Full text
Department of Health and Human Services
OFFICE OF
INSPECTOR GENERAL
HHS DID NOT FULLY COMPLY WITH
FEDERAL REQUIREMENTS AND HHS
POLICIES AND PROCEDURES WHEN
AWARDING AND MONITORING
CONTRACTS FOR VENTILATORS
Inquiries about this report may be addressed to the Office of Public Affairs at
Public.Affairs@oig.hhs.gov.
Amy J. Frontz
Deputy Inspector General
for Audit Services
September 2022
A-02-20-02002
Office of Inspector General
https://oig.hhs.gov
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is
to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the
health and welfare of beneficiaries served by those programs. This statutory mission is carried out
through a nationwide network of audits, investigations, and inspections conducted by the following
operating components:
Office of Audit Services
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with
its own audit resources or by overseeing audit work done by others. Audits examine the performance of
HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are
intended to provide independent assessments of HHS programs and operations. These audits help reduce
waste, abuse, and mismanagement and promote economy and efficiency throughout HHS.
Office of Evaluation and Inspections
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress,
and the public with timely, useful, and reliable information on significant issues. These evaluations focus
on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of
departmental programs. To promote impact, OEI reports also present practical recommendations for
improving program operations.
Office of Investigations
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and
misconduct related to HHS programs, operations, and beneficiaries. With investigators working in all 50
States and the District of Columbia, OI utilizes its resources by actively coordinating with the Department
of Justice and other Federal, State, and local law enforcement authorities. The investigative efforts of OI
often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties.
Office of Counsel to the Inspector General
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering
advice and opinions on HHS programs and operations and providing all legal support for OIG’s internal
operations. OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS
programs, including False Claims Act, program exclusion, and civil monetary penalty cases. In
connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG
renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides
other guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement
authorities.
Notices
THIS REPORT IS AVAILABLE TO THE PUBLIC
at https://oig.hhs.gov
Section 8M of the Inspector General Act, 5 U.S.C. App., requires
that OIG post its publicly available reports on the OIG website.
OFFICE OF AUDIT SERVICES FINDINGS AND OPINIONS
The designation of financial or management practices as
questionable, a recommendation for the disallowance of costs
incurred or claimed, and any other conclusions and
recommendations in this report represent the findings and
opinions of OAS. Authorized officials of the HHS operating
divisions will make final determination on these matters.
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Report in Brief
Date: September 2022
Report No. A-02-20-02002
Why OIG Did This Audit
HHS is one of the largest
contracting agencies in the
Federal Government. In fiscal
year 2020, HHS awarded over
$14 billion in contracts in
response to the COVID-19
pandemic. Of these contracts,
HHS’s Administration for Strategic
Preparedness and Response
(ASPR) awarded 10 contracts
between March 30, 2020, and
May 28, 2020, totaling nearly $2.9
billion to supply approximately
198,000 ventilators for the
Strategic National Stockpile (SNS)
by the end of 2020.
Our objective was to determine
whether ASPR awarded and
monitored contracts for the
production of ventilators in
accordance with Federal
requirements and HHS policies
and procedures.
How OIG Did This Audit
We audited the five highest-dollar
value contracts that ASPR
awarded for the production of
ventilators, totaling
approximately $2.4 billion. We
reviewed these firm-fixed price
contracts and associated
modifications, invoices, delivery
documentation, and other
documentation maintained by
ASPR.
HHS Did Not Fully Comply With Federal
Requirements and HHS Policies and Procedures
When Awarding and Monitoring Contracts for
Ventilators
What OIG Found
ASPR did not consistently award and monitor contracts for ventilators
for use in responding to the COVID-19 pandemic in accordance with
Federal requirements and HHS policies and procedures. Specifically,
ASPR did not establish roles and responsibilities for communication with
other emergency response teams, did not always accurately report
contract data, and did not always properly monitor contractor
performance.
As a result, ASPR could not ensure compliance with applicable Federal
requirements or that each contract’s terms were economically and
efficiently achieved; therefore, ASPR could not determine whether the
use of taxpayer funds was reasonable. In addition, the Federal
Government may have used inaccurate contract data supplied by ASPR
to measure and assess the impact of Federal procurements on
Coronavirus Aid, Relief and Economic Security (CARES) Act spending.
Finally, ASPR potentially hindered the SNS’s ability to meet anticipated
ventilator demand in support of the Federal Government’s COVID-19
pandemic response.
What OIG Recommends and ASPR Comments
We made a series of recommendations to ASPR, including that it
establish written policies and procedures for communicating with
federally established emergency response team lead agencies,
accurately report contract data, and strengthen its policies and
procedures to ensure proper monitoring of contractor performance.
In written comments on our draft report, ASPR did not indicate
concurrence or nonconcurrence with our findings and
recommendations; however, it stated that it looks forward to utilizing
our findings and recommendations to strengthen future response
efforts. We encourage ASPR to implement our recommendations in
these efforts.
