Full text
COVID-19
CONTRACTING
Observations on
Federal Contracting in
Response to the
Pandemic
Report to Congressional Committees
July 2020
GAO-20-632
United States Government Accountability Office
United States Government Accountability Office
Highlights of GAO-20-632, a report to
congressional committees
July 2020
COVID-19 CONTRACTING
Observations on Federal Contracting in Response to
the Pandemic
What GAO Found
Government-wide contract obligations in response to the COVID-19 pandemic
totaled $17.8 billion as of June 11, 2020. Four agencies accounted for 85 percent
of total COVID-19 contract obligations (see figure). This report provides available
baseline data on COVID-19 federal contract obligations.
Contract Obligations in Response to COVID-19 by Department, as of June 11, 2020
About 62 percent of federal contract obligations were for goods to treat COVID-
19 patients and protect health care workers—including ventilators, gowns, and
N95 respirators. Less than half of total contract obligations were identified as
competed (see figure).
Top Five Goods and Services and Percentage of Obligations Competed, as of June 11, 2020
View GAO-20-632. For more information,
contact Marie A. Mak at 202-512-4841 or
MakM@gao.gov
Why GAO Did This Study
According to the Centers for Disease
Control and Prevention, as of June 30,
2020, the United States has
documented more than 2.5 million
confirmed cases and more than
125,000 deaths due to COVID-19. To
facilitate the U.S. response to the
pandemic, numerous federal agencies
have awarded contracts for critical
goods and services to support federal,
state, and local response efforts.
GAO’s prior work on federal
emergency response efforts has found
that contracts play a key role, and that
contracting during an emergency can
present unique challenges as officials
can face pressure to provide goods
and services as quickly as possible.
The Coronavirus Aid, Relief, and
Economic Security Act (CARES Act)
included a provision for GAO to
provide a comprehensive review of
COVID-19 federal contracting. This is
the first in a series of GAO reports on
this issue. This report describes,
among other objectives, key
characteristics of federal contracting
obligations awarded in response to the
COVID-19 pandemic. Future GAO
work will examine agencies’ planning
and management of contracts awarded
in response to the pandemic, including
agencies’ use of contracting flexibilities
provided by the CARES Act.
GAO analyzed data from the Federal
Procurement Data System-Next
Generation on agencies’ reported
government-wide contract obligations
for COVID-19 through June 11, 2020.
GAO also analyzed contract
obligations reported at the
Departments of Health and Human
Services, Defense, Homeland Security,
and Veterans Affairs—the highest
obligating agencies.
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GAO-20-632 COVID-19 Contracting
Letter
1
Background
4
Federal Agencies Have Obligated $17.8 Billion on Contracts in
Response to the COVID-19 Pandemic to Provide Critical Goods
and Services
9
Agencies Have a Variety of Contracting Flexibilities to Facilitate
Government Response to the COVID-19 Pandemic
21
Agency Snapshots
27
Agency Comments
37
Appendix I
Selected Agencies’ Use of Special Emergency Procurement Authority
for COVID-19 Contract Obligations
40
Appendix II
GAO Contact and Staff Acknowledgments
41
Table
Table 1: COVID-19 Contract Obligations, As Reported in the
Federal Procurement Data System-Next Generation, That
Were Between Existing and Emergency Procurement
Thresholds, by Agency, as of June 11, 2020
40
Figures
Figure 1: Government-wide Contract Obligations in Response to
COVID-19 by Agency, as of June 11, 2020
10
Figure 2: Timeline of Significant Events and Government-wide
Contract Obligations Related to COVID-19 by Week, as
of June 11, 2020
11
Figure 3: Examples of Medical Equipment and Supplies Used in
Response to COVID-19
13
Figure 4: Government-wide Contract Obligations for Top Goods
and Services, as of June 11, 2020
14
Figure 5: Proportion of Competed Government-wide Contract
Obligations for Goods and Services, as of June 11, 2020
16
Figure 6: Proportion of Competed Government-wide Contract
Obligations for New and Preexisting Contracts, as of
June 11, 2020
17
Contents
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GAO-20-632 COVID-19 Contracting
Figure 7: Government-wide Contract Obligations by Type of
Contract for Goods and Services, as of June 11, 2020
18
Figure 8: Competed COVID-19 Government-wide Contract
Obligations by Type of Contract, as of June 11, 2020
19
Figure 9: Government-wide Contract Obligations for Goods and
Services by Contract Method, as of June 11, 2020
20
Figure 10: Government-wide Contract Obligations to Top 10
Vendors, as of June 11, 2020
21
Abbreviations
CARES Act
Coronavirus Aid, Relief, and Economic Security Act
COVID-19
Coronavirus Disease 2019
DHS
Department of Homeland Security
DOD
Department of Defense
DPA
Defense Production Act
GSA
General Services Administration
FAR
Federal Acquisition Regulation
FPDS-NG
Federal Procurement Data System-Next Generation
FEMA
Federal Emergency Management Agency
HHS
Department of Health and Human Services
UCA
Undefinitized Contract Action
VA
Department of Veterans Affairs
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GAO-20-632 COVID-19 Contracting
441 G St. N.W.
Washington, DC 20548
July 29, 2020
Congressional Committees
In December 2019, a new strain of coronavirus emerged and quickly
spread around the globe. On March 11, 2020, the World Health
Organization declared the outbreak of Coronavirus Disease 2019
(COVID-19) a pandemic, and 2 days later the President of the United
States declared a national emergency, pursuant to the National
Emergencies Act and Robert T. Stafford Disaster Relief and Emergency
Assistance Act. According to the Centers for Disease Control and
Prevention, as of June 30, 2020, the United States had documented over
2.5 million reported cases of COVID-19 and over 125,000 reported
deaths. To facilitate the U.S. response, numerous federal agencies have
continued to award contracts for vital goods and services to support
federal, state, and local COVID-19 response efforts. Our prior work has
found that contracts play a key role in federal emergency response
efforts, and that contracting during an emergency can present a unique
set of challenges as officials can face a significant amount of pressure to
provide critical goods and services as expeditiously and efficiently as
possible.1 In June 2020, we issued the first in a series of reports on
monitoring and oversight of the use of funds made available to prepare
for, respond to, and recover from the COVID-19 pandemic.2
Additionally, the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act) includes a provision for GAO to provide a comprehensive
audit and review of federal contracting pursuant to authorities provided in
the Act. This is our first report in response to that provision. We plan to
issue future products focused on agencies’ planning and management of
contracts awarded in response to the pandemic, including agencies’ use
1GAO, Disaster Contracting: FEMA Continues to Face Challenges with Its Use of
Contracts to Support Response and Recovery, GAO-19-518T (Washington, D.C.: May 9,
2019); 2017 Disaster Contracting: Actions Needed to Improve the Use of Post-Disaster
Contracts to Support Response and Recovery, GAO-19-281 (Washington, D.C.: Apr. 24,
2019); and 2017 Disaster Contracting: Action Needed to Better Ensure More Effective Use
and Management of Advance Contracts, GAO-19-93 (Washington, D.C: Dec. 6, 2018).
2GAO, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts,
GAO-20-625 (Washington, D.C.: June 25, 2020).
Letter
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GAO-20-632 COVID-19 Contracting
of contracting flexibilities provided by the CARES Act.3 This report
describes (1) key characteristics of federal contracting obligations
awarded in response to the COVID-19 pandemic; and (2) the flexibilities
available to federal agencies through the CARES Act, or other means, to
help facilitate the federal government’s contract response.
To identify key characteristics of federal contracting obligations made in
response to the COVID-19 pandemic, we analyzed data available in the
Federal Procurement Data System-Next Generation (FPDS-NG) as of
June 11, 2020. In addition to obligating dollars through procurement
contracts, agencies may obligate dollars through various other vehicles
such as grants or cooperative agreements. This report is focused
specifically on contract obligations.4 We primarily identified these contract
actions and associated obligations related to the COVID-19 response by
using the National Interest Action code.5 We supplemented the use of the
National Interest Action code by searching for “coronavirus” and “COVID-
19” in the contract description field to identify a limited number of
additional contract actions and associated obligations.6 Some contract
actions identified as being for COVID-19 based on the National Interest
3We have initiated reviews on the use of the Defense Production Act and the
implementation of section 3610 of the CARES Act, which generally allows agencies to
reimburse contractors, subject to certain limitations, that provided paid leave to keep their
employees or subcontractors in a ready state during the public health emergency.
