Actions Needed to Enhance Transparency and Oversight of Selected Awards (GAO-21-501)
Summary
A GAO report to congressional committees, GAO-21-501, dated July 2021, on COVID-19 contracting. It notes that Congress passed the CARES Act in March 2020 with provisions for federal contracting. GAO reports that as of March 2021 the Departments of Defense, Health and Human Services, and Homeland Security obligated at least $12.5 billion using other transaction agreements, a mechanism not subject to certain federal contract laws and requirements that allowed agencies to customize the agreements. Agencies cited the timeliness of awards as a major factor in using it. Its title states that actions are needed to enhance transparency and oversight of selected awards.
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Report to Congressional Committees
COVID-19
July 2021
CONTRACTING
Actions Needed to
Enhance
Transparency and
Oversight of Selected
Awards
GAO-21-501
July 2021
COVID-19 CONTRACTING
Actions Needed to Enhance Transparency and
Oversight of Selected Awards
Highlights of GAO-21-501, a report to
congressional committees
Why GAO Did This Study What GAO Found
In March 2020, Congress passed the In response to COVID-19, as of March 2021, the Departments of Defense,
CARES Act as part of the federal Health and Human Services, and Homeland Security obligated at least $12.5
response to COVID-19. The act had billion using a contracting mechanism that gave them the flexibility to quickly
certain provisions for federal respond to urgent pandemic needs. This mechanism—known as an other
contracting, including providing transaction agreement—is not subject to certain federal contract laws and
additional flexibilities. Contracting plays requirements but allowed the agencies to customize the agreements. Agencies
a critical role in the pandemic response cited the timeliness of awards as a major factor for using these agreements,
as agencies obligate billions of dollars including awards that accelerated COVID-19 vaccine manufacturing.
for goods and services.
The Department of Defense used this mechanism to award $7.2 billion to
The act also included a provision for
consortium members—organizations and federal contractors organized around a
GAO to review federal contracting in
response to COVID-19. This report
specific topic area—through one consortium management firm (see figure).
examines, among other objectives, the Obligations on Other Transaction Agreements in Response to COVID-19 as of March 2021
extent to which the Departments of
Defense, Health and Human Services,
and Homeland Security—the only
agencies that reported using other
transaction agreements in response to
COVID-19 in the federal procurement
database—used such agreements,
including awards to consortia, and
oversight of such use.
GAO analyzed federal procurement
data as of March 2021; reviewed a
nongeneralizable sample of 15
agreements selected based on high
dollar amounts, agency, a mix of
products and services, among other
criteria; reviewed agency policies; and
interviewed agency officials. GAO’s analysis found two challenges with how the agencies tracked these
What GAO Recommends agreements due to limitations with the federal procurement database. First, the
three agencies did not properly identify at least $1.6 billion of the $12.5 billion as
GAO is making 14 recommendations COVID-19-related agreements. Second, the Department of Defense reported
to selected agencies, to improve the that one consortium management firm received $7.2 billion in agreements, as
transparency of agreement awards in noted above. In actuality, the management firm distributed nearly all of the
the federal procurement database and awarded dollars to five pharmaceutical companies, with each receiving $450
update policies to improve the million to $2 billion. The database is the only way for Congress and the public to
oversight of agreements awarded
track these obligations, but transparency is limited without accurate reporting.
through consortium management firms.
The agencies agreed with 11 of the Also, two agencies’ policies on other transaction agreements did not address the
recommendations and did not agree requirement for enhanced oversight of certain activities that consortium
with three of them. GAO continues to management firms may perform, potentially posing risks to the government.
believe the recommendations are valid, According to Office of Federal Procurement Policy guidance, these types of
as discussed in the report. activities require enhanced oversight because they can closely support tasks
fundamental to the public interest, such as the award of contracts. By not
View GAO-21-501. For more information,
contact Marie A. Mak at (202) 512-4841 or
addressing such oversight in their policies, agencies may not fully consider the
makm@gao.gov. range of actions they should take to mitigate risks of inappropriate influence for
government decisions.
United States Government Accountability Office
Contents
Letter 1
Background 6
Agencies Obligated At Least $12.5 Billion on OTAs to Quickly
Respond to COVID-19 but Did Not Accurately Report All
Awards 12
Majority of COVID-19 OTA Obligations Awarded through
Consortia, but Transparency and Oversight Are Limited 30
DOD, HHS, and DHS Obligated $4.7 Billion on Undefinitized
Contracts, but Contract Finalization Varied in Selected Cases 43
Conclusions 50
Recommendations for Executive Action 51
Agency Comments and Our Evaluation 54
Appendix I Objectives, Scope, and Methodology 60
Appendix II Comments from the Department of Defense 67
Appendix III Comments from the Department of Health and Human Services 70
Appendix IV Comments from the Department of Homeland Security 73
Appendix V Comments from the General Services Administration 77
Appendix VI GAO Contact and Staff Acknowledgments 78
Tables
Table 1: Dollars Obligated on OTAs Awarded by DOD and HHS
for COVID-19 Vaccine Development and Manufacturing
by Manufacturer as of March 14, 2021 22
Table 2: Methods Used by DOD and HHS in Awarding OTAs to
Help Expedite COVID-19 Vaccine Development and
Manufacturing 24
Page i GAO-21-501 COVID-19 Contracting
Table 3: Cited Benefits of Using OTAs for Selected Nonvaccine
COVID-19 Efforts Cited by DOD, HHS, and DHS 27
Table 4: DOD, HHS, and DHS Undefinitized Contract Obligations
in Response to Coronavirus Disease 2019 as of March
14, 2021 44
Table 5: Definitization Timing and Amounts Obligated for Selected
Undefinitized Contracts Awarded in Response to
Coronavirus Disease 2019 (COVID-19) 49
Table 6: Selected COVID-19 Other Transaction Agreements
(OTA) 62
Table 7: Selected COVID-19 Undefinitized Contracts 66
Figures
Figure 1: DOD, HHS, and DHS Other Transaction Agreement
Obligations in Response to Coronavirus Disease 2019 as
of March 14, 2021 13
Figure 2: Top COVID-19 Products and Services Acquired by
DOD, HHS, and DHS Using OTAs as of March 14, 2021 15
Figure 3: Coronavirus Disease 2019 (COVID-19) OTA Obligations
by Vaccine and Nonvaccine Awards from March 2020
through March 2021 16
Figure 4: Top Recipients of COVID-19 OTA Obligations as of
March 14, 2021 31
Figure 5: Notional Depiction of Relationships for One Type of
Consortium Other Transaction Agreement Model 32
Figure 6: Coronavirus Disease 19 Other Transaction Agreement
Awardees and Obligations in Federal Procurement
Database Compared to Awardees Who Actually
Received Funds as of March 14, 2021 35
Figure 7: Examples of Services Performed by Advanced
Technology International that May Closely Support
Inherently Governmental Functions for a Coronavirus
Disease 2019 Wearable Diagnostics Other Transaction
Agreement 40
Figure 8: Top COVID-19 Products and Services Acquired by
DOD, HHS, and DHS Using Undefinitized Contracts as of
March 14, 2021 45
Page ii GAO-21-501 COVID-19 Contracting
Abbreviations
ASPR Office of the Assistant Secretary for Preparedness
and Response
ATI Advanced Technology International
COVID-19 Coronavirus Disease 2019
DHS Department of Homeland Security
DOD Department of Defense
GSA General Services Administration
FAR Federal Acquisition Regulation
FPDS-NG Federal Procurement Data System-Next
Generation
HHS Department of Health and Human Services
OTA other transaction agreement
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Page iii GAO-21-501 COVID-19 Contracting
Letter
441 G St. N.W.
Washington, DC 20548
July 26, 2021
Congressional Committees
The Coronavirus Disease 2019 (COVID-19) pandemic has resulted in
catastrophic loss of life and substantial damage to the global economy. In
the U.S., there have been over 33 million reported cases and over
595,000 reported deaths due to COVID-19 as of July 2, 2021. 1 The
country also continues to experience serious economic repercussions.
Among other actions in response to this unprecedented global crisis, in
March 2020, Congress passed, and the President signed into law, the
CARES Act, which provided over $2 trillion in emergency assistance and
health care response for individuals, families, and businesses affected by
COVID-19. The CARES Act also provided supplemental appropriations
for federal agencies to respond to COVID-19 and included a number of
provisions related to federal contracting efforts to facilitate agencies’
responses to the pandemic. Federal contracting continues to play a
critical role in the response to COVID-19. Agencies have obligated nearly
$69 billion as of March 2021 through a variety of contracting mechanisms
to acquire vital goods and services.
One type of contracting mechanism, called other transaction agreements
(OTA), has played a significant role in the response to COVID-19. Unlike
procurement contracts, OTAs are not subject to federal acquisition
regulations. The CARES Act removed certain requirements related to the
use of OTAs for the Department of Health and Human Services (HHS)
and the Department of Defense (DOD), such as requirements related to
congressional reporting and who can approve certain OTAs. 2 The
CARES Act also relaxed certain limitations on DOD’s use of undefinitized
contracts—a procurement contract mechanism that is subject to federal
1Data on COVID-19 cases are based on aggregate case reporting to the Centers for
Disease Control and Prevention and include probable and confirmed cases as reported by
states and jurisdictions. The Centers for Disease Control and Prevention’s National Center
for Health Statistics COVID-19 death counts in the U.S. are based on provisional counts
from death certificate data, which do not distinguish between laboratory-confirmed and
probable COVID-19 deaths.
2Pub. L. No. 116-136, §§ 3301, 13006, 134 Stat. at 383, 522.
Page 1 GAO-21-501 COVID-19 Contracting
and DOD acquisition regulations and allows contractors to begin work
before all terms and conditions are finalized. 3
The CARES Act includes a provision for GAO to conduct a
comprehensive audit and review of federal contracting pursuant to
authorities provided in the act. 4 This report is one in a series of reports in
response to that provision. 5 This report examines the extent to which: (1)
selected agencies used OTAs in response to COVID-19 and what factors
contributed to their use, (2) these COVID-19 OTAs were awarded to
consortia and how agencies provided oversight, and (3) selected
agencies used and managed undefinitized contracts in response to
COVID-19.
To identify the extent to which selected agencies used OTAs in response
to COVID-19, we identified all the agencies that reported obligating
dollars through OTAs in response to COVID-19 in the Federal
3Pub. L. No. 116-136, § 13005, 134 Stat. at 522. See also Defense Federal Acquisition
Regulation Supplement subpt. 217.74.
4Pub. L. No. 116-136, § 19010. The CARES Act also requires GAO to, among other
things, conduct monitoring and oversight of the exercise of authorities, or the receipt,
disbursement, and use of funds made available by law to prepare for, respond to, and
recover from the pandemic. We regularly issue government-wide reports on the federal
response to COVID-19. For the latest report, see GAO, COVID-19: Continued Attention
Needed to Enhance Federal Preparedness, Response, Service Delivery, and Program
Integrity, GAO-21-551 (Washington, D.C.: July 19, 2021). Our next government-wide
report will be issued in October 2021 and will be available on GAO’s website at
https://www.gao.gov/coronavirus.
5For COVID-19 contracting reports, see GAO, VA COVID-19 Procurements: Pandemic
Underscores Urgent Need to Modernize Supply Chain, GAO-21-280 (Washington, D.C.:
June 15, 2021); COVID-19: Efforts to Increase Vaccine Availability and Perspectives on
Initial Implementation, GAO-21-443 (Washington, D.C.: Apr. 14, 2021); Defense
Production Act: Opportunities Exist to Increase Transparency and Identify Future Actions
to Mitigate Medical Supply Chain Issues, GAO-21-108 (Washington, D.C.: Nov. 19, 2020);
COVID-19 Contracting: Observations on Contractor Paid Leave Reimbursement Guidance
and Use, GAO-20-662 (Washington, D.C.: Sept. 3, 2020); and COVID-19 Contracting:
Observations on Federal Contracting in Response to the Pandemic, GAO-20-632
(Washington, D.C.: July 29, 2020). We plan to issue future products focused on contractor
paid leave reimbursement and agencies’ assessment of prospective vendors and
contracting lessons learned in response to the pandemic.
Page 2 GAO-21-501 COVID-19 Contracting
Procurement Database System-Next Generation (FPDS-NG), as of
March 14, 2021. 6 These agencies were:
• DOD; 7
• HHS—specifically, the Office of the Assistant Secretary for
Preparedness and Response (ASPR), which includes the Biomedical
Advanced Research and Development Authority; 8 and
• Department of Homeland Security (DHS)—specifically, the Countering
Weapons of Mass Destruction Office and the Transportation Security
Administration.
We analyzed the FPDS-NG data to identify the types of goods or services
procured by DOD, HHS, and DHS using OTAs. We assessed the
reliability of the FPDS-NG data by comparing them to OTA
documentation and agency-provided data and by performing electronic
testing, among other steps, and found the agencies did not accurately
report all COVID-19 OTA obligations, which we discuss in the report. We
identified additional COVID-19 OTA obligations through agency-provided
data and documents. After we corrected the FPDS-NG OTA data for the
inaccuracies and underreporting, we determined the data were sufficiently
reliable for the purposes of describing agencies’ reported OTA obligations
in response to COVID-19. We also interviewed officials from the General
Services Administration (GSA), which administers FPDS-NG, including
the OTA module.
To identify the factors that contributed to DOD, HHS, and DHS using
OTAs in selected cases, we selected a nongeneralizable sample of 15
OTAs awarded between February 2020 and October 2020. Our
6FPDS-NG is a comprehensive, web-based tool for agencies to report procurement
contract actions and is the authoritative source for procurement award data, including
dollars obligated on contract actions. It also includes a module for reporting OTAs. In June
2021, FPDS-NG was renamed to FPDS. For the purposes of this report, we refer to the
system as FPDS-NG.
7While DOD has authority to use OTAs for research, prototyping, and production
purposes, this report is focused on OTAs used to support DOD’s prototyping and
production efforts.
8The National Institutes of Health—a part of HHS—did not report awarding any OTAs in
response to COVID-19 in FPDS-NG as of March 14, 2021. In May 2021, officials from the
National Institutes of Health informed us they had obligated about $520 million on COVID-
19 OTAs as of April 26, 2021. We did not assess the reliability of these data and did not
include the $520 million in our analysis.
Page 3 GAO-21-501 COVID-19 Contracting
selections were based on the highest dollars obligated, representation of
all three contracting agencies, and a mix of product or service acquired,
among other criteria. When we selected our sample of OTAs in October
2020, the obligations on all COVID-19 OTAs across DOD, HHS, and DHS
were 30 percent of total obligations for these three agencies. We selected
all seven vaccine OTAs awarded by DOD and HHS, which comprised
$8.9 billion in obligations. We also selected eight nonvaccine OTAs
awarded by DOD, HHS, and DHS, which accounted for an additional $1.2
billion in obligations. Combined, these 15 OTAs accounted for 81 percent
of all obligations on COVID-19 OTAs as of March 14, 2021. For these
selected cases, we analyzed OTA documents, such as written
determinations for OTA use, and interviewed agreements officers—
federal employees with the authority to bind the government by signing an
OTA—and program officials. As part of our analysis, we determined the
extent to which these OTAs used available CARES Act flexibilities. In
addition, we reviewed agencies’ OTA policies and guidance and
interviewed contracting policy officials at DOD, HHS, and DHS.
To identify the extent to which DOD, HHS, and DHS awarded OTAs to
consortia in response to COVID-19, we analyzed the same data available
in the OTA module of FPDS-NG discussed above by vendor. We
supplemented this analysis with reviews of publicly available information
and OTA documents. Of the 15 OTA cases we reviewed, six were
awarded to consortia by DOD. To determine how DOD provided oversight
for these six OTAs, we analyzed OTA documents and interviewed
agreements officers and program officials. We reviewed DOD, HHS, and
DHS policies related to OTAs awarded to consortia and these agencies’
reports to congressional committees regarding OTA use. We also
interviewed officials from Advanced Technology International (ATI), the
consortium management firm that received the majority of COVID-19
OTA obligations according to FPDS-NG data.
To identify the extent to which DOD, HHS, and DHS used undefinitized
contracts in response to COVID-19, we analyzed data available in the
procurement contract module of FPDS-NG as of March 14, 2021. For the
purposes of our data analysis, undefinitized contract obligations are
associated with contract actions identified in FPDS-NG as undefinitized,
which includes letter contracts. DOD, HHS, and DHS accounted for 96
percent of all COVID-19-related undefinitized contract obligations
reported across the federal government over the time frame of our
Page 4 GAO-21-501 COVID-19 Contracting
review. 9 We analyzed the FPDS-NG data to identify the types of goods or
services procured by DOD, HHS, and DHS using undefinitized contracts.
We assessed the reliability of the FPDS-NG data by comparing them to
contract documentation and agency-provided data and performing
electronic testing, among other steps, and determined that they were
sufficiently reliable for the purposes of describing agencies’ reported
undefinitized obligations in response to COVID-19.
To identify how DOD, HHS, and DHS managed selected undefinitized
contracts, we selected a nongeneralizable sample of three undefinitized
contracts awarded between February 2020 and October 2020. Our
selections were based on the highest dollars obligated, representation of
the contracting agencies with the majority of undefinitized contract
obligations (DOD and HHS), and a mix of product or service acquired,
among other criteria. When we selected our sample of undefinitized
contracts, the obligations on all COVID-19 undefinitized contracts across
the three agencies were 6 percent of their total obligations during this
time frame. The three undefinitized contracts we selected were awarded
by DOD and HHS and had combined obligations of $509 million, or about
10 percent of all COVID-19 undefinitized contract obligations. For these
selected cases, we analyzed contract documents, such as written
determinations and award documents, and interviewed contracting
officers and program officials. As part of our analysis, we determined the
extent to which DOD used available CARES Act flexibilities for its
undefinitized contracts. In addition, we reviewed federal acquisition
regulations, agencies’ federal acquisition regulation supplements, and
agency policies and guidance related to undefinitized contracts. We also
interviewed contracting policy officials at DOD, HHS, and DHS.
For additional information on our objectives, scope, and methodology,
see appendix I.
We conducted this performance audit from August 2020 to July 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
9On April 12, 2021, in response to our review, HHS corrected information for an
undefinitized contract we reviewed by revising nine actions from being incorrectly
identified as undefinitized to correctly identified as definitized. We updated our March 14,
2021 data analysis, which resulted in a reduction of HHS undefinitized contract obligations
by $120 million.
Page 5 GAO-21-501 COVID-19 Contracting
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Every agency has inherent authority to award procurement contracts—
Background contracts subject to the Federal Acquisition Regulation (FAR)—to procure
goods or services for its own use. However, agencies must receive
specific authority through legislation to award OTAs, which are not
subject to the FAR. Undefinitized contracts are procurement contracts
subject to the FAR but have certain requirements related to their use.
Overview of Other OTAs are not required to include terms and conditions that are typically
Transaction Agreements required when using procurement contracts subject to the FAR. They
enable agencies and companies to start with a “blank sheet of paper” to
negotiate contractual terms and conditions specific to the OTA. This
flexibility can help agencies address concerns from nontraditional
contractors—entities that do not typically do business with the federal
government such as start-up companies—about requirements that apply
to federal procurement contracts. These concerns can include
establishing a government-unique cost accounting system or losing
intellectual property rights, among others. 10 Our prior work found that
OTAs with nontraditional companies have been used for research,
prototyping, and production of new technologies or products. 11 We also
found, however, risks with the use of OTAs regarding reduced
accountability and transparency, in part, because they are exempt from
10GAO, Military Acquisitions: DOD Is Taking Steps to Address Challenges Faced by
Certain Companies, GAO-17-644 (Washington, D.C.: July 20, 2017).
11GAO, Army Modernization: Army Should Improve Use of Alternative Agreements and
Approaches by Enhancing Oversight and Communication of Lessons Learned, GAO-21-8
(Washington, D.C.: Oct. 1, 2020); Defense Acquisitions: DOD’s Use of Other Transactions
for Prototype Projects Has Increased, GAO-20-84 (Washington, D.C.: Nov. 22, 2019); and
Federal Acquisitions: Use of ‘Other Transaction’ Agreements Limited and Mostly for
Research and Development Activities, GAO-16-209 (Washington, D.C.: Jan. 7, 2016).
Page 6 GAO-21-501 COVID-19 Contracting
the FAR and related oversight mechanisms that apply to procurement
contracts. 12
Congress provided the agencies in our review the authority to use OTAs,
and each authority is unique to the agency:
• DOD. DOD generally has department-wide authority to award OTAs
for research, prototyping, and production purposes. Specifically, DOD
can use OTAs to carry out certain prototype projects, including those
that are directly relevant to enhancing the mission effectiveness of
military personnel and the supporting platforms, systems,
components, or materials proposed to be acquired or developed by
DOD. DOD may not enter into a prototype OTA unless at least one of
four conditions is met. The conditions are related to participation by a
nontraditional defense contractor, nonprofit research institution or
small business participation; cost sharing; or senior procurement
executive approval. 13 Congress did not define a prototype project in
statute, but DOD’s November 2018 OTA guide defined a prototype
project as addressing certain needs, such as a proof of concept,
model, and novel application of commercial technologies for defense
purposes. DOD can also award follow-on production OTAs—without
using competitive procedures—to the participants of a competitively
awarded prototype OTA, provided several conditions are met, such as
successful completion of the prototype. 14
12GAO, COVID-19: Critical Vaccine Distribution, Supply Chain, Program Integrity, and
Other Challenges Require Focused Federal Attention, GAO-21-265 (Washington, D.C.:
Jan. 28, 2021); Transportation Security Administration: After Oversight Lapses,
Compliance with Policy Governing Special Authority Has Been Strengthened,
GAO-18-172 (Washington, D.C.: Dec. 21, 2017); Department of Homeland Security:
Further Action Needed to Improve Management of Special Acquisition Authority,
GAO-12-557 (Washington, D.C.: May 8, 2012); and Department of Homeland Security:
Improvements Could Further Enhance Ability to Acquire Innovative Technologies Using
Other Transaction Authority, GAO-08-1088 (Washington, D.C.: Sept. 23, 2008).
13National Defense Authorization Act for Fiscal Year 2016, Pub. L. No. 114-92, § 815
(2015), codified at 10 U.S.C. § 2371b. For purposes of DOD OTAs, a nontraditional
defense contractor is an entity that is not performing on any DOD contract or subcontract
that is subject to full coverage under the cost accounting standards prescribed by certain
statutes and regulations, and has not performed on such a contract or subcontract for at
least 1 year before DOD’s solicitation for the OTA. 10 U.S.C. § 2302(9). The OTA
authorities for HHS, the Transportation Security Administration, and DHS’s Countering
Weapons of Mass Destruction Office did not include statutory definitions of nontraditional
contractors.
1410 U.S.C. § 2371b(f).
Page 7 GAO-21-501 COVID-19 Contracting
Further, DOD agreements officers can award certain higher-dollar
prototype OTAs if senior DOD contracting officials approve the OTAs
in writing. 15 For example, for most DOD entities, OTAs expected to
cost more than $100 million but not more than $500 million may only
be carried out if the senior procurement executive makes a written
determination that certain statutory requirements will be met and that
use of OTA authority is essential to promoting the success of the
prototype project. 16 OTAs expected to cost more than $500 million
may only be carried out if the Under Secretary of Defense for
Research and Engineering or the Under Secretary of Defense for
Acquisition and Sustainment makes a written determination that
certain statutory requirements will be met and that the use of OTA
authority is essential to meet critical national security objectives. DOD
must also notify the congressional defense committees in writing of
any OTAs expected to cost more than $500 million at least 30 days
before the OTA authority is exercised.
• HHS. Two of HHS’s components have authority to award OTAs:
ASPR, which leads the nation’s response to public health
emergencies and includes the Biomedical Advanced Research and
Development Authority, and the National Institutes of Health, which is
composed of 27 institutes and centers, each with a specific agenda. 17
ASPR’s OTA authority supports advanced research and development
for medical countermeasures, such as vaccines and therapeutics. 18
Several programs and types of projects within the National Institutes
of Health have OTA authority, such as a program focused on
researching heart, lung, and blood diseases. 19
ASPR’s agreements officers can award OTAs expected to cost more
than $100 million if the HHS Assistant Secretary for Financial
1510 U.S.C. § 2371b(a)(2).
16In the case of the Defense Advanced Research Projects Agency or the Missile Defense
Agency, the agency director must make the written determination.
17To fulfill its mission to seek fundamental knowledge about the nature and behavior of
living systems and the application of that knowledge to enhance health, lengthen life, and
reduce illness and disability, the National Institutes of Health funds research related to life
processes and many diseases and conditions.
1842 U.S.C. § 247d-7e(c)(5)(A).
1942 U.S.C. § 285b-3; Consolidated and Further Continuing Appropriations Act, 2015,
Pub. L No. 113-235, div. G, title II, § 213,128 Stat. 2487 (2014); 42 U.S.C. § 284n; and 42
U.S.C. § 287a.
Page 8 GAO-21-501 COVID-19 Contracting
Resources makes a written determination that use of such authority is
essential to promoting the success of the project. 20
• DHS. Two of DHS’s components each have unique, unrestricted
authorities to award OTAs to carry out their missions: the Countering
Weapons of Mass Destruction Office and the Transportation Security
Administration. 21 DHS also awards OTAs for research and prototyping
efforts across the department.
The CARES Act removed certain requirements related to the use of OTAs
for DOD and HHS ASPR in response to COVID-19, which we refer to as
CARES Act flexibilities for the purposes of our report. 22 These flexibilities
allow for delegation of OTA award approval to lower-level contracting
officials and changes to congressional notification requirements.
Specifically, for DOD:
• Senior procurement executives can delegate approval of written
determinations to other officials for prototype OTAs expected to cost
more than $100 million but not more than $500 million.
• The Under Secretary of Defense for Research and Engineering and
the Under Secretary of Defense for Acquisition and Sustainment can
delegate approval of written determinations to other officials for
prototype OTAs expected to cost more than $500 million.
• DOD can notify the congressional defense committees in writing of
prototype OTAs expected to cost more than $500 million as soon as
practicable after the OTA is awarded instead of at least 30 days
before the OTA authority is exercised.
Additionally, during a public health emergency, ASPR can award
advanced research and development OTAs expected to cost more than
$100 million without a written determination from the HHS Assistant
Secretary for Financial Resources. The CARES Act did not provide
HHS’s National Institutes of Health or DHS with additional OTA
flexibilities.
2042 U.S.C. § 247d-7e(c)(5)(A)(ii).
216 U.S.C. § 596 and 49 U.S.C. § 114(m).
22Pub. L. No. 116-136, §§ 3301, 13006, 134 Stat. at 383, 522.
Page 9 GAO-21-501 COVID-19 Contracting
DOD and DHS have established policies requiring the reporting of certain
OTAs into FPDS-NG, in part to help address certain statutory reporting
requirements. 23 DHS, for example, established policies requiring reporting
of research and prototype and Transportation Security Administration
OTAs to FPDS-NG. 24 Transportation Security Administration officials
stated that they report OTAs to FPDS-NG to also assist with
understanding the workload involved in awarding and administering
OTAs. HHS ASPR reports its use of OTAs to FPDS-NG while the
National Institutes of Health does not.
Overview of Undefinitized To help meet urgent needs, agencies can use undefinitized contracts to
Contracts authorize contractors to begin work and incur costs before reaching final
agreement on contract terms and conditions. 25 Before these contracts are
finalized, they are called undefinitized. In contrast, a definitized contract is
one in which all terms and conditions, including price, are agreed to by
the parties to the contract at the time of contract award. We previously
found that undefinitized contracts may be risky for the government. 26 In
particular, the government may incur unnecessary costs if requirements
change before the contract is definitized.
23The Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 required
certain improvements to FPDS-NG, including the collection of data on certain OTAs. Pub.
L. No. 110-417, § 874 (2008). DOD does not report its use of research OTAs to FPDS-
NG. Instead, DOD requires their use to be reported to the Defense Assistance Awards
Data System, a system used to track assistance awards, including grants.
24According to DHS officials, DHS requires research and prototype OTAs (issued
pursuant to 6 U.S.C. § 391) to be reported in FPDS-NG in accordance with section 874 of
the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009. DHS does
not require Countering Weapons of Mass Destruction OTAs (issued pursuant to 6 U.S.C.
§ 596) to be entered into FPDS-NG but still enters these OTAs into FPDS-NG.
25For the purposes of our report, we define undefinitized contracts to include letter
contracts (a preliminary contract that authorizes the contractor to begin work immediately)
pursuant to FAR § 16.603. In addition, we define undefinitized contracts to include what
DOD refers to as “undefinitized contract actions,” which includes any contract action for
which the contract terms, specifications, or price are not agreed upon before performance
has begun under the action. These actions include letters contracts, undefinitized task or
delivery orders issued against a pre-established umbrella contract, and undefinitized
modifications for additional supplies or services to an existing contract. Defense Federal
Acquisition Regulation Supplement subpt. 217.74.
26GAO, Defense Contracting: DOD Has Enhanced Insight into Undefinitized Contract
Action Use, but Management at Local Commands Needs Improvement, GAO-10-299
(Washington, D.C.: Jan. 28, 2010).
Page 10 GAO-21-501 COVID-19 Contracting
To help minimize these risks:
• The FAR generally requires letter contracts—a type of undefinitized
contract—to include a schedule that provides for definitization within
180 days of the contract award or before completion of 40 percent of
the work to be performed, whichever occurs first. 27 HHS and DHS are
subject to the undefinitized contract requirements in the FAR as well
as agency-specific acquisition regulations and policies.
• Additionally, DOD may only enter an undefinitized contract if it
requires definitization of the contractual terms, specifications, and
price within 180 days of the contractor submitting a qualifying
proposal—a proposal that contains sufficient information to enable
DOD to conduct meaningful analyses and audits—or before more
than 50 percent of the estimated contract price is obligated, whichever
occurs first. 28
The CARES Act allows DOD to waive time frames to definitize
undefinitized contracts and to waive limitations on the amounts that can
be obligated before the undefinitized contract is definitized, which we
refer to as CARES Act flexibilities for the purposes of our report. 29 The
CARES Act did not provide HHS or DHS with additional flexibilities for
undefinitized contracts.
27FAR § 16.603. For the purposes of our report, we refer to letter contracts as
undefinitized contracts.
28For the purposes of our report, we refer to the negotiated overall ceiling price and not-to-
exceed price in DOD’s undefinitized contracts, as well as the proposed estimated cost in
HHS’s undefinitized contracts, as the estimated contract price. For DOD, if a contractor
submits a qualifying proposal to definitize the undefinitized contract before 50 percent of
the not-to-exceed price is obligated, the limitation on obligations can be increased to 75
percent of the estimated contract price. 10 U.S.C. § 2326(b) and Defense Federal
Acquisition Regulation Supplement subpt. 217.74. See also HHS Acquisition Policy,
Guidance and Instructions § 316.603-70.
29Pub. L. No. 116-136, § 13005, 134 Stat. at 522.
Page 11 GAO-21-501 COVID-19 Contracting
DOD, HHS, and DHS obligated at least $12.5 billion on COVID-19-related
Agencies Obligated OTAs from March 2020 through March 2021, primarily to help accelerate
At Least $12.5 Billion vaccine development and manufacturing. However, of that $12.5 billion,
at least $1.6 billion was underreported because HHS misreported its
on OTAs to Quickly OTAs as procurement contracts, while DOD and DHS did not accurately
Respond to COVID- identify certain OTAs as COVID-19-related. In addition, agency officials
cited timeliness of award as the main factor contributing to OTA use but
19 but Did Not also noted that the OTA required less administrative work and facilitated
Accurately Report All engagement with nontraditional contractors.
Awards
Agencies Made Significant Our analysis of FPDS-NG and agency-provided data found that DOD,
Use of OTAs for Vaccine HHS, and DHS obligated at least $12.5 billion on OTAs in response to
COVID-19 as of March 2021 (see fig. 1). 30
Development and
Manufacturing
30Prior to March 2020, DHS awarded OTAs in response to COVID-19. These OTAs
accounted for $8 million in obligations or 0.07 percent of all COVID-19 OTA obligations
and are included in our analysis.
Page 12 GAO-21-501 COVID-19 Contracting
Figure 1: DOD, HHS, and DHS Other Transaction Agreement Obligations in Response to Coronavirus Disease 2019 as of
March 14, 2021
Note: We corrected the FPDS-NG data by adding $1.6 billion in obligations the agencies did not
accurately report as COVID-19 OTAs. Our analysis did not include data that are not reported in
FPDS-NG because we did not assess the reliability of these data.
These three agencies’ obligations on OTAs for COVID-19 have been
significant when compared with both of their OTA obligations in prior
years and their COVID-19 procurement contract obligations. For example:
• OTA obligations in prior years. Obligations reported on OTAs
across the three agencies increased from $2.4 billion in fiscal year
Page 13 GAO-21-501 COVID-19 Contracting
2017 to $7.8 billion in fiscal year 2019. 31 In comparison, from March
2020 to March 2021, their OTA obligations were $12.5 billion for the
COVID-19 response alone.
• OTA obligations as a proportion of total obligations. The three
agencies have obligated $54.7 billion in response to COVID-19 using
both OTAs and procurement contracts. The $12.5 billion those
agencies have obligated on OTAs for COVID-19 represents about 23
percent of the total obligations. In comparison, in fiscal year 2019,
prior to the COVID-19 pandemic, their OTA obligations accounted for
2 percent of total obligations.
Of the $12.5 billion obligated on COVID-19 OTAs, $8.9 billion or 71
percent was for vaccine development—including clinical trials—and
manufacturing efforts. The remaining $3.6 billion was for medical
research and development and other nonvaccine products and services
(see fig. 2).
31Our fiscal year 2017 through 2019 analysis generally did not include data that are not
reported in the FPDS-NG OTA module, such as OTA obligations from the National
Institutes of Health, because we did not assess the reliability of these data. However, we
supplemented our analysis of FPDS-NG data by including data on OTA obligations
provided by HHS ASPR.
Page 14 GAO-21-501 COVID-19 Contracting
Figure 2: Top COVID-19 Products and Services Acquired by DOD, HHS, and DHS Using OTAs as of March 14, 2021
Note: We corrected the FPDS-NG data by adding $1.6 billion in obligations the agencies did not
accurately report as COVID-19 OTAs. Our analysis did not include data that are not reported in
FPDS-NG because we did not assess the reliability of these data.
Most of the COVID-19 OTA dollars were obligated in July 2020 and
driven by vaccine awards. From November 2020 through March 2021,
OTA obligations were comparatively not as significant as earlier in the
pandemic, in part because additional vaccine doses were acquired using
procurement contracts instead of OTAs (see fig. 3).
Page 15 GAO-21-501 COVID-19 Contracting
Figure 3: Coronavirus Disease 2019 (COVID-19) OTA Obligations by Vaccine and Nonvaccine Awards from March 2020
through March 2021
Note: We corrected the FPDS-NG data by adding $1.6 billion in obligations the agencies did not
accurately report as COVID-19 other transaction agreements (OTA). Our analysis did not include
data that are not reported in FPDS-NG because we did not assess the reliability of these data.
Agencies Did Not HHS, DOD, and DHS reported obligating $10.9 billion on COVID-19
Accurately Reflect All OTAs in FPDS-NG. However, our analysis of FPDS-NG and agency-
provided data, as well as OTA documentation, found these three
Dollars Obligated on
agencies actually obligated at least $12.5 billion on COVID-19 OTAs—a
COVID-19 OTAs $1.6 billion difference. In addition to this $1.6 billion, HHS’s National
Institutes of Health officials told us they obligated about $520 million on
COVID-19 OTAs, which were not reported in FPDS-NG.
HHS ASPR was responsible for a majority of the inaccurate reporting of
COVID-19 OTA dollars. We previously found in January 2021 that HHS
ASPR misreported its COVID-19 OTAs as procurement contracts
because it reports OTAs into the procurement module of FPDS-NG. 32
32GAO-21-265.
Page 16 GAO-21-501 COVID-19 Contracting
Based on our analysis of FPDS-NG data as of March 14, 2021, ASPR
continues to misreport these OTAs, which have about $1.55 billion in
obligations. ASPR’s approach of reporting OTAs in the procurement
module is inconsistent with the FAR. Agencies can only report OTAs in
FPDS-NG under certain conditions, such as if the OTAs can be
segregated from procurement contract actions and written approval from
the FPDS program office is obtained. 33 For example, DOD and DHS
report certain OTAs in a separate OTA module of FPDS-NG. 34
Furthermore, ASPR’s approach does not provide a way for FPDS-NG
users to systematically identify which actions are OTAs. FPDS-NG
reflects overreporting of ASPR’s COVID-19 procurement contracts by
$1.55 billion and no dollars obligated on ASPR’s COVID-19 OTAs in the
OTA module. In January 2021, we recommended that ASPR should
accurately report data in FPDS-NG and provide information that would
allow the public to distinguish between spending on OTAs and
procurement contracts. 35 ASPR concurred with our recommendation. As
of April 2021, ASPR officials stated that they have discussed within ASPR
the need to consistently identify OTAs in FPDS-NG and explored how
their contract writing system may interface with the FPDS-NG OTA
module in the future. ASPR officials added that, in the meantime, they
have identified OTAs in the procurement module by manually adding
designators such as “OTA” or “other transaction agreement” into the
description of requirement data field. We will continue to monitor ASPR’s
efforts to implement our recommendation.
Separately, DOD and DHS reported their COVID-19 OTAs in the FPDS-
NG OTA module but did not accurately identify certain OTAs and
associated dollars as COVID-19-related. Specifically:
• In November 2020, DOD obligated $52.5 million on the Pfizer vaccine
OTA but did not identify these dollars as COVID-19-related.
• From February 2020 through September 2020, DHS’s Countering
Weapons of Mass Destruction Office obligated $25.5 million on two
OTAs for COVID-19 screening at airports and ports of entry but did
33FAR § 4.601; 4.603(b); and 4.606(a).
34As noted earlier, DOD and DHS are generally not required by statute or regulation to
report OTAs into FPDS-NG but have established policies requiring such reporting for
certain OTAs.
35GAO-21-265.
Page 17 GAO-21-501 COVID-19 Contracting
not identify these OTAs as COVID-19-related.
Additionally, the National Institutes of Health did not report awarding any
OTAs in response to COVID-19 in FPDS-NG, as it is not required to do so
by statute or policy. In May 2021, National Institutes of Health officials told
us they obligated about $520 million on COVID-19 OTAs as of April
2021. 36 Officials told us that while they do not report their use of OTAs to
FPDS-NG, they plan to report these OTAs to the Tracking Accountability
in Government Grants System—a database used by HHS to track grant
awards—starting in summer 2021. Officials stated that such reporting will
allow the National Institutes of Health to submit its OTA data to
USAspending.gov—a public-facing website that tracks federal spending
on procurement and assistance awards. According to officials, the
National Institutes of Health has not included information on OTAs in
USAspending.gov in the past.
Transparency in federal spending is desired by policymakers and the
public. For example, the Federal Funding Accountability and
Transparency Act of 2006—which established USAspending.gov—and
the Digital Accountability and Transparency Act of 2014 require agencies
to disclose spending data on certain federal awards, including contracts
and grants. 37 While an agency official—in response to public inquiries on
the availability of OTA data on USAspending.gov—noted that the acts are
not applicable to OTAs, the Digital Accountability and Transparency Act
of 2014 aims to establish government-wide data standards to provide
consistent, reliable, and searchable spending data that are displayed
accurately for taxpayers and policymakers. Additionally, federal internal
control standards state that an agency’s management should design
information systems and externally communicate quality information to
achieve objectives and address related risks. 38
DOD, DHS, and HHS currently do not use a systematic approach to
consistently and accurately track OTAs awarded in response to COVID-
36We did not assess the reliability of the data provided by the National Institutes of Health
or include them in our analysis.
37Pub. L. No. 113-101, 128 Stat. 1146 (May 9, 2014). The Digital Accountability and
Transparency Act of 2014 amended the Federal Funding Accountability and Transparency
Act of 2006. Pub. L. No. 109-282, 120 Stat. 1186 (Sept. 26, 2006), codified at 31 U.S.C. §
6101 note.
38GAO, Standards for Internal Control in the Federal Government, GAO-14-704G
(Washington, D.C.: September 2014).
Page 18 GAO-21-501 COVID-19 Contracting
19 or other national interest events and the associated dollars obligated.
Based on our March 2021 analysis, only DOD and DHS reported their
COVID-19 OTAs to the FPDS-NG OTA module—a government data
system available for agencies to report OTA actions and associated
obligations. As noted earlier, while HHS ASPR reported its COVID-19
OTAs to FPDS-NG, it continues to misreport them in the procurement
module.
Even if agencies consistently required that their OTA awards be reported
to the FPDS-NG OTA module, the module does not have a systematic
way for agencies to identify an OTA as COVID-19-related. The
procurement contract module of FPDS-NG, in contrast, includes a
National Interest Action data field that allows tracking of COVID-19
contracts. According to Office of Management and Budget guidance,
National Interest Action codes are used in the procurement module to
consistently collect data on contract actions related to emergency or
contingency responses or other nationally significant events. 39 Examples
of past national interest events tracked by these codes include Hurricanes
Katrina, Harvey, Irma, Florence and Michael; Operation Enduring
Freedom; and the 2014 Ebola outbreak in West Africa.
In March 2020, GSA added a National Interest Action code to track
acquisition costs of federal agencies involved in the response to COVID-
19. 40 The Office of Management and Budget later broadened the
application of this code, noting that the use of such codes contributes to
transparency in tracking of COVID-19-related procurement actions in
FPDS-NG. 41 As noted earlier, HHS ASPR continues to misreport its OTAs
in the procurement module of FPDS-NG. Because the National Interest
Action code data field is available in the procurement module, FPDS-NG
users are able to identify which HHS ASPR OTAs are COVID-19-related
39Office of Management and Budget, Office of Federal Procurement Policy, Memorandum
for Chief Acquisition Officers, Senior Procurement Executives: Emergency Acquisitions
Guide (Washington, D.C.: Jan. 14, 2011).
40Office of Management and Budget, Memorandum to the Heads of Executive
Departments and Agencies: Managing Federal Contract Performance Issues Associated
with the Novel Coronavirus (COVID-19), M-20-18 (Washington, D.C.: Mar. 20, 2020).
41Office of Management and Budget, Memorandum for the Heads of Departments and
Agencies: Implementation Guidance for Supplemental Funding Provided in Response to
the Coronavirus Disease 2019 (COVID-19), M-20-21 (Washington, D.C.: Apr. 10, 2020).
Page 19 GAO-21-501 COVID-19 Contracting
using this code if ASPR identifies the awards as OTAs in the description
of requirement field.
GSA administers the Integrated Award Environment, a government-wide
initiative that includes a suite of federal award data systems, including
FPDS-NG and its OTA module. 42 According to the Integrated Award
Environment’s governing charter, the initiative’s mission includes
simplifying, unifying, and streamlining the federal award process for
government agencies, which it achieves through changes to a portfolio of
government-wide online systems. The initiative has a change control
board, which includes 24 voting members from agencies identified in the
Chief Financial Officer Act—including DOD, DHS, HHS, and GSA. Any
revisions to FPDS-NG must be approved by a majority of the agencies
that are voting members.
According to GSA officials, as of April 2021, no agency requested to add
the National Interest Action data element to the OTA module. GSA
officials explained that not all of the agencies use the OTA module.
However, because updates to the FPDS-NG system and other Integrated
Award Environment systems are collectively funded by all 24 agencies,
each agency has a vote in how the funding is spent and what system
changes are prioritized. GSA is currently leading an effort to modernize
the Integrated Award Environment systems, including FPDS-NG, which
may offer an alternative system and process for reporting on OTAs.
However, GSA officials did not have time frames for when the new
system will be implemented.
Adding a National Interest Action data field to the OTA module is one
option for tracking OTAs used for national emergencies such as the
pandemic response. Without this or another systematic approach, policy
makers and the public will continue to lack insight into the extent to which
agencies are using OTAs to respond to national emergencies.
Additionally, due to a lack of a systematic way to identify national interest
events for OTA awards, agencies take different approaches over how and
whether they distinguish COVID-19 OTAs from other OTAs. In March
2020, DOD issued guidance informing contracting personnel that the OTA
42The Integrated Award Environment is a GSA-managed presidential e-government
initiative established in 2002.
Page 20 GAO-21-501 COVID-19 Contracting
module does not have a National Interest Action data field and instructed
them to enter “COVID-19” in the description of requirement data field. 43
DHS, however, does not have guidance on how COVID-19 OTAs should
be specifically identified in the OTA module. While DHS’s March 2020
National Interest Action code guidance emphasizes the importance of all
DHS-related FPDS-NG actions being promptly and correctly coded as
COVID-19 for congressional oversight, it does not include information on
how OTAs should be specifically coded. 44 Without such guidance, public
users of FPDS-NG will not have an accurate understanding of the extent
to which DHS used OTAs in response to COVID-19.
Timeliness among Top
Factors Cited for OTA Use
in Response to COVID-19
DOD and HHS Used OTAs to DOD and HHS officials cited the timeliness of awards as one of the main
Help Expedite Large Vaccine factors for using OTAs for COVID-19 vaccine development and
Awards manufacturing. Vaccine development efforts included clinical trials that
evaluated the product’s safety, efficacy, proposed doses, schedule of
immunizations, and methods of delivery in volunteers. Vaccine
manufacturing efforts included large-scale production of hundreds of
millions of doses that met the Food and Drug Administration’s regulatory
standards for ensuring pharmaceutical quality. According to OTA
justification documents and DOD officials, OTAs offered streamlined
competitive processes for evaluation and selection of awardees. Seven
OTAs awarded by either HHS or DOD accounted for all $8.9 billion in
OTA obligations on vaccine development and manufacturing (see table
1).
43Department of Defense, Office of the Under Secretary of Defense for Acquisition and
Sustainment, Reporting COVID-19 Related Actions to the Federal Procurement Data
System (Washington, D.C.: Mar. 31, 2020).
44Department of Homeland Security, Chief Procurement Officer, Increasing Thresholds for
Procurements Supporting Coronavirus (COVID-19) Response and Recovery (Washington,
D.C.: Mar. 17, 2020).
Page 21 GAO-21-501 COVID-19 Contracting
Table 1: Dollars Obligated on OTAs Awarded by DOD and HHS for COVID-19 Vaccine Development and Manufacturing by
Manufacturer as of March 14, 2021
Contracting agency Vaccine manufacturer (effort) Total dollars obligated ($)
HHS ASPR Janssen (development and clinical studies) 1.1 billion
DOD Army Janssen (manufacturing) 1.0 billion
HHS ASPR AstraZeneca (development) 0.126 billion
DOD Army AstraZeneca (manufacturing) 1.2 billion
DOD Army Sanofi (manufacturing) 1.8 billion
DOD Army Novavax (manufacturing) 1.6 billion
DOD Army Pfizer (manufacturing) 2.03 billion
Total 8.9 billion
ASPR - Office of the Assistant Secretary for Preparedness and Response
COVID-19 - Coronavirus Disease 2019
DOD - Department of Defense
FPDS - NG - Federal Procurement Data System-Next Generation
HHS - Department of Health and Human Services
OTA - Other transaction agreement
Source: GAO analysis of FPDS-NG data and information from DOD and HHS. | GAO-21-501
Note: We corrected the FPDS-NG data by adding $1.3 billion in obligations the agencies did not
accurately report as COVID-19 OTAs. Our analysis did not include data that are not reported in
FPDS-NG because we did not assess the reliability of these data.
More broadly, OTAs have played a significant role in the joint effort
between DOD and HHS to expedite the acquisition and development of
COVID-19 vaccine candidates—previously known as the Operation Warp
Speed effort. 45 For example, the seven vaccine OTAs we reviewed
accounted for 43 percent of the $20.5 billion obligated by DOD and HHS
on vaccine development and manufacturing as of March 14, 2021. 46
The award times for the COVID-19 vaccine OTAs were generally shorter
than award times for OTAs and procurement contracts we reviewed in our
prior work in 2018 and 2019. We defined award times as the time from
the contracting office releasing a solicitation until the time the government
45As of January 20, 2021, the federal government no longer uses the name Operation
Warp Speed, but the DOD and HHS partnership has continued. DOD and HHS’s
partnership was formalized through a memorandum of understanding between the two
departments. For more information on COVID-19 vaccines, see GAO-21-443.
46The remaining $11.4 billion in obligations were on contract vehicles outside the scope of
this review. For example, these vehicles included $5.3 billion in procurement contracts
awarded to Moderna for vaccine development.
Page 22 GAO-21-501 COVID-19 Contracting
awarded the OTA. Specifically, for the six vaccine OTAs awarded in
response to a COVID-19 solicitation, the award times ranged from 27
days to about 8 months, with a median of 54 days. 47 For non-COVID-19
OTAs, in November 2019, we found that award times for a
nongeneralizable sample of 11 DOD prototype OTAs ranged from 45
days to about 1 year, with a median of nearly 10 months. 48 For
procurement contracts, in July 2018, we found that the award time for 129
weapon systems-related contracts ranged from less than a month to over
4 years, with a median of about 9 months. 49
DOD and HHS employed several contracting methods to further expedite
the award of the seven vaccine OTAs (see table 2).
47We excluded from our analysis of award times the ASPR-awarded OTA to Janssen
because it was awarded prior to the COVID-19 pandemic. The six OTAs included in our
analysis were five awarded by Army Contracting Command to Janssen, Sanofi, Novavax,
Pfizer, and AstraZeneca, and one awarded by ASPR to AstraZeneca. Both of the
AstraZeneca OTAs—one awarded in May 2020 and the other in October 2020—were in
response to the same solicitation issued in March 2020.
48GAO-20-84.
49GAO, Defense Contracts: DOD Should Develop a Strategy for Assessing Contract
Award Time Frames, GAO-18-467 (Washington, D.C.: July 16, 2018).
Page 23 GAO-21-501 COVID-19 Contracting
Table 2: Methods Used by DOD and HHS in Awarding OTAs to Help Expedite COVID-19 Vaccine Development and
Manufacturing
Methods to expedite Contracting agency / vaccine manufacturer
award of OTAs Army / HHS ASPR / Army / HHS ASPR / Army / Army / Army /
Janssen Janssen AstraZeneca AstraZeneca Sanofi Novavax Pfizer
DOD and HHS ✓ ✗ ✓ ✗ ✓ ✓ ✓
partnership
DOD OTA award that ✓ ✗ ✓a ✗a ✗ ✗ ✗
continues work of
previously awarded
HHS OTA
Modified existing OTA ✓ ✓ ✗ ✗ ✓ ✓ ✓
to add projects
Awarded OTAs ✗ ✗ ✓ ✓ ✓ ✓ ✗
without finalized terms
and conditions
Delegated approval to ✓ ✗ ✓ ✗ ✓ ✓ ✓
lower-level
management review
pursuant to the
CARES Act
Congressional ✓ ✗ ✓ ✗ ✓ ✓ ✓
notification
requirement not
provided in advance
pursuant to the
CARES Act
Legend:
✓ = yes
✗ = no or not applicable
ASPR - Office of the Assistant Secretary for Preparedness and Response
COVID-19 - Coronavirus Disease 2019
DOD - Department of Defense
HHS - Department of Health and Human Services
OTA - other transaction agreement
Source: GAO analysis of DOD and HHS OTA documentation and testimonial information from officials. | GAO-21-501
a
Army officials stated that their October 2020 OTA award to AstraZeneca replaced and finalized the
OTA that HHS ASPR had awarded in May 2020.
The methods used by DOD and HHS to expedite vaccine development
and manufacturing in their OTA awards are further illustrated below:
• DOD and HHS partnership. According to DOD and HHS officials,
HHS partnered with DOD to leverage DOD’s OTA authorities and
acquisition workforce capacity, which HHS lacked. First, HHS ASPR’s
OTA authority is limited to advanced research and development, while
Page 24 GAO-21-501 COVID-19 Contracting
DOD’s OTA authority allows for research, prototyping, and production
efforts. However, while DOD awarded five vaccine prototype OTAs, it
did not award any follow-on vaccine production OTAs as of March
2021. For example, to acquire an additional 200 million Pfizer vaccine
doses after the initial 100 million acquired under the prototype OTA,
DOD awarded $4 billion in procurement contracts. DOD officials
explained that, when they began negotiating the follow-on contracts
with Pfizer for additional doses in December 2020, Pfizer had not yet
fully demonstrated its prototyping efforts under the OTA—namely,
delivering 100 million doses. Successful prototype project completion
is one of the conditions that must be met to award a follow-on
production OTA without being required to use competitive
procedures. 50
Second, according to senior HHS contracting officials, the contracting
needs resulting from COVID-19 overwhelmed HHS’s acquisition
workforce both in terms of capacity and expertise. In March 2021, a
third-party company assessed the office of HHS’s senior procurement
executive and found the office does not have sufficient staffing.
Additionally, the assessment noted that the office had limited funding
for acquisition staffing and did not provide sufficient oversight of
contracts and the acquisition workforce. Further, the assessment
found HHS had outdated contracting policies.
• DOD OTA awards that continue work of previously-awarded HHS
OTAs. As part of the DOD and HHS partnership, Army Contracting
Command awarded OTAs that continued COVID-19 work started
under OTAs awarded by ASPR. For example, in May 2020, ASPR
awarded AstraZeneca an OTA for vaccine development without
finalized terms and conditions, in anticipation of another OTA award
that would replace it. In October 2020, Army Contracting Command
awarded a $1.2 billion prototype OTA that built upon AstraZeneca’s
efforts in developing and manufacturing the vaccine under ASPR’s
OTA. After Army Contracting Command awarded the OTA to
AstraZeneca, ASPR terminated its OTA, which had $126 million in
obligations.
• DOD and HHS modified existing OTAs to add projects. For four of
the vaccine OTAs, Army Contracting Command modified an existing
OTA for COVID-19 prototype projects awarded to Janssen, Sanofi,
Novavax, and Pfizer. 51 ASPR also modified an OTA previously
5010 U.S.C. 2371b(f)(2)(B).
51Janssen is a pharmaceutical subsidiary of Johnson & Johnson.
Page 25 GAO-21-501 COVID-19 Contracting
awarded to Janssen to include COVID-19 vaccine development in the
scope. A senior ASPR official explained that Janssen’s existing OTA
provided HHS with the flexibility to quickly pivot from an existing
portfolio of vaccines to focus on COVID-19, which would not have
been possible under a procurement contract.
• DOD and HHS awarded OTAs without finalized terms and
conditions. In July and October 2020, Army Contracting Command
made vaccine awards to Sanofi, Novavax, and AstraZeneca that were
not finalized. DOD senior contracting officials stated that doing so
allowed the vaccine manufacturers to initiate work quickly. According
to Army Contracting Command officials, examples of terms and
conditions not finalized included the total project costs and elements
of project scope, including the clinical trials. According to officials, all
three OTAs were finalized in December 2020, 2 to 5 months after the
awards. As noted earlier, ASPR also awarded an OTA to AstraZeneca
without finalized terms and conditions, such as what intellectual
property rights the government would receive. ASPR officials stated
that this approach allowed AstraZeneca to initiate work quickly.
• DOD used CARES Act flexibility to delegate approval of OTAs to
lower-level management review. Of the six vaccine OTAs that met
the dollar thresholds to use CARES Act flexibilities for the initial
award, five used the flexibility that allowed lower-level contracting
officials to approve the OTAs. 52 Specifically, the Army’s senior
procurement executive, rather than the Under Secretary of Defense
for Research and Engineering or the Under Secretary of Defense for
Acquisition and Sustainment, approved the written determinations for
these five OTAs. 53
• DOD used CARES Act flexibility to provide congressional
notifications after awards. All five vaccine OTAs awarded by DOD
used the CARES flexibility to notify the congressional defense
committees in writing of these OTAs after they were awarded (rather
than the typical requirement of notification at least 30 days before
52ASPR awarded an OTA to Janssen in August 2017, prior to passage of the CARES Act
in March 2020. The CARES Act flexibility was not used for the initial award. Pub. L. No.
116-136, § 3301.
53The five OTAs that met the $500 million estimated cost threshold and used the CARES
Act flexibility related to approval delegation from the Under Secretary of Defense for
Research and Engineering or the Under Secretary of Defense for Acquisition and
Sustainment to other officials for prototype OTAs were the Janssen, AstraZeneca, Pfizer,
Novavax, and Sanofi OTAs.
Page 26 GAO-21-501 COVID-19 Contracting
award). 54 For all five vaccine OTAs, DOD notified the committees
within 1 week of award.
Additionally, the written justifications for four of the vaccine OTAs cited
the flexibility to negotiate individualized OTA language and unique terms
and conditions that would not have been possible under a procurement
contract as factors contributing to the use of OTAs. For example, DOD
officials cited flexible payment terms through milestone payment
schedules, flexible termination provisions, and custom rights for
intellectual property, technical data, and regulatory deliverables.
DOD, HHS, and DHS Cited Factors that contributed to agencies using OTAs for the eight selected
Timeliness and Other Factors nonvaccine efforts included (1) timeliness of awards, (2) a more flexible
for Nonvaccine OTAs process which requires less administrative work, (3) engaging
nontraditional contractors, and (4) the ability to use cost-sharing or
additional funding streams (see table 3).
Table 3: Cited Benefits of Using OTAs for Selected Nonvaccine COVID-19 Efforts Cited by DOD, HHS, and DHS
Cited Benefits of Nonvaccine OTA
OTAs Army crisis Army Army Army HHS ASPR Air Force DHS airport DHS airport
response rapid wearable Regeneron Regeneron 3D printing and port cleaning
technology test COVID-19 therapeutic therapeutic screening
kits detection
Timeliness of ✓ ✓ ✓ ✓ ✓ ✗ ✓ ✓
awards
More flexible ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
process or less
administrative work
Nontraditional ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
contractor
engagement
Cost-sharing or use ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✗
of additional
funding streams
Legend:
✓ = yes
✗ = no or not applicable
ASPR - Office of the Assistant Secretary for Preparedness and Response
COVID-19 - Coronavirus Disease 2019
DHS - Department of Homeland Security
DOD - Department of Defense
HHS - Department of Health and Human Services
OTA - Other transaction agreement
Source: GAO analysis of DOD and HHS OTA documentation and testimonial information from officials. | GAO-21-501
54Pub. L. No. 116-136, § 13006(b).
Page 27 GAO-21-501 COVID-19 Contracting
The factors that contributed to the use of OTAs are further illustrated in
the examples below.
• Timeliness of awards. Contracting officials noted that the OTAs
allowed them to successfully execute efforts in weeks, whereas a
procurement contract would generally take months to award. 55 For
example, in February 2020, the DHS Countering Weapons of Mass
Destruction Office noncompetitively awarded a $23 million OTA for
COVID-19 screening at airports and ports of entry within 1 day of
receiving the requirement. DHS officials stated that the contractor
began work based on a verbal agreement and then signed a written
OTA award 24 days later. In another example, ASPR’s approval
document for an OTA awarded to Regeneron for therapeutics against
emerging infectious diseases noted significant time savings as a
benefit of using OTAs. According to the approval document, the OTA
allowed for the immediate replacement of underperforming assets
within a therapeutics portfolio with a promising new candidate, which
resulted in an estimated savings of up to 9 months and hundreds of
hours of government effort. ASPR officials explained that under a
procurement contract, terminating work and adding scope can take
longer given the additional FAR requirements that must be met to do
so, such as those related to terminations or competition for
modifications that change the scope of work.
• More flexible contracting process and less administrative work.
According to officials interviewed and the approval documents for all
eight OTAs we reviewed, OTAs have a more flexible process and
require less administrative work than procurement contracts. For
example, in April 2020, Army Contracting Command modified an
existing production OTA for a suite of communication capabilities
used in national emergencies to include $11 million for use of such
capabilities at COVID-19 testing sites. 56 Army Contracting Command
officials noted that these OTAs required less administrative work to
execute, including less required documentation than a procurement
contract.
55DOD and Transportation Security Administration officials stated that OTA awards are
not always faster to award than procurement contracts.
56Army Contracting Command officials awarded this production OTA to Augustine
Consulting, Inc. upon the successful completion of their prototype under a separate
prototype OTA. According to FPDS-NG data as of October 2020, this OTA was the only
production OTA awarded by DOD, which in part covered some of the communications
equipment used for the COVID-19 response.
Page 28 GAO-21-501 COVID-19 Contracting
• Nontraditional contractor engagement. Most of the nonvaccine
OTAs in our review were awarded to nontraditional contractors. For
example, in August and September 2020, the Army Medical Research
Acquisition Activity awarded OTAs with combined total obligations of
$19.2 million for seven nontraditional contractors to develop COVID-
19 wearable diagnostic devices. Army Medical Research Acquisition
Activity officials told us the OTAs enabled them to engage with
commercial companies that do not normally do business with DOD.
One such example is Fitbit. Army officials stated that military work
does not typically fit into Fitbit’s business model, but it entered into an
OTA for diagnostic devices. Similarly, HHS officials stated that many
biomedical research and development organizations are unable or
unwilling to agree to some government conditions in procurement
contracts, which they perceive to be burdensome.
In another example, in October 2020, Army Contracting Command
awarded a $481 million OTA to Cue Inc. for rapid COVID-19 detection
testing kits, which were the official test kits for the National Basketball
Association. Army Contracting Command officials told us that the OTA
provided a collaborative “training wheels” type of arrangement. This
allowed Cue Inc. to learn how to be a government contractor and
allowed the government to learn how to use Cue Inc.’s new
technology, which would not have been possible under a traditional
contracting mechanism.
• OTAs allowed for cost-sharing and ability to use additional
funding streams. Cost-sharing on an OTA occurs when a portion of
the total cost is paid by sources other than the federal government.
For example, in September 2020, the Air Force awarded an OTA with
$4.3 million in obligations to Essentium Inc. that was used to support
the defense industrial base for 3D printing capabilities. The Air Force
plans to leverage this 3D printing capability to address maintenance
and obsolescence issues in aircraft. In April 2021, we found that
COVID-19 exacerbated challenges at Air Force depots, such as
having too few materials to finish work. 57
Air Force officials explained that this OTA award helped increase cash
flow to the contractor to offset financial distress caused by COVID-19.
The Air Force awarded this OTA through a small business innovation
research pilot program, which has a cost-sharing requirement.
Specifically, the program has a matching-funds requirement: For
57GAO, Depot Maintenance: DOD Should Improve Pandemic Plans and Publish Working
Capital Fund Policy, GAO-21-103 (Washington, D.C.: Apr. 6, 2021).
Page 29 GAO-21-501 COVID-19 Contracting
every dollar of small business innovation research funding provided,
nonfederal sources must fund one dollar, and a private third-party
must fund two dollars. Air Force officials stated that accommodating
this cost-sharing requirement was a fundamental reason and benefit
for using an OTA for the effort.
Similar to the vaccine OTAs, two of the nonvaccine OTAs—Army
Contracting Command’s Regeneron therapeutics and COVID-19 rapid
test kit OTAs—used the CARES Act flexibility to delegate approval to
lower-level management reviews. 58 The Army’s head of contracting
activity—rather than the senior procurement executive—approved the
written determinations for both OTAs. Five nonvaccine OTAs we
reviewed did not use the CARES Act flexibility because they were (1)
awarded by DHS, which did not receive OTA flexibilities under the
CARES Act; or (2) below the relevant dollar thresholds. The remaining
nonvaccine OTA was awarded prior to the flexibilities being granted.
DOD awarded about 58 percent of the $12.5 billion in COVID-19 OTA
Majority of COVID-19 obligations to members of consortia through a single consortium
OTA Obligations management firm, but agencies did not report which members received
the awards and do not have policies that address the need for enhanced
Awarded through oversight of firm-managed consortia OTAs. DOD, HHS, and DHS did not
Consortia, but publicly report which consortium members received OTA awards because
of limitations with FPDS-NG, which reduces the transparency of these
Transparency and OTAs. In addition, consortium management firms can provide acquisition-
Oversight Are Limited support services for OTA awards that require heightened management
attention from the government. However, DOD and HHS policies do not
address mitigation of this known risk.
$7.2 Billion of OTA According to FPDS-NG, the top recipient of COVID-19 OTA obligations
Obligations Awarded was Advanced Technology International (ATI), a consortium management
firm (see fig. 4). 59
through One Consortium
Management Firm
58These two OTAs met the $100 million cost threshold to use DOD’s CARES Act flexibility
related to the senior procurement executives delegating approval of written determinations
to other officials. Pub. L. No. 116-136, § 13006(a).
59According to its website, ATI manages 21 different consortia—15 through OTAs and six
through procurement contracts.
Page 30 GAO-21-501 COVID-19 Contracting
Figure 4: Top Recipients of COVID-19 OTA Obligations as of March 14, 2021
Note: We corrected the FPDS-NG data by adding $1.6 billion in obligations the agencies did not
accurately report as COVID-19 OTAs. Our analysis did not include data that are not reported in
FPDS-NG because we did not assess the reliability of these data.
Prior to the COVID-19 response, OTA awards to ATI accounted for $3.5
billion, or 49 percent of the obligations on DOD’s prototype OTA awards
from fiscal years 2016 through 2018. 60
60GAO-20-84.
Page 31 GAO-21-501 COVID-19 Contracting
A consortium is comprised of members which can include traditional
contractors, nontraditional companies, nonprofit organizations, and
academic institutions interested in a specific topic area. A consortium can
be established to provide the government a pool of stakeholders to further
innovate in that topic area. According to ATI staff, some of these
consortium members may be less experienced in contracting with the
government. A consortium management firm may administratively
manage the consortium and act as a liaison or broker between the
members and the government in OTA awards (see fig. 5).
Figure 5: Notional Depiction of Relationships for One Type of Consortium Other
Transaction Agreement Model
Page 32 GAO-21-501 COVID-19 Contracting
As a consortium management firm, ATI manages multiple consortia. ATI
provides administrative support services that facilitate the contracting
process and does not perform prototype or production work under OTAs.
For example, ATI receives requests for prototype proposals from DOD
and distributes them to consortium members through an ATI-managed
solicitation system. ATI then reviews consortium members’ proposals to
ensure all required documentation is complete before submitting it to
DOD. ATI, on behalf of the consortia, also negotiates the terms and
conditions of base or “umbrella” OTA awards between DOD and
consortium members when such an approach is used. The base OTA
provides terms and conditions that generally apply to all project OTAs
awarded and serves as a starting point for negotiations between DOD
and consortium member awardees. For the six OTAs awarded through
ATI in our review, DOD paid ATI for its services under a cost-plus-fixed-
fee structure to assist in executing OTAs, which include acquisition
support services. Separately, consortium members pay dues to the
consortium.
For the COVID-19 response, three consortia managed by ATI have
received OTA awards: the Medical Chemical, Biological, Radiological and
Nuclear Defense Consortium (hereafter referred to as the medical
defense consortium), the Medical Technology Enterprise Consortium
(hereafter referred to as the medical technology consortium), and the
Countering Weapons of Mass Destruction Consortium. 61 According to
DOD and ASPR officials, awarding OTAs to consortia provided two main
benefits to the government for responding to COVID-19: a ready supply of
organizations interested in the subject matter and faster negotiation times
due to streamlined solicitation and selection procedures. For example:
• Medical defense consortium. In April 2016, Army Contracting
Command awarded a 20-year base OTA with an estimated ceiling of
$10 billion to the medical defense consortium through ATI. This OTA
was for conducting research and development into medical,
pharmaceutical, and diagnostic technologies to enhance mission
effectiveness of military personnel. From this base OTA, Army
Contracting Command awarded four vaccine OTAs and one
therapeutic OTA. According to DOD officials, the base OTA’s terms
and conditions provided a starting point for negotiations, which
expedited the negotiation process. The average award time for the
five medical defense consortium OTAs was 45 days.
61ATI waived its fixed fee for all COVID-19 awards.
Page 33 GAO-21-501 COVID-19 Contracting
• Medical technology consortium. In August 2015, Army Medical
Research Acquisition Activity awarded a 10-year base OTA to ATI to
help establish a medical technology consortium that could perform on
future OTA projects. 62 The projects include conducting research,
development, and testing leading to technology demonstrations in the
biomedical sciences and related fields to maintain and improve
service member health and performance. Army Medical Research
Acquisition Activity officials explained that the OTA consortium model
allows them to engage with medical companies that are not
accustomed to and generally do not want to navigate the government
procurement process. These officials also stated that ATI can rapidly
distribute their government solicitations to a pool of more than 300
medical technology consortium members that are already aware of or
engaged in work compatible with the activity’s needs.
Additionally, ASPR officials stated that while they previously did not
award many OTAs to consortia, they were interested in expanding their
use as a result of their positive experience with DOD and the medical
defense consortium. Specifically, ASPR officials stated that consortia
provide a ready pool of companies to respond to requests for proposals.
Agencies Generally Do When federal agencies award OTAs to consortia, they do not report
Not Report Data on which consortia members received the awards because the OTA module
of FPDS-NG does not currently have the capability to allow for this
Consortium Members
reporting. Instead, the OTA module tracks the top-level awardee—the
Receiving OTA Awards consortium or consortium management firm—but is opaque beyond that.
For example, our analysis of FPDS-NG data showed ATI receiving $7.2
billion in OTA obligations in response to COVID-19. However, our
analysis of OTA award documentation, publicly available data, and data
provided by ATI found that the majority of that funding was distributed to
five OTA awardees who performed the work. ATI received about 0.12
percent of the obligations to fund its support services (see fig. 6).
62According to ATI officials, after the medical technology consortium was established as a
legal entity, the OTA was novated or transferred to the consortium on August 31, 2016.
Page 34 GAO-21-501 COVID-19 Contracting
Figure 6: Coronavirus Disease 19 Other Transaction Agreement Awardees and Obligations in Federal Procurement Database
Compared to Awardees Who Actually Received Funds as of March 14, 2021
In another example, analysis of FPDS-NG data showed the medical
technology consortium—which is managed by ATI—received $19.2
million for the wearable COVID-19 diagnostics OTA award. Our analysis
of OTA documents for this project found that seven nontraditional defense
contractors—the University of California, San Francisco; Diomics; Silbel;
Philips; Empatica; Sempulse; and Fitbit—each received from $1.8 million
to $5.2 million to perform the work. 63 The medical technology consortium
and ATI did not receive any of the $19.2 million. Instead, ATI received a
separate payment of about $885,000 to reimburse OTA-execution costs,
63The request for prototype proposal for this OTA was open to both members and
nonmembers of the medical technology consortium. The request for prototype proposals
further noted that, if a nonmember submitted a proposal that was selected by the
government, the nonmember was required to join the consortium to receive an OTA
award. The medical technology consortium is administratively managed by ATI but is
separately identified in FPDS-NG, unlike the medical defense consortium.
Page 35 GAO-21-501 COVID-19 Contracting
which was awarded under the base OTA and not identified as COVID-19-
related.
ATI staff told us that the FPDS-NG OTA data overstate how much ATI
has received, making it appear that ATI retains billions in funding for its
services. ATI staff stated that the way the government reports OTA data
into FPDS-NG does not accurately capture ATI’s role. For the OTAs
awarded through ATI, the government selects which consortium members
receive awards and the amount of those awards. To this end, ATI’s
consortia websites provide some information on the consortium members
who received awards and the amounts each member received by
solicitation.
In November 2019, we found similar OTA data system limitations, and
DOD officials at that time stated they were working to address them. 64 In
April 2021, the DOD Inspector General also found that FPDS-NG did not
provide insight into consortium member awardees for non-COVID-19
OTAs awarded through consortia, among other data limitations. 65 The
DOD Inspector General recommended that DOD coordinate with GSA to
update FPDS-NG to more accurately capture data related to OTAs
awarded through consortia. DOD concurred with the recommendation
and stated that it was requesting FPDS-NG updates through the
Integrated Award Environment.
In April 2021, DOD officials told us they were proposing two changes to
the OTA module—one that would allow tracking of whether an OTA was
awarded to a consortium or not and one that would allow tracking of
which consortium members performed work on the OTA. However, DOD
officials added that they face challenges implementing changes related to
adding the capability to track consortium members. One challenge is that
FPDS-NG changes are resource-constrained and must be prioritized by a
majority of the Integrated Award Environment governing board. As noted
earlier, the board includes DOD, DHS, HHS, and GSA. Another issue is
that more broadly, GSA is leading an effort to revamp how federal
contractors are identified and tracked, which is to be completed by April
2022. DOD officials explained that they may wait until this tracking effort
is implemented before adding the capability to track consortium member
awardees for OTAs. While DOD’s proposed changes to the FPDS-NG
64GAO-20-84.
65Department of Defense Inspector General, Audit of Other Transactions Awarded
Through Consortiums, DODIG-2021-077 (Alexandria, VA: Apr. 21, 2021).
Page 36 GAO-21-501 COVID-19 Contracting
OTA module could provide the necessary insight into consortium member
awardees, these changes may not be prioritized by the Integrated Award
Environment given other competing demands for FPDS-NG and other
system changes.
Until the agencies have the capability to systematically track the
consortium members who received OTAs, information on the consortium
member awardees could be included in the description of requirement
field in the OTA module. As of April 2021, DOD, HHS, and DHS indicated
they have not required agreement officers to do so.
Additionally, agencies do not consistently provide this type of information
to congressional decision makers. For example, DOD’s fiscal year 2019
report on the use of OTAs submitted to the congressional defense
committees includes information on whether OTAs were awarded to a
consortium but does not include information on the consortium member
awardees. 66 In contrast, DHS’s fiscal year 2019 report on OTAs submitted
to the congressional homeland security committees includes some
information on consortium members who received OTA awards. 67
However, DHS’s OTA reports are not published, so taxpayers do not
have insight into which consortium members have received OTA awards
from DHS. According to HHS officials, HHS did not have a requirement to
report on its OTA use to congressional committees prior to the pandemic
and thus also has not provided OTA consortia awardee information to
congressional decision makers. 68
According to DOD, HHS, and DHS policies, one of the primary objectives
of agencies for using OTAs is to build new relationships with entities that
may not ordinarily do business with the government, such as start-up
companies. Further, federal standards for internal controls state that an
66Department of Defense, Office of the Under Secretary of Defense for Acquisition and
Sustainment, Report to Congress on the Use of Other Transactions (OT) Authority for
Prototype Projects in FY 2019 and First Quarter of FY 2020 (Washington, D.C.: Apr. 16,
2020).
67Department of Homeland Security, Office of the Chief Procurement Officer, Other
Transaction Authority, Fiscal Year 2019 (Washington, D.C.: Nov. 4, 2020).
68The CARES Act requires HHS to provide a report to the certain congressional
committees on the funds used for OTAs using certain CARES Act flexibilities after
expiration of the public health emergency declaration. Pub. L. No. 116-136, §§ 3301.
Page 37 GAO-21-501 COVID-19 Contracting
agency’s management should externally communicate quality information
to achieve its objectives and related risks. 69
Without transparency on the awardees who are performing the work on
OTAs awarded to consortia, congressional decision makers and
taxpayers have limited insight into the extent to which agencies are
achieving one of the purposes of awarding OTAs—attracting
nontraditional contractors.
DOD and HHS Policies Do When consortium management firms perform acquisition-support
Not Address Risks for services—activities that closely support inherently governmental
functions—they often require heightened management attention. For all
Consortium OTAs That
six OTAs that DOD awarded through ATI in our review, documentation of
Need Heightened DOD’s analysis of risks or mitigation steps related to this heightened
Management Attention attention was lacking.
According to the Office of Federal Procurement Policy’s Policy Letter 11-
01, inherently governmental functions refer to functions that are so
intimately related to the public interest, they are required to be performed
by federal employees. 70 One example of such a function is the
determination of whether prices are fair and reasonable when awarding
contracts. Additionally, the policy letter identifies categories of service
functions that are not considered inherently governmental and that
agencies are allowed to contract for but that require heightened
management attention because they are closely associated with the
performance of inherently governmental functions. These types of service
functions may require enhanced attention because of the possibility that
contractors may inappropriately influence the government’s authority,
control, and accountability for decisions.
According to the policy letter, an agency can determine that contractor
performance of such a service function is appropriate. However, for all
procurements of services above the simplified acquisition threshold where
the contracted function is closely associated with an inherently
governmental function, the agency should identify—during the acquisition
planning phase—risk mitigation steps to oversee and manage the
69GAO-14-704G.
70Office of Management and Budget, Office of Federal Procurement Policy, Performance
of Inherently Governmental and Critical Functions, Policy Letter 11-01, 76 Fed. Reg.
56,227 (Sept. 12, 2011).
Page 38 GAO-21-501 COVID-19 Contracting
contractor’s activities. 71 Specifically, the agency should document in the
contract file an analysis that establishes that the agency has sufficient
capacity and capability to give special management attention to
contractor performance and limit or guide the contractor’s discretion,
among other analyses.
As noted earlier, consortium management firms such as ATI can provide
acquisition-support services to the government that closely support
inherently governmental functions. For the six consortium OTAs in our
review, ATI’s acquisition-support responsibilities are outlined in the terms
and conditions of the base OTAs, which generally apply to the OTAs
awarded to consortia members. ATI’s acquisition-support responsibilities
for the COVID-19 wearable diagnostic devices OTA are outlined in the
terms and conditions associated with the August 2015 base OTA
awarded to the medical technology consortium. ATI provided services
that may closely support inherently governmental functions for the
wearable diagnostics OTA, such as analyzing consortium members’ cost
proposals (see fig. 7).
71The simplified acquisition threshold is generally $250,000. In certain situations, for
domestic purchases, this threshold can be increased to $800,000. For example, the Office
of Management and Budget noted that the President’s emergency declaration related to
COVID-19 allowed the simplified acquisition threshold to be increased. Currently, the
simplified acquisition threshold for these purposes is $800,000.
Page 39 GAO-21-501 COVID-19 Contracting
Figure 7: Examples of Services Performed by Advanced Technology International that May Closely Support Inherently
Governmental Functions for a Coronavirus Disease 2019 Wearable Diagnostics Other Transaction Agreement
The Army Medical Research Acquisition Activity agreements officer
responsible for the wearable diagnostic devices OTA stated that, while
ATI provided services that closely supported inherently governmental
functions, the government ultimately retained control over its inherently
governmental decisions. The agreements officer noted that he monitored
ATI’s performance to help ensure everyone “stayed in their lanes.” For
example, ATI conducted a cost analysis of the consortium members’ cost
proposals by reviewing proposed labor rates and comparing them to
Page 40 GAO-21-501 COVID-19 Contracting
market rates, noting that the proposals provided sufficient cost data and
were an adequate basis for award. The Army agreements officer then
reviewed ATI’s cost analysis and determined the costs to be fair and
reasonable to the government. However, the agreements officer
acknowledged that the Army Medical Research Acquisition Activity has
limited contracting capacity, citing increased use of medical technology
consortium OTA awards. ATI provides assistance in the government’s
evaluation process by providing cost analysis, which the agreements
officer reviews, and administrative support. The agreements officer also
confirmed that neither the base nor project OTA files included an
assessment of the extent to which ATI was closely supporting inherently
governmental functions or any enhanced management steps that needed
to be planned for or taken to oversee ATI’s performance of these
activities. Since our review, Army officials plan to develop a process to
measure and report on the consortium management’s firm performance
and a related quality assurance surveillance plan for the medical
technology consortium OTA.
For the five OTAs that Army Contracting Command awarded through ATI
to medical defense consortium members, Command officials also did not
document an assessment of the extent to which ATI was closely
supporting inherently governmental functions or any related enhanced
management steps for overseeing ATI’s performance in either the base or
project OTAs. When we discussed this issue with an Army Contracting
Command official in May 2021, the official told us that, upon review of the
policy letter, it did not appear that ATI provides services that closely
support inherently governmental functions. The official added that the
agreement officers, agreement officer’s representatives, and program
officials responsible for these OTAs provide oversight of ATI’s
performance. A Command official also noted that the government’s
oversight responsibilities were reviewed and discussed during the
acquisition planning phase, and that ATI performs services after receiving
approval or authorization from an agreement officer or agreement officer’s
representative. Army Contracting Command has highlighted in its OTA
training various acquisition support services provided by consortium
management firms that could closely support inherently governmental
functions, which are permitted. Specifically, typical consortium
management duties include preparing requests for proposals; negotiating,
awarding, and administering project OTAs; and project invoice receipt
and payments. However, the training emphasized that the firms cannot
perform inherently governmental functions. For the five medical defense
consortium OTAs, ATI issued Army Contracting Command’s request for
proposals, entered into project OTAs on behalf of the government, and
Page 41 GAO-21-501 COVID-19 Contracting
distributed funding to the OTA awardees. Without conducting and
documenting an assessment of ATI’s responsibilities, Army Contracting
Command missed an opportunity to determine the extent to which ATI’s
services closely supported inherently governmental functions and to take
any necessary steps to mitigate potential risks.
HHS’s September 2012 and DOD’s November 2018 OTA guides do not
include information that agreements officers should consider when
considering the use of a consortium management firm to support
acquisition-related activities that could closely support inherently
governmental functions. 72 The HHS OTA guide acknowledges that the
roles and responsibilities of the participants in an OTA awarded through a
consortium should be documented. However, the guide does not discuss
the role of a consortium management firm specifically. HHS officials noted
that they do not currently make much use of consortium management
firms. However, as noted above, HHS officials stated they are interested
in increasing use of consortiums in the future, which may lead to
increased use of consortium management firms. Officials from DOD’s
Office of Defense Pricing and Contracting—the office responsible for
updating DOD’s OTA guide—noted that they are aware of risks
associated with the functions provided by consortium management firms,
such as performing services that closely support inherently governmental
functions. Officials stated they are planning to update the DOD OTA
guide to address such risks but did not offer time frames for when the
update would be completed.
HHS’s and DOD’s guides also do not address what agreements officers
should do after award to help ensure consortium management firms are
not performing inherently governmental functions when they closely
support such functions. For example, the guides do not direct agencies to
monitor their oversight of consortium management firm activities to
ensure they have sufficient capacity and capability to provide such
oversight as needed. In contrast, DHS’s July 2019 OTA guide states that
agreements officers should, before and after award, ensure that
consortium management firms are not performing inherently
72Department of Health and Human Services, Office of the Assistant Secretary for
Preparedness and Response, Acquisition Management, Contracts and Grants, Biomedical
Advanced Research and Development Authority, Other Transaction Authority Guide and
Standard Operating Procedure (Sept. 2012) and Department of Defense, Office of the
Under Secretary of Defense for Acquisition and Sustainment, Other Transactions Guide,
Version 1.0 (Nov. 2018).
Page 42 GAO-21-501 COVID-19 Contracting
governmental functions. 73 The guide notes that the agreements officer
should review the proposed scope of work of consortium management
firms to identify functions that could be deemed inherently governmental
and ensure that the OTA specified that the performance of such activities
are conducted with sufficient federal involvement.
Without guidance on information that agreements officers should consider
prior to awarding OTAs through consortia in which consortium
management firms support acquisition-related activities, DOD and HHS
agreements officers may not fully consider the range of actions they
should take to mitigate risks of consortium management firms if they
perform functions that closely support inherently governmental functions.
From March 2020 through March 2021, DOD, HHS, and DHS obligated
DOD, HHS, and DHS $4.7 billion on undefinitized contracts in response to COVID-19 and
Obligated $4.7 Billion definitized these contracts to varying degrees for the selected cases we
reviewed. A majority of the $4.7 billion in contract obligations was for
on Undefinitized medical equipment and testing, hospital construction, drugs and
Contracts, but biologicals, and support of the defense industrial base. DOD officials cited
the ability to quickly award undefinitized contracts as a major benefit
Contract Finalization during COVID-19, while HHS and DHS used undefinitized contracts to a
Varied in Selected lesser extent.
Cases
Undefinitized Contracts From March 2020 to March 2021, obligations on DOD, HHS, and DHS
Used to Acquire Medical undefinitized contracts in response to COVID-19 increased from $250.3
million to about $4.7 billion. These undefinitized contract obligations
Supplies and Services,
comprised about 11 percent of COVID-19 procurement contract
Construct Hospitals, and obligations across these three agencies as of March 14, 2021, with DOD
Support Industrial Base accounting for the majority (see table 4).
73Department of Homeland Security, Office of the Chief Procurement Officer, Other
Transactions for Research and Prototype Projects Guide (July 11, 2019).
Page 43 GAO-21-501 COVID-19 Contracting
Table 4: DOD, HHS, and DHS Undefinitized Contract Obligations in Response to Coronavirus Disease 2019 as of March 14,
2021
Agency Undefinitized contract Procurement contract Undefinitized contract
obligations ($) obligations ($) obligations as a
percentage of
procurement contract
obligations (%)
Department of Defense (DOD) 4 billion 24.1 billion 17
Department of Health and Human Services (HHS) 668 million 16 billion 4
Department of Homeland Security (DHS) 12 million 2.2 billion 1
Total 4.7 billion 42.2 billion 11
Source: GAO analysis of Federal Procurement Data System-Next Generation data. | GAO-21-501
This 11 percent is slightly higher than in fiscal years 2017 through 2019,
when obligations on DOD, HHS, and DHS’s undefinitized contracts
accounted for 8 to 10 percent of procurement contract obligations in each
year.
Most of the COVID-19 obligations on undefinitized contracts awarded by
DOD, HHS, and DHS were used to acquire medical equipment, testing,
and drugs and biologicals; construct or alter hospitals; and support the
defense industrial base (see fig. 8).
Page 44 GAO-21-501 COVID-19 Contracting
Figure 8: Top COVID-19 Products and Services Acquired by DOD, HHS, and DHS Using Undefinitized Contracts as of March
14, 2021
Note: Under the foreign military sales program, foreign governments pay the U.S. government to
acquire defense articles and services on their behalf.
According to DOD officials, undefinitized contracts have been helpful in
addressing COVID-19 because they allowed contractors to begin work
immediately while they finalized negotiations. A senior DOD official stated
that the ability to award an undefinitized contract on the same day that the
agency receives funding is a powerful tool for responding to COVID-19.
HHS officials stated that they did not make significant use of undefinitized
contracts, in part, because many of their early purchases were for
commercial products, which did not require undefinitized terms and
conditions. DHS contracting policy officials stated that they did not make
Page 45 GAO-21-501 COVID-19 Contracting
significant use of undefinitized contracts because they are not a preferred
contracting mechanism within the department.
Following is additional information on the three undefinitized contracts we
reviewed:
• U.S. Army Corps of Engineers’ undefinitized contract for an
alternative care facility. In March 2020, the Army Corps awarded a
firm-fixed-price undefinitized contract with an estimated contract price
of $101 million to Turner Construction, nearly 1 week after issuing the
request for proposal. The contract was used to construct a temporary
COVID-19 alternative care facility at Stony Brook University in New
York. 74 According to a senior Army Corps official, the use of an
undefinitized contract was imperative to building the facility as quickly
as possible. When the Army Corps awarded the contract, terms and
conditions such as the type, quantity, and location of equipment and
structures had not yet been definitized.
In May 2020, after the contract was definitized and the contractor
completed construction of the facility, the State of New York took
control of the facility. According to Army Corps officials, the facility
was ready to be occupied when they turned it over to the State of New
York. Army Corps officials emphasized that the State of New York did
not require the facility to be permanent or designed to withstand
adverse weather conditions. According to a senior Army Corps official,
after construction completion, the facility experienced snow damage,
wind damage, generator issues, and mold growth. The contractor
maintained an on-site presence and worked with the Army Corps and
the State of New York to resolve issues covered by the contractor’s
warranty during the 6-month warranty period. After the warranty
period ended, the facility continued to experience weather-related
damage and could no longer be occupied. The State of New York
ultimately decided that the facility was not needed for patients, and
the facility was never used. As of March 2021, the Army Corps
74The facility was one of multiple facilities constructed throughout the U.S. by the Army
Corps with disaster relief funding from the Federal Emergency Management Agency to
help supplement the lack of capacity of existing hospitals. In April 2021, the DOD
Inspector General reviewed the Army Corps’ management of definitization timelines, fair
and reasonable price determinations, and profits adjusted for costs incurred for 30
alternative care facility undefinitized contracts. For more information, see Department of
Defense Inspector General, Audit of the U.S. Army Corps of Engineers Use of
Undefinitized Contract Actions for the Conversion of Alternate Care Sites in Response to
the Coronavirus Disease–2019 Pandemic, DODIG-2021-074 (Alexandria, VA: Apr. 7,
2021).
Page 46 GAO-21-501 COVID-19 Contracting
obligated $155 million for this effort, which included an additional $54
million above the initial estimated price for items not included in the
initial contract. These items included tents for putting on and taking off
personal protective equipment.
• ASPR undefinitized contract for convalescent plasma. In March
2020, ASPR awarded a $750,000 undefinitized contract to the
American Red Cross to start initial work for recruiting, collecting, and
distributing convalescent plasma from individuals who have COVID-
19 antibodies. ASPR awarded the undefinitized contract on the same
day the program office received this requirement. ASPR officials
stated that the undefinitized contract allowed the American Red Cross
to begin work before officials had information on the delivery schedule
or full scope of work. ASPR officials explained that none of the terms
and conditions were definitized at the time of award because they did
not have information on (1) the number of individuals who would be
willing to donate plasma or (2) the start-up costs, such as marketing
costs to recruit donors and the costs associated with the additional
personal protective equipment needed to collect plasma from COVID-
19 patients. These officials also noted that the requirement was
extraordinary and urgent because no other therapeutic options were
available at the time.
According to ASPR officials, when they definitized the contract in June
2020, the American Red Cross had already completed the necessary
start-up work. According to ASPR officials, as of January 2021, the
American Red Cross had collected over 142,000 units—at 200
milliliters per unit—of COVID-19 convalescent plasma and provided at
least 1 unit of plasma to over 1,200 hospitals. As of March 2021,
ASPR had obligated $120 million for this effort.
• Air Force undefinitized contracts for aircraft engines. In April
2020, the Air Force awarded four firm-fixed-price undefinitized
contracts with a combined estimated total contract price of $707
million to General Electric Aviation for foreign military sales of F110
engines to Slovakia, Bulgaria, Qatar, and Taiwan. 75 Prior to the
COVID-19 pandemic, the Air Force had already planned to award
75The foreign military sales program is an acquisition process through which the U.S.
government procures military equipment, training, and other services on behalf of foreign
governments. The Arms Export Control Act authorizes the sale of defense articles and
services to eligible foreign customers under this program, which is one of multiple security
cooperation programs that provide for the transfer of defense articles and services to
foreign governments.
Page 47 GAO-21-501 COVID-19 Contracting
undefinitized contracts for sales to Slovakia and Bulgaria because of
the long-lead times for production. 76 COVID-19, however, caused a
significant decrease in worldwide commercial airline travel, which
created unprecedented challenges for aerospace companies reliant
on commercial sales, including General Electric. As a result, General
Electric requested that the Air Force also award undefinitized
contracts for sales of engines to Qatar and Taiwan, as well as
advance payments on all four undefinitized contracts.
The Air Force approved the requests, and according to Air Force
officials, the only term not definitized at the time of award was the final
negotiated price. Air Force officials explained that using undefinitized
contracts for foreign military sales is a common practice because this
allows the contractor to start work while the government works with
the foreign nation on country-specific requirements. Similarly, we have
previously found that DOD used undefinitized contracts for foreign
military sales to help reduce schedule risk by allowing the work to
start earlier than under a definitized contract. 77
Timing of Definitization Table 5 shows the timing of definitization and the amounts obligated for
and Amount Obligated the three undefinitized contracts we reviewed.
Prior to Definitization
76Long-lead items include aircraft engines, which need to be procured early to reduce
production lead times and ensure that planned production schedules are maintained for
the related end item—the aircraft.
77GAO, Foreign Military Sales: Expanding Use of Tools to Sufficiently Define
Requirements Could Enable More Timely Acquisitions, GAO-17-682 (Washington, D.C.:
Aug. 14, 2017).
Page 48 GAO-21-501 COVID-19 Contracting
Table 5: Definitization Timing and Amounts Obligated for Selected Undefinitized Contracts Awarded in Response to
Coronavirus Disease 2019 (COVID-19)
Description of undefinitized contract Time between award and definitization Amount obligated prior to definitization
and the contracting agency
Alternative care facility in Stony Brook, 22 days $101 million or 100 percent of the estimated
New York (U.S. Army Corps of contract pricea
Engineers)
COVID-19 convalescent plasma 72 days $750,000 or 100 percent of the initial
(Department of Health and Human estimated contract priceb
Services, Office of the Assistant
Secretary for Preparedness and
Response)
Foreign military sales of F110 engines to Not applicable – not yet definitized as of $354 million or 50 percent of the estimated
support defense industrial base (Air April 12, 2021, 349 days after award contract price
Force)c
Source: GAO analysis of Department of Defense and Department of Health and Human Services information. | GAO-21-501
a
The CARES Act grants additional flexibilities for DOD to waive certain limitations on the amounts that
can be obligated before the contract is definitized.
b
The initial estimated contract price of $750,000, obligated at the time of award, was ultimately less
than 1 percent of the total obligated amount on the undefinitized contract as of March 14, 2021 ($120
million).
c
The Air Force took actions to increase cash flow to the contractor to offset financial distress caused
by COVID-19.
Agency officials provided additional context for the obligation amounts
and timing of definitization for these three undefinitized contracts:
• Pursuant to the CARES Act, the Army Corps’ head of contracting
activity approved a class waiver that removed certain statutory and
regulatory limitations on obligations for all alternative care facility
undefinitized contracts, including the Stony Brook contract. 78
Specifically, the waiver permitted Army Corps contracting personnel to
obligate 100 percent of the estimated contract price prior to
definitization. According to the determination, the Army Corps was the
only entity with the capacity to build the temporary medical
infrastructure needed to support rapid response to COVID-19. The
determination further noted that definitizing the undefinitized contract
at 50 percent of the estimated contract price (or 75 percent with a
qualifying proposal from the contractor) would have risked
unacceptable construction delay for this significant and high priority
mission.
78Pub. L. No. 116-136, § 13005, 134 Stat. at 522.
Page 49 GAO-21-501 COVID-19 Contracting
• For the COVID-19 convalescent plasma undefinitized contract, ASPR
officials explained that they determined the initial estimated contract
price to be $750,000 and obligated this full amount at award. As noted
earlier, ASPR officials did not have information related to the price per
unit, quantities, or start-up costs. As a result, they did not include a
total estimated contract price in their justification for using an
undefinitized contract, which is inconsistent with HHS’s acquisition
procedures. 79 ASPR officials explained that given the urgency of the
requirement and lack of information, including an estimated cost for
the total effort was not feasible at the time. According to ASPR
officials, the senior officials responsible for approving the undefinitized
contract knew that the total effort would be greater than the initial
$750,000 and that the risks of starting the undefinitized contract
without key information far outweighed risks of waiting for more
information given the lives being lost to COVID-19. ASPR officials
definitized the contract after obligating the initial $750,000, which
accounted for less than 1 percent of the $120 million obligated on the
contract as of March 14, 2021.
• For the four foreign military sales undefinitized contracts, Air Force
officials stated that they had not yet definitized the contracts 349 days
after award because General Electric had not yet submitted a
qualifying proposal. DOD may only enter into an undefinitized contract
if it requires definitization of contractual terms, specifications, and
price within 180 days after the contractor submits a qualifying
proposal for definitization or before obligating 50 percent of the
estimated contract price, whichever occurs earlier. 80 The CARES Act
allowed DOD to waive these requirements. However, the Air Force
has not elected to waive these requirements for the four foreign
military sales undefinitized contracts. 81
Federal contracting—including OTAs—plays a critical role in the nation’s
Conclusions response to COVID-19 by accelerating the development of vaccines and
the procurement of vital goods and services. It is imperative for the public
and congressional decision makers to understand the significant role that
OTAs play and how they can be leveraged in the future, especially if
another national emergency calls for the expanded use of such tools.
Government-wide systems can improve OTA reporting, but only if
79Department of Health and Human Services; Health and Human Services Acquisition
Regulation; Policy, Guidance, and Instructions § 316.603-70.
8010 U.S.C. § 2326(b).
81Pub. L. No. 116-136, § 13005, 134 Stat. at 522.
Page 50 GAO-21-501 COVID-19 Contracting
agencies collectively prioritize and implement these changes. Further, it is
also critical that agencies provide greater insight and oversight on
consortium management firms that may perform functions that are closely
associated with inherently governmental functions. This will contribute to
greater transparency and help ensure that the firms do not perform
inherently governmental functions.
We are making a total of 14 recommendations, including four to DOD,
Recommendations for four to DHS, two to GSA, and four to HHS. Specifically:
Executive Action
The Secretary of Defense—in coordination with the change control board
governing the Integrated Award Environment—should consider prioritizing
the development and implementation of a systematic approach to
consistently and accurately track other transaction agreements used for
national interest events and the associated dollars obligated.
(Recommendation 1)
The Secretary of Homeland Security—in coordination with the change
control board governing the Integrated Award Environment—should
consider prioritizing the development and implementation of a systematic
approach to consistently and accurately track other transaction
agreements used for national interest events and the associated dollars
obligated. (Recommendation 2)
The Secretary of Health and Human Services—in coordination with the
change control board governing the Integrated Award Environment—
should consider prioritizing the development and implementation of a
systematic approach to consistently and accurately track other
transaction agreements used for national interest events and the
associated dollars obligated. (Recommendation 3)
The Administrator of the General Services Administration—in
coordination with the change control board governing the Integrated
Award Environment—should consider prioritizing the development and
implementation of a systematic approach to consistently and accurately
track other transaction agreements used for national interest events and
the associated dollars obligated. (Recommendation 4)
Until a systematic approach to consistently and accurately track other
transaction agreements used for national interest events is implemented,
the Secretary of Homeland Security should update Department of
Homeland Security guidance to clarify how other transaction agreements
awarded in response to COVID-19 should be designated when reporting
Page 51 GAO-21-501 COVID-19 Contracting
in the other transaction agreement module of the Federal Procurement
Data System-Next Generation. (Recommendation 5)
The Secretary of Defense—in coordination with the change control board
governing the Integrated Award Environment—should consider prioritizing
the development and implementation of a systematic approach to track
the consortium members performing for each other transaction
agreement awarded through a consortium or consortium management
firm. (Recommendation 6)
The Secretary of Homeland Security—in coordination with the change
control board governing the Integrated Award Environment—should
consider prioritizing the development and implementation of a systematic
approach to track the consortium members performing for each other
transaction agreement awarded through a consortium or consortium
management firm. (Recommendation 7)
The Secretary of Health and Human Services—in coordination with the
change control board governing the Integrated Award Environment—
should consider prioritizing the development and implementation of a
systematic approach to track the consortium members performing for
each other transaction agreement awarded through a consortium or
consortium management firm. (Recommendation 8)
The Administrator of the General Services Administration—in
coordination with the change control board governing the Integrated
Award Environment—should consider prioritizing the development and
implementation of a systematic approach to track the consortium
members performing for each other transaction agreement awarded
through a consortium or consortium management firm. (Recommendation
9)
Until a systematic approach to track consortium members for other
transaction agreements awarded through a consortium or consortium
management firm is implemented, the Secretary of Defense should
provide information to the public and congressional decision makers on
the consortium members performing on each other transaction agreement
awarded through a consortium or consortium management firm, such as
by including this information in the description of requirement field in the
other transaction agreement module of the Federal Procurement Data
System-Next Generation. (Recommendation 10)
Page 52 GAO-21-501 COVID-19 Contracting
Until a systematic approach to track consortium members for other
transaction agreements awarded through a consortium or consortium
management firm is implemented, the Secretary of Health and Human
Services should direct the Office of the Assistant Secretary for
Preparedness and Response to provide information to the public and
congressional decision makers on the consortium members performing
on each other transaction agreement awarded through a consortium or
consortium management firm, such as by including this information in the
description of requirement field in the other transaction agreement
module of the Federal Procurement Data System-Next Generation.
(Recommendation 11)
Until a systematic approach to track consortium members for other
transaction agreements awarded through a consortium or consortium
management firm is implemented across agencies, the Secretary of
Homeland Security should provide information to the public on the
consortium members performing on each other transaction agreement
awarded through a consortium or consortium management firm, such as
by including this information in the description of requirement field in the
other transaction agreement module of Federal Procurement Data
System-Next Generation. (Recommendation 12)
The Secretary of Defense should direct the Director of Defense Pricing
and Contracting to update the Department of Defense’s other transaction
agreement guidance to include what agreement officers should consider
when planning to use a consortium management firm to support
acquisition-related activities, such as assessing the extent to which a
consortium management firm is closely supporting inherently
governmental functions and, for firms that do so, what enhanced
management oversight activities are appropriate, if any.
(Recommendation 13)
The Secretary of Health and Human Services should direct the Assistant
Secretary for Preparedness and Response to update the Department of
Health and Human Services’ other transaction agreement guidance to
include what agreement officers should consider when planning to use a
consortium management firm to support acquisition-related activities,
such as assessing the extent to which a consortium management firm is
closely supporting inherently governmental functions and, for firms that do
so, what enhanced management oversight activities are appropriate, if
any. (Recommendation 14)
Page 53 GAO-21-501 COVID-19 Contracting
We provided a draft of this report to DOD, HHS, DHS, and GSA for
Agency Comments review and comment. In written comments provided by DOD, HHS, DHS,
and Our Evaluation and GSA (reproduced in appendices II, III, IV, and V), the agencies
concurred with 11 of the 14 recommendations. Specifically, DOD
concurred with three of four recommendations, HHS concurred with all
four, DHS concurred with two of four, and GSA concurred with both
recommendations. The agencies generally provided steps they plan to
take to address these recommendations. As discussed further below,
DOD partially concurred with one recommendation, and DHS did not
concur with two recommendations—all three related to consistently and
accurately tracking OTAs awarded in response to national interest events
and dollars obligated.
DOD concurred with recommendations 6, 10, and 13 and described its
plans to address these recommendations in its written comments. DOD
partially concurred with the first recommendation regarding consideration
to prioritize the development and implementation of a systematic
approach to consistently and accurately track OTAs used for national
interest events and the associated dollars obligated. In its written
comments, DOD noted that it understands the importance of being able to
quickly identify awards made in support of national emergencies, such as
the response to the COVID-19 pandemic, for the public. DOD further
notes that the federal response to COVID-19 is very unique, and it is
unlikely that OTAs will be used to respond to national emergencies,
natural disasters, or contingency actions in the future. As a result, DOD
stated it does not believe expending resources on system changes to
FPDS-NG is warranted.
However, as we noted in our report, prior to the start of the pandemic,
DOD, DHS, and HHS increased their use of OTAs from $2.4 billion in
fiscal year 2017 to $7.8 billion in fiscal year 2019, or a 225 percent
increase. Further, in response to COVID-19, agencies obligated about
$12 billion on OTAs for research, development, and manufacturing
purposes. As future national emergencies arise—whether they are natural
disasters, contingency operations, or another health crisis—OTAs will
likely play a role in such events.
Through the Integrated Award Environment’s change control board,
agencies have an opportunity to lay the groundwork for better
transparency on OTA awards for national interest events in the future. In
its written comments, DOD also noted that a process-based approach,
rather than FPDS-NG system changes, could help track such OTAs, and
that it would work with the Integrated Award Environment’s change
control board to consider different approaches for identifying OTA awards
in the future. As the recommendation did not specify that the systematic
Page 54 GAO-21-501 COVID-19 Contracting
tracking should be accomplished through FPDS-NG changes, we believe
that DOD’s planned actions could meet the intent of the recommendation.
HHS concurred with recommendations 3, 8, 11, and 14 and described its
plans to address these recommendations in its written comments. In its
response, HHS shared plans to work in coordination with DOD and DHS
to prioritize the development of a systematic approach to consistently and
accurately track OTAs used for national interest events and to track the
consortium members performing for each OTA awarded through a
consortium or consortium management firm.
DHS concurred with recommendations 7 and 12 and described its plans
to address these recommendations in its written comments. DHS did not
concur with the second recommendation regarding consideration to
prioritize the development and implementation of a systematic approach
to consistently and accurately track OTAs used for national interest
events and the associated dollars obligated. In its written comments, DHS
noted that only its research and prototype OTAs are required by statute to
be reported in FPDS-NG. However, the primary purpose of the
recommendation is to increase accuracy and transparency for the public
to better understand the use of OTAs and dollars obligated, regardless of
what is required by statute to be publicly reported. Regardless of what
OTAs are required to be reported, DHS reported its use of OTAs to
FPDS-NG, and the reporting was inaccurate. As we noted in our report,
DHS obligated $57 million on COVID-19 OTAs, and of that, $25.5 million
or about 45 percent had not been accurately identified by DHS as
COVID-19-related. Further, none of the $57 million on DHS’s COVID-19
OTAs were research and prototype OTAs. Instead, all of DHS’s COVID-
19 OTAs were awarded by either the Countering Weapons of Mass
Destruction Office or Transportation Security Administration for services,
such as airport screening and cleaning. The discrepancy between what
DHS is statutorily required to report and what it actually reports for OTAs
underscores the inconsistency of reporting within DHS and the need for
quality information about OTA use and dollars in response to national
interest events.
In its response, DHS stated that if there is future use of OTAs in response
to a national interest event, DHS will issue instructions on how to identify
those actions when reporting to FPDS-NG is required. We believe there
are shortcomings to such an approach. The lack of a systematic
approach is, in part, why there was inaccurate reporting of COVID-19
OTAs. While it is not possible to anticipate the types of national interest
events that may arise in the future, DHS has an opportunity to approach
OTA reporting in a proactive rather than reactive manner.
Page 55 GAO-21-501 COVID-19 Contracting
DHS’s response also noted that FPDS-NG is used for reporting summary
level details of awards rather than dollars. However, this is an inaccurate
portrayal of FPDS-NG. FPDS-NG is the authoritative source for
contracting data, which includes dollars obligated on contract actions, and
is used by federal agencies to create reports to the President, the
Congress, GAO, federal agencies, and the public. As we noted in our
report, DHS obligated $57 million on OTAs in response to COVID-19
based on FPDS-NG data. In addition, FPDS-NG is a public database that
provides insight into summary-level OTA spending (agencies have not
reported data on OTAs in USAspending.gov). The recommendation is
meant to start a dialogue among the Integrated Award Environment’s
change control board agencies to weigh the costs and benefits of a
systematic approach to allow accurate and consistent tracking of OTA
obligations for decision makers and the public.
While DHS requests the recommendation be resolved and closed, given
the reasons that we cited above, we continue to believe that DHS should
consider prioritizing the development and implementation of a systematic
approach to accurately and consistently track OTAs used for national
interest events and the associated dollars obligated.
DHS also did not concur with the fifth recommendation regarding
updating DHS guidance to clarify how OTAs awarded in response to
COVID-19 should be designated when reporting in the OTA module of
FPDS-NG. In its response, DHS noted that additional guidance is not
necessary because designation of OTAs is addressed in its July 2019
OTA guide, and that only research and prototype OTAs are required to be
reported in FPDS-NG. However, DHS’s response does not address the
primary purpose of the recommendation—to provide the public with better
transparency on the dollars obligated on COVID-19 OTAs. First, DHS’s
July 2019 OTA guide pre-dates COVID-19 and thus does not address
how DHS should identify COVID-19 OTAs. Further, as noted above,
regardless of what DHS is required to report in FPDS-NG, it did not
accurately identify 45 percent of reported OTA dollars as COVID-19-
related.
DHS’s response noted that DHS voluntarily entered all of its Countering
Weapons of Mass Destruction OTAs into FPDS-NG in response to
COVID-19. However, without guidance to contracting personnel, it is likely
that there will continue to be errors in reporting. As we noted in our report,
part of the reason why DHS did not accurately identify $25.5 million in
OTAs as COVID-19-related is because DHS lacks guidance instructing
contracting personnel to do so. In its response, DHS also noted that it
maintains an internal OTA data collection and tracking log to ensure
Page 56 GAO-21-501 COVID-19 Contracting
OTAs are being documented. While this may be a helpful agency
management tool, such information is not publicly available and does not
provide the public with transparency into DHS’s COVID-19 OTAs.
While DHS requests the recommendation be resolved and closed, given
the reasons that we cited above, we continue to believe that DHS should
update DHS guidance to clarify how OTAs awarded in response to
COVID-19 should be designated when reporting in the OTA module of
FPDS-NG.
GSA concurred with recommendations 4 and 9 and described its plans to
address these recommendations in its written comments. In its response,
GSA recognized that policy drives the Integrated Award Environment
system functionality and noted it will collaborate with executive branch
stakeholders to clarify existing policy guidance on agency reporting
requirements for OTAs. GSA also noted it will work with the Integrated
Award Environment’s change control board to identify opportunities to
enhance OTA tracking and reporting compliance.
DOD, HHS, and DHS also provided technical comments, which we
incorporated as appropriate.
We are sending copies of this report to the appropriate congressional
committees, the Administrator of the General Services Administration, the
Secretary of Defense, the Secretary of Health and Human Services, the
Secretary of Homeland Security, and other interested parties. In addition,
the report is available at no charge on the GAO website at
http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-4841 or makm@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 the report
are listed in appendix VI.
Marie A. Mak
Director, Contracting and National Security Acquisitions
Page 57 GAO-21-501 COVID-19 Contracting
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
Chairwoman
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 58 GAO-21-501 COVID-19 Contracting
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 59 GAO-21-501 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
This report examines the extent to which: (1) selected agencies used
other transaction agreements (OTA) in response to Coronavirus Disease
2019 (COVID-19), and what factors contributed to their use, (2) these
COVID-19 OTAs were awarded to consortia and how agencies provided
oversight, and (3) selected agencies used and managed undefinitized
contracts in response to COVID-19.
To identify the extent to which selected agencies used OTAs in response
to COVID-19, we identified all the agencies that reported obligating
dollars through OTAs in response to COVID-19 in the Federal
Procurement Database System-Next Generation (FPDS-NG). 1 These
agencies were:
• Department of Defense (DOD); 2
• Department of Health and Human Services (HHS)—specifically, the
Office of the Assistant Secretary for Preparedness and Response
(ASPR), which includes the Biomedical Advanced Research and
Development Authority; 3 and
• Department of Homeland Security (DHS)—specifically, the Countering
Weapons of Mass Destruction Office and the Transportation Security
Administration.
We analyzed data available in the OTA module of FPDS-NG as of March
14, 2021 and identified OTAs and associated obligations by searching for
“coronavirus” and “COVID-19” in the description of requirement data field.
We analyzed the FPDS-NG data to identify the types of goods or services
procured by DOD, HHS, and DHS using OTAs. We assessed the
reliability of the FPDS-NG data by reviewing existing information about
the FPDS-NG system and the data it collects, such as the data dictionary
and data validation rules; performing electronic testing; and comparing
reported data to agency-provided data and OTA documents. We
1FPDS-NG is a comprehensive, web-based tool for agencies to report procurement
contract actions and is the authoritative source for procurement award data, including
dollars obligated on contract actions. It also includes a module for reporting OTAs.
2While DOD can use OTAs for research, prototyping, and production purposes, this report
is focused only on OTAs used to support prototyping and production efforts.
3The National Institutes of Health—a part of HHS—did not report awarding any OTAs in
response to COVID-19 in FPDS-NG as of March 14, 2021. In May 2021, officials from the
National Institutes of Health informed us they had obligated about $520 million on COVID-
19 OTAs as of April 26, 2021. We did not assess the reliability of these data and did not
include the $520 million in our analysis.
Page 60 GAO-21-501 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
determined that the control activities component of internal controls was
significant to this objective, along with the principle that management
should design information systems and related control activities to
achieve objectives and respond to risks. We also determined that the
information and communication component of internal controls was
significant to this objective, along with the principle that management
should externally communicate quality information to achieve objectives.
We assessed the FPDS-NG OTA module system and its ability to
accurately provide quality data on the actions and associated obligations
for COVID-19 OTAs and the extent to which this information was
communicated to congressional decision makers and the public. We
found the agencies did not accurately report all COVID-19 OTA
obligations, which we further discuss in the report. We identified
additional COVID-19 OTA obligations through agency-provided data and
documents. After we corrected the FPDS-NG OTA data for the
inaccuracies and underreporting, we determined the data were sufficiently
reliable for the purposes of describing agencies’ reported OTA obligations
in response to COVID-19. We also interviewed officials from the General
Services Administration (GSA), which administers FPDS-NG, including
the OTA module.
To identify the factors that contributed to DOD, HHS, and DHS using
OTAs in selected cases, we selected a nongeneralizable sample of 15
OTAs awarded between February 2020 and October 2020 based on the
FPDS-NG data, using the following criteria: 4
• Highest dollars obligated
• Representation of all three contracting agencies
• Mix of product or service acquired
• Vendor, including consortium participation
• Justification for OTA use (nontraditional contractor participation, cost
sharing, exceptional circumstance)
• Type of OTA (prototype or production)
• OTAs with potential data reliability concerns, including those identified
by agencies as COVID-19-related but were not identified as COVID-
19 in FPDS-NG
4Our selected OTAs included those awarded prior to February 2020 but were modified
between February 2020 and October 2020 to include COVID-19 work.
Page 61 GAO-21-501 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
When we selected our sample of OTAs in October 2020, the obligations
on OTAs across DOD, HHS, and DHS were 30 percent of total
obligations on all contracting mechanisms—OTAs and procurement
contracts—for these three agencies.
We selected seven vaccine OTAs, which comprised all obligations on
COVID-19 vaccine OTAs. We also selected eight nonvaccine OTAs. See
table 6 for details on the OTAs we selected.
Table 6: Selected COVID-19 Other Transaction Agreements (OTA)
Agency / component - vendor OTA number Description Obligations as of March
(consortium participation) 14, 2021 ($)
HHS / ASPR - Janssen (not through HHSO100201700018C COVID-19 vaccine 1.1 billion
a consortium) development and clinical
studies
DOD / Army Contracting Command W15QKN1691002 COVID-19 vaccine 1 billion
- Janssen (through a consortium) P000081 manufacturing
HHS / ASPR - AstraZeneca (not 75A50120C00114 COVID-19 vaccine 126 million
through a consortium) development
DOD / Army Contracting Command W15QKN2191003 COVID-19 vaccine 1.2 billion
- AstraZeneca (not through a development and
consortium) manufacturing
DOD / Army Contracting Command W15QKN1691002 COVID-19 vaccine 1.8 billion
- Sanofi (through a consortium) P000078 manufacturing
DOD / Army Contracting Command W15QKN1691002 COVID-19 vaccine 1.6 billion
- Novavax (through a consortium) P000074a manufacturing
DOD / Army Contracting Command W15QKN1691002 COVID-19 vaccine 2 billion
- Pfizer (through a consortium) P000076 manufacturing
DOD / Army Contracting Command W911NF2190001 Nonvaccine: increase domestic 481 million
- Cue Inc. (not through a production capacity of COVID-
consortium) 19 rapid detection test kits
DOD / Army Medical Research W81XWH2090015 Nonvaccine: the development 19.2 million
Acquisition Activity – University of of