The full report can be found at https://oig.hhs.gov/oas/reports/region2/22002002.asp.
TABLE OF CONTENTS
INTRODUCTION............................................................................................................................... 1
ASPR Did Not Establish Roles and Responsibilities for Communication With Other
ASPR Monitoring of Select Ventilator Contracts Did Not Ensure Accurate Reporting of
APPENDICES
Why We Did This Audit ....................................................................................................... 1
Objective ............................................................................................................................. 1
Background ......................................................................................................................... 1
ASPR and Its Role in the National Response Framework ....................................... 1
Federal Efforts To Address COVID-19 and the Ventilator Shortage....................... 2
ASPR Ventilator Contracting Process During the COVID-19 Pandemic .................. 4
Federal Requirements Applicable to Acquisitions and Internal Controls............... 5
How We Conducted This Audit........................................................................................... 6
FINDINGS......................................................................................................................................... 6
Emergency Response Teams When Awarding Ventilator Contracts ............................... 7
Contract Data in the Federal Procurement Data System ................................................... 8
ASPR Did Not Always Properly Monitor Contractor Performance ..................................... 9
RECOMMENDATIONS ................................................................................................................... 11
ASPR COMMENTS ........................................................................................................................ 11
A: Audit Scope and Methodology..................................................................................... 13
B: Overview of ASPR’s Ventilator Contracting Process
During the COVID-19 Pandemic ................................................................................ 15
C: Ventilator Contracts Awarded by ASPR Between March 30, 2020, and
May 28, 2020 ............................................................................................................. 16
D: ASPR Comments ........................................................................................................... 17
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
INTRODUCTION
WHY WE DID THIS AUDIT
The Department of Health and Human Services (HHS) is one of the largest contracting agencies
in the Federal Government. In fiscal year (FY) 2020, HHS awarded over $14 billion in contracts
in response to the COVID-19 pandemic. Of these contracts, HHS’s Administration for Strategic
Preparedness and Response (ASPR)1 awarded 10 contracts totaling nearly $2.9 billion to supply
approximately 198,000 ventilators for the Strategic National Stockpile (SNS) by the end of
2020.2, 3
COVID-19 has created extraordinary challenges for the delivery of health care and human
services to the American people. As the oversight agency for HHS, the Office of Inspector
General (OIG) oversees HHS’s COVID-19 response and recovery efforts. This audit is part of
OIG’s COVID-19 response strategic plan.4
OBJECTIVE
Our objective was to determine whether ASPR awarded and monitored contracts for the
production of ventilators in accordance with Federal requirements and HHS policies and
procedures.
BACKGROUND
ASPR and Its Role in the National Response Framework
ASPR leads the nation’s medical and public health preparedness for, response to, and recovery
from disasters and public health emergencies. ASPR collaborates with hospitals, health care
coalitions, biotech firms, community members, State, local, Tribal, and territorial Governments,
and other partners across the country to improve readiness and response capabilities. In
accordance with the National Response Framework (NRF), HHS is designated as the Federal
1 ASPR was formerly known as the Office of the Assistant Secretary for Preparedness and Response. On
July 22, 2022, the office was elevated from a staff division to an operating division and renamed the Administration
for Strategic Preparedness and Response.
2 The SNS is part of HHS’s Federal medical response infrastructure. It is a repository of vaccines, antibiotics,
antidotes, antitoxins, medical devices (including ventilators), supplies, and medications meant to supplement and
resupply State and local public health agencies in the event of a national emergency in the U.S. or its territories.
3 SNS was originally funded by Congress in FY 1999 and operated by the Centers for Disease Control and
Prevention. ASPR has been responsible for operating the SNS since 2018. The SNS stores and maintains a variety
of ventilator models, each with different features.
4 OIG’s COVID-19 response and strategic plan activities can be accessed at HHS-OIG’s Oversight of COVID-19
Response and Recovery | HHS-OIG.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
1
agency to lead the Federal Government’s response to a public health emergency.5 HHS,
through ASPR, is the primary coordinator for emergency support functions related to public
health and medical services. ASPR has previously led this emergency support function in
response to previous public health emergencies, such as the Zika Virus outbreak in Puerto Rico
and public health emergencies declared in response to various natural disasters. However,
prior to the COVID-19 pandemic, ASPR had not acted as an emergency support function
supporting agency in response to a public health emergency; rather, ASPR has historically been
the primary coordinator for emergency support functions related to public health and medical
services.
Federal Efforts To Address COVID-19 and the Ventilator Shortage
On December 31, 2019, the World Health Organization (WHO) noted several cases of viral
pneumonia in Wuhan, China. On January 20, 2020, the United States identified its first
confirmed case of COVID-19, and on January 30, 2020, the WHO declared COVID-19 a Public
Health Emergency of International Concern.6
As a result of confirmed cases of COVID-19, the HHS Secretary declared a public health
emergency on January 31, 2020. At the time, hospitals were experiencing shortages of
ventilators critical to providing treatment to COVID-19 patients. (See text box below.)