4For the purposes of this report, “contract obligations” means obligations on contracts that
are subject to the Federal Acquisition Regulation, and does not include, for example,
grants, cooperative agreements, loans, other transactions for research, real property
leases, or requisitions from federal stock.
5National Interest Action codes were established in 2005 after Hurricane Katrina with the
purpose of tracking federal procurements for specific disasters, emergencies, or
contingency events. Based on a memorandum of agreement, the Department of Defense
(DOD), the Department of Homeland Security (DHS), and the General Services
Administration (GSA) are jointly responsible for when a National Interest Action code
should be established and closed. DOD requests new or extended National Interest Action
codes on behalf of the military departments and defense agencies, DHS requests new or
extended codes on behalf of the civilian agencies, and GSA acts as the servicing agency
by modifying FPDS-NG.
6Our prior work has identified some inconsistencies in the information agencies report in
the contract description field. See GAO, DATA Act: Quality of Data Submissions Has
Improved but Further Action Is Needed to Disclose Known Data Limitations, GAO-20-75
(Washington, D.C.: Nov. 8, 2019).
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GAO-20-632 COVID-19 Contracting
Action code included obligations not specific to the pandemic.7 For
contract actions over $1 million, we removed obligations that were
identified in the contract description as not related to COVID-19.
We analyzed the FPDS-NG data to identify the federal departments and
agencies with the most contract obligations, as well as information such
as the types of goods or services procured by federal agencies, rates of
competition, and vendor characteristics.8 We selected the agencies with
the highest reported contract obligations—the Departments of Health and
Human Services (HHS), Defense (DOD), Homeland Security (DHS), and
Veterans Affairs (VA)—and identified additional details on contracting
obligations at these agencies using the same methods described above.
We assessed the reliability of FPDS-NG data by reviewing existing
information about the FPDS-NG system and the data it collects—
specifically, the data dictionary and data validation rules—and performed
electronic testing. We determined the FPDS-NG data were sufficiently
reliable for the purposes of describing agencies’ reported contract
obligations in response to COVID-19.
To describe the contracting flexibilities available to federal agencies to
help facilitate the government’s response to the COVID-19 pandemic, we
reviewed the CARES Act and identified any provisions that modify
acquisition-related procedures or requirements. We also reviewed the
Federal Acquisition Regulation (FAR) to identify contracting flexibilities
that are available to agencies during a national emergency or disaster. In
addition, we reviewed available guidance issued through June 11, 2020,
7According to Office of Management and Budget, any contract action affected by COVID-
19 is to be reported using the National Interest Action code, including modifications that
were issued to address COVID-19, irrespective of whether the contract being modified
was originally awarded to address COVID-19. See Office of Management and Budget, M-
20-21 Implementation Guidance for Supplemental Funding Provided in Response to the
Coronavirus Disease 2019 (Apr. 10, 2020).
8For purposes of this report, competition rate is the percentage of total obligations
associated with contracts awarded competitively. We calculated competition rates as the
percentage of obligations on competitive contracts and orders over all obligations on
contracts and orders annually. Competitive contracts included contracts and orders coded
in FPDS-NG as “full and open competition,” “full and open after exclusion of sources,” and
“competed under simplified acquisition procedures” as well as orders coded as “subject to
fair opportunity” and as “fair opportunity given,” and “competitive set aside.”
Noncompetitive contracts included contracts and orders coded in FPDS-NG as “not
competed,” “not available for competition,” and “not competed under simplified acquisition
procedures,” as well as orders coded as an exception to “subject to fair opportunity,”
including “urgency,” “only one source,” “minimum guarantee,” “follow-on action following
competitive initial action,” “other statutory authority,” and “sole source.” Even for contracts
identified as noncompetitive, agencies may have solicited more than one source.
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GAO-20-632 COVID-19 Contracting
by the four agencies in our review—HHS, DOD, DHS, and VA—that
implemented contracting flexibilities from the CARES Act or authorized
agency-specific flexibilities, along with guidance issued by the Office of
Management and Budget and the General Services Administration
(GSA). For both objectives, we reached out to the Pandemic Response
Accountability Committee and Inspectors General at HHS, DOD, DHS,
and VA to share our plans for this review and to coordinate on any similar
ongoing work.
We conducted this performance audit from April 2020 to July 2020 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.
COVID-19 is caused by a new coronavirus named Severe Acute
Respiratory Syndrome CoV-2 and is highly infectious. Within the United
States, confirmed cases grew from about 1,900 cases on March 13,
2020, to about 186,000 on March 31, 2020, to more than 2.5 million by
June 30, 2020. As previously mentioned, on March 13, 2020, the
President of the United States declared a national emergency, pursuant
to the National Emergencies Act and Robert T. Stafford Disaster Relief
and Emergency Assistance Act.9 The Robert T. Stafford Disaster Relief
and Emergency Assistance Act allows states, territories, and tribal
governments to request presidential disaster declarations—the
mechanism by which the federal government gets involved in funding and
coordinating response and recovery activities—to obtain federal
assistance.
9A declaration under the National Emergencies Act authorizes the President to activate
existing emergency authorities in other statutes, and the President must cite the
authorities being exercised. 50 U.S.C. § 1621. A governor may request an emergency
declaration under the Stafford Act if the situation is of such severity and magnitude that
effective response is beyond the capabilities of the state and the affected local
governments, and federal assistance is necessary. 42 U.S.C. § 5191. According to the
Federal Emergency Management Agency, the President declared a nationwide
emergency pursuant to 42 U.S.C. § 5191(b) to avoid governors needing to request
individual emergency declarations.
Background
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GAO-20-632 COVID-19 Contracting
Agencies have contracted to obtain the goods and services needed to
respond to COVID-19 within the context of their roles and responsibilities
in response to the pandemic. The March 2020 U.S. Government COVID-
19 Response Plan describes the structure and authorities to lead and
coordinate this response.10 HHS is designated as the lead federal agency
to address the public health and medical portion of the response, and, as
the needs of the pandemic increased nationwide, the Federal Emergency
Management Agency (FEMA) was designated as the lead agency for
coordinating the overall federal response. As described in the plan, the
Unified Coordination Group—made up of the Administrator of FEMA, the
HHS Assistant Secretary for Preparedness and Response, and a Centers
for Disease Control and Prevention representative—has responsibility for
operational command, leadership, and decision-making for the COVID-19
pandemic response. These three leaders are partners in operational
decision-making for the whole-of-government response and provide input
to the White House Coronavirus Task Force.
Generally, during a national emergency, the Secretary of Homeland
Security is responsible for ensuring that federal preparedness actions are
coordinated to prevent gaps in the federal government’s response efforts,
and FEMA is designated to lead the response efforts across federal
agencies.11 In addition to DHS and FEMA, other federal agencies are
designated as coordinating agencies across 15 Emergency Support
Functions—specific functional areas for the most frequently needed
capabilities during an emergency. For example:
•
The U.S. Army Corps of Engineers, within DOD, is responsible for the
provision of assets and services related to public works and
engineering—like the construction of alternate care facilities to treat
COVID-19 patients.
•
HHS is the coordinating agency responsible for public health and
medical services, which can include the assessment of public health
10According to the COVID-19 Response Plan, the purpose of the White House
Coronavirus Task Force is to coordinate a whole-of-government approach, including with
governors, state and local officials, and with members of Congress, to develop the best
options for the safety, well-being, and health of the American people. According to officials
responsible for supporting the response at the Federal Emergency Management Agency
and HHS, although rapidly evolving situations have required some adaptation as the
response unfolds, the COVID-19 Response Plan generally remains the operative plan for
the federal response.
