GAO-22-104745, COVID-19 CONTRACTING: Indian Health Service Used Flexibilities to Meet Increased Medical Supply Needs
- Issuer
- Government Accountability Office
- Document type
- Report
- Date
- 2021-06-30
Summary
GAO-22-104745, a U.S. Government Accountability Office report to congressional addressees dated October 14, 2021, examines Indian Health Service (IHS) contracting for COVID-19 medical supplies. GAO analyzed Federal Procurement Data System data through June 30, 2021, reviewed four contracts and interviewed IHS contracting officials. The report states that IHS contract obligations for products in response to the pandemic totaled more than $206 million as of June 30, 2021, and that IHS obligated $293 million for non-pharmaceutical products in the first 12 months of the national emergency, compared to $136 million in the prior 12 months. It finds that IHS used emergency flexibilities such as bulk buying, noncompetitive awards and streamlined procedures, but that contracting officers did not notice that some COVID-related supplies were delivered late.
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United States Government Accountability Office
Report to Congressional Addressees
COVID-19
October 2021
CONTRACTING
Indian Health Service
Used Flexibilities to
Meet Increased
Medical Supply Needs
GAO-22-104745
COVID-19 CONTRACTING
Indian Health Service Used Flexibilities to Meet Increased
Medical Supply Needs
October 2021
Highlights of GAO-22-104745, a report to congressional addressees.
IHS Contract Obligations Increased Substantially
Why This Matters Due to COVID-19
The Indian Health Service (IHS) serves over 2 million
American Indians and Alaska Natives. These groups
have been disproportionately vulnerable to negative
outcomes from COVID-19. During emergencies, federal
contracting staff face pressure to work quickly to meet
increased needs. We examined some of IHS's COVID-
related contracts to see how the agency’s efforts fared.
Key Takeaways
Despite facing challenges, including unprecedented
demand for medical supplies, IHS was able to acquire
needed products from a variety of vendors. IHS contract
obligations for products, excluding prescription drugs,
increased substantially during COVID-19 to address
emergent needs for additional personal protective
equipment, lab supplies, and more. Using emergency
contracting flexibilities available under federal regulation,
IHS
• bought personal protective equipment and other
medical products in bulk How GAO Did This Study
• awarded contracts noncompetitively We analyzed relevant federal procurement data through
June 30, 2021. We also reviewed four contracts—
• used streamlined procedures for higher dollar covering about 1/4 of obligations in IHS's largest product
contracts to obtain medical supplies faster category (medical and surgical instruments, equipment,
However, we found that IHS contracting officers did not and supplies). We also interviewed IHS contracting
notice that some COVID-related supplies were delivered officials.
late. Officials attributed this oversight to the spike in
volume as well as the urgency of procurements during a
pandemic.
Contracting officers are responsible for ensuring the
terms of a contract are met—under normal
circumstances and in emergency acquisitions. IHS
officials told us that they began taking intermediate steps
to improve tracking of products during 2020; the agency
is currently obtaining new software to improve contractor
oversight.