On March 13, 2020—2 days after the WHO declared COVID-19 a pandemic—the President
proclaimed the pandemic a national emergency. On March 19, 2020, the White House
Coronavirus Taskforce (WHCTF) designated, under
Early Demand for Ventilators
Stafford Act authority (42 U.S.C. § 5121), the
Federal Emergency Management Agency (FEMA)
According to FEMA, early in the Federal
to lead the Federal response in combating the
Government’s response to COVID-19,
pandemic. FEMA’s response involved coordinating
data models were still being developed
with HHS and establishing a Unified Coordination
to project the number of new COVID-19
Group (UCG) responsible for ensuring a whole-of
cases and hospitalizations. In the face of
Government response to COVID-19. The UCG
such uncertainty, States prepared for
included the FEMA Administrator, the HHS ASPR
the worst by asking for large numbers of
Incident Manager, and the HHS Assistant Secretary
ventilators from the SNS. Ventilator
for Health.
requests from March 16 to March 31,
2020, totaled 133,239—8 times the
On March 21, 2020, HHS’s Program Support
number of ventilators that the SNS had
Center posted a Request for Information (RFI) on a
in stock.
Federal Government website to seek information
5 The NRF is a guide to how the Nation responds to all types of disasters and emergencies and includes emergency
support functions published by the Department of Homeland Security.
6 A Public Health Emergency of International Concern is a formal declaration by the WHO of an extraordinary event
determined to constitute a public health risk through the international spread of diseases and to potentially
require a coordinated international response.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
2
from the manufacturing community on the maximum number of ventilators that could be
quickly produced and the cost for producing them.7
On March 25, 2020, the Under Secretary of Defense for Acquisition and Sustainment
established the Joint Acquisition Task Force (JATF), which was comprised of acquisition
professionals from the Department of Defense (DoD) and designed to support DoD’s COVID-19
response for medical resources in coordination with FEMA and HHS.
One day later, on March 26, 2020, due to the urgency of the situation and the estimated
demand for ventilators, ASPR began the process for quickly awarding ventilator contracts to
vendors based on their responses to the RFI.8
The following day—March 27, 2020—The Coronavirus Aid, Relief and Economic Security
(CARES) Act was signed into law. The law allocated approximately $25 billion to ASPR to
procure personal protective equipment and ventilators for the SNS and to support State and
local COVID-19 response.9 Accordingly, ASPR’s Office of Resource Management (ORM), SNS
Contracting Branch entered into contracts with vendors to purchase ventilators for this
purpose. In addition, the President used his authority under the Defense Production Act of
1950 (DPA) to direct HHS to facilitate the supply of materials for the production of ventilators to
respond to the spread of COVID-19.10
The figure on the following page illustrates the timeline of key events described above.
7 In response to the RFI, ASPR received responses from 11 vendors that asserted to have the capacity to provide
various models of ventilators to the SNS as early as Apr. 13, 2020.
8 Between Mar. 26, 2020, and the awarding of the first contract on Mar. 30, 2020, HHS anticipated that funds for
contracts would be provided with the passage of the Coronavirus Aid, Relief and Economic Security Act and
developed authorizations for contractors to proceed at risk.
9 Of the $25 billion, not more than $16 billion was to be allocated for the SNS.
10 The DPA designation prioritized vendor delivery of ventilators to the Federal Government and manufacturer
access to ventilator components and parts.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
3
Dec.31,2019
WHO noted several cases of viral
pneumonia in Wuhan, China.
ACRONYMS
WHO: World Health Organization
JANUARY
Jan. 20, 2020
U.S. identified its first confirmed
case of COVID-19.
Jan. 30, 2020
WHO declared Public Health
Emergency of International
Concern.
Jan. 31, 2020
HHS Secretary declared
nationwide public health
emergency.
HHS: Department of Health and Human Services
FEMA: Federal Emergency Management Agency
UCG: Unified Coordination Group
RFI: Request for Information
DoD: Department of Defense
JATF: Joint Acquisition Task Force
CARES: Coronavirus Aid, Relief, and Economic Security
ASPR: Assistant Secretary for Preparedness and Response
MARCH
Mar. 11, 2020
WHO declared COVID-19 a
pandemic.
Mar. 13, 2020
President declared nationwide
emergency under the Stafford Act.
Mar. 19, 2020
FEMA assumed the lead for the
Federal response.
FEMA and HHS established UCG.
Mar. 21, 2020
HHS posted ventilator RFI.
Mar. 25, 2020
DoD established JATF.
Mar. 26, 2020
ASPR began contract awarding
process based on RFI responses.
Mar. 27, 2020
CARES Act signed into law.
Mar. 30-May 28, 2020
ASPR awarded contracts for
ventilators.
