GAO-22-105380, COVID-19: Agencies Are Taking Steps to Improve Future Use of Defense Production Act Authorities
- Issuer
- Government Accountability Office
- Document type
- Report
- Date
- 2021-12-16
Summary
GAO-22-105380 is a U.S. Government Accountability Office report to congressional committees dated December 16, 2021, on federal agencies' use of Defense Production Act (DPA) authorities during COVID-19. It reports that agencies used the DPA and other actions over 100 times through September 2021 to prioritize contracts, fund domestic production projects and enter partnerships with private companies. The report states that the CARES Act and other supplemental appropriations provided at least $11 billion for DPA purchases and other actions. It finds that HHS has established offices for DPA work but has not developed a plan for using DPA to address future medical supply needs, as GAO recommended in November 2020. The report also covers background on DPA Titles I, III and VII.
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Full text
United States Government Accountability Office
Report to Congressional Committees
COVID-19
December 2021
Agencies Are Taking
Steps to Improve
Future Use of
Defense Production
Act Authorities
GAO-22-105380
December 2021
COVID-19
Agencies Are Taking Steps to Improve Future Use of
Defense Production Act Authorities
Highlights of GAO-22-105380, a report to
congressional committees
Why GAO Did This Study What GAO Found
COVID-19 put the U.S. health care Federal agencies used the Defense Production Act (DPA) and other actions over
system under severe strain, affecting 100 times to help address COVID-19 medical supply needs through September
federal agencies’ ability to buy and 2021. Agencies used DPA authorities to 1) prioritize contracts so those orders
maintain critical medical supplies to can get preference over others, (2) fund projects to expand domestic production
help treat patients and protect health of supplies, and (3) enter into partnerships with private companies (see figure).
care workers. The federal
government’s COVID-19 response Defense Production Act and Other Actions, March 2020-September 2021
included a significant use of DPA
authorities, as well as other actions
focused on expanding domestic
production of medical supplies to help
stabilize the medical supply chain. The
CARES Act and other supplemental
appropriations provided at least $11
billion for DPA purchases and other
actions related to COVID-19 or other
public health emergencies through
September 2025.
The CARES Act includes a provision
for GAO to monitor funds provided for
the COVID-19 pandemic. This report Other actions refer to production expansion projects not executed under DPA Title III authority.
a
summarizes federal agencies’ use of
the DPA to respond to COVID-19 and Representatives from companies that received DPA awards generally stated that
industry perspectives, as well as the use of the DPA gave them timely access to raw materials and supplies and
implementation challenges and steps helped them expand production faster than they could have on their own.
agencies have taken to address these
challenges. This report summarizes GAO previously reported that federal agencies faced challenges using DPA
information contained in reports issued authorities. Agencies have taken some steps to address these obstacles as well
in June, September, and November as one of two recommendations GAO made.
2020, and January, March, April and • The Department of Health and Human Services (HHS), which had limited
July 2021, and provides data updates DPA experience prior to COVID-19, reported establishing offices to review
through September 2021.
DPA priority rating requests and to manage industrial base expansion efforts.
However, it has not developed a plan for using DPA and other actions to
What GAO Recommends address future medical supply needs as GAO recommended.
In November 2020, GAO • The Department of Defense, which has been providing significant contracting
recommended that HHS identify how support to HHS, documented procedures to facilitate the timely transfer of
the DPA and other actions will be used funds between the two agencies and established a permanent office in
to increase production of domestic October 2020 to support interagency needs.
medical supplies and reduce U.S.
reliance on foreign sources. HHS • The Office of Management and Budget established a web page to collect and
agreed but has not yet determined publish data on DPA priority ratings, which addressed a prior GAO
what specific actions it will take. recommendation concerning transparent reporting of these DPA actions.
Additional DPA and other actions are expected through 2025 as agencies use
$10 billion appropriated in the American Rescue Plan Act for medical supply
View GAO-22-105380. For more information,
contact W. William Russell at (202) 512-4841
investments and implement a September 2021 national strategy to strengthen
or RussellW@gao.gov the domestic medical industrial base. GAO plans to monitor agencies’ efforts.
United States Government Accountability Office
Contents
Letter 1
Background 3
Federal Agencies Used DPA and Other Actions to Help Address
COVID-19 Medical Supply and Vaccine Needs 7
Agencies Are Taking Some Actions to Address Challenges They
Experienced When Using DPA Authorities 12
Agency Comments 17
Appendix I GAO Contact and Staff Acknowledgments 21
Related GAO Products 22
Table
Table 1: Executive Orders Related to the Defense Production Act
and Medical Supplies, March 2020-September 2021 6
Figures
Figure 1: Defense Production Act Priority-Rating Actions by
Supply Type, March 2020 – September 2021 7
Figure 2: Defense Production Act and Other Actions to Increase
Domestic Medical Supply Production, March 2020–
September 2021 9
Figure 3: Domestic Production Expansion Projects for Selected
Medical Supply Types, March 2020–September 2021 10
Page i GAO-22-105380 COVID-19 Defense Production Act
Abbreviations
COVID-19 Coronavirus Disease 2019
DOD Department of Defense
DPA Defense Production Act
FEMA Federal Emergency Management Agency
HHS Department of Health and Human Services
PPE personal protective equipment
Stafford Act Robert T. Stafford Disaster Relief and Emergency
Assistance Act
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Page ii GAO-22-105380 COVID-19 Defense Production Act
