In a major setback for the nations efforts to counter bioterrorism, federal officials Tuesday canceled their $877.5 million contract with Brisbane-based VaxGen for an improved anthrax vaccine, because the company was behind schedule developing it. The U.S. Department of Health and Human Services sent VaxGen a letter terminating the contract, awarded in March 2004, citing the company’s failure to meet a deadline Monday for beginning a key test of the vaccine in people. The contract had been the largest issued under President Bush’s Project BioShield, a $5.6 billion program to counter bioterrorism over 10 years. Under the contract, VaxGen was to have provided 75 million doses of the vaccine, which were to be stockpiled for civilian use in case of an anthrax attack on the country.