Figure: Timeline of Key Events
ASPR Ventilator Contracting Process During the COVID-19 Pandemic
Between March 30, 2020, and May 28, 2020 (our audit period), ASPR awarded 10 contracts
totaling nearly $2.9 billion to supply approximately 198,000 ventilators for the SNS by the end
of 2020. ASPR’s process for awarding ventilator production contracts included numerous
acquisition and administrative activities. ASPR contracting officials11 were responsible for
developing a streamlined acquisition plan, a request for proposal, and ultimately awarding the
contracts. After awarding the contracts, ASPR contracting officials administered the contracts,
to include contract reporting, monitoring the contractors’ performance, and reviewing and
approving (or disapproving) contractors’ requests for payment. See Appendix B for an overview
of ASPR’s ventilator contracting process during the COVID-19 pandemic.
11 We use the term “contracting officials” to refer to the Head of Contracting Activities, Contracting Officers, and
Contracting Officer’s Representatives.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
4
Federal Requirements Applicable to Acquisitions and Internal Controls
The Federal Acquisition Regulation (FAR) guides the acquisition process by which Federal
executive agencies acquire goods and services through contracts using appropriated funds. The
FAR requires Federal agencies to report contract actions (e.g., contract award dates, amounts,
and modifications) in the Federal Procurement Data System (FPDS) (FAR § 4.606(a)(1)).12 It also
allows for acquisition flexibilities when responding to a national emergency, including limiting
the number of sources from which the Government solicits in situations with an unusual and
compelling urgency (FAR § 6.302(a)(2)). In response to COVID-19, HHS’s Assistant Secretary for
Financial Resources issued emergency guidance further simplifying HHS’s acquisition process by
allowing for certain contracting flexibilities.13
In March 2020, the Office of Management and Budget (OMB) directed Federal agencies to
enter a specific action code in the FPDS for all procurement actions issued in response to the
COVID-19 pandemic.14 The action code has been used as a means to track acquisition costs of
Federal agencies involved in the response to COVID-19.
The Federal Managers’ Financial Integrity Act (P.L. No. 97-255) requires Federal executive
branch entities, including HHS, to establish internal controls in accordance with standards
prescribed by the Comptroller General. Standards for Internal Control in the Federal
Government (issued by the Comptroller General and known as the Green Book) states that
agencies should establish an organizational structure, assign responsibility, and delegate
authority to achieve the entity’s objective.15 Specifically, management should internally and
externally communicate the necessary quality information to achieve the entity’s
objectives.16, 17
12 The FPDS is the real-time, relational database that serves the government acquisition community as the
authoritative source of contract information. It contains summary level data that is used for policy and trend
analysis. Because contracts change over time and FPDS is a real-time, relational database, the numbers change in
FPDS every day.
13 One contracting flexibility included informally requesting quotes via telephone, email, or other electronic means.
14 Memorandum to the Heads of Executive Departments and Agencies, M-20-18, issued Mar. 20, 2020. Available
online at https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-18.pdf. Accessed on Feb. 1, 2022.
The guidance was intended to assist the acquisition workforce as it addresses impacts due to COVID-19.
15 Green Book ¶ 3.02.
16 Green Book ¶ 14.01.
17 Communications should enable personnel to perform key roles in achieving objectives, addressing risks, and
supporting the internal control system. In these communications, management should assign internal control
responsibilities for key roles (Green Book ¶ 14.03). Further, management should develop and maintain
documentation of its internal control system (Green Book ¶ 3.09).
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
5
HOW WE CONDUCTED THIS AUDIT
We audited the five highest-dollar value contracts that ASPR awarded for the production of
ventilators between March 30, 2020, and May 28, 2020 (our audit period). These firm-fixed
price contracts, totaling approximately $2.4 billion of the nearly $2.9 billion in total contracts
awarded, were awarded to procure 139,474 ventilators by December 31, 2020.18
We obtained an understanding of the Federal contracting process and the flexibilities granted
under emergency guidance. To determine whether contracts were awarded and monitored in
accordance with Federal requirements and HHS policies and procedures, we reviewed contracts
and associated modifications, invoices, delivery documentation, and other documentation
maintained by ASPR. We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit objectives.
Appendix A contains the details of our audit scope and methodology. Appendix C contains a
summary of the ventilator contracts awarded by ASPR during our audit period.
FINDINGS
ASPR did not consistently award and monitor contracts for ventilators for use in responding to
the COVID-19 pandemic in accordance with Federal requirements and HHS policies and
procedures. Specifically, ASPR did not establish roles and responsibilities for communication
with other emergency response teams, did not always accurately report contract data, and did
not always properly monitor contractor performance.19, 20
18 The SNS ultimately received 71,739 ventilators because, as of Aug. 31, 2020, 3 of the contracts were partially
terminated prior to completion. As of the end of our fieldwork, in April 2022, termination settlement negotiations
for one of these three partially terminated contracts were still ongoing and two were completed. Excess funds of
approximately $905 million for these three contracts were deobligated.
19 We note that the Department of Homeland Security, Office of Inspector General recommended that FEMA,
working with HHS, issue clarifying guidance defining agencies’ pandemic response roles and responsibilities under
Stafford Act declarations (Lessons Learned from FEMA’s Initial Response to COVID-19, OIG-21-64, Sept. 21, 2021).