Letter
441 G St. N.W.
Washington, DC 20548
December 16, 2021
Congressional Committees
The emergence of the Coronavirus Disease 2019 (COVID-19) pandemic
put the U.S. health care system under severe strain. The federal
government struggled to meet medical supply needs, in part, because the
U.S. is dependent on foreign sources for some medical supplies, such as
surgical gowns and nitrile gloves, and global demand for these items
surged during the pandemic. In March 2020, within one month of the start
of the pandemic, the Department of Health and Human Services (HHS)
had distributed most of the personal protective equipment (PPE) supplies
in the Strategic National Stockpile to states and other entities. 1
Additionally, the Federal Emergency Management Agency (FEMA)
received requests for millions of N95 respirators and gloves—from states,
local, tribal, and territorial governments—that far exceeded domestic
supply.
As early as March 2020, federal agencies began using authorities
delegated under the Defense Production Act (DPA) of 1950 to address
medical supply chain needs. According to federal agencies, the extent of
use of the DPA in a medical context was unprecedented. Among other
things, the authorities allow federal agencies to:
• place priority ratings on medical supply contracts so that agencies’
orders can get preference over others, including those by private
industry organizations;
• provide incentives or investments to private industry to expand
domestic production of medical supplies and reduce foreign
dependence; and
• enter into public-private agreements with industry to coordinate
emergency responses. 2
1The Strategic National Stockpile is the largest federally owned repository of
pharmaceuticals, critical medical supplies, federal medical stations, and medical
equipment available for rapid delivery to support the response to a public health
emergency when state and local supplies are depleted.
2Pub. L. No. 81-774 (1950), codified at 50 U.S.C. App. §§ 4501 et seq., as amended.
Page 1 GAO-22-105380 COVID-19 Defense Production Act
As of September 2021, Congress provided agencies at least $11 billion in
funding—through the July 2020 CARES Act and other supplemental
legislation—for DPA purchases and other actions related to COVID-19 or
future pandemics through fiscal year 2025. 3 For purposes of this report,
other actions refers to industrial base expansion projects for medical
supplies that have similar goals but were not executed under the DPA
Title III authority.
The CARES Act includes a provision for GAO to conduct monitoring and
oversight of the use of funds made available to prepare for, to respond to,
and to recover from the COVID-19 pandemic. 4 We have issued nine
products relating to COVID-19 oversight, listed in the Related GAO
Products section, which include products with information on agencies’
use of the DPA since March 2020. This report summarizes our key
observations from those reports and provides updated data we collected
since July 2021 related to (1) federal agencies’ use of the DPA and other
actions to respond to COVID-19 and industry perspectives and (2) steps
agencies have taken to address DPA implementation challenges.
To describe federal agencies’ use of the DPA and other actions to
respond to COVID-19, we updated analyses from our prior work on DPA
priority ratings, domestic production projects, and public-private
agreements with industry to cover the time period from March 2020
through September 2021. We also summarized contractor perspectives
that we previously collected through written responses from six vaccine
manufacturers, and semi-structured interviews with representatives from
six companies that were executing DPA Title I priority-rated contracts, a
domestic production expansion project, or both. The companies we
3The CARES Act provided the Department of Defense (DOD) $1 billion specifically for
DPA purchases to prevent, to prepare for, and to respond to COVID-19 domestically or
internationally. Pub. L. No. 116-136, title III, division B (2020). DOD used approximately
$200 million for medical supplies, $100 million for a loan program managed by the U.S.
Development Finance Corporation, and the remainder to offset financial distress in the
defense industrial base. The American Rescue Plan Act of 2021 appropriated $10 billion
to support the use of the DPA for medical supplies. Pub. L. No. 117-2, title III, § 3101
(2021). As of September 30, 2021, HHS also used approximately $2.9 billion in funding
from the following legislation for domestic production investments: Coronavirus
Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-
123 (2020), and Paycheck Protection Program and Health Care Enhancement Act, Pub.
L. No. 116-139 (2020).
4Pub. L. No. 116-136, § 19010 (2020).
Page 2 GAO-22-105380 COVID-19 Defense Production Act
selected for this nongeneralizable sample varied in size, federal
contracting experience, and the types of products they produced.
To determine steps agencies have taken to address DPA implementation
challenges, we summarized information from our previous reports,
interviewed agency officials and collected documentation related to efforts
to address the challenges. We also assessed the status of two previous
recommendations we made to agencies regarding the use of DPA
authorities. More detailed information on our objectives, scope, and
methodology for the nine products can be found in each of the reports
cited in the Related GAO Products section.
We conducted the work on which this product is based 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.
During the Korean War, Congress enacted the Defense Production Act of
Background 1950 to ensure the availability of industrial resources to meet the
Department of Defense’s (DOD) needs. The DPA facilitates the supply
and timely delivery of products, materials, and services to military and
civilian agencies in times of peace as well as in times of war. Since it was
enacted in 1950, Congress amended the DPA to broaden its definition
beyond military application and expanded coverage to include crises
resulting from natural disasters or human-caused events not amounting to
an armed attack on the U.S. The definition of national defense in the DPA
has been amended to include emergency preparedness activities
conducted pursuant to Title VI of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (Stafford Act) and critical infrastructure
Page 3 GAO-22-105380 COVID-19 Defense Production Act
protection and restoration. 5 In 2018, Congress reauthorized the DPA
through September 30, 2025. 6
The three major authorities of the DPA currently in effect are Titles I, III,
and VII.
