Observations: Fiscal Year 2020 COVID-19 Federal Contracting

Summary

Observations: Fiscal Year 2020 COVID-19 Federal Contracting, a Pandemic Response Accountability Committee report dated August 4, 2021. It states that the federal government contracted for $643 billion in goods and services between April 1, 2020, and September 30, 2020, of which approximately $28 billion was deemed related to the pandemic. The report finds that 1,656 contract actions worth $4.4 billion were awarded to first-time federal contractors, and that $128 million was deobligated from contracts with first-time federal contractors. It also reviews limited competition authorities, stating that its survey of 14 contracts from five agencies found that 71% either had data entry errors or an inappropriate authority selection.

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PANDEMIC
RESPONSE
ACCOUNTABILITY
COMMITTEE
August 4, 2021
Observations:
Fiscal Year 2020
COVID-19 Federal Contracting

OBSERVATIONS: FISCAL YEAR 2020 COVID-19 FEDERAL CONTRACTING  |  AUGUST 4, 2021
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Since the beginning of the novel coronavirus
disease 2019 (COVID-19) pandemic, Congress
has authorized more than $5 trillion1 to mitigate
the effects of the pandemic. Numerous federal
agencies have used a large portion of these
funds to award contracts for critical goods and
services to support federal, state, and local
response efforts.
In July 2020,2 the Government Accountability
Office reported that contracting—while critical
during emergencies—can also present unique
challenges. Officials may face pressure to
provide goods and services as quickly as
possible, which can result in fraud and improper
payments.
Even in non-pandemic times, financial
management controls and proper oversight
of government contracts pose a challenge to
federal agencies and programs. The substantial
increase in funding for pandemic-related
programs combined with the public’s expectation
that these funds get distributed quickly makes it
more likely that these risks may occur. However,
even in times of emergency, federal agencies
must put controls in place to protect against
fraud and ensure taxpayer dollars are spent
effectively.
What We Found
•
First-time federal contractors received $4.4 billion worth of pandemic contracts
in Fiscal Year 2020.
•
$128 million was deobligated from contracts with first-time federal contractors
during the same period.
COVID-19 Contracting in Fiscal Year 2020
1 The more than $5 trillion in pandemic response funds
includes funds authorized under the first-time Coronavirus
Response and Relief Supplemental Appropriations Act
as well as the Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020; the Families First
Coronavirus Response Act; the Coronavirus Aid, Relief, and
Economic Security Act; the Paycheck Protection Program and
Health Care Enhancement Act, and the American Rescue
Plan.
2 COVID-19 Contracting: Observations on Federal Contracting
in Response to the Pandemic, GAO-20-632, July 2020.
The CARES Act mandates the PRAC to conduct and coordinate oversight of covered funds
and the coronavirus response.
This includes “…comprehensive audit and review of charges made to Federal contracts pursuant to
authorities provided in the Coronavirus Aid, Relief, and Economic Security Act, to determine whether
wasteful spending, poor contract or grant management, or other abuses are occurring...and reviewing
whether competition requirements applicable to contracts …using covered funds have been satisfied”
| CARES Act 15010 (d)(1)(B)