20 We note that the Government Accountability Office (GAO) has identified what it described as persistent
deficiencies in HHS’s preparedness and response efforts in several areas, including: (1) establishing clear roles and
responsibilities for the wide range of key Federal, State, local, Tribal, territorial, and nongovernmental partners;
(2) collecting and analyzing complete and consistent data to inform decision making as well as future
preparedness; and (3) establishing transparency and accountability to help ensure program integrity and build
public trust. (See GAO, COVID-19: Significant Improvements Are Needed for Overseeing Relief Funds and Leading
Responses to Public Health Emergencies, GAO 22-105291, Jan. 27, 2022.)
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
6
As a result, ASPR could not ensure compliance with applicable Federal requirements or that
each contract’s terms were economically and efficiently achieved; therefore, ASPR could not
determine whether the use of taxpayer funds was reasonable. In addition, the Federal
Government may have used inaccurate FPDS data supplied by ASPR to measure and assess the
impact of Federal procurements on CARES Act spending. Finally, ASPR potentially hindered the
SNS’s ability to meet anticipated ventilator demand in support of the Federal Government’s
COVID-19 pandemic response.
ASPR DID NOT ESTABLISH ROLES AND RESPONSIBILITIES FOR COMMUNICATION WITH OTHER
EMERGENCY RESPONSE TEAMS WHEN AWARDING VENTILATOR CONTRACTS
The FAR requires an agency head or a designee to prescribe procedures for ensuring that
acquisition planners address the requirement to specify needs, develop specifications, and
solicit offers in such a manner as to promote and provide for full and open competition with
due regard to the nature of the supplies and services to be acquired.21 Further, the Green Book
states that management should: (1) assign responsibility and internally and externally
communicate the necessary quality information to achieve the entity’s objectives,22 and (2)
develop and maintain documentation of its internal control system.23
ASPR did not assign clearly defined roles and responsibilities for communicating with outside
agencies designated as emergency response leads or federally established emergency response
teams related to the awarding of ventilator production contracts. Specifically, ASPR did not
develop procedures for documenting the decision-making process used by FEMA or the JATF in
their determination of certain contract details communicated to ASPR. Thus, ASPR could not
ensure compliance with full and open competition.
Beginning March 19, 2020, FEMA rather than ASPR was designated to lead the Federal response
to COVID-19; accordingly, FEMA determined what equipment and supplies were required, the
necessary quantities and specifications, and which vendors would be awarded contracts to
supply these critical lifesaving medical supplies, including ventilators. Normally, ASPR
contracting officers would be responsible for making these types of decisions under FAR parts 7
(acquisition planning), 12 (commercial item contracting), and 13 (simplified acquisition
procedures). In the weeks that followed, ASPR, whose role was to support the Federal
response led by FEMA, awarded ventilator contracts that included details such as ventilator
specifications and required quantities communicated to ASPR by FEMA and the JATF without
ASPR’s knowledge of how decisions regarding these critical contract details were made. ASPR
contracting officials stated that they did not know how the JATF made these determinations.
ASPR had historically been the primary coordinator for emergency support functions related to
public health and medical services. ASPR officials stated that, prior to the COVID-19 pandemic,
21 FAR 7.103(c), 10 U.S.C. 2305(a)(1)(A) and 41 U.S.C. 3306(a)(1).
22 Green Book ¶ 14.03.
23 Green Book ¶ 3.09.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
7
ASPR never had a need to develop procedures for documenting the decision-making process of
outside agencies. Despite serving as a supporting agency in the Federal Government’s
emergency response, ASPR retained the responsibility of awarding and monitoring the
contracts in accordance with applicable Federal requirements.
Because ASPR was unable to document the decision-making process used by FEMA or the JATF
to establish ventilator specifications or the quantities that vendors were required to provide, it
could not ensure compliance with the acquisition planning process or that each contract’s
terms were economically and efficiently achieved. Therefore, ASPR cannot determine whether
the use of taxpayer funds was reasonable.
ASPR MONITORING OF SELECT VENTILATOR CONTRACTS DID NOT ENSURE ACCURATE
REPORTING OF CONTRACT DATA IN THE FEDERAL PROCUREMENT DATA SYSTEM
The FAR requires agencies to report contract actions in the FPDS and any modification to
contract actions that change previously reported contract action data, regardless of dollar
value.24 Further, per OMB guidance, agencies are directed to assign a specific action code to all
procurement actions reported into the FPDS for actions issued in response to the COVID-19
pandemic.25
ASPR’s monitoring of select ventilator contracts did not ensure accurate reporting of contract
data in the FPDS. Specifically, for 4 of the 5 contracts we audited, ASPR entered a total of 11
incorrect contract signature dates in the FPDS related to when contracts were signed and
modified. The difference between the dates entered into FPDS and the actual signature dates
ranged from 2 days prior to the actual signature date to 191 days after the actual signature
date. Also, for the same four contracts, ASPR reported nine inaccurate contract obligations or
deobligations in the FPDS. Differences between the reported and actual contract obligations or
deobligations ranged from $34 million in obligations to $543 million in deobligations.26 Finally,
for one of the four contracts, ASPR did not assign the required action code in the FPDS to
facilitate tracking Federal agencies’ acquisition costs for responding to COVID-19.