• Title I: Priorities and Allocation Authority. Title I authorizes the
President to require priority performance on contracts or orders and
allocate materials, services, and facilities as necessary or appropriate
to promote the national defense. The President has delegated Title I
authority to various agency heads, including at the Departments of
Commerce, Defense, and HHS, among others. The authority each
department holds is based upon its area of expertise in different
sectors such as industrial resources, water, or health resources. Title I
authority allows priority-rated contracts or orders to take preference
over any other unrated contracts or orders if a contractor cannot meet
all required delivery dates.
In 2008, we found that some agencies did not have a system or
regulations in place for the priorities and allocations authority. 7 We
recommended that several civilian agencies develop and implement a
system for using the priorities and allocations authority for each
agency’s respective area of expertise. Since then, each of these
agencies developed its own priorities and allocations systems. We
also recommended that, to maximize effective use of the priorities and
allocations authority, the Secretaries at the Departments of
Agriculture, Energy, HHS, Homeland Security, and Transportation
consider, in advance of an emergency, approving programs and
placing priority ratings on contracts for items that are likely to be
needed in an emergency. Agencies later informed GAO that
5The Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended,
permits the President to declare a major disaster after a state’s governor or chief
executive of an affected Indian tribal government—a governing body of an Indian or
Alaska Native tribe, band, nation, pueblo, village, or community that is federally
recognized—finds that the emergency or major disaster is of such a severity and
magnitude beyond the state, Indian tribal government, and local government’s capabilities.
42 U.S.C. § 5170. 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.
6Pub. L. No. 115-232, §1791 (2018).
7GAO, Defense Production Act: Agencies Lack Policies and Guidance for Use of Key
Authorities, GAO-08-854 (Washington, D.C.: June 26, 2008).
Page 4 GAO-22-105380 COVID-19 Defense Production Act
processes and procedures for placing priority ratings on contracts
prior to an emergency were either in place or being assessed.
• Title III: Expansion of Productive Capacity and Supply. Title III
authorizes the President to provide a variety of financial incentives—
loans, loan guarantees, direct purchases, and purchase
commitments—to companies to meet a variety of national defense
goals, including maintaining, restoring, and expanding the domestic
industrial base. The financial incentives may be used only when
certain conditions are met. For example, purchase commitments may
generally be made when, among other conditions, the President finds
that the U.S. industry cannot reasonably be expected to provide the
capability for the needed industrial resources, material, or critical
technology in a timely manner. Title III financial incentives can help
reduce the risks for domestic suppliers associated with the
capitalization and investments required to establish, expand, or
preserve production capabilities.
Executive Order 13603, signed in 2012, delegated the authority to
implement Title III actions to the Secretary of Defense and the head of
each agency engaged in procurement for the national defense. It also
designated the Secretary of Defense as the DPA Fund Manager for
the government. 8 According to DOD officials, the Deputy Assistant
Secretary of Defense for Industrial Policy provides management,
direction, and oversight of the DPA Title III program, on behalf of the
Under Secretary of Defense for Acquisition and Sustainment. The Air
Force serves as the Executive Agent for DOD’s Title III program and
maintains a program office to execute the authority under the
guidance of the Office of the Secretary of Defense.
• Title VII: General Provisions. Title VII provides for a range of
authorities, which include giving private firms that participate in
voluntary agreements for preparedness programs limited protection
from aspects of the antitrust laws. Title VII also provides for
investigative authority to collect information on the U.S. industrial
base. For purposes of this report, we focused on the Title VII authority
to enter into voluntary agreements for preparedness programs with
industry representatives.
8Exec. Order No. 13603, 77 Fed. Reg. 16651 (March 22, 2012).
Page 5 GAO-22-105380 COVID-19 Defense Production Act
Since March 2020, eight executive orders related to the DPA and COVID-
19 medical supply chain issues have been issued, as shown in table 1.
Table 1: Executive Orders Related to the Defense Production Act and Medical Supplies, March 2020-September 2021
Executive order
number Datea Description
13909 March 2020 Provides authority to the Secretary of Health and Human Services to determine, in
consultation with the Secretary of Commerce and the heads of other executive
departments and agencies, proper nationwide priorities and allocations of all health
and medical resources needed to respond to Coronavirus Disease 2019 (COVID-19)
within the United States
13910 March 2020 Addresses prevention of hoarding and price gouging of resources, such as personal
protective equipment and disinfecting and sanitizing products
13911 March 2020 Provides the Secretary of Health and Human Services and the Secretary of Homeland
Security the authority to expand production capacity of resources, such as personal
protective equipment and ventilators. Delegation of Defense Production Act Title I and
VII authorities are also provided.b
13922 May 2020 Provides the Chief Executive Officer of the United States International Development
Finance Corporation the authority to, among other things, make loans to create,
maintain, protect, expand, and restore the domestic industrial base capabilities,
including supply chains within the United States and its territories
13944 August 2020 Provides authority to the Secretary of Health and Human Services to determine
priorities and allocations of essential medicines, medical countermeasures, and critical
inputs, including active pharmaceutical ingredients
13987 January 2021 Establishes the position of COVID-19 Response Coordinator as a direct report to the
President and establishes the position of deputy response coordinator
14001 January 2021 Requires immediate assessments of selected medical supplies and the ability of the
domestic industrial base to produce these supplies; requires development of a strategy
to design, build, and sustain a long-term capability in the United States to manufacture
supplies for future pandemics and biological threats by July 2021
14017 March 2021 Requires 100-day supply chain risk assessments for the public health and defense
sectors, among others
Source: GAO analysis of presidential executive orders | GAO-22-105380
a
Exec. Order No. 13909, 85 Fed. Reg.16227 (Mar. 23, 2020); Exec. Order No. 13910, 85 Fed. Reg.
