Contract Horror Story: Confessions Of A Rogue Contractor

By Ed Miseta, Chief Editor, Clinical Leader

By Ed Miseta, editor, Clinical Leader and Outsourced Pharma

This story is true, and was recited to me by an executive of a firm who had knowledge of it happening at a CRO where he was previously employed. The names of the individual and the company have been changed.

It was the wrong thing to do. I know that now. In fact, I knew it back then as well. But we all know in this industry that margins can be razor thin, and sometimes this will tempt you to do things that might otherwise cause you to think twice. By now you’re probably wondering what I’m talking about. Let me back up a little.

Call me John Doe. I am the VP of business development for XYZ Pharmaceutical Services. A year ago a customer came to me requesting a quote on a job. When we submitted our proposal and price, we were informed that one of our large competitors came in at a lower price. If we wanted the contract, we would have to beat their price. I knew producing the product in our labs would not be possible at that price. But I also knew of labs overseas that could do it at a much lower cost. So I did the unthinkable. I quoted the sponsor a lower price, told them we would produce it in our labs, and then outsourced it to Asia. The contract firm was now doing the contracting. What could possibly go wrong?

At first everything was fine. The firm we contracted with told us everything was progressing nicely. They were on schedule and on budget. When my customer asked me for a status update, I parroted that information back to them — all is fine, job progressing nicely, we will have it to you on schedule. I remember thinking how smart I was and how happy my company would be that I landed this additional business. I even wondered what kind of accolades I would receive at our next monthly employee meeting.

When things go bad, they always seem to go downhill slowly. Nothing ever falls apart in one fell swoop. We got a call from our contract firm saying they ran into a snag, and the project would be delayed a few days. No big deal, I thought. Minor problems come up now and then. I called our customer and passed along the info. “Just a slight delay,” I told them. “My people have assured me there are no major issues. Everything continues to go well. We are sorry for the delay.”

This happened a second time. And then a third time. Each time I simply apologized to the customer, but I could tell they were getting annoyed. I’m sure my failure to meet their deliver date was now holding up one of their projects. This is when reality starts to set in, and you begin to regret your decision. But what could I do? I was already in over my head, and at that point there was no turning back. If I told the customer I misled them, they would never do business with us again. I had to stay the course. I had to stick to my lies.

Needless to say, the next few days I got very little sleep. Each time I had a call with our producer I pressed for details, but got very few. It’s a manufacturing delay, and we will need more time,” was all the feedback I got. I wished I could inspect the facility to see what was actually going on, but that was half a world away. I crossed my fingers and prayed. I felt I should come clean, but opted to wait it out a little longer.

Eventually the end did come. One morning I spoke with my contact in Asia and was told they were not able to perform the work. The delays were not due to manufacturing setbacks; the company was simply stalling for more time, trying to figure out if they were able to do the job. Turns out, they couldn’t. The phone call I had to make to my customer was the hardest I have ever had to make. I was forced to tell them the whole truth, as there was no longer any way to cover it up. That was also the last call I would make for my company. I was released the next day.

In retrospect, it is easy to say that honesty is the best policy, and that sometimes it is better to lose a bid than to lose your integrity. But I can also tell you that sometimes job pressures, sales quotas, and deadlines can make you think the unthinkable. I will now have a lot of time to ponder my actions. You should too. What would you have done?

If you outsource some of your research or manufacturing, here are a few things I recommend you consider going forward:

1. If a CRO or CMO comes back to you with a second proposal that has a lower price than the first one, why did the price change, and how were they able to attain the lower price?

2. How closely are you monitoring their progress and the methods they are you using? Have they shown you any samples of where they stand, or are you simply taking their word for it?

3. How well do you know the contract firm performing your work? Is it a company you have worked with for years, or is it a new relationship? The less you know about the contractor, the more closely you need to monitor them.

4. How much do you really trust your contractor? We work in a business where altruism is paramount, and everyone must act with the utmost amount of character and integrity. But also keep in mind that there are others like me out there. Perhaps working on your next contract job.