ASPR stated that it did not always accurately report contract obligations and did not assign the
required action code for one contract due to human error and that the associated data would
be corrected once final negotiated settlement modifications related to the contract are entered
into FPDS. ASPR did not provide an explanation for why it reported inaccurate data for the
24 FAR § 4.606(a)(1).
25 Memorandum to the Heads of Executive Departments and Agencies, M-20-18, issued Mar. 20, 2020.
26 Examples of these differences include: (1) a no cost modification incorrectly reported in FPDS as a $543 million
deobligation, and (2) a $1.4 million deobligation incorrectly reported in FPDS as a no cost change in obligation
amount.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
8
three other contracts or if the errors we identified would be corrected during contract
closeout.27
In fulfilling its financial stewardship responsibilities, the Government needs to understand
where tax dollars are spent. The ability to look at contracts across Government agencies, in
greater detail, is a key component in establishing trust in our Government and credibility in the
professionals who use these contracts. Further, it provides opportunity for the Government to
better assess where its money is being spent, thereby offering opportunities to better
determine how to most effectively and efficiently expend those resources. FPDS contains
contracting data that allows for this kind of insight. FPDS data are also used to create recurring
and special reports to the President, Congress, the Government Accountability Office, Federal
executive agencies, and the general public. Because ASPR reported incorrect information,
these reports may have been inaccurate. Therefore, the Federal Government may have used
inaccurate FPDS data to measure and assess the impact of Federal procurements on the
nation’s economy.
ASPR DID NOT ALWAYS PROPERLY MONITOR CONTRACTOR PERFORMANCE
Despite serving as a supporting agency in the Federal Government’s emergency response, ASPR
retained the responsibility of awarding and monitoring the contracts in accordance with
applicable Federal requirements. In accordance with the FAR, ASPR designated Contracting
Officer’s Representatives (CORs) for each of the contracts. The CORs’ duties, as detailed in their
COR appointment memos,28 included completing interim evaluations of contractors’
performance and reviewing contractors’ monthly invoices in a timely manner to ensure that the
invoices accurately reflected the work completed and were in accordance with the terms of the
contracts.29 Contract terms and conditions included a COVID-19 specific requirement for the
contractors to notify ASPR in writing “as soon as it is reasonably possible” if they became aware
of a circumstance beyond their control that may result or resulted in nonperformance, partial
performance, or delay in performance.30
ASPR did not always properly monitor contractor performance during the period of
performance for two of the five contracts we audited. Specifically, ASPR did not complete
27 As of Mar. 16, 2022, ASPR had not corrected FPDS for any of these errors.
28 The COR appointment memo authorizes a COR to perform certain duties with respect to acquisition planning,
execution, management, and closeout matters within the scope of the contract. The COR is authorized, subject to
limitations, to act on behalf of ASPR in all matters related to monitoring the programmatic aspects of the contract.
29 FAR § 1.602-2 requires Contracting Officers to ensure compliance with contract terms and conditions as well as
to designate and authorize a COR.
30 Notices of delays in performance were required to include: (1) the identified cause of the delay, (2) the known
particulars of the delay, (3) the actions being taken by the contractor to immediately address and mitigate the
delay, (4) the anticipated duration of the delay, and (5) the projected and actual impact of the delay on the
vendor’s delivery schedule.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
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interim evaluations of the vendors’ delivery schedules (including quantities and dates) or
delivery delays throughout the period of performance. Rather, ASPR only reconciled
deliverables to established delivery schedules when the contracts were completed or
terminated. As a result, ASPR did not identify when vendors did not meet contracted delivery
schedules or deliveries of insufficient quantities of ventilators.31 Further, ASPR did not always
ascertain the reasons for, and extent of, delays or determine whether the vendors’ delays in
delivering ventilators were excusable under contract terms and conditions.
The following examples illustrate how ASPR did not always properly monitor contractor
performance:
Example 1: ASPR Did Not Act on Ventilator Delays
Despite Acting on Other Contract Delays
ASPR provided no documentation or explanation for why one vendor did not
deliver its initial quota of ventilators on time. Specifically, the vendor was
contracted to deliver 3 specific items, including an initial quota of 1,200
ventilators during April 2020; however, the vendor delivered only 299 ventilators
during this period. The vendor delivered the remaining ventilators during May
2020. At no point did the vendor request a bilateral contract modification to the
schedule or ask ASPR for approval of an excusable delay for the delivery
shortage. On May 21, 2020, the vendor requested an excusable delay related to
one of the other contracted items, which ASPR acted on by removing that item
from the contract 5 days later. However, ASPR did not ascertain why the
vendor’s delivery of ventilators was delayed. It also did not determine whether
the vendors’ failure to timely deliver ventilators was excusable under contract
terms and conditions.