17001 (Mar. 26, 2020); Exec. Order No. 13911, 85 Fed. Reg. 18403 (Apr. 1, 2020); Exec. Order
No.13922, 85 Fed. Reg. 30583 (May 19, 2020); Exec. Order No. 13944, 85 Fed. Reg. 49929 (Aug.
14, 2020); Exec. Order No. 13987, 86 Fed. Reg. 7019 (Jan. 25, 2021); Exec. Order 14001, 86 Fed.
Reg. 7219 (Jan. 26, 2021); and Exec. Order 14017, 86 Fed. Reg. 11849 (Mar. 1, 2021).
b
Title VII provides for a range of authorities, which include giving private firms that participate in
voluntary agreements for preparedness programs limited protection from aspects of the antitrust laws,
among other things.
Page 6 GAO-22-105380 COVID-19 Defense Production Act
Federal agencies used DPA and other actions over 100 times to respond
Federal Agencies to COVID-19 and stabilize the medical supply chain through September
Used DPA and Other 2021. Agencies used DPA Title I priority ratings to expedite the delivery of
supplies to help replenish the U.S. Strategic National Stockpile and
Actions to Help support vaccine development. Agencies also made investments with
Address COVID-19 commercial companies using DPA Title III authority and through other
actions to expand domestic production capacity for a range of medical
Medical Supply and supplies. Further, FEMA established a voluntary agreement using DPA
Vaccine Needs Title VII authority to help the federal government coordinate with industry
partners for the COVID-19 response and for potential future pandemics.
Types of Medical Supplies Federal agencies used priority ratings for medical supplies like N95
with Priority-Rated respirators and ventilators early in the pandemic response, then shifted to
focus on COVID-19 vaccines, therapeutics, and diagnostics. As shown in
Contracts Shifted
figure 1, agencies placed 73 priority ratings on contracts and orders
throughout the Pandemic during the pandemic, as of September 2021. Most of these ratings were
placed in 2020 when medical supply manufacturers were addressing PPE
shortages, and other manufacturers were beginning to develop COVID-19
vaccines, therapeutics, and diagnostic supplies.
Figure 1: Defense Production Act Priority-Rating Actions by Supply Type, March 2020 – September 2021
a
Medical supplies include N95 respirators, ventilators, air purifying respirators, and goggles.
b
Vaccine supplies include syringes, vials, manufacturing equipment, and other items necessary to
support the production and delivery of Coronavirus Disease 2019 (COVID-19) vaccines.
c
Therapeutics being purchased include monoclonal antibodies, which are laboratory-made antibodies
that may potentially be used to prevent or treat COVID-19 infection.
d
Diagnostics include COVID-19 diagnostics and expansion products related to ancillary supplies of
diagnostics.
Page 7 GAO-22-105380 COVID-19 Defense Production Act
The majority of priority-rating actions through September 2020 were for
medical supplies, such as N95 respirators and ventilators. For example,
HHS and FEMA placed priority ratings on orders for over 800 million N95
respirators to support states and medical providers. HHS also placed
priority ratings on contracts for ventilators and other medical supplies to
help replenish the Strategic National Stockpile, which had exhausted its
inventory of certain supplies early in the pandemic.
Subsequently, agencies placed priority ratings on contracts relating to
vaccines, therapeutics, and COVID-19 diagnostics. For example,
agencies placed priority ratings on six vaccine manufacturing contracts
and additional ratings for monoclonal antibody therapeutics, which are
laboratory-made antibodies potentially used to prevent or treat COVID-19
infection.
According to most industry representatives we spoke with, these priority
ratings helped manufacturers expedite the delivery of critical supplies and
raw materials and helped support development of the vaccines. For
example, one company representative said that demand increased
significantly for meltblown material—a raw material for N95 respirators
and ventilators—in the spring of 2020. The company was able to place
priority-rated orders with its meltblown material manufacturer to ensure it
could meet the contractual delivery date. Additionally, vaccine
manufacturers told us that these priority ratings helped them maintain a
steady flow of supplies. However, one COVID-19 vaccine manufacturer
representative told us that priority ratings could constrain supplies for
other lifesaving medicines, such as the seasonal flu vaccine. 9
Federal Investments Are Federal agencies also invested in a range of projects to increase the
Increasing Domestic domestic production of medical supplies needed to support the COVID-19
response, and, in some cases, to reduce U.S. reliance on foreign
Production of Medical
manufacturers. Specifically, between March 1, 2020, and September 30,
Supplies 2021, DOD reported investing approximately $3.1 billion in 60 domestic
production expansion projects through DPA and other actions. Six of
these were DPA projects with approximately $200 million in award value.