For more information, contact: Marie A. Mak at (202) 512-
4841 or makm@gao.gov
United States Government Accountability Office
Contents
Letter 1
Background 2
IHS Has Obligated Millions of Dollars on New Contracts for
COVID-19-Related Products 5
IHS Adapted Its Contracting Approach to Address COVID-19
Challenges, but Was Unaware of Some Delivery Delays 10
Agency Comments 16
Appendix I Objectives, Scope, and Methodology 20
Appendix II GAO Contact and Staff Acknowledgments 23
Table
Table 1: Acquisition Flexibilities Used for Selected Contracts 13
Figures
Figure 1: Map of Indian Health Service Area Offices 4
Figure 2: Timeline of Indian Health Service Contract Obligations
for COVID-19-Related Products by Month, as of June 30,
2021 6
Figure 3: Indian Health Service Contract Obligations on Non-
Pharmaceutical Products, March 2016 through February
2021 7
Figure 4: Top Five Products Procured in Response to COVID-19
by Indian Health Service, as of June 30, 2021 8
Figure 5: Competitive Versus Noncompetitive Indian Health
Service Contracts for COVID-19-Related Products, as of
June 30, 2021 9
Figure 6: COVID-19-Related Events and Award Dates for Four
Selected Indian Health Service (IHS) Contracts 12
Figure 7: Contract Obligations for Products in Response to
COVID-19 by Indian Health Service (IHS) Area Office, as
of June 30, 2021 14
Page i GAO-22-104745 IHS COVID-19 Contracting
Abbreviations
AI/AN American Indian and Alaska Native
COVID-19 Coronavirus Disease 2019
DHS Department of Homeland Security
DOD Department of Defense
FAR Federal Acquisition Regulation
FPDS Federal Procurement Data System
GSA General Services Administration
HHS Department of Health and Human Services
IHS Indian Health Service
NSSC National Supply Service Center
PPV pharmaceutical prime vendor
U.S.C. U.S. Code
WHO World Health Organization
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Page ii GAO-22-104745 IHS COVID-19 Contracting
Letter
441 G St. N.W.
Washington, DC 20548
October 14, 2021
Congressional Addressees
Coronavirus Disease 2019 (COVID-19) has put the U.S. health care
system, including the Indian Health Service (IHS), under severe strain,
affecting the federal government’s ability to buy and maintain critical
medical supplies to treat patients and protect health care workers. IHS
provides comprehensive health services for American Indians and Alaska
Natives (AI/AN)—a population that has long experienced lower life
expectancy and health disparities compared to other Americans.
Our prior work 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 significant pressure to
provide critical goods and services as expeditiously and efficiently as
possible. 1
You requested that we review IHS’s contracting efforts for COVID-19
medical supplies. This report examines (1) the key characteristics of
IHS’s contract obligations for COVID-19-related products, including
medical supplies, and (2) the contracting approaches IHS used to buy
medical supplies and any challenges it faced in the award and
administration of those contracts.
To conduct this review, we analyzed data available in the Federal
Procurement Data System (FPDS) as of June 30, 2021 to identify the IHS
area offices with the most contract obligations and obtain detailed
information about those contracts. 2 We assessed the reliability of FPDS
data by reviewing existing information about the FPDS system and the
data it collects, and determined the FPDS data were sufficiently reliable
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); 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).
2For 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.
Page 1 GAO-22-104745 IHS COVID-19 Contracting
for the purposes of describing IHS’s reported contract obligations in
response to COVID-19.
Based on those data, we then selected and reviewed the five largest
completed IHS contracts for COVID-19-related medical supplies as of
January 25, 2021, when we began this review. During our review, we
excluded one of these contracts because it was potentially the subject of
an ongoing Office of Inspector General investigation. 3 We also
interviewed the cognizant contracting officers for these contracts as well
as officials at IHS headquarters and the IHS National Supply Service
Center (NSSC), which manages a large portion of IHS’s COVID-19
contracts. Finally, we reviewed IHS’s procurement policies and relevant
portions of the Federal Acquisition Regulation (FAR). Further details
about the scope and methodology for this work can be found in appendix
I.
We conducted this performance audit from January 2021 to October 2021
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.
IHS, an agency within the Department of Health and Human Services
Background (HHS), provides health care for over 2 million AI/AN people who are
members or descendants of federally recognized tribes. 4 We previously
reported that AI/AN people tend to experience health disparities when
compared to other Americans. 5 As of October 2019, AI/AN people had a
life expectancy that was 5.5 years less than all other races or ethnicities
in the U.S. and died at higher rates than other Americans from many
preventable causes, including diabetes mellitus and chronic lower
3We refer to the four remaining contracts we reviewed as Contracts A, B, C, and D.
4Federally recognized tribes have a government-to-government relationship with the U.S.
and are eligible to receive certain protections, services, and benefits by virtue of their
status as Indian tribes. The Secretary of the Interior publishes a list of all tribal entities that
the Secretary recognizes as Indian tribes annually in the Federal Register. As of January
29, 2021 there were 574 federally recognized tribes. See 86 Fed. Reg. 7554 (Jan. 29,
2021).