OBSERVATIONS: FISCAL YEAR 2020 COVID-19 FEDERAL CONTRACTING  |  AUGUST 4, 2021
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Why We Examined Federal Contracting
for COVID-19 Impacts
The Coronavirus Aid, Relief, and Economic
Security (CARES) Act created the Pandemic
Response Accountability Committee (PRAC) to
oversee the federal government’s pandemic
response. Among its many directives, the CARES
Act requires the PRAC to audit or review funding
for federal contracts (detailed above).
Additionally, on June 5, 2020, several members
of Congress requested the PRAC investigate
pandemic-related contracts entered with federal
contractors that previously had never worked
with the government. Moreover, during the
past year several first-time federal contractors
were convicted of failing to provide goods that
were contracted for during the pandemic. For
example, an individual lied to a federal agency
about being able to produce large quantities of
personal protective equipment, including N95
masks. His company was awarded contracts for
more than $35 million but was unable to deliver
any of the equipment.
Our objective was to review pandemic-related
federal contracts and identify first-time
contractors and contracts awarded without
competitive bidding. To accomplish this, we
partnered with the Treasury Inspector General
for Tax Administration to use a data-driven
approach (see Appendix B).
How was Federal Contracting Affected
by the Pandemic?
The federal government contracted for $643
billion in goods and services between April
1, 2020, and September 30, 2020. Of this
amount, approximately $28 billion was
deemed related to the pandemic. Of this
amount, approximately $12.5 billion was set
aside for contract actions funded by COVID-19
supplemental appropriations and another
approximately $15.4 billion was for contract
actions not funded by COVID-19 supplemental
appropriations (see below). Contract actions
are defined as written or verbal actions that
result in the purchase, rent or lease of supplies
or services using appropriated dollars over the
Pandemic Funded Contracts ($12.5B)
Contracts that were awarded specifically to
address needs of the agencies to address
COVID-19. These are often for testing for
COVID-19, cleaning of impacted buildings,
personal protection equipment, and many other
critical needs. In accordance with the Office of
Management and Budget Memorandum M-20-
21, COVID-19 supplemental appropriations are
identified by a Disaster Emergency Fund Code
(DEFC) in USA Spending reporting.
Pandemic Response Contracts Not Funded by
Pandemic Funds ($15.4B)
Some agencies already had contracts for goods or
services that were affected by COVID-19. These
contract actions are identified in the Federal
Procurement Data System-Next Generation (FPDS)
by the National Interest Action (NIA) code.

OBSERVATIONS: FISCAL YEAR 2020 COVID-19 FEDERAL CONTRACTING  |  AUGUST 4, 2021
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micro-purchase threshold (cannot be purchased
with a government credit card). Contract actions
also include any modifications to these actions
regardless of dollar value.
First-Time Federal Contractors
Within the approximately $28 billion of overall
pandemic response contracts between April
and September 2020, we found that 1,656
contract actions worth $4.4 billion (16%)
were awarded to first-time federal
contractors.
First-Time Federal Contractors in
Pandemic Response Efforts
The Office of Federal Procurement Policy’s
(OFPP) Emergency Acquisitions Guide (January
2011) helps the federal contracting community
plan and carry out procurement activities
during emergencies. The guide is a supplement
to agency-specific guidance and the Federal
Acquisition Regulation (FAR). The guide reminds
Contracting Officers that contractor
responsibility determinations are still required
in emergency operations, as detailed below.
To provide insight on the extent to which
pandemic-related contracts were awarded
to responsible prospective contractors, we
reviewed deobligations on pandemic
contracts. Deobligations occur when funds are
removed.
Contractor Responsibility Determinations
Contracts may be awarded only to
responsible prospective contractors that
meet the requirements of FAR 9.104.
The requirement for determinations of
contractor responsibility is not waived
during emergency operations…
from a contract for reasons such as failure to
meet requirements, contract termination for
convenience, or change in contract scope. As
of September 30, 2020, pandemic contracts
had almost $1.2 billion in deobligations, $128
million (approximately 11%) of which were
associated with first-time federal contractors.
More specifically, we found that 23% of first-time
federal contractors’ contract actions had an
associated deobligation. Further, when sorted by
product or service code, we found that certain
industries had higher rates of deobligations than
others related to contracts with first-time federal
contractors. For example, the highest percentage
of deobligations for pandemic contracts
with first-time federal contractors was in the
accommodation and food industry.
To determine why deobligations occurred with
first-time federal contractors, we surveyed five
agencies associated with 18 contracts (see
Appendix B). We found the reasons for the
reduction or termination of the contracts
were: (1) non-completion of contract terms; (2)
changing requirements; and (3) other reasons.
(See Figure 3.)
3
Various
Others
9
Non-
Completion
of Contract
Terms
6
Changing
Requirements
Figure 3. Reasons for Deobligations
Source: Synopsis of survey responses from five
agencies.