11Department of Homeland Security, National Response Framework (October 2019).
Overview of the Structure
of the U.S. Government’s
Pandemic Response
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and medical needs, provision of medical equipment and supplies, and
public health communication, among other responsibilities. As
identified in the U.S. Government COVID-19 Response Plan, VA
supports HHS emergency responsibilities for public health and
medical services, including providing personal protective equipment,
medical screening, and personnel in support of the response.
As part of the federal response effort, Congress passed and the President
signed four COVID-19 relief laws, including the CARES Act in March
2020.12 The CARES Act provides supplemental appropriations for federal
agencies to respond to COVID-19 and emergency assistance and health
care response for individuals, families, and businesses affected by
COVID-19. The CARES Act also includes a number of provisions related
to federal contracting efforts to facilitate agencies’ response to the
pandemic.
Agencies generally acquire goods and services through contracts that
identify the government’s requirements, the price and payment
arrangements agreed upon by the government and the vendor, and other
terms and conditions. Whether contracting during an emergency or as
part of normal operations, agencies must evaluate a variety of
considerations when deciding how to obtain goods and services from a
contractor, including whether or not the contract can be competitively
awarded and the contract type.
Under the FAR, agencies are generally required to use full and open
competition when soliciting offers and awarding contracts. Our prior work
has emphasized that competition is a cornerstone of the acquisition
system, and that promoting competition in federal contracting presents
the opportunity for significant cost savings, among other benefits.13
However, contracting during an emergency or disaster can present
unique circumstances in which to solicit, award, and administer contracts.
12The Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, 134 Stat
281 (2020). The other three COVID-19 relief laws enacted as of May 31, 2020 are the
Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L.
No. 116-123, 134 Stat. 146; Families First Coronavirus Response Act, Pub. L. No. 116-
127, 134 Stat. 178 (2020); and Paycheck Protection Program and Health Care
Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020).
13GAO, Federal Contracting: Opportunities Exist to Increase Competition and Assess
Reasons When Only One Offer Is Received, GAO-10-833 (Washington, D.C.: July 26,
2010).
Congressional Response
to COVID-19
Contracting
Considerations
Competition
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GAO-20-632 COVID-19 Contracting
Agencies are permitted to use exceptions to full and open competition
under certain circumstances. These circumstances include when:
•
requirements are of such an unusual and compelling urgency that the
government would suffer serious financial or other injury,
•
there is only one responsible source able to satisfy the agency’s
requirement, or
•
the head of an agency determines it is not in the public interest for the
particular acquisition, among other exceptions.14
The government can use several different contract types to acquire goods
and services, each with potential risks to either the government or the
contractor.
•
Fixed-price: The government pays a fixed price even if the actual
total cost of the good or service falls short of or exceeds the contract
price. The contractor is responsible for providing the good or service
based on the terms specified in the contract, and bears the risk of cost
overruns. Some fixed-price contracts may provide an incentive fee
tied to contractor performance.
•
Cost-reimbursement: The government pays the contractor for
allowable costs incurred, to the extent prescribed by the contract. The
contractor attempts to provide the government’s needs within the
estimated costs, but the government is not promised a completed
good or service within the estimated costs.
•
Time & materials/labor hour: The government pays fixed per-hour
labor rates that include wages, overhead, general administrative
costs, and profit as well as the actual cost of materials. The
government may reimburse the contractor for other direct costs, such
as travel and materials costs. The contract includes a ceiling price,
which the contractor exceeds at its own risk. The government is not
promised a completed good or service within the ceiling price.
The Office of Management and Budget considers cost-reimbursement
contracts high risk because they do not directly incentivize contractors to
control costs, and thus carry the potential risk of the federal government
overspending. Our prior work has found that cost-reimbursement and
time & material/labor hour contracts can be appropriate when there are
uncertainties in the scope of work, cost of services, or level of labor effort
14FAR 6.302.
Contract Type
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needed. However, we have also reported challenges with agencies
documenting their rationale for using these types of contracts over others,
and with agencies not conducting analysis to determine the potential to
transition to contract types with firmer pricing.15
FPDS-NG reports a variety of contract actions, such as definitive
contracts and indefinite delivery vehicles.16 Definitive contracts, which
have a defined scope of work, are categorized in FPDS-NG as not
allowing individual orders to be placed on the contract.
Indefinite delivery vehicles are those categorized in FPDS-NG as allowing
agencies to place orders against them. Indefinite delivery vehicles include
indefinite delivery, indefinite quantity contracts, which provide for an
indefinite quantity, within stated limits, of supplies or services to be
provided during a fixed period. Indefinite delivery vehicles also include
Federal Supply Schedule and Government-wide Acquisition Contracts
that can be used by multiple agencies to procure goods and services and
leverage the government’s buying power.
Agencies may also use orders under blanket purchase agreements and
basic ordering agreements to fulfill their needs. Blanket purchase
agreements are simplified methods of receiving needed supplies and
services through the establishment of a “charge account” with a qualified
source of supply. Basic ordering agreements are agreements with a
contractor to terms and conditions that will apply to future contracts
between the parties, a description of the goods and services to be
supplied, and methods for pricing and issuing orders. Neither of these
vehicles are contracts.
Agencies may establish indefinite delivery contracts in advance of an
emergency or disaster to support their needs for certain goods and
services. For example, our prior work found that FEMA and U.S. Army
Corps of Engineers advance, or preexisting contracts are predominantly
15GAO, Contract Management: Extent of Federal Spending under Cost-Reimbursement
Contracts Unclear and Key Controls Not Always Used, GAO-09-921 (Washington, D.C.:
Sep. 30, 2009); and Defense Contracting: Improved Insight and Controls Needed over
DOD’s Time-and-Materials Contracts, GAO-07-273 (Washington, D.C.: June 29, 2007).
16These terms are only relevant for purposes of FPDS-NG reporting and have no
significance regarding other parts of the FAR, including part 16. FAR 4.601.
Contract Actions Reported in
FPDS-NG
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indefinite delivery contracts.17 According to FEMA’s advance contract
strategy, relying on advance, or preexisting contracts, established before
a disaster, can help preclude the need to procure goods and services
under unusual and compelling urgency.18
Based on data in FPDS-NG, government-wide contract obligations in
response to the COVID-19 pandemic totaled about $17.8 billion as of
June 11, 2020. Across the 42 federal departments and agencies with
COVID-19 contract obligations, HHS, DOD, DHS, and VA accounted for
85 percent of total contract obligations (see fig. 1).
17GAO-19-93.
18Department of Homeland Security, Federal Emergency Management Agency, Advance
Contracting of Goods and Services Report to Congress (December 2007).
Federal Agencies
Have Obligated $17.8
Billion on Contracts in
Response to the
COVID-19 Pandemic
to Provide Critical
Goods and Services
Four Agencies Accounted
for Most of the $17.8
Billion in Contract
Obligations
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GAO-20-632 COVID-19 Contracting
Figure 1: Government-wide Contract Obligations in Response to COVID-19 by
Agency, as of June 11, 2020
Dollars in millions
Contract obligations underwent the greatest increase from the middle to
the end of March, following the President’s March 13, 2020, national
emergency declaration. As of March 15, 2020, federal agencies reported
obligating about $601 million in response to COVID-19.19 By March 29,
2020, government-wide obligations were more than $4.3 billion, an
increase of over 600 percent. See figure 2 for details on contract
obligations over the course of key COVID-19 events in the United States.
19Obligations made by federal agencies prior to the establishment of the National Interest
Action code on March 13, 2020, were identified through the description field in FPDS-NG.
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Figure 2: Timeline of Significant Events and Government-wide Contract Obligations Related to COVID-19 by Week, as of June
11, 2020
As noted above, federal agencies are using a National Interest Action
code to track contract actions and associated obligations reported in
FPDS-NG in response to COVID-19. The COVID-19 National Interest
Action code was established on March 13, 2020, and is currently slated to
expire on September 30, 2020. HHS, DOD, DHS, and VA have provided
guidance on the use of the National Interest Action code for COVID-19
reporting in FPDS-NG.