5GAO, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts,
GAO-20-625 (Washington, D.C.: June 25, 2020).
Page 2 GAO-22-104745 IHS COVID-19 Contracting
respiratory diseases. AI/AN individuals with these health conditions are at
greater risk of developing serious complications from COVID-19. 6
IHS provides services directly through a network of hospitals, clinics, and
health stations it operates, and it funds services provided at tribally
operated facilities. 7 IHS also provides funding to nonprofit, urban Indian
organizations through the Urban Indian Health program to provide health
care services to AI/AN people living in urban areas.
IHS administers services through a system of 12 area offices and 170
IHS and tribally operated service units. IHS’s 12 area offices serve
different geographic regions within the U.S., as shown in figure 1. Each
area has its own contracting office, which is responsible for awarding and
administering contracts in that area.
6GAO-20-625.
7See 25 U.S.C. § 1653.
Page 3 GAO-22-104745 IHS COVID-19 Contracting
Figure 1: Map of Indian Health Service Area Offices
Within the Oklahoma City area office, IHS has the NSSC, which
coordinates large national contracts. NSSC is a focus of our review
because it managed a large portion of IHS’s contracting for COVID-19-
related products, including medical supplies.
Page 4 GAO-22-104745 IHS COVID-19 Contracting
COVID-19 Timeline of • December 2019 – A new strain of coronavirus emerged and quickly
Events spread around the globe.
• March 11, 2020 – The World Health Organization declared the
outbreak of COVID-19 a pandemic.
• March 13, 2020 – The President of the U.S. declared a national
emergency, pursuant to the National Emergencies Act and under
section 501(b) of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (Stafford Act).
• As of July 24, 2021, IHS reported 204,197 confirmed COVID-19 cases
among those receiving care at IHS facilities.
Federal Regulations and The FAR establishes uniform policies and procedures for acquisition by
Agency-specific all executive agencies, including requirements for planning and
competition for awarding contracts. Although agencies generally must use
Acquisition Guidance
full and open competition when awarding contracts, the FAR provides
exceptions, such as when an agency’s need for supplies or services is of
such “unusual and compelling urgency” that the government would suffer
serious harm unless it is permitted to limit the sources from which it
solicits the supplies or services. In addition, the FAR states that it is the
policy of the government to provide maximum practicable opportunities in
acquisitions to small businesses.
IHS also follows HHS’s acquisition regulation that supplements the FAR.
In addition, Part 5, Chapter 5 of the Indian Health Manual identifies,
explains, and clarifies IHS’s policies and procedures for acquisition
management.
IHS obligations for medical supplies increased substantially after the
IHS Has Obligated COVID-19 national emergency declaration, primarily through new,
Millions of Dollars on noncompetitive contracts used to obtain a variety of critical products. 8 The
agency’s contract obligations for products in response to the pandemic
New Contracts for totaled more than $206 million as of June 30, 2021. Contract obligations
COVID-19-Related peaked in April 2020 and again in January 2021.
Products According to FPDS data, the first peak included substantial purchases of
masks and gloves, and the second peak was primarily driven by an
8For purposes of this report, “noncompetitive contracts” refers to contracts and orders
identified with certain codes in FPDS, as explained in detail in appendix I of this report.
Even for contracts and orders identified with these codes, agencies may have solicited
more than one source.
Page 5 GAO-22-104745 IHS COVID-19 Contracting
agency-wide contract for lab analyzers, test kits, and reagents to test
COVID-19 samples. Figure 2 illustrates IHS contract obligations by month
for COVID-19-related products since the start of the pandemic.
