AKAO 2017 Annual Report

61 • suspend the contractor from receiving new contracts pending resolution of alleged violations of procurement laws or regulations; • impose U.S. manufacturing requirements for products that embody inventions conceived or first reduced to practice under such agreements; • suspend or debar the contractor from doing future business with the government; • control and potentially prohibit the export of products; and • pursue criminal or civil remedies under the False Claims Act (“FCA”), the False Statements Act and similar remedy provisions specific to government agreements. We may not have the right to prohibit the U.S. government from using or allowing others to use certain technologies developed by us, and we may not be able to prohibit third-party companies, including our competitors, from using those technologies in providing products and services to the U.S. government. The U.S. government generally obtains the right to royalty-free use of technologies that are developed under U.S. government contracts. In addition, government contracts normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. These requirements include, for example: • specialized accounting systems unique to government contracts; • mandatory financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent; • public disclosures of certain contract information, which may enable competitors to gain insights into our research program; and • mandatory socioeconomic compliance requirements, including labor standards, anti-human-trafficking, non-discrimination, and affirmative action programs and environmental compliance requirements. If we fail to maintain compliance with these requirements, we may be subject to potential contract or FCA liability and to termination of our contracts. U.S. government agencies have special contracting requirements that give them the ability to unilaterally control our contracts. U.S. government contracts typically contain unfavorable termination provisions and are subject to audit and modification by the government at its sole discretion, which will subject us to additional risks. These risks include the ability of the U.S. government to unilaterally: • audit and object to our BARDA contract-related costs and fees, and require us to reimburse all such costs and fees; • suspend or prevent us for a set period of time from receiving new contracts or extending our existing contracts based on violations or suspected violations of laws or regulations; • cancel, terminate or suspend our contracts based on violations or suspected violations of laws or regulations; • terminate our contracts if in the government’s interest, including if funds become unavailable to the applicable governmental agency; • reduce the scope and value of our contract; and • change certain terms and conditions in our contract.