Our prior work has reported on the importance of such codes for
providing visibility into emergency or contingency contracting activities
following the 2017 hurricanes—Harvey, Irma, and Maria. In April 2019,
we identified inconsistencies in establishing and closing these codes
following previous disasters or emergencies, which could have
implications for the use of the National Interest Action code for tracking
contract actions and associated obligations in response to COVID-19
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GAO-20-632 COVID-19 Contracting
over the longer term.20 We recommended that GSA, in coordination with
DHS and DOD, assess whether the criteria in their current National
Interest Action code agreement meets the long-term needs for high-
visibility events and accounts for the needs of users, such as FEMA,
other agencies, and Congress. GSA and DOD concurred with our
recommendation, and in August 2019 GSA, DOD, and DHS revised their
agreement. However, the revised agreement did not provide a process to
ensure consistent implementation of the criteria, long-term visibility
needs, or the needs of National Interest Action code users, and so it has
not been fully addressed.
Federal agencies procured a variety of critical goods and services in
response to the COVID-19 pandemic. About $11 billion, or 62 percent of
total obligations, were reported in FPDS-NG as procuring goods, like
medical equipment and supplies, as shown in figure 3.21 According to the
contract description in FPDS-NG, obligations on contracts within the top
five products included
•
about $3 billion for ventilators;
•
about $1.3 billion for N95 respirators;
•
about $1.2 billion for personal protective equipment like surgical
gowns, coveralls, and gloves; and
•
about $737 million for drugs and biologicals, including
pharmaceuticals to treat COVID-19 patients and reagents used for
administering COVID-19 tests.
20GAO-19-281.
21When a contract action includes more than one product or service, the Federal
Procurement Data System Product and Service Code Manual states the product and
service code selected should reflect the predominant good or service being purchased.
Most Obligations Were on
Contracts for Goods,
While Obligations on
Contracts for Services
Were More Frequently
Competed
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GAO-20-632 COVID-19 Contracting
Figure 3: Examples of Medical Equipment and Supplies Used in Response to COVID-19
In addition to goods, agencies have obligated about $2.1 billion on
contracts for advanced, basic, and commercial biomedical research and
development for vaccination development, among other things. Agencies
have also obligated about $513 million on contracts for financial
management support services, which includes $500 million by the Small
Business Administration for data analysis and loan recommendation
services, according to the contract description in FPDS-NG. Figure 4
below shows top goods and services.
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Figure 4: Government-wide Contract Obligations for Top Goods and Services, as of
June 11, 2020
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GAO-20-632 COVID-19 Contracting
Government-wide, about $8.3 billion, or 47 percent, of contract
obligations in response to COVID-19 were identified as competitively
awarded as of June 11, 2020. Out of the approximately $9.4 billion
identified as noncompetitive contract obligations, more than two-thirds, or
about $6.9 billion, were reported as using the unusual and compelling
urgency exception to full and open competition.22 Awarding contracts
under the unusual and compelling urgency exception to full and open
competition can be necessary in certain circumstances, but our prior work
has noted that promoting competition—even in a limited form—increases
the potential for quality goods and services at a lower price in urgent
situations.23
With regards to competition for goods and services procured, while
almost two-thirds of government-wide contract obligations have been on
contracts for goods, agencies competed these contracts less frequently.
For example, about 91 percent, or about $5.5 billion in contract
obligations for medical and surgical equipment, were identified as not
competed. Overall, as shown in figure 5, about 39 percent of obligations
for goods were competed compared to about 61 percent of obligations for
services.
22For the purposes of this report, obligations identified as using the unusual and
compelling urgency exception include those associated with contracts subject to FAR part
6.302-2, as well as orders under multiple award contracts, which are subject to separate
competition requirements under FAR part 16.505(b)(2). Specifically, under 16.505(b)(2),
orders on multiple award contracts require contracting officers to give every awardee a fair
opportunity to be considered for a delivery-order or task-order exceeding $3,500; with
exceptions, including if the agency need for the supplies or services is so urgent that
providing a fair opportunity would result in unacceptable delays. When using the unusual
and compelling urgency exception to full and open competition, agencies still must request
offers from as many potential sources as is practicable under the circumstances.
23GAO, Federal Contracting: Noncompetitive Contracts Based on Urgency Need
Additional Oversight, GAO-14-304 (Washington, D.C.: Mar. 26, 2014).
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GAO-20-632 COVID-19 Contracting
Figure 5: Proportion of Competed Government-wide Contract Obligations for Goods and Services, as of June 11, 2020
Note: About $12 million in service contract obligations were not identified as being competed or not
competed.
A majority of the government-wide contract obligations reported in FPDS-
NG, about $11.7 billion, were associated with new contracts, compared
with about $6.1 billion on preexisting contracts.24 For example, while
obligations on contracts for drugs and biologicals were primarily procured
on preexisting contracts, the majority of the remaining obligations for the
top five goods were on new contracts in response to the pandemic.
Obligations on new contracts were competed less frequently than
obligations on preexisting contracts, with about 34 percent of obligations
on newly awarded contracts competed, compared to about 72 percent of
obligations on pre-existing contracts (see fig. 6). Our prior work has noted
that agencies can leverage contracts awarded in advance of a disaster to
24New contract obligations include obligations on new definitive contracts (as reported in
FPDS-NG), purchase orders, indefinite delivery vehicles, and blanket purchase
agreements awarded after February 4, 2020—the date of the first contract obligations in
response to COVID-19—and all associated orders, calls, and modifications to these
awards. Preexisting contract obligations include obligations on orders, calls, and
modifications to definitive contracts, purchase orders, indefinite delivery vehicles, and
blanket purchase agreements awarded prior to February 4, 2020.
Agencies’ Contract
Obligations Were
Predominantly on New
Contracts, Which Were
Competed Less
Frequently than
Preexisting Contracts
Page 17
GAO-20-632 COVID-19 Contracting
rapidly and cost-effectively mobilize resources, and that these contracts
can help preclude the need to procure critical goods and services
noncompetitively.25
Figure 6: Proportion of Competed Government-wide Contract Obligations for New and Preexisting Contracts, as of June 11,
2020
Note: About $12 million in new contract obligations were not identified as being competed or not
competed.
According to FPDS-NG data, agencies made about $13.8 billion, or 78
percent of all contract obligations on fixed-price contracts, with more
contract obligations made on fixed-price contracts for goods than fixed-
price contracts for services (see fig. 7). About $3 billion, or 17 percent, of
contract obligations were made on cost-reimbursement contracts.
Agencies used cost-reimbursement and time & materials/labor hour
contracts more frequently for contracts for services than for goods. As
shown below, about 48 percent of service contract obligations were for
one of these two contract types.
25GAO-19-93.
Most Obligations on
Contracts for Goods Were
Made on a Fixed-Price
Basis
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GAO-20-632 COVID-19 Contracting
Figure 7: Government-wide Contract Obligations by Type of Contract for Goods and
Services, as of June 11, 2020
Note: About $223,000 in contract obligations were identified as having an “other” contract type.
As shown in figure 8, although most contract obligations were made on
fixed-price contracts, about 64 percent, or $8.8 billion of those obligations
were on contracts identified as not competed.
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GAO-20-632 COVID-19 Contracting
Figure 8: Competed COVID-19 Government-wide Contract Obligations by Type of
Contract, as of June 11, 2020
Note: About $12 million in fixed-price contract obligations were not identified as being competed or
not competed, and about $223,000 in contract obligations were identified as having an “other”
contract type.
As shown in figure 9, agencies relied on contracts FPDS-NG categorizes
as definitive for about $11 billion, or 62 percent of obligations, particularly
obligations for goods. Definitive contracts have a defined scope of work,
and are categorized in FPDS-NG as not allowing individual orders to be
placed on the contract. Agencies obligated an additional $5.3 billion on
orders under indefinite delivery contracts, which can provide flexibility if
agencies are not certain of the amount of goods or services needed.
About $978.7 million in obligations made on indefinite delivery vehicles
were on Federal Supply Schedule and Government-wide Acquisition
Contracts, which can be used to leverage the government’s buying
power, when appropriate.