Figure 2: Timeline of Indian Health Service Contract Obligations for COVID-19-
Related Products by Month, as of June 30, 2021
Overall IHS obligations for non-pharmaceutical products (such as gloves,
masks, and gowns) increased substantially after the COVID-19 national
emergency declaration. 9 For example, IHS obligated $293 million for non-
pharmaceutical products in the first 12 months of the national emergency,
compared to $136 million during the 12-month period before the March
2020 declaration (see fig. 3).
9For purposes of Figure 3, we removed obligations for the pharmacy prime vendor (PPV)
program from our calculations. IHS officials said that prior to August 2019, FPDS data
included all obligations for the PPV program. IHS officials added that since August 2019,
IHS has not reported PPV obligations for tribally-operated facilities in FPDS to ensure
accurate reporting of IHS-specific obligations in FPDS.
Page 6 GAO-22-104745 IHS COVID-19 Contracting
Figure 3: Indian Health Service Contract Obligations on Non-Pharmaceutical
Products, March 2016 through February 2021
IHS procured a variety of critical products in response to the pandemic.
The top five product types accounted for 90 percent of total obligations for
COVID-19-related products. For example, medical and surgical
instruments, equipment, and supplies accounted for nearly $91 million, or
44 percent, of obligations for COVID-19-related products. Figure 4 shows
the top five products by contract obligations.
Page 7 GAO-22-104745 IHS COVID-19 Contracting
Figure 4: Top Five Products Procured in Response to COVID-19 by Indian Health Service, as of June 30, 2021
Most of IHS’s COVID-19-related contract obligations reported in FPDS,
about $169 million, were for new contracts, compared with about $37
million in obligations on pre-existing contracts. 10 Almost three-quarters of
IHS’s COVID-19 obligations for products were on contracts identified as
awarded noncompetitively, as shown in figure 5.
10New contract obligations include obligations on new definitive contracts (as reported in
FPDS), purchase orders, indefinite delivery vehicles, and blanket purchase agreements
awarded or established after March 17, 2020—the date of the first IHS 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 or established prior to March 17, 2020.
Page 8 GAO-22-104745 IHS COVID-19 Contracting
Figure 5: Competitive Versus Noncompetitive Indian Health Service Contracts for
COVID-19-Related Products, as of June 30, 2021
Note: For purposes of this report, noncompetitive contracts refers to contracts and orders identified
with certain codes in the Federal Procurement Data System, as explained in detail in appendix I of
this report. Even for contracts and orders identified with these codes, agencies may have solicited
more than one source.
Most of the contracts awarded noncompetitively (74 percent) cited the
unusual and compelling urgency exception to full and open competition. 11
As with the federal government overall, competition rates for IHS
contracts during the pandemic were much lower than normal due to the
national emergency. From fiscal years 2015 through 2019, IHS contracts
were awarded noncompetitively, on average, almost 19 percent of the
time, compared to 74 percent during the pandemic.
In addition, about 43 percent of IHS’s COVID-19 contract obligations were
for products provided by small businesses.
11Our methodology for identifying noncompetitive contracts is explained in detail in
appendix I of this report. Even for contracts identified as noncompetitive, agencies may
have solicited more than one source.
Page 9 GAO-22-104745 IHS COVID-19 Contracting
IHS used available emergency contracting flexibilities and increased bulk
IHS Adapted Its purchases to meet its COVID-19 medical supply needs. However,
Contracting Approach contracting officials experienced challenges due to the increased volume
and urgency of procurements and were unaware that vendors delivered
to Address COVID-19 some supplies late.
Challenges, but Was
Unaware of Some
Delivery Delays
IHS Used Contracting IHS responded to COVID-19-related medical supply challenges by using
Flexibilities and Increased acquisition flexibilities available in the FAR for emergency acquisitions to
streamline its procurement of goods and services, including the following:
Bulk Purchases to Meet Its
COVID-19 Medical Supply • Unusual and compelling urgency - Provides an exception to the
Needs general requirement for full and open competition when an agency’s
need for supplies or services is of such “unusual and compelling
urgency” that the government would suffer serious harm unless it is
permitted to limit the sources from which it solicits the supplies of
goods or services. 12
• Increased simplified acquisition threshold – Increases the threshold
for using simplified acquisition procedures from $250,000 to $800,000
for acquisitions in the U.S. to support a response to an emergency or
major disaster declared under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act. 13 For purchases at or below the
simplified acquisition threshold, agencies may use streamlined
procurement procedures, called “simplified acquisition procedures.”
