: job creation; UPMC's record at places like Braddock, where the hospital giant closed a community hospital last year; and potential safety and environmental concerns associated with having a vaccine facility nearby.
UPMC officials never said the vaccine center was a "slam dunk," Richter says. But he thought they'd at least be submitting a proposal. And if UPMC had concerns about the proposal, Richter says no one in the community knew about them. While UPMC learned in January that the government wouldn't promise to buy vaccines, for example, Richter says he never heard about that deal-breaker until the summer.
Richter says the first real sign of trouble he saw came in May, when he says UPMC's Logan told him the government solicitation was "very disconcerting." And even then, Richter says, Logan told him that the Pentagon proposal was still in the offing.
"They conveyed the impression that they were going to apply to both proposals," Richter says. "There were no indications that they were going to withdraw."
It wasn't until June that Richter received a call from Doyle telling him that UPMC was pulling out. The news, he says, was devastating.
"Why can't you help the communities in your own back yard?" David Hughes, of Squirrel Hill, asked UPMC's Logan during the July 12 community meeting. "Take a little loss once in a while."
"I understand people being hurt by this, but it would be unfair to say anyone was trying to mislead anyone," says Doyle. "None of us dreamed [UPMC] wouldn't submit a proposal. You don't spend $20 million to not submit a proposal."
Although Doyle wishes UPMC would have stayed in the game, he says that, given the budget debate in Washington and the likelihood of cuts in government spending, "I'm starting to wonder whether the Department of Defense is willing to do this. I'm not sure anyone's going to get a [biodefense] center at this point.
"I don't think there's a guilty party," Doyle adds. "If there is, the guilty party is the federal government. We fell victim to this [financial] mess we're in."