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GAO-20-632 COVID-19 Contracting
Figure 9: Government-wide Contract Obligations for Goods and Services by Contract Method, as of June 11, 2020
aIncludes blanket purchase agreement calls and orders off of blanket purchase and basic ordering
agreements.
As of June 11, 2020, federal agencies reported contract actions with over
6,200 vendors in response to COVID-19, while the top 10 vendors
accounted for about one-third, or $5.6 billion of total contract obligations
(see fig. 10). About $5.1 billion, or 29 percent, of contract obligations were
reported by agency contracting officers as going to small businesses. To
promote small business participation in federal contracting, there is a
government-wide goal to award about a quarter of contract obligations to
small businesses.
Top Vendors Received
about One-Third of
Obligations
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GAO-20-632 COVID-19 Contracting
Figure 10: Government-wide Contract Obligations to Top 10 Vendors, as of June 11,
2020
Note: According to Federal Procurement Data System-Next Generation data, General Motors
Company and Modernatx Inc. had obligations on one contract action; Emergent Biosolutions Inc. had
obligations on two contract actions; RER Solutions had obligations on three contract actions;
Hanesbrand Inc. had contract obligations on six contract actions; Parkdale Advanced Materials Inc.
had obligations on 13 contract actions; Hamilton Bonaduz AG had obligations on 17 contract actions;
Janssen Pharmaceuticals Inc. had obligations on 41 contract actions; Philips Electronics North
America Corp had obligations on 57 contract actions, and Thermo Fisher Scientific Inc. had
obligations on 201 contract actions.
Additional details on contract obligations for the top four agencies with the
highest contract obligations in response to COVID-19—HHS, DOD, DHS,
and VA—are presented in agency snapshots later in this report.
A variety of contracting flexibilities are available to agencies to facilitate
the award and obligation of funds in response to the COVID-19
pandemic. For example, the CARES Act included provisions to help
agencies contract for critical goods and services, while the FAR
authorizes additional flexibilities for agencies to use during emergencies.
While some flexibilities are available to agencies when an emergency is
declared, such as those in the FAR, others require guidance to
implement. Some agencies have taken steps to implement guidance and
address the use of certain flexibilities, including the four agencies in our
Agencies Have a
Variety of Contracting
Flexibilities to
Facilitate Government
Response to the
COVID-19 Pandemic
Page 22
GAO-20-632 COVID-19 Contracting
review—HHS, DOD, DHS, and VA. For the purposes of this report, we
have categorized these flexibilities into four areas: contracting techniques,
financing provisions for contractors, the Defense Production Act, and
waivers of acquisition requirements.
Agencies can use several existing contracting techniques—based on
provisions in the CARES Act and emergency procurement authorities in
the FAR—that provide flexibilities to quickly and efficiently award
contracts in response to the pandemic. We plan to conduct additional
reviews that address the oversight and management of various contract
types and techniques used in support of COVID-19.
•
Undefinitized contract actions (UCA). This contracting technique
allows contractors to begin work before reaching a final agreement
with the government on all contract terms and conditions. Section
13005 of the CARES Act allows DOD to waive timeframes to definitize
contracts and to also waive limitations on the amounts that can be
obligated before the contract is defined.26 UCAs can allow the
government to fulfill requirements that are urgent or need to be met
quickly when there is insufficient time to use normal contracting
vehicles. Our prior work has noted that UCAs can pose risks to the
government, such as when contractors lack incentives to control costs
before all contract terms and conditions are defined.27
•
Agency guidance and use of flexibility: Within DOD, the Navy
issued guidance to encourage the use of UCAs to the maximum
allowable obligations, and the Air Force also issued guidance to
waive price ceilings and restrictions to enter into foreign military
sales contracts on UCAs for the COVID-19 pandemic. As of June
11, 2020, DOD reported about $850 million, or about 28 percent,
of its obligations on UCAs for goods and services like alternate
care facilities to treat COVID-19 patients and N95 respirator
production. HHS, DHS, and VA reported obligating an additional
$606.4 million, $9.5 million, and $22.8 million, respectively, on
UCAs in response to COVID-19.
•
Other transaction authority. Other transactions enable federal
agencies to negotiate terms and conditions specific to a project
26Pub. L. No. 116-136, § 13005, 134 Stat. at 522.
27GAO, Defense Contracting: DOD Has Enhanced Insight into Undefinitized Contract
Action Use, but Management at Local Commands Needs Improvement, GAO-10-299
(Washington, D.C.: Jan. 28, 2010).
Contracting Techniques
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GAO-20-632 COVID-19 Contracting
without requiring them to comply with certain federal regulations. The
CARES Act removes certain limits on the use of other transactions for
HHS and DOD (sections 3301 and 13006, respectively), such as
congressional reporting requirements and who can approve certain
transactions.28 Our prior work has noted that other transactions can
enable agencies to attract companies that have not typically done
business with the government to perform research, prototyping, and
production of new technologies or products.29 We have also noted
challenges with their use in terms of a risk of reduced accountability
and transparency.30
•
Agency guidance and use of flexibility: To implement these
provisions, DOD issued guidance, which identified approval
authority of other transactions related to the national emergency
declaration for COVID-19 at different cost thresholds, and relaxed
notification requirements to congressional defense committees.
For example, under DOD’s new guidance, Senior Procurement
Executives of the military departments and the Directors of the
Defense Advanced Research Projects Agency and the Missile
Defense Agency are able to approve other transactions for
prototype projects in excess of $500 million. These authorities
previously resided with the Under Secretaries of Defense for
Research and Engineering and Acquisition and Sustainment. HHS
officials stated that no guidance has been issued regarding the
use of other transactions for COVID-19 projects. As of June 11,
2020, DOD reported obligating $235 million for production and
prototype other transactions, including clinical trials and research
into the use of antibodies against COVID-19. Within FPDS-NG we
found that HHS reported obligating about $47.7 million on one
other transaction.
28Pub. L. No. 116-136, §§ 3301, 13006, 134 Stat. at 383, 522.
29GAO, Defense Acquisitions: DOD’s Use of Other Transactions for Prototype Projects
Has Increased, GAO-20-84 (Washington, D.C.: Nov. 22, 2019); and Federal Acquisitions:
Use of ‘Other Transaction’ Agreements Limited and Mostly for Research and
Development Activities, GAO-16-209 (Washington, D.C.: Jan. 7, 2016).
30GAO-20-84.
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GAO-20-632 COVID-19 Contracting
•
Special emergency procurement authorities.31 The FAR also
authorizes flexibilities for agencies during national emergencies and
disasters, which includes the COVID-19 pandemic. In general,
agencies are able to increase micro-purchase thresholds and
simplified acquisition thresholds to $20,000 and $750,000,
respectively, when an emergency or major disaster is declared under
the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
Doing so allows agencies to use government purchase cards or to
use simplified acquisition procedures at higher dollar amounts. In
addition, the threshold for using simplified acquisition procedures for
certain commercial items can be increased to $13 million during
national emergencies.
•
Agency guidance and use of flexibility: HHS, DOD, DHS, and VA
have issued guidance regarding emergency acquisition
authorities, related to FAR parts 13 and 18, respectively, raising
the thresholds as outlined in the FAR. For example, as of June 11,
2020, the four agencies reported obligating $667.1 million in new
awards for commercial items subject to simplified acquisition
procedures under the increased threshold of $13 million
(increased from the previous threshold of $7 million). Agencies
also reported about $414.2 million in obligations for new awards
subject to simplified acquisition procedures between the previous
threshold of $250,000 and the increased threshold of $750,000.
See appendix I for additional details on the four agencies’ use of
special emergency procurement authorities, based on FPDS-NG
data.
Agencies are leveraging various contract financing flexibilities to ensure
that contractors are able to maintain readiness and fund contract
expenses during the pandemic.