• Increased threshold for simplified procedures for commercial items –
Increases the threshold for using simplified acquisition procedures for
commercial items from $7.5 million to $15 million for purchases to
support a response to an emergency or major disaster declared under
12On March 21, 2020, the HHS senior procurement executive issued a class justification
and approval that generally authorized HHS contracting offices to award contracts under
the unusual and compelling urgency exception to full and open competition for COVID-19-
related procurements.
13At the outset of the period covered by our review, the simplified acquisition threshold for
acquisitions in the U.S. to support a response to an emergency or major disaster was
$750,000. Effective October 1, 2020, the FAR was amended to increase this threshold to
$800,000. 85 Fed. Reg. 62,485, 62,487 (Oct. 2, 2020).
Page 10 GAO-22-104745 IHS COVID-19 Contracting
the Robert T. Stafford Disaster Relief and Emergency Assistance
Act. 14
Further, on March 21, 2020, HHS’s senior procurement executive granted
a waiver of the requirement for detailed, formal acquisition plans for all
COVID-19-related acquisitions above the simplified acquisition threshold,
allowing HHS contracting activities to use HHS’s Streamlined Acquisition
Plan template instead. 15
Additionally, on April 2, 2020, the head of contracting activity for the
Navajo Area Indian Health Service authorized the acquisition of personal
protective equipment for the COVID-19 response without regard to
restrictions in the Buy American Act or the Trade Agreements Act, based
on exceptions to those restrictions. The Buy American Act establishes a
preference that only domestic end products be acquired for public use.
The act, however, permits federal agencies to procure foreign products
under certain exceptions, such as where domestic products are not
reasonably available in sufficient quantities of a satisfactory quality. 16 The
Trade Agreements Act, as implemented by the FAR, requires the
acquisition of only U.S.-made or designated country end products or U.S.
or designated country services, unless offers for such products or
services are insufficient for the requirements. 17
14At the outset of the period covered by our review, these thresholds, as implemented in
the FAR, were $7 million and $13 million, respectively. Effective October 1, 2020, the FAR
was amended to increase these thresholds to $7.5 million and $15 million, respectively. 85
Fed. Reg. 62,485, 62,488 (Oct. 2, 2020).
15In general, acquisition plans detail milestones at which decisions should be made for an
acquisition as well as all the technical, business, management, and other significant
considerations that will control the acquisition. See FAR § 7.105. The HHS Acquisition
Regulation references the content requirements for a written acquisition plan in the FAR
and requires a written acquisition plan for all acquisitions above the simplified acquisition
threshold.
1641 U.S.C. § 8302; FAR § 25.101, 25.102, 25.103. The head of contracting activity for
the Navajo Area Indian Health Service cited this exception in the authorization for the
acquisition of COVID-19-related personal protective equipment without Buy American Act
restrictions.
1719 U.S.C. § 2512(a); FAR § 25.403(c). In the authorization for the acquisition of COVID-
19-related personal protective equipment without Trade Agreements Act restrictions, the
head of contracting activity for the Navajo Area Indian Health Service cited an exception
for acquisitions that do not use full and open competition.
Page 11 GAO-22-104745 IHS COVID-19 Contracting
Figure 6 illustrates key events in IHS’s procurement response to the
COVID-19 pandemic, including the implementation of contracting
flexibilities and award dates for the four selected contracts in our review.
Figure 6: COVID-19-Related Events and Award Dates for Four Selected Indian Health Service (IHS) Contracts
Note: We refer to the four selected Indian Health Service contracts as Contracts A, B, C, and D.
a
According to the Food and Drug Administration, level 2 gowns offer barrier protection for low risk
settings, whereas level 3 gowns offer barrier protection for moderate risk settings.