Example 2: ASPR Did Not Act on Delays of Ventilator Upgrade Kits
ASPR did not properly monitor one vendor’s contract delays. Specifically, the
contract contained three specific deliverable items—ventilators, disposable
resupply kits, and ventilator upgrade kits—each of which had its own delivery
schedule. The delivery schedule called for the vendor to provide 7,603 ventilator
upgrade kits during August 2020; however, the vendor did not deliver its first
order until September 8, 2020. Final delivery was made nearly 1 month late, on
September 24, 2020. At no point did the vendor request a bilateral contract
modification to the schedule or ask ASPR to approve an excusable delay for the
final delivery. Further, ASPR did not ascertain why the vendor’s delivery of
31 The two vendors did not always meet agreed-upon delivery schedules and did not always request excusable
delays in accordance with contract terms and conditions, nor did they request modifications to delivery schedules
via bilateral contract modifications with ASPR.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
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ventilator upgrade kits was delayed. It also did not determine whether the
vendors’ failure to timely deliver the kits was excusable under contract terms and
conditions.
Although the CORs’ duties, as detailed in the COR appointment memos, included the
completion of interim evaluations to ensure that vendors’ contractual delivery schedules were
met or delays were excusable in accordance with specific contract terms and conditions, ASPR’s
policies and procedures did not ensure contracting officials completed interim evaluations of
deliverables throughout each vendor’s period of performance.
ASPR’s failure to monitor whether vendors met contracted delivery schedules potentially
hindered the SNS’s ability to meet anticipated ventilator demand in support of the Federal
Government’s COVID-19 pandemic response. Additionally, failure to perform the COR’s duties
(e.g., completing interim evaluations of contractors’ performance) may lead to acceptance and
full payment of submitted invoices when such payment would otherwise not be justified.
RECOMMENDATIONS
We recommend that the Administration for Strategic Preparedness and Response:
• establish written policies and procedures regarding the roles and responsibilities for
organizational communication between ASPR and federally established emergency
response team lead agencies;
• make corrections in the FPDS for the four contracts for which ASPR reported inaccurate
contract data, as detailed in our report;
• develop and implement policies and procedures to help ensure the accurate reporting
of contract data in FPDS; and
• strengthen its policies and procedures to ensure CORs monitor contractor performance
in accordance with duties detailed in COR appointment memos, including timely
completing interim evaluations of performance and determining whether delays were
excusable in accordance with specific contract terms and conditions.
ASPR COMMENTS
In written comments on our draft report, ASPR did not indicate concurrence or nonconcurrence
with our findings and recommendations; however, it stated that it looks forward to utilizing our
findings and recommendations to strengthen future response efforts. We encourage ASPR to
implement our recommendations in these efforts.
ASPR noted that, in order to quickly execute numerous contracts, it partnered with the DoD to
assist in the acquisition process. ASPR stated that, from March to June 2020, many functions
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
11
and processes were transferred between various Federal agencies, resulting in some confusion
of roles and responsibilities. Finally, ASPR stated that the HHS Secretary recently approved
ASPR’s transition from a staff division to an operating division to allow ASPR to strengthen
administrative capabilities, including hiring and contracting.
ASPR also provided technical comments, which we addressed as appropriate. ASPR’s comments,
excluding the technical comments, are included in their entirety as Appendix D.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
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APPENDIX A: AUDIT SCOPE AND METHODOLOGY
SCOPE
We reviewed the top five highest-dollar value contracts awarded for the acquisition of
ventilators for the SNS in response to the COVID-19 pandemic (COVID-19). These contracts
related to $2,432,716,089 (84 percent) of the $2,894,048,058 in total contracts that ASPR
awarded for ventilators between March 30, 2020, and May 28, 2020 (our audit period). We
reviewed ASPR’s process of awarding and monitoring contracts for the production of
ventilators.
We assessed ASPR's policies, procedures, and practices applicable to awarding and monitoring
contracts for the acquisition of ventilators in response to COVID-19. Our assessment would not
necessarily disclose all material weaknesses in this control structure. However, it disclosed
weaknesses in ASPR’s monitoring of certain contract details. We discussed these weaknesses in
the body of this report.
We conducted our audit work from November 2020 through April 2022.
METHODOLOGY
To accomplish our objective, we:
• reviewed applicable Federal requirements;
• interviewed ASPR contracting officials to gain an understanding of and to document its
processes for awarding Government contracts using emergency funding and for
mitigating risks associated with making such awards;
• completed an internal control assessment to document ASPR’s internal controls
applicable to our audit objective;
• interviewed ASPR and HHS Program Support Center contracting officials to obtain an
understanding of the contracting process and flexibilities granted due to the effects of
the pandemic;
• determined contracts awarded by ASPR and reviewed copies of selected contracts and
accompanying contract files;
• reviewed documentation to determine if ASPR followed established policies and
procedures related to Federal Government contracting and the DPA;
• reviewed contract information that ASPR reported to the FPDS;
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
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• determined if selected vendors met contract terms and conditions;
• reviewed vendors’ invoices to determine whether they included data required by the
FAR and were approved by the required contracting officials; and
• discussed the results of our audit with ASPR officials.