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Contracting Officers responsible for several of
the contracts in the survey noted the following
reasons for deobligations:
•
The contractor could not deliver the required
kinds [of products] and quantities under the
order terms and conditions.
•
The contractor was not able to meet the
required delivery schedule of seven days
after receipt of the order.
•
The emergency requirement was for
particular levels of isolation gowns. When
the first delivery was made, it was discovered
that the (individual) gowns were labeled as
required. However “Not Intended for Medical
Use” was posted on the shipping box. Upon
inspection it was determined the gowns
would not be acceptable for the intended
use. It was decided by the authorities above
to accept the delivered gowns for use in
departments where medical care was not
being performed, but the remainder of the
order would be canceled.
While contractor responsibility determinations
are still required (see callout box on page 3) for
some procurements, Contracting Officers noted
the challenge of ensuring the contractor could
perform. Our survey found contract officers
attempted to verify contractors’ capabilities
through various methods, such as searching
local markets or responses to solicitations.
However, the results were mixed, as detailed
below in the Contracting Officers' comments:
•
Searched sources for the required products,
but due to the urgency and limited quantity
of the requirement, and the immediate need
for delivery, a discussion was held with the
verified business to determine if they could
provide information on their capability of
providing N95 NIOSH Masks. Discussion
with Supplier provided information on their
specifics such as available Quantities,
Cost, and Shipping Availability, which met
the requirements. However, in the end, the
contract was terminated when the contractor
could not deliver.
•
As this COVID-19 requirement was needed
immediately, we did not have time for a
Request for Information or Sources Sought
notice. We issued a combined synopsis
and solicitation for the commercial product.
Contractor failed to meet obligation as
specified within the contract and it was
Termination for Cause for failure to provide
required product.
•
The specific contractor was not identified
during market research. They responded to
a competitive, unrestricted open continuous
solicitation for personal protective
equipment/medical supplies. The contract
was reduced due to the product being
unavailable from the manufacturer.
We also asked Contracting Officers for their
ratings of the contractors in the Contractor
Performance Assessment Reporting System
(CPARS) to assist with gauging overall
satisfaction, as depicted in Figure 4:
Figure 4. Planned Positive or Negative Ratings in
CPARS
Source: Synopsis of survey responses from five
agencies.
N/A, 1
Yes/Positive, 11
No/Negative, 6

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•
Contractor was identified by calling several
local contractors and identifying which
contractors had total or partial capacity to
meet the government’s requirements. This
contractor was ultimately selected as they
were able to meet the government’s total
requirement for lodging and laundry, were
willing to mobilize immediately to provide
support, and offered a lodging rate below the
per diem rate.
Emergency acquisitions are of critical need
during a pandemic and any delay in delivery
can have catastrophic effects. Almost a quarter
of these contracts contained decreases in
obligation amounts and about half of our sample
ended with non-completion of the contract
terms, demonstrating the potential increased
risk to the government. While not all decreases
in value and terminations are due to a negative
performance by the contractor, the results of our
data analysis and survey responses highlight the
need for heightened diligence during emergency
acquisitions, especially when contracting with
first-time federal contractors.
Limited Competition in Pandemic
Contracting
The FAR generally requires agencies to use full
and open competition when awarding contracts.
However, FAR 6.302 allows for exceptions under
certain circumstances, such as a declared
emergency. While flexibilities are allowed during
declared emergencies, FAR 6.301 (d) states:
“When not providing for full and open
competition, the Contracting Officer shall solicit
offers from as many potential sources as is
practicable under the circumstances.”
This is further reiterated in OFPP’s Emergency
Acquisitions guidance from January 2011,
Minimizing Risk
If time does not permit adequate
acquisition planning and market research,
an agency should carefully consider
limiting the value and length of a contract
to only address immediate needs. This
approach allows the agency to plan
strategically for ongoing requirements.
Situational Terms, Conditions, and Pricing
Contract pricing, terms, and conditions
will vary depending on the emergency
environment. Contracting Officers should
be aware of opportunities for terms
and pricing to change through different
phases of an emergency response.
which highlights the importance of minimizing
risk through appropriate contract pricing, terms,
and conditions.
We reviewed contracting data for pandemic
spending and found the four most common
flexibilities identified to justify limited competition
were urgency, only one source, simplified
acquisition procedures and authorized by
statute, as shown in Figure 5.
Figure 5. Top Four Limited Competition Authorities
Source: Summarized data from FPDS and
USAspending.
$419M
$457M
$1,258M
$4,822M
Authorized by
Statute
Simplified Acquisition
Procedures
Only One Source
Urgency