Page 12 GAO-22-104745 IHS COVID-19 Contracting
Our review of the four large IHS medical supply contracts found that three
of those contracts used at least one of the acquisition flexibilities
previously discussed (see table 1). Use of these flexibilities allowed IHS
to award these contracts soon after identifying a vendor that could meet
its needs.
Table 1: Acquisition Flexibilities Used for Selected Contracts
Acquisition Flexibility
Contract Class Justification & Increased Increased Streamlined Waived Buy
Approval for Simplified Commercial Items Acquisition Plan American Act and
noncompetitive award Acquisition Threshold Trade Agreement
based on urgency Threshold Act Restrictions
Contract A — — — —
(gloves)
Contract B — — — — —
(N-95 respirators)
Contract C — — — —
(ear-loop masks)
Contract D — —
(level 2 and level 3
medical gowns)
Source: GAO Analysis of Indian Health Service contract files and Federal Procurement Data System data. | GAO-22-104745
Note: “—” indicates the flexibility was not applicable to the procurement or the contract file did not
reflect that IHS used the flexibility
““ indicates the contract file reflected that IHS used the acquisition flexibility
IHS officials told us that awarding contracts quickly was important
because the medical supply market was volatile, and the availability of
items could rapidly change. In addition, some existing vendors were
unable to deliver medical supplies at the time.
For example, IHS relied on an existing agreement for purchasing gowns
prior to the pandemic, but the vendor was unable to deliver needed
quantities once the COVID-19 pandemic began. As a result, IHS had to
identify another vendor for gowns, which led to Contract D. Likewise, IHS
terminated Contract B for the government’s convenience after the vendor
was unable to obtain the N-95 respirators from the manufacturer within
the time frame specified in the contract.
IHS also responded to COVID-19 challenges by increasing bulk
purchases of medical products by NSSC. While NSSC’s overall mission
Page 13 GAO-22-104745 IHS COVID-19 Contracting
has remained unchanged during the COVID-19 emergency, according to
IHS officials, the volume of supplies procured by NSSC and the number
of customers served have increased, and the urgency of the
procurements has escalated.
Responding to these increased demands, IHS provided $398 million in
funding to NSSC to coordinate and manage the purchase and distribution
of COVID-19-related medical products nationwide to IHS and tribal
medical facilities and urban medical centers. 18 NSSC provided these
supplies at no cost to the facilities and centers. Under normal
circumstances, NSSC recovers costs by charging reimbursement fees to
the medical facilities.
NSSC determined IHS’s COVID-19 medical supply needs by working with
IHS’s 12 area offices to calculate cumulative medical supply usage rates.
The Oklahoma City Area accounted for $135.1 million of the $206 million
obligated (see fig. 7).
Figure 7: Contract Obligations for Products in Response to COVID-19 by Indian
Health Service (IHS) Area Office, as of June 30, 2021
18IHS provided $398 million to NSSC to procure personal protective equipment and other
medical supplies for IHS, tribal, and urban medical facilities at no cost to the facilities. Of
this, $10 million was included in an appropriation to IHS under the CARES Act. IHS
officials report that the remaining $388 million came primarily from HHS’s Public Health
and Social Services Emergency Fund to prevent, prepare for, and respond to coronavirus.
According to IHS officials, some of these funds are available through fiscal year 2024, and
some are available until expended.
Page 14 GAO-22-104745 IHS COVID-19 Contracting
Contracting Officials IHS officials stated that their greatest challenge was dealing with the
Experienced COVID-19 increased volume of supplies and urgency of procurements during the
COVID-19 emergency and that this contributed to the lack of awareness
Challenges and Were that vendors delivered some products late. 19 IHS officials stated that, as a
Unaware of Late whole, however, the agency considered these acquisitions successful
Deliveries because they were able to acquire the needed supplies during a national
emergency.