•
Reimbursement of contractors for maintaining employees in a
ready state. This flexibility allows agencies to reimburse contractors,
subject to certain limitations, that provided paid leave to keep their
31Section 816 of the National Defense Authorization Act for Fiscal Year 2017 expanded
the permissible uses of the special emergency procurement authorities to include support
of international disaster assistance and support of a national emergency or natural
disaster relief efforts in the United States, as defined by the Robert T. Stafford Disaster
Relief and Emergency Assistance Act. The conference report to the National Defense
Authorization Act for Fiscal Year 2017 directed GAO, not later than 4 years after the date
of enactment of the Act, to submit to the Committees on Armed Services of the Senate
and House of Representatives a review of all procurement activities conducted under the
authorities provided by the provision. In agreement with the cognizant committees, the
information in this section of the report addresses the mandate.
Financing Provisions for
Contractors
Page 25
GAO-20-632 COVID-19 Contracting
employees or subcontractors in a ready state during the public health
emergency. Section 3610 of the CARES Act permits agencies to
modify contracts or other agreements to allow these reimbursements
when contractors are unable to perform work at their approved work
site due to closures resulting from the pandemic, and are unable to
telework. This provision expires on September 30, 2020.
•
Agency guidance and use of flexibility: All four agencies in our
review issued guidance regarding the implementation of section
3610. We have ongoing work that is examining the extent to which
the Office of Management and Budget and selected agencies
provided guidance on implementing section 3610 and the extent
to which agencies are using this authority.
•
Progress payment rates. Under this type of contract financing
flexibility, contractors receive payments for their expenses as work
progresses. Progress payments can help contractors improve cash
flow and manage expenses, such as material, labor, and overhead for
capital intensive projects.
•
Agency guidance and use of flexibility: DOD and HHS have both
issued guidance to increase progress payment rates. Each
agency raised the progress payment rates from 80 percent to 90
percent for large business concerns. Both also raised the rates to
95 percent for small business concerns—up from 85 percent for
HHS and 90 percent for DOD.
The Defense Production Act (DPA) facilitates the supply and timely
delivery of products, materials, and services to military and civilian
agencies in support of the national defense, including in response to
emergency preparedness activities.
•
DPA awards and priority rated contracts. Since March 18, 2020,
the President has taken several actions to allow agencies to use DPA
authorities to mitigate COVID-19 supply chain issues. For example,
agencies can require private companies to prioritize fulfilling
government contracts or orders before fulfilling contracts or orders
from other customers. DOD can also award agreements under the
DPA to companies to expand domestic production of health and
medical resources. The CARES Act also included DPA provisions
such as providing DOD with $1 billion for DPA purchases to prevent,
prepare for, and respond to the coronavirus, domestically or
internationally, and waiving requirements for a separate act of
Congress to authorize certain DPA projects over $50 million.
Defense Production Act
Page 26
GAO-20-632 COVID-19 Contracting
•
Agency guidance and use of flexibility: DHS and HHS issued
guidance regarding the use of DPA authority to prioritize
government contracts and orders. For example, DHS’s guidance
outlines how to place priority ratings on contracts and orders for
goods and services to expedite delivery. HHS’s guidance provides
language to be included in all COVID-19 contracts and orders to
ensure they can be priority rated, as needed, by the Secretary of
HHS. As we reported in June 2020, HHS reported using DPA
authority to prioritize at least eight contracts to produce more than
150,000 ventilators for $2 billion by the end of 2020.32 We have
ongoing work that will assess the federal government’s use of
DPA authority to obtain the health and medical resources
necessary to combat COVID-19 and to mitigate industrial base
risks.
Agencies are also using additional flexibilities through the CARES Act
and agency guidance to waive contract requirements related to
competition, solicitations, and contract documentation.
•
Noncompetitive procurements. Under normal circumstances, GSA
must notify Congress no less than 30 days before awarding a contract
using the public interest exception to full and open competition. GSA
may make these determinations if full and open competition is not in
the public interest. Although GSA is not one of the agencies with the
highest obligations in response to COVID-19, Section 15003 of the
CARES Act changed the time between notification to Congress and
contract award to no less than 3 days.
•
Agency guidance and use of flexibility: GSA issued guidance
regarding this change to the notification requirement. However, as
of June 11, 2020, none of GSA’s noncompetitively awarded
contracts and associated obligations in FPDS-NG relied on the
public interest exception to competition.
•
Other. In addition to areas where Congress provided contracting
flexibilities, agencies have issued guidance to permit alternate
methods of meeting acquisition requirements. For example, HHS,
DOD, and DHS issued guidance that added other allowable forms of
communication to notify contractors of suspensions and debarments,
including electronic notifications. DOD also relaxed some standards to
32GAO-20-625.
Waivers of Acquisition
Requirements
Page 27
GAO-20-632 COVID-19 Contracting
permit the use of electronic signatures and copies of documents, in
place of manual signatures and original documents.
DHS and HHS have also issued guidance to waive additional
acquisition requirements. For example, DHS has suspended its
internal review and approval requirements for exceptions to the Buy
American Act, allowing contracting officers to notify DHS management
of exceptions to the Buy American Act concurrent with the contract
award, instead of in advance. DHS also alerted its contracting
activities that the Department of Labor has waived certain labor laws
and their associated contract requirements, and deferred its
congressional notification requirement to notify Congress of certain
contract actions in excess of $1 million for COVID-19 procurements.33
To facilitate recovery efforts necessary to address COVID-19, HHS
also provided broad authority for its contracting officers to use the
urgent and compelling exception to full and open competition to award
contracts.
Both DHS and HHS have issued guidance related to acquisition
planning flexibilities. DHS suspended requirements for acquisition
planning for certain procurements, and HHS waived the requirement
for detailed acquisition plans for acquisitions above the simplified
acquisition threshold related to COVID-19.
In the following section, we provide a two-page profile of each of the top
four agencies with the highest contract obligations in response to COVID-
19. Each agency snapshot provides background on the agency and its
role in the response to COVID-19; obligations over time; significant
contract actions—those identified as having the highest obligations during
the scope of our review; the types of goods and services procured; the
agency’s methods of procurement; and details on the types of vendors.
Certain figures in the snapshots, such as competed goods and services,
and percent of obligations for small businesses, are displayed to scale
based on their associated obligations.
Unless otherwise noted, the source for all graphics in the snapshots is our
analysis of data reported in the Federal Procurement Data System-Next
33Department of Homeland Security, Department of Homeland Security Acquisition
Manual § 3005.303-70 (October 2009).
Agency Snapshots
Page 28
GAO-20-632 COVID-19 Contracting
Generation, as of June 11, 2020. In some cases percentages may not
add to 100 percent due to rounding.34
34Figures in the HHS snapshot for type of contract do not reflect $222,866 in obligations
that were identified as “other” in the type of contract field in FPDS-NG. Figures in the VA
snapshot for competition and type of contract do not reflect $12 million in obligations not
identified as competed or not competed in the extent competed field in FPDS-NG.
xxxx
xxxx
xxxx
xxxx
Dollars (in millions)
GAO-20-632 COVID-19 Contracting
29
Contract Obligations
The mission of the Department of Health
and Human Services (HHS) is to enhance
the health and well-being of all Americans,
by providing for effective health and human
services and by fostering sound, sustained
advances in the sciences underlying
medicine, public health, and social services.
HHS is designated as the lead agency to
address the public health and medical
portion of the response during the pandemic,
DEPARTMENT OF
HEALTH AND HUMAN SERVICES
aligned with its emergency response
responsibilities under the National Response
Framework. HHS’s Office of the Assistant
Secretary for Preparedness and Response—
which leads the nation’s medical and public
health preparedness for, response to, and
recovery from disasters and public health
emergencies—has obligated about $7.7
billion, or about 86 percent, of HHS’s $8.9
billion in total obligations as of June 11, 2020.
HHS awards $551 million
for ventilators to Hamilton
Bonaduz AG
HHS awards $628.3 million
for vaccine manufacturing
to Emergent Biosolutions
HHS awards $646.7
million for ventilators to
Philips using Defense
Production Act
Dollars (in millions)
Timeline of HHS Obligations and Significant Contract Actions
Note: HHS reported obligating an additional $9.4 million in response to COVID-19 prior to March 1, 2020.