The remaining 54 projects were other actions with about $2.9 billion in
award value. The companies are using the funding, among other things,
to procure additional equipment and materials as well as to optimize
9 GAO, COVID-19: Efforts to Increase Vaccine Availability and Perspectives on Initial
Implementation, GAO-21-443 (Washington, D.C.: Apr. 14, 2021).
Page 8 GAO-22-105380 COVID-19 Defense Production Act
production at existing facilities. Figure 2 shows the number of projects by
supply type and the associated dollar value.
Figure 2: Defense Production Act and Other Actions to Increase Domestic Medical
Supply Production, March 2020–September 2021
Note: Other actions refers to industrial base expansion projects for medical supplies that have similar
goals but were not executed under Defense Production Act Title III authority. Of the 60 projects listed
above, six were DPA projects and the remaining 54 were other actions.
a
Testing materials include Coronavirus Disease 2019 (COVID-19) tests, and ancillary materials, such
as swabs or swabsticks used to perform tests.
b
Vaccine supplies include syringes, vials, manufacturing equipment, and other items necessary to
support the production and delivery of COVID-19 vaccines.
According to DOD, 19 projects have been completed as of September
2021. Projects are considered complete when the companies begin
producing supplies at the agreed upon higher rate of production. Twenty-
nine more projects are expected to be completed between October 2021
and September 2022, and the remaining 12 projects are expected to be
completed by September 2024.
For some supplies, these projects expanded an existing domestic
industrial base to meet surging demand during the pandemic. For
example, according to federal estimates prior to 2020, domestic N95
respirator manufacturers were able to meet a majority of U.S. demand,
primarily from industrial sectors including construction and mining.
Domestic manufacturers pivoted to producing N95 respirators for health
care workers but needed additional investments through federal and
private funding to further increase production. Other projects are aimed at
further developing a domestic industrial base to help reduce reliance on
Page 9 GAO-22-105380 COVID-19 Defense Production Act
foreign manufacturers, such as for nitrile gloves. Figure 3 describes
investments made to increase the domestic production of N95 respirators
and nitrile gloves.
Figure 3: Domestic Production Expansion Projects for Selected Medical Supply Types, March 2020–September 2021
We previously reported in March 2021 that medical supply company
representatives we interviewed generally stated that the DPA and other
actions were useful in helping them expand domestic production. For
example, representatives from five of the six companies we interviewed
that received funding for domestic production expansion projects said the
funding allowed their companies to expand production faster than they
could have on their own. Representatives at three companies further
stated that their companies would not have made the investments to
expand production without receiving government funding.
Representatives from all six companies said that their companies
experienced some minor issues navigating the federal government’s
procurement process, such as developing and submitting white papers to
propose a project, negotiating the final terms and conditions of their
contracts or agreements, and submitting invoices for payment. However,
some representatives said that agency officials were helpful in answering
questions. Agency officials also provided training and documents to help
these companies through the priority rating process.
Page 10 GAO-22-105380 COVID-19 Defense Production Act
FEMA Created Voluntary FEMA established a voluntary agreement to enhance coordination and
Communication Channels cooperation with private sector manufacturers, distributors, and other
industry representatives using DPA Title VII authorities on August 17,
to Share Information and
2020. According to FEMA officials, this agreement created
Coordinate Distribution of communication channels with the private sector not present at the start of
Medical Supplies with the pandemic. Officials said that FEMA now has an established list of
Industry industry contacts that the agency can communicate with to send requests
for information or coordinate a pandemic response through 2025, the
duration of the agreement. Additionally, agency officials said that FEMA is
now familiar with how to create a Title VII agreement and could establish
similar agreements more quickly in the future if needed.
FEMA established five working groups—PPE, medical devices,
diagnostic test kits, drug products, and medical gases—to consider next
steps for coordinating manufacturer and distributor efforts to respond to
pandemics through 2025. Some of these working groups have concluded
their activities.
• FEMA published a PPE plan on December 8, 2020. This plan allows
federal agencies—including FEMA, HHS, and DOD—to gather data
from private-sector representatives to inform the government’s
demand estimates for PPE and to coordinate actions to distribute
supplies, among other things. According to FEMA officials, the PPE
working group then held a series of meetings through spring 2021 to
develop findings and recommendations and shared these with other
federal agencies.
• FEMA officials stated that the medical devices, diagnostic test kit, and
drug products working groups held meetings between June and
August 2021 to discuss requirements for these items. Officials said
these working groups did not identify any issues requiring continued
meetings at this time.
• According to FEMA officials, the medical gases working group is
focusing its efforts on medical oxygen based on its preliminary
discussions. Officials also stated that, as of September 2021, the
group plans to hold meetings through fall 2021 and develop
recommendations and an implementation plan for executing the
recommendations.