We found that deliveries for masks and gowns under contracts C and D
were late, according to the terms of the contracts. During initial interviews
about the contracts under review, IHS officials told us that the vendors for
each of the four contracts we reviewed, except for the vendor whose
contract was terminated, delivered all supplies on time. However, we
determined that the vendor for contracts C and D delivered some
quantities late on both contracts. For example, our analysis found that,
under the contract for level 2 and level 3 gowns, the vendor delivered
about 20 percent of the level 2 gowns and about 35 percent of the level 3
gowns up to 1 month late. Under the contract for ear-loop masks, the
vendor delivered about 6 percent of masks up to 10 days late. For both
contracts, the contracting officer acknowledged that they were unaware
the supplies were delivered late until we identified the discrepancy.
The Indian Health Manual states that the key to effective contract
administration is constantly monitoring contractor performance. The
manual also states that, after contract award, a project officer is
responsible for tracking contract progress and for advising the contracting
officer, in writing, of contractor performance, including monitoring the
delivery of acceptable contractor supplies or services according to
contract terms and conditions.
IHS officials stated that warehouse staff at NSSC’s distribution
warehouse generate reports documenting delivery and acceptance once
products are successfully delivered. These reports—known as receiving
reports—are provided to the contracting officer via intra-office mail.
Officials added that these receiving reports should be included in the
contract file. Although receiving reports were prepared and, according to
19GAO reviewed four NSSC contract files. No deliveries were made under Contract B, and
it was terminated for convenience by the government. Contract A was fulfilled on time.
Contracts C and D both involved late deliveries. The FAR provides that contracting
officers are responsible for ensuring performance of all necessary actions for effective
contracting, ensuring compliance with the terms of the contract, and safeguarding the
interests of the U.S. in its contractual relationships. FAR § 1.602-2.
Page 15 GAO-22-104745 IHS COVID-19 Contracting
NSSC officials, a hard copy of each report was delivered to the
contracting officer, contracting officials did not realize that supplies
ordered under contracts C and D were not delivered according to the
schedule terms identified in the contracts.
IHS contracting officials stated that during the COVID-19 emergency, the
workload of the contracting and NSSC warehouse staff increased
significantly because of the volume of supplies being procured and
delivered. IHS officials stated that, under normal circumstances, either the
contracting or NSSC warehouse staff would have noticed if products were
not yet received or delivered late. In these instances, the contracting
officer would have contacted the vendor and discussed possible
corrective actions.
NSSC officials stated that they recognized in 2020 the need for
improvements in their ability to track supplies during the COVID-19
emergency. As a result, NSSC began implementing procedural changes,
including maintaining daily logs of all supplies delivered. These actions
are still underway and have not been fully implemented. In addition,
NSSC officials stated that they recently procured new software that will
enable real-time tracking of deliveries and improved communication
between warehouse and contracting staff. NSSC is currently developing
internal guidance for the use of this software and plans to have the
software fully deployed to track all supply procurements within NSSC by
October 2021.
We provided a draft of this report to the Department of Health and Human
Agency Comments Services for review and comment. The agency provided technical
comments which we incorporated as appropriate.
We are also sending copies of this report to the appropriate congressional
committees and offices. In addition, the report will be made available at
no charge on the GAO website at http://www.gao.gov.