WHAT DID HHS BUY?
Two-thirds, or about $5.9 billion,
of HHS’s contract obligations
in response to COVID-19 have
been on contracts for goods, with
about $3.5 billion, or 39 percent,
of its obligations on contracts for
medical and surgical equipment
like N95 respirators, gloves,
ventilators, and hospital beds.
Dollars (in millions)
GAO-20-632 COVID-19 Contracting
30
Department of Health and Human Services Contract Obligations
HOW DID HHS BUY IT?
WHO GOT THE
CONTRACTS?
About 44 percent of HHS’s COVID-19
contract obligations were on contracts
identified as awarded competitively.
About $6.7 billion of total obligations
were on new contracts, identified
as competed 37 percent of the time,
compared to 62 percent of preexisting
contract obligations identified as
competed. HHS used the urgency
exception to full and open competition
for about $3.8 billion, or about 76
percent, of its contract obligations
identified as not competed. HHS’s
contracts for goods were identified
as competed less frequently than its
contracts for services.
About 72 percent of HHS’s contract
obligations were made on fixed-price
contracts, with another 27 percent on
cost-reimbursement contracts, including
cost sharing contracts for pharmaceuticals
and biomedical research and development.
About 71 percent of HHS’s fixed-price
contracts were identified as not competed,
compared to 17 percent of cost-
reimbursement contracts. HHS obligated
approximately $6.9 billion, or 78 percent, of
its contract obligations on purchase orders
or definitive contracts.
About $1.3 billion, or 15 percent, of
HHS’s contract obligations were to
vendors identified as small businesses.
HHS’s top 10 vendors accounted for
50 contract actions, and about $5.1
billion, or 57 percent, of HHS’s overall
contract obligations. According to
federal procurement data, at least $2.5
billion of the top vendor obligations
were for ventilators.
Competed Obligations Dollars (in millions)
Vendors
Type of Contract
Competed Goods and Services Dollars (in millions)
DOD awards $227 million to
Battelle Memorial Institute for
mask decontamination
DOD awards $94.5 million
to 3M for respirators
DOD awards $80.8 million
to W.S. Darley & Co. for
mask decontamination
Dollars (in millions)
xxxx
xxxx
xxxx
xxxx
xxxx
Dollars (in millions)
GAO-20-632 COVID-19 Contracting
31
Contract Obligations
DEPARTMENT OF DEFENSE
The mission of the Department of Defense
(DOD) is to provide combat-credible military
forces needed to deter war and protect
the security of the United States. DOD is
contributing military support, expertise, and
equipment in support of the whole-of-
government response to COVID-19. When
an emergency is declared, DOD is the
emergency response coordinator for public
works and engineering under the National
Response Framework. The Department of
the Army—in particular the U.S. Army Corps of
Engineers, which coordinates the department’s
public works and engineering efforts—has
obligated about $1.3 billion, or 45 percent, of
DOD’s total $3 billion in obligations as of June
11, 2020. The Defense Logistics Agency, which
is responsible for contracting, purchasing,
storing, and distributing items for DOD, has
obligated an additional $821 million, or 27
percent, of DOD’s total obligations.
WHAT DID DOD BUY?
DOD’s obligations in response to
COVID-19 have been almost evenly
split on contracts for goods and
services, with about $1.6 billion for
services and $1.4 billion for goods.
About 23 percent, or $684.2 million,
of DOD’s total obligations were on
contracts for medical equipment
and supplies. Another $571 million,
or 19 percent, were on contracts for
services related to the engineering,
construction, repair, or alteration of
hospital buildings.
Timeline of DOD Obligations and Significant Contract Actions
Note: DOD reported obligating an additional $1.7 million in response to COVID-19 prior to March 1, 2020.
Dollars (in millions)
GAO-20-632 COVID-19 Contracting
32
HOW DID DOD BUY IT?
About 37 percent of DOD’s COVID-19
contract obligations were on contracts
identified as awarded competitively.
About $1.6 billion of total obligations
were on new contracts, identified
as competed 15 percent of the time,
compared to 63 percent of preexisting
contract obligations identified as
competed. DOD used the urgency
exception to full and open competition
for about $1.2 billion, or 63 percent, of
its contract obligations identified as
not competed. DOD’s contracts for
goods were identified as competed
less frequently than its contracts for
services.
About 90 percent, or $2.7 billion, of
DOD’s contract obligations were made
on fixed-price contracts. About two-
thirds of fixed-price contracts were
identified as not competed. DOD
obligated about $1.4 billion on definitive
contracts and purchase orders, and
another $1.3 billion for orders on
indefinite delivery contracts.
Competed Obligations Dollars (in millions)
Type of Contract
Competed Goods and Services Dollars (in millions)
WHO GOT THE
CONTRACTS?
About $1.1 billion, or 37 percent, of
DOD’s contract obligations were to
vendors identified as small businesses.
DOD’s top 10 vendors accounted for
744 contract actions, and about $1.4
billion, or 49 percent, of DOD’s overall
contract obligations. According to federal
procurement data, at least $447 million
of the top vendor obligations were
for alternate care facilities for treating
COVID-19 patients.
Vendors
Department of Defense Contract Obligations
DHS awards $175 million
to Hanesbrands Inc. for
reusable gowns
DHS awards $531.9 million to
Parkdale Advanced Materials
for reusable gowns
DHS awards $96.4 million
to Airboss of America for
air-purifying respirators
Dollars (in millions)
xxxx
Dollars (in millions)
GAO-20-632 COVID-19 Contracting
33
Contract Obligations
The Department of Homeland Security’s
(DHS) broad strategic goals include countering
terrorism and homeland security threats,
preserving U.S. prosperity and economic
security, and strengthening preparedness and
resilience. On March 21, 2020, the Federal
Emergency Management Agency—the
primary agency responsible for preparedness,
response, and recovery from all hazards—was
identified as the lead for federal operations
in response to COVID-19 on behalf of the
White House Coronavirus Task Force. When
an emergency is declared, under the National
Response Framework DHS and the Federal
Emergency Management Agency are involved
as the emergency response coordinators
for communications, mass care and human
services, and logistics, among other activities.
The Federal Emergency Management Agency
has obligated about $1.6 billion, or 96 percent,
of DHS’s $1.7 billion in contract obligations as
of June 11, 2020.
DEPARTMENT OF
HOMELAND SECURITY
Timeline of DHS Obligations and Significant Contract Actions
WHAT DID DHS BUY?
About $1.4 billion, or 85 percent, of
DHS’s obligations in response to
COVID-19 have been on contracts for
goods. Almost 70 percent of DHS’s
total obligations were on contracts
for medical equipment and supplies,
including reusable gowns and N95
respirators for medical professionals.
According to federal procurement
data, the $196 million DHS obligated
for other medical services were
on contracts for emergency
management support services in
New York and New Jersey.
Note: DHS did not report any obligations in response to COVID-19 prior to March 1, 2020.
Dollars (in millions)
GAO-20-632 COVID-19 Contracting
34
HOW DID DHS BUY IT?
About 21 percent of DHS’s COVID-19
contract obligations were on contracts
identified as awarded competitively.
About $1.4 billion of total obligations
were on new contracts, identified
as competed 7 percent of the time,
compared to 88 percent of preexisting
contract obligations identified as
competed. DHS used the urgency
exception to full and open competition
for about $1.1 billion, or 87 percent,
of contract obligations identified as
not competed. DHS’s contracts for
goods were identified as competed
less frequently than its contracts for
services.
WHO GOT THE
CONTRACTS?
About $287 million, or 17 percent,
of DHS’s contract obligations were
to vendors identified as small
businesses. DHS’s top 10 vendors
accounted for 35 contract actions,
and about $1.3 billion, or 76 percent,
of DHS’s overall contract obligations.
According to federal procurement
data, at least $776 million of the top
vendor obligations were for reusable
gowns for health care providers.