Page 11 GAO-22-105380 COVID-19 Defense Production Act
HHS, FEMA, and DOD identified challenges while executing DPA
Agencies Are Taking authorities, including gaps in DPA expertise and administrative obstacles
Some Actions to to interagency support. Agency officials stated that they have taken some
steps to address these and other challenges as well as one of two
Address Challenges previous GAO recommendations. Agencies are also working on plans to
They Experienced further mitigate medical supply chain risks, such as using $10 billion from
the American Rescue Plan Act to expand and sustain the industrial base
When Using DPA for testing and diagnostics, vaccines, and PPE.
Authorities
HHS and FEMA Are The severity of the pandemic and the surge in demand for medical
Addressing DPA Expertise supplies surpassed HHS’s capacity to respond quickly to COVID-19 in
early 2020, including using DPA authorities to address medical supply
Gaps
needs. For example, in September and November 2020, we reported that
HHS officials said the department’s contracting workforce had limited
experience with and training on how to use DPA authorities. Since March
2020, HHS has relied on DOD organizations for contracting support to
execute DPA domestic production expansion projects for key medical
supplies like N95 respirators.
According to HHS officials, the agency has taken some initial steps to
address its DPA expertise and staffing challenges. For example, an HHS
official told us that a DPA office was created within the Office of the
Assistant Secretary for Preparedness and Response in June 2020. This
office is expected to be responsible for managing and centralizing all
department-related DPA activities. HHS officials also said an industrial
base expansion program office was created in September 2020. This
office is expected to manage requirements for medical supply domestic
production expansion projects. As of September 30, 2021, HHS had not
provided us with information about the staffing for these organizations.
Senior DOD and HHS officials signed a memorandum of understanding in
May 2021 to establish a framework whereby the agencies will identify a
path to enhance HHS’s own capabilities while incrementally reducing
DOD’s support. This memorandum is in effect through September 2023.
According to agency officials, progress on implementing this
memorandum has been delayed due to the resurgence of COVID-19
cases, among other reasons. The two agencies were supposed to
develop a 90 day transition plan by August 2021. However, as of October
2021, this plan had not been completed.
Page 12 GAO-22-105380 COVID-19 Defense Production Act
FEMA also identified gaps in its DPA expertise. In a January 2021 self-
assessment of its COVID-19 response, the agency identified lack of
trained, permanent personnel with expertise to address technical supply
chain issues as a major operational gap. 10 Specifically, it noted that the
FEMA DPA Program Office consisted of four full-time employees. The
team was given 26 additional federal employees from DOD, HHS, and
FEMA during the COVID-19 response, but only some were familiar with
DPA authorities and many required DPA training. FEMA’s assessment
recommended taking steps to support the DPA office in times of need,
such as developing a plan to recruit and train staff and formalizing an
interagency process to allow staff with DPA expertise from other federal
agencies to support FEMA.
As of October 2021, FEMA officials stated that 10 FEMA employees have
been identified to offer surge support to the DPA office in a future
emergency. FEMA has also started discussions with other federal
agencies to establish memoranda of agreement for interagency staffing
support.
DOD Improved Its Ability Based upon its experience early in the pandemic, DOD took two actions
to Provide Interagency to improve the manner in which it supports other federal agencies during
COVID-19 and potential future crises.
Support
• First, in June 2020, the Under Secretary of Defense for Acquisition
and Sustainment testified that DOD had difficulty facilitating the timely
transfer of funding from other agencies to DOD for execution. 11 This
included the transfer of funds from HHS to DOD to award other
actions for medical supply domestic production expansion projects.
To address this challenge, the Under Secretary of Defense for
Acquisition and Sustainment stated in June 2020 that DOD and HHS
had assessed the interworking of the Economy Act and how to legally
assist each other in acquisition and distribution of funds. DOD formally
documented the interagency process for transferring and executing
funds in a handbook, which was last updated in October 2021.
10 Federal Emergency Management Agency, Pandemic Response to Coronavirus
Disease 2019 (COVID-19) Initial Assessment Report (January 2021).
11 House Committee on Armed Services. “Department of Defense COVID-19 Response to
Industrial Base Challenges.” Wednesday, June 10, 2020. This transfer of funding was
generally made through orders under the Economy Act. 31 U.S.C. § 1535.
Page 13 GAO-22-105380 COVID-19 Defense Production Act
• Second, as other federal agencies turned to DOD for assistance at
the start of the pandemic, DOD recognized that it needed to centralize
its contracting support for the COVID-19 response. DOD initially
established the Joint Acquisition Task Force to be the single point of
entry to the DOD acquisition enterprise, in support of FEMA’s and
HHS’s COVID-19 response efforts.
On October 13, 2020, DOD replaced the Joint Acquisition Task Force
with a permanent office, the Defense Assisted Acquisition Cell, to
provide policy, guidance, and oversight for current and future DOD
support to interagency partners. The office is located within the Under
Secretary of Defense for Acquisition and Sustainment’s Joint Rapid
Acquisition Cell and will continue to serve as the single entry point for
urgent interagency requests for DOD assisted acquisition.
Agencies Are Considering Federal agencies recognized the importance of maintaining awareness of
the Effects of Priority the effect of priority ratings on suppliers and took action to enhance
coordination to avoid supply chain disruptions. We previously reported
Ratings on Supply Chains
one example of a potential supply chain disruption related to priority
ratings. An HHS official told us that priority ratings were placed on
multiple ventilator and N95 respirator contracts. Ventilators and N95
respirators share a common raw material—meltblown fabric, which was in
short supply early in the pandemic—and the official said more than 10
companies with priority ratings were trying to obtain this material at the
same time. To avoid material shortages, HHS officials worked with the
ventilator and N95 companies to identify alternative suppliers and
methods for producing meltblown fabric.