Page 16 GAO-22-104745 IHS COVID-19 Contracting
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
Page 17 GAO-22-104745 IHS COVID-19 Contracting
List of Addressees
The Honorable Patrick Leahy
Chairman
The Honorable Richard Shelby
Vice Chairman
Committee on Appropriations
United States Senate
The Honorable Ron Wyden
Chairman
The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate
The Honorable Patty Murray
Chair
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Gary C. Peters
Chairman
The Honorable Rob Portman
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Rosa L. DeLauro
Chair
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Cathy McMorris Rodgers
Republican Leader
Committee on Energy and Commerce
House of Representatives
Page 18 GAO-22-104745 IHS COVID-19 Contracting
The Honorable Bennie G. Thompson
Chairman
The Honorable John Katko
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable Raúl M. Grijalva
Chairman
Committee on Natural Resources
House of Representatives
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives
The Honorable Richard E. Neal
Chairman
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives
The Honorable Ruben Gallego
House of Representatives
Page 19 GAO-22-104745 IHS COVID-19 Contracting
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
To identify the key characteristics of the Indian Health Service’s (IHS)
contract obligations made in response to the Coronavirus Disease 2019
(COVID-19) pandemic, we analyzed data available in the Federal
Procurement Data System (FPDS) as of June 30, 2021. 1 We analyzed
the FPDS data to identify the IHS area offices with the most contract
obligations, as well as information such as the types of goods procured by
these offices, rates of competition on awarded contracts, and
characteristics of the vendors that were awarded contracts. 2 We
assessed the reliability of FPDS data by reviewing existing information
about the FPDS system and the data it collects—specifically, the data
dictionary and data validation rules. We determined the FPDS data were
sufficiently reliable for the purposes of describing IHS’s reported contract
obligations in response to COVID-19. We primarily identified these
contract actions and associated obligations related to the COVID-19
response by using the National Interest Action code. 3 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
1For 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.
2For 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 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 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.
3National 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.
Page 20 GAO-22-104745 IHS COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
number of additional contract actions and associated obligations. 4 For the
purposes of this report, we are focusing on IHS obligations for COVID-19-
related medical products. In order to determine the increased obligations
related to procuring COVID-19-related medical products, as presented in
figure 3, we removed obligations for the pharmacy prime vendor (PPV)
program from our calculations. 5
To examine the contracting approaches IHS used to buy medical supplies
and the challenges it faced in the award and administration of those
contracts, we selected and reviewed the contract files for the five largest
completed IHS contracts for COVID-19-related medical supplies as of
January 25, 2021, when we began this review, based on FPDS data. The
selected contract files account for 28 percent of obligations for the top
product category—medical and surgical instruments, equipment, and
supplies—as of June 30, 2021. During our review, we excluded one of
these contracts because it was potentially the subject of an ongoing
Office of Inspector General investigation. While the information we
obtained from the selected contract files is not generalizable to all IHS
contracts, the files provided examples of IHS procurements of COVID-19-
related medical products. We also interviewed the cognizant contracting
officers for these contracts to obtain their perspective on the contract
actions and the circumstances surrounding the contracts. Additionally, we
conducted interviews with officials at IHS headquarters, IHS’s National
Supply Service Center, located in the Oklahoma City area—which
manages a large portion of IHS’s COVID-19 contracts—to determine
what challenges the COVID-19 environment presented and what
contracting flexibilities IHS utilized to award contracts in response to the
COVID-19 pandemic. We also asked officials about their contracting
procedures during the interviews we conducted, and reviewed IHS’s
procurement policies in Part 5, Chapter 5, of the Indian Health Manual as
well as portions of the Federal Acquisition Regulation.
We conducted this performance audit from January 2021 to October 2021
in accordance with generally accepted government auditing standards.
4Our prior work 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).
5IHS officials said that prior to August 2019, FPDS data included all obligations for the
PPV program. IHS officials added that since August 2019, IHS has not reported PPV
obligations for tribally-operated facilities in FPDS to ensure accurate reporting of IHS-
specific obligations in FPDS.
Page 21 GAO-22-104745 IHS COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
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.
Page 22 GAO-22-104745 IHS COVID-19 Contracting
Appendix II: GAO Contact and Staff
Appendix II: GAO Contact and Staff
Acknowledgments
Acknowledgments
Marie A. Mak, 202-512-4841 or MakM@gao.gov
GAO Contact:
In addition to the contact named above, Teague Lyons (Assistant
Staff Director), John Warren (Analyst in Charge), Jewel Conrad, Matthew T.
Acknowledgments: Crosby, Suellen Foth, Stephanie Gustafson, Jeff Hartnett, Gina Hoover,
and Robin Wilson made contributions to this report.
(104745)
Page 23 GAO-22-104745 IHS COVID-19 Contracting
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