We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
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Awarding Phase
Identify need for goods/services
Develop and post RFI
Issue class justification and approval
Review RFI responses and determine procurement
requirements
Complete HHS streamline acquisition plan
Complete RFP through oral solicitation
Issue authorization to proceed at risk
Issue authorization to proceed
Award formal contract
Contract Monitoring Phase
AppointCOR
Award contract modifications as needed
Disburse allowable advanced payments to contractors
Invoice receipt and payment
Contract closeout or contract termination/settlement
ACRONYMS
RFI: Request for Information
HHS: Department of Health and
Human Services
RFP: Request for Proposal
COR: Contracting Officer's
Representative
APPENDIX B: OVERVIEW OF ASPR’S VENTILATOR CONTRACTING PROCESS
DURING THE COVID-19 PANDEMIC
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
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APPENDIX C: VENTILATOR CONTRACTS AWARDED BY ASPR BETWEEN
MARCH 30, 2020, AND MAY 28, 2020
Vendor
Contract Amount
Number of
Ventilators
Philips North America, LLC
$646,683,750
43,000
Hamilton Medical, Inc.
552,007,147
25,574
General Motors, LLC
476,143,048
30,000
Vyaire Medical, Inc.
407,904,453
22,000
Zoll Medical Corporation
349,977,691
18,900
Subtotal - Five Highest-Dollar Value
Ventilator Contracts Audited
$2,432,716,089
139,474
Datex-Ohmeda, Inc. (General Electric)*
$336,000,000
50,000
Datex-Ohmeda, Inc. (General Electric)†
64,134,631
2,410
Resmed, Inc.
31,982,100
2,550
Hill-Rom Holdings, Inc.
20,097,400
3,400
Covidien Sales, LLC (Medtronic)
9,117,838
560
Subtotal – Other Ventilator Contracts
Awarded
$461,331,969
58,920
Total Ventilator Contracts Awarded
$2,894,048,058
198,394
* Contract to provide pNeuton Model A-E ventilators.
† Contract to provide Carescape R860 ventilators.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
16
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DEPARTMENT OF HEALTH & HU,1AN SERVIC F,S
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Administration for Strategic
Preparedness and Response
Washington, D.C. 2020/
DATE:
TO:
FROM:
08/11/2022
Amy J. frontz
Deputy Inspector General for Audit Services
Office or the Inspector General
Dawn O'Connell
Assistant Secretary for Preparedness and Response
Administration for Strategic Preparedness and Response ~
SUBJECT:
OIG Draft Report: HHS Did 1\/ot Fully Comply With Federal Requirements and
HHS Policies and Procedures When A,rarding and Monitoring Contracts for
Ventilators, A-02-20-02002
The Administration for Strategic Preparedness and Response (ASPR) welcomes the audit
conducted by the Department of Health and Human Services' (HHS) Office of the Inspector
General (OIG) which reviewed contracts for ventilator purchases during the COVID-19
pandemic. ASPR notes that in the early days of the response, specifically March to June 2020,
many functions and processes were transferred between various agencies and Departments,
resulting in some confusion on roles and responsibilities, As the response progressed through the
summer, the Trump Administration stood up task forces and supporting operational components,
such as the Joint Coordination Group. were put in place to enhance control. transparency and
monitoring of previous awards and purchases.
ASPR as an organization is continually looking to learn lessons from past responses to improve
its future response efforts. As noted in this report, in Fiscal Year 2020, 111 IS as a whole awarded
over $14 billion in contracts to respond to the COY ID-19 pandemic. or these, ASPR awarded 10
contracts between March 30, 2020 and May 28, 2020, totaling nearly $2.9 billion to supply
approximately 198,000 ventilators to the Strategic National Stockpile (SNS) by the end of 2020.
In order to execute so many contracts so quickly, ASPR partnered with the Department of
Defense to assist in the acquisition process. This was an unprecedented effort in an
unprecedented response for ASPR, including ASPR's partnership with the Department of
Defense. We look forward to utilizing findings and recommendations provided by OIG to
strengthen our future response efforts.
ASPR would also like to note that the Secretary recently approved the transition of the Office of
the Assistant Secretary for Preparedness and Response from a Staff Division to an Operating
Division. As such, we are now the Administration for Strategic Preparedness and Response. One
critical reason we requested this change, and the Secretary approved it, to allow us to strengthen
our administrative capabilities, including hiring and contracting. These enhanced capabilities will
help us ensure moving forward that APSR has the people in place to support critical mission
APPENDIX D: ASPR COMMENTS
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
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Draft Report - Ventilators
Page 2
efforts as well as fully execute contracting requirements without relying on other partners for
support. This additional capability will help us apply the lessons learned from this report.
HHS Awarding and Monitoring of Ventilator Contracts (A-02-20-02002)
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