OBSERVATIONS: FISCAL YEAR 2020 COVID-19 FEDERAL CONTRACTING  |  AUGUST 4, 2021
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Of the competition flexibilities recognized by the
FAR allowed in an emergency, the “only one
responsible source” authority is defined to be
used when supplies and services are available
from only one source in certain conditions,
either unsolicited research proposals or a follow-
on contract for continued development.
In our review of federal contract data, we found
that 11% of non-competitive contracts used
the “only one responsible source” authority.
Upon closer review of award descriptions for
these contracts, we found several that did not
fit this authority and instead should have used a
different FAR authority. Refer to Figure 5 to see
how the only one source authority falls in the top
four authorities for limited competition in terms
of amounts awarded.
Based on this observation, we conducted a
survey (see Appendix B) involving 14 contracts
from five agencies. Our survey found that 71%
of contracts either had data entry errors or an
inappropriate authority selection. Specifically,
we found:
•
Five should have used urgency (FAR 6.302-2)
rather than only one source and;
•
Five used the urgency authority but had data
entry errors in the federal procurement
system.
Both instances demonstrate the importance of
ensuring acquisitions are properly developed
and documented. The use of the “only
one responsible source” authority reduces
competition in emergency situations, a situation
that can enhance the risk of increased prices
and decreased contractor performance.
Conclusion
In our review of the contracts awarded in FY
2020 related to the pandemic response, the
use of first-time federal contractors and limited
competition authorities affected agencies’
response. Even in emergency acquisitions,
agencies are expected to use sound fiscal
prudence and due diligence to maximize value
for each taxpayer dollar spent.

OBSERVATIONS: FISCAL YEAR 2020 COVID-19 FEDERAL CONTRACTING  |  AUGUST 4, 2021
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Appendix A: Acronyms
CARES Act
Coronavirus Aid, Relief, and Economic Security Act
CPARS
Contractor Performance Assessment Reporting System
DEFC
Disaster Emergency Fund Code
FAR
Federal Acquisition Regulations
FPDS
Federal Procurement Data System – Next Generation
NIA (code)
National Interest Action (code)
OFPP
Office of Federal Procurement Policy
OMB
Office of Management and Budget
PRAC
Pandemic Response Accountability Committee
TIGTA
Treasury Inspector General for Tax Administration

OBSERVATIONS: FISCAL YEAR 2020 COVID-19 FEDERAL CONTRACTING  |  AUGUST 4, 2021
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Appendix B:
Scope and Methodology
The objectives of our review were to (1) review pandemic-related federal contracts to identify
first-time vendors: and (2) review pandemic-related federal contracts to identify those that were
awarded without competitive bidding.
We partnered with Treasury Inspector General for Tax Administration (TIGTA), on a data driven
approach and analyzed two sets of data as they relate to our scope.
The scope of our review included COVID-19 pandemic-related federal contracts reported in
USAspending through September 30, 2020 with COVID-19 Disaster Emergency Fund Code values
(“L”, “M”, “N”, “O”, and “P”). For contracts reporting in Federal Procurement Data System (FPDS),
all awards with the National Interest Action (NIA) Static Report on COVID-19 as of September 30,
2020. The FPDS COVID-19 NIA Static Report captures all contracting actions where the NIA value
is ‘COVID-19 2020’ (code P20C).  The NIA code is used to track COVID-19 spending. However,
it only applies to procurement actions (i.e., contracts) and is not necessarily tied to COVID-19
supplemental appropriations (unlike the USA Spending COVID-19 report).
First-Time Federal Contractor
We defined a first-time federal contractor as any vendor that did not have a contract with the
federal government in the last ten fiscal years, or between October 1, 2009 and September 30,
2019.
Criteria Review
We reviewed the following regulations and applicable guidance:
a. Coronavirus, Aid, Relief, and Economic Security Act, March 27, 2020;
b. Federal Acquisition Regulation (FAR), March 10, 2021;
c. Office of Management and Budget M-20-18, Managing Federal Contract Performance Issues
Associated with the Novel Coronavirus (COVID-19), March 20, 2020; and
d. Office of Federal Procurement Policy Emergency Acquisitions Guide, January 14, 2011.
Survey Selection
Based on our observations in the contract data, we conducted a survey on contracts with
associated deobligations and contracts with limited competition, using “Only One Source-Other
(FAR 6.302-1 Other)” to obtain feedback from Contracting Officers on these two areas. We
selected two non statistical samples.
a. The deobligations sample included those contracts within the scope period issued to first-
time federal government contractors that fall into one of the top five North American Industrial

