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Shares of Siga Technologies (NASDAQ:SIGA) closed on a high last week after comments made by Siga board member Fran Townsend to CNN circulated the media wires and reassured investors that the large government contract awarded to Siga by the Biomedical Advanced Research and Development Authority of the United States Department of Health and Human Services (BARDA) earlier in the year was, in fact, on track.

Congressional bickering, some potential conflicts-of-interest and a court ruling that turned out in favor of a Siga rival had many wondering whether the once-promising future of the company after landing the nearly half-billion dollar government contract would ever come to fruition.

If the words of Fran Townsend last week were not enough to reinvigorate investor confidence, then maybe an 8-k filed by Siga stating the company had received a payment of approximately $36 million from BARDA early last week will be good enough. It's likely that this lump sum payment, which is in addition to $5 million already received by Siga, is what sparked the short covering late last week and sent SIGA shares significantly higher.

The combined $41 million payment, according to the 8-k, "constitutes full receipt of the advance payments permitted under the Company's $435 million amended smallpox antiviral contract."

Government money rolling in, even amid the congressional disagreements surrounding the contract award, is a key indication that Siga's contract award isn't going anywhere.

Although Friday's price spike looked to be a setup for additional short covering into the new trading week, shares of SIGA inched downwards again and were trading 5% lower as of mid-day Tuesday.

With that being said, there is still a very significant amount of short interest in this stock, and any follow-up news to the lump-sum payment that would incline those short shares to cover could lead to another quick runup in price.

Most likely, it'll take news of a resolution of the PharmAthene (NYSEMKT:PIP) lawsuit - Siga is working a 'reconsideration' of judgment - to bring in a significant amount interest from investors who are still skittish about an investment here, but with another $36 million coming into the company coffers, Siga is alive and kicking - but so are the shorts, unfortunately for longs of the stock.

Continue monitoring this story, however, as any events that would lead to quick short covering could offer a repeat of last Friday's price action.

Disclosure: Long SIGA.

Source: Siga's BARDA Boost Sparks Short Covering