About 91 percent, or $1.5 billion, of
DHS’s contract obligations were made
on fixed-price contracts. About 85
percent of DHS’s fixed-price contract
obligations were identified as not
competed. Seventy-four percent or
about $1.2 billion of DHS’s contract
obligations were for orders on
indefinite delivery contracts.
Competed Goods and Services Dollars (in millions)
Type of Contract
Vendors
Note: Contract obligations for the N95 respirator contract with Panthera Solutions
LLC were reported in the federal procurement database as of June 11, 2020;
however, FEMA officials stated this contract has since been terminated for cause.
Competed Obligations Dollars (in millions)
Department of Homeland Security Contract Obligations
VA awards $47.5 million
to First Nation Security
LLC for ventilators
VA awards a $66.9
million to Veterans
Tech LLC for laptops
to support telehealth
VA awards $50 million to
Colossal Contracting LLC
for information technology
equipment
Dollars (in millions)
xxxx
xxxx
xxxx
xxxx
Dollars (in millions)
GAO-20-632 COVID-19 Contracting
35
Contract Obligations
DEPARTMENT OF VETERANS AFFAIRS
The mission of the Department of Veterans
Affairs (VA) is to serve veterans of the U.S.
armed forces and provide health, pension,
burial, and other benefits. As the nation’s
largest integrated healthcare network, VA
has been responsible for caring for veterans
infected with COVID-19, providing continuity
of care for non-infected veterans, and limiting
the spread of COVID-19 among veterans and
VA staff. As identified in the U.S. Government
COVID-19 Response Plan, the Veterans Health
Administration supports the Department
of Health and Human Services’ emergency
responsibilities for public health and medical
services, including medical screening, and
personnel in support of the response. As of
June 11, 2020, various contracting organizations
within VA have been involved in procuring its
$1.5 billion in obligations for goods and services
in response to COVID-19, including Network
Contracting Offices that support the various
regions of VA’s hospital network.
Timeline of VA Obligations and Significant Contract Actions
Note: VA reported obligating an additional $146,247 in response to COVID-19 prior to March 1, 2020.
WHAT DID VA BUY?
Almost three-quarters, or about
$1.1 billion, of VA’s obligations
in response to COVID-19 have
been for goods. About $686
million, or 46 percent, of VA’s total
obligations have been for medical
and surgical equipment, like
ventilators and N95 respirators.
VA’s obligations for services
include information technology
and telecommunications services
to support telemedicine efforts,
among other things.
Dollars (in millions)
GAO-20-632 COVID-19 Contracting
36
HOW DID VA BUY IT?
Competed Obligations Dollars (in millions)
About 39 percent of VA’s COVID-19
contract obligations were on contracts
identified as awarded competitively.
About $779.3 million of total obligations
were on new contracts, identified
as competed 8 percent of the time,
compared to 72 percent of preexisting
contract obligations identified as
competed. VA used the urgency
exception to full and open competition
for about $626.6 million, or 70 percent,
of its contract obligations identified
as not competed. VA’s contracts for
goods were identified as competed
less frequently than its contracts for
services.
All but about $10 million of VA’s $1.5 billion
in obligations were made on fixed-price
contracts. About 61 percent of fixed-price
contracts were identified as not competed.
VA obligated about $711.3 million, or
48 percent, of its total obligations on
definitive contracts and purchase orders,
and another $283.5 million for orders on
Government-wide Acquisition Contracts.
Type of Contract
Competed Goods and Services Dollars (in millions)
WHO GOT THE
CONTRACTS?
About $973 million, or 66 percent,
of VA’s contract obligations were to
vendors identified as small businesses.
VA’s top 10 vendors accounted for 121
contract actions, and about $569.6
million, or 39 percent, of VA’s overall
contract obligations. According to
federal procurement data, at least $354
million of the top vendor obligations
were for information technology
equipment or services.
Vendors
Department of Veterans Affairs Contract Obligations
Page 37
GAO-20-632 COVID-19 Contracting
We provided a draft of this report to HHS, DOD, DHS, and VA for review
and comment. All four agencies provided technical comments, which we
incorporated as appropriate.
We are sending copies of this report to the appropriate congressional
committees and offices; and the Secretaries of Health and Human
Services, Defense, Homeland Security, and Veterans Affairs. In addition,
the report will be made available at no charge on the GAO website at
http://www.gao.gov.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4841. Contact points for our offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. Staff members making key contributions to this report are
listed in appendix II.
Marie A. Mak
Director, Contracting and National Security Acquisitions
Agency Comments
Page 38
GAO-20-632 COVID-19 Contracting
List of Committees
The Honorable Richard Shelby
Chairman
The Honorable Patrick J. Leahy
Vice Chairman
Committee on Appropriations
United States Senate
The Honorable James M. Inhofe
Chairman
The Honorable Jack Reed
Ranking Member
Committee on Armed Services
United States Senate
The Honorable Lamar Alexander
Chairman
The Honorable Patty Murray
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Ron Johnson
Chairman
The Honorable Gary C. Peters
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable James Lankford
Chairman
The Honorable Kyrsten Sinema
Ranking Member
Subcommittee on Regulatory Affairs and Federal Management
Committee on Homeland Security and Governmental Affairs
United States Senate
Page 39
GAO-20-632 COVID-19 Contracting
The Honorable Nita M. Lowey
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Adam Smith
Chairman
The Honorable Mac Thornberry
Ranking Member
Committee on Armed Services
House of Representatives
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Greg Walden
Republican Leader
Committee on Energy and Commerce
House of Representatives
The Honorable Bennie Thompson
Chairman
The Honorable Mike Rogers
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives
Appendix I: Selected Agencies’ Use of Special
Emergency Procurement Authority for COVID-
19 Contract Obligations
Page 40
GAO-20-632 COVID-19 Contracting
Table 1: COVID-19 Contract Obligations, As Reported in the Federal Procurement Data System-Next Generation, That Were
Between Existing and Emergency Procurement Thresholds, by Agency, as of June 11, 2020
Micro-purchasesa
Simplified acquisitions
Commercial items
Number of
awards
Obligations
(in dollars)
Number of
awards
Obligations
(in dollars)
Number of
awards
Obligations
(in dollars)
Department of Defense
(since March 13, 2020)
338
5,392,975
325
145,800,819
33
212,910,357
Department of Health and Human
Services (since March 21, 2020)
159
2,420,800
122
110,852,514
18
171,496,372
Department of Homeland Security
(since March 17, 2020)
34
523,204
56
22,797,234
18
143,753,593
Department of Veterans Affairs
(since March 15, 2020)
99
1,909,166
332
134,726,790
30
138,945,482
Total
630
10,246,145
835
414,177,357
99
667,105,804
Source: GAO analysis of Federal Procurement Data System–Next Generation data. | GAO-20-632
Note: Obligations reflect new awards reported from the date each agency increased their special
emergency procurement authority through June 11, 2020, with an estimated contract value above the
existing procurement thresholds. In general, the reported obligations reflect micro-purchases between
$10,000 and $20,000; obligations subject to simplified acquisition procedures between $250,000 and
$750,000; and commercial items between $7,000,000 and $13,000,000.
aAgencies are only required to report contract actions above the micro-purchase threshold in the
Federal Procurement Data System-Next Generation per FAR 4.606. As shown above, some agencies
have reported these actions in response to COVID-19, but the actions and obligations reported do not
reflect all agency micro-purchases.
Appendix I: Selected Agencies’ Use of
Special Emergency Procurement Authority
for COVID-19 Contract Obligations
Appendix II: GAO Contact and Staff
Acknowledgments
Page 41
GAO-20-632 COVID-19 Contracting
Marie A. Mak, 202-512-4841 or MakM@gao.gov
In addition to the contact named above, Janet McKelvey (Assistant
Director), Meghan Perez (Analyst in Charge), Dennis Antonio, Lorraine
Ettaro, Kurt Gurka, Stephanie Gustafson, Julia Kennon, and Robin Wilson
made contributions to this report.
Appendix II: GAO Contact and Staff
Acknowledgments
GAO Contact
Staff
Acknowledgments
(104277)
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