OBSERVATIONS: FISCAL YEAR 2020 COVID-19 FEDERAL CONTRACTING  |  AUGUST 4, 2021
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Classification System (NAICS) codes by count. For each of the five NAICS Codes, we selected the top
three to five largest deobligations.
The “Only One Source-Other (FAR 6.302-1 Other)” sample included those contracts within our scope
period that have an “Other than Full and Open Competition” field identified as “Only One Source-
Other (FAR 6.302-1 Other). We decided to select all contracts greater than $100,000 and then
judgmentally select contracts under the $100,000 that were for goods and services that are likely,
based on our professional judgement, to have more than one source available.
After selecting our sample, we reached out to each of the contracting agency’s Office of Inspector
General (OIG) for coordination and deconfliction purposes. We had some modifications due to their
feedback to the sample.
We sent surveys to each of the heads of contracting activity for each of the respective contracts within
our sample to gain an understanding about either the justification and use of “Only One Source-Other
(FAR 6.302-1 Other)” or the reason for deobligating funds on the contract.
For the limited competition sample, we contacted 10 agencies about 24 contracts and received
responses from five. These five agencies provided feedback on 14 contracts.
b. We received responses from the Departments of Veterans Affairs, Justice, State, Interior, and also
from the Department of Labor Office of the Inspector General, whom had a contract in our sample.
For the deobligation sample, we contacted nine agencies about 23 contracts and received responses
from six agencies.
a. We received responses from the Departments of Veterans Affairs, Justice, Homeland Security,
Defense (the Army and Navy), Agriculture, and Transportation.
b. These six agencies provided feedback on 21 contracts.
c. Note: We removed three contracts during review of responses, since the response indicated the
contract did not fit the parameters of the sample, resulting in a total of 18 contracts from five
agencies in our synopsis.
Data Reliability
TIGTA performed a data reliability assessment for the four primary data sources used to support our
conclusions: (1) USA Spending COVID-19 Profile Page Contract Prime Award Summaries Table, (2)
Federal Procurement Data System (FPDS) National Interest Action (NIA) Static Report on COVID-19,
(3) Federal Procurement Data System (FPDS) Ad Hoc Report on Vendor DUNS Number and Dollars
Obligated, and (4) System for Award Management (SAM) Entity Management Extracts Sensitive Data
Package. The data from these four sources were found to be accurate and reliable.
Standards
We conducted the review in accordance with the Quality Standards for Inspection and Evaluation
issued by the Council of the Inspectors General on Integrity and Efficiency.

OBSERVATIONS: FISCAL YEAR 2020 COVID-19 FEDERAL CONTRACTING  |  AUGUST 4, 2021
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POINT OF CONTACT
PRAC
Brooke Holmes, Associate Director of Oversight and Accountability
Brooke.Holmes@cigie.gov
REPORT FRAUD, WASTE, ABUSE, AND MISMANAGEMENT
To report allegations of fraud, waste, abuse, or misconduct
regarding funds or programs covered within the following Acts,
please go to the PRAC website at PandemicOversight.gov.
@COVID_Oversight
CARES Act
Paycheck Protection Program and Health Care
Enhancement Act
Families First Coronavirus Response Act
Coronavirus Preparedness and Response
Supplemental Appropriations Act
Coronavirus Response and Relief Supplemental
Appropriations Act, 2021
American Rescue Plan Act of 2021
A Committee of the
 Council of the Inspectors General
on Integrity and Efficiency

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