To address this problem, an HHS official stated that HHS, DOD, FEMA,
the Department of Commerce, and other agencies began meeting in the
spring of 2020 to discuss the potential effects of priority ratings on supply
chains. HHS’s DPA Program Office also developed a template to help
employees assess the potential effect of priority rating requests, such as
the impact to other contracts or suppliers.
According to HHS and FEMA officials, agencies are still meeting to
discuss the potential effect of priority ratings on medical and nonmedical
supply chains. For example, FEMA officials stated that agencies
discussed the effect that placing priority ratings on liquid oxygen contracts
for hospitals’ use might have on municipality water treatment sites or
military and other space launch sites that also use this product. HHS
officials also said that federal agencies met several times to ensure that
medical and firefighting communities had access to resin, which is used in
Page 14 GAO-22-105380 COVID-19 Defense Production Act
products such as syringes and firehoses. HHS officials stated that resin
production has been severely limited due to hurricanes and ice storms
over the last year in Texas and Louisiana, a region where most domestic
resin production occurs.
Agencies Are Taking In November 2020 we found that agencies did not comprehensively and
Actions to Improve consistently identify DPA priority ratings in the Federal Procurement Data
System. 12 There was no existing data field to allow agencies to indicate
Reporting on Their Use of
priority ratings electronically within the data system. Further, federal
DPA Priority Ratings agencies were not required to identify priority ratings. Without identifying
priority ratings in a single source, agencies were missing an opportunity
to promote transparency of federal actions and provide quality information
to support government-wide analysis of the efficacy of use of the DPA.
Therefore, we recommended that the Office of Management and Budget
direct the Office of Federal Procurement Policy to issue guidance to
federal agencies to identify DPA priority ratings. In response, in July
2021, the Office of Federal Procurement Policy created a page in its MAX
Information System, an Office of Management and Budget government-
wide collaboration site, to collect information on past and future COVID-
related DPA Title I awards. 13
Options to Further Mitigate Moving forward, the federal government is evaluating what actions it will
Medical Supply Chain take with regard to domestic production of medical supplies, including the
use of DPA authorities. For example, in March 2021, the American
Risks Using DPA
Rescue Plan Act appropriated $10 billion to support the use of the DPA
Authorities Are Being for medical supplies. 14
Considered
12GAO-21-108. The Federal Procurement Data System is a comprehensive, web-based
tool for agencies to report contract actions. It is a searchable database of contract
information that provides a capability to examine data across government agencies and
provides managers a mechanism for determining where contract dollars are spent.
13The Office of Management and Budget uses the MAX Information System to collect,
validate, analyze, model, collaborate with agencies on, and publish information relating to
its government-wide management and budgeting activities. For example, one of the end
products of the MAX system is the Budget of the United States Government, also known
as the President's Budget.
14 The American Rescue Plan Act provided $10 billion to carry out titles I, III, and VII of the
DPA. These amounts must generally “be used for the purchase, production (including the
construction, repair, and retrofitting of government-owned or private facilities as
necessary), or distribution of medical supplies and equipment (including durable medical
equipment) related to combating the COVID-19 pandemic.” Pub. L. No. 117-2, tit. III, §
3101, (2021).
Page 15 GAO-22-105380 COVID-19 Defense Production Act
HHS officials provided us with some details of how they plan to use over
$6 billion of this funding through fiscal year 2022:
• Vaccine supplies and materials. Approximately $3.4 billion is
targeted for projects to expand production of vials, syringes, and other
consumables and raw materials.
• PPE capacity and raw materials. Nearly $1.4 billion is targeted for
projects related to expanding or sustaining production of gloves,
gowns, and respiratory protection items.
• Testing capacity and raw materials. Over $1 billion is targeted for
projects to expand production of testing consumables, such as tips
and swabs, as well as at-home test kits, and other items.
• Platform technology and commercialization. $100 million is
targeted for the distributed production of drug substances and drug
products, biofabrication of key starting materials, and distributed
production of supportive care fluids.
• Program management and acquisition support. $225 million is
targeted for use by HHS to hire more personnel, enhance its technical
and supply chain analysis capabilities, and reimburse other agencies
for acquisition support.
Agency officials are coordinating with White House officials to define a
spend plan for the remaining funding through fiscal year 2025.
Additionally, in September 2021, federal agencies published a strategy in
response to Executive Order 14001, which considers how to design,
build, and sustain a medical domestic production capability. 15 This
strategy states that the domestic medical supply chain remains vulnerable
to future pandemics without transformational, long-term investment, and
reaffirms that a robust medical supply chain is critical to national security.
The strategy includes several recommendations to build resilience into
the medical supply chain so that the U.S. can be responsive to a variety
of possible disruptions, including two recommendations that specifically
mention DPA authorities.
• One recommendation calls for significant, sustained federal
investments in domestic medical supply manufacturing over the next
15 Departments of Defense, Health and Human Services, Homeland Security, Commerce,
State, and Veterans Affairs. National Strategy for a Resilient Public Health Supply Chain
(Washington, D.C.: Sept. 3, 2021); A Sustainable Public Health Supply Chain, Exec.
Order No. 14001, § 4, 86 Fed. Reg. 7219, 7220-21 (Jan. 21, 2021).
Page 16 GAO-22-105380 COVID-19 Defense Production Act
10 years, beyond funding already appropriated to respond to COVID-
19. As part of this recommendation, the strategy states that HHS
should determine the appropriate financial incentives, including the
use of DPA authorities for industrial base expansion.
• Another recommendation states that HHS’s Office of the Assistant
Secretary for Preparedness and Response and the Food and Drug
Administration should establish regular meetings with government
agencies and industry to identify problems that may delay providing
support in response to future public health emergencies and should
develop solutions to these problems. The recommendation further
states that DPA Title VII processes should complement other
coordination efforts with private industry to capture as many voluntary
private industry participants as possible and to avoid duplication in
effort. 16
In response to these two recommendations, HHS officials stated that they
are currently working to develop a policy for DPA use that will strengthen
America’s supply chains and domestic manufacturing. At this time, there
is no estimate or timeframe for the release of a strategy.
In November 2020, we made a similar recommendation that, as part of
federal efforts to reduce U.S. dependence on foreign manufacturers of
medical supplies, HHS should identify how the DPA and other actions will
be used to increase domestic production of medical supplies in the future.
HHS concurred with the recommendation and is working with the White
House and other agencies to determine how the remaining $4 billion in
American Rescue Plan funding will be used to expand or sustain the
medical industrial base. However, HHS has not yet determined how it will
use DPA authorities as part of its efforts to implement our
recommendation. We will continue to monitor HHS’s implementation
efforts.
We provided a draft of this report to DOD, FEMA, and HHS for comment.
Agency Comments Each agency provided technical comments that we incorporated in the
report, as appropriate.
16 One such coordination effort is the Critical Infrastructure Partnership Advisory Council,
which facilitates relationships between government agencies and representatives from
critical infrastructure owners and operators to discuss and support critical infrastructure
security and resilience efforts. There are 16 sectors covered under the council, including a
Health care and Public Health sector which is managed by HHS.
Page 17 GAO-22-105380 COVID-19 Defense Production Act
We are sending copies of this report to the appropriate congressional
committees, the Secretary of Health and Human Services; the Secretary
of Homeland Security; and the Secretary of Defense. In addition, the
report is available at no charge on the GAO website at
https://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-4841 or russellw@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to this
report are listed in appendix I.
W. William Russell
Director, Contracting and National Security Acquisitions
Page 18 GAO-22-105380 COVID-19 Defense Production Act
List of Committees
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 19 GAO-22-105380 COVID-19 Defense Production Act
The Honorable Bennie G. Thompson
Chairman
The Honorable John Katko
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
The Honorable Richard E. Neal
Chairman
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives
Page 20 GAO-22-105380 COVID-19 Defense Production Act
Appendix I: GAO Contact and Staff
Appendix I: GAO Contact and Staff
Acknowledgments
Acknowledgments
W. William Russell, (202) 512-4841 or russellw@gao.gov
GAO Contact
In addition to the contact named above, Cheryl Andrew, Assistant
Staff Director; Daniel Glickstein, Analyst in Charge; Matthew Crosby, Lori
Acknowledgments Fields; Kurt Gurka; Stephanie Gustafson; and Julia Kennon made key
contributions to this report. Other staff who made key contributions to the
products cited in this report are identified in the source products, which
are listed in the Related GAO Products section.
Page 21 GAO-22-105380 COVID-19 Defense Production Act
Related GAO Products
Related GAO Products
COVID-19: Additional Actions Needed to Improve Accountability and
Program Effectiveness of Federal Response. GAO-22-105051.
Washington, D.C.: October 27, 2021.
COVID-19: Continued Attention Needed to Enhance Federal
Preparedness, Response, Service Delivery, and Program Integrity.
GAO-21-551. Washington, D.C.: July 19, 2021.
COVID-19: Efforts to Increase Vaccine Availability and Perspectives on
Initial Implementation. GAO-21-443. Washington, D.C.: April 14, 2021.
COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its
Second Year. GAO-21-387. Washington, D.C.: March 31, 2021.
COVID-19: Critical Vaccine Distribution, Supply Chain, Program Integrity,
and Other Challenges Require Focused Federal Attention. GAO-21-265.
Washington, D.C.: January 28, 2021.
COVID-19: Urgent Actions Needed to Better Ensure an Effective Federal
Response. GAO-21-191. Washington, D.C.: November 30, 2020.
Defense Production Act: Opportunities Exist to Increase Transparency
and Identify Future Actions to Mitigate Medical Supply Chain Issues.
GAO-21-108. Washington, D.C.: November 19, 2020.
COVID-19: Federal Efforts Could Be Strengthened by Timely and
Concerted Actions. GAO-20-701. Washington, D.C.: September 21, 2020.
COVID-19: Opportunities to Improve Federal Response and Recovery
Efforts. GAO-20-625. Washington, D.C.: June 25, 2020.
(105380)
Page 22 GAO-22-105380 COVID-19 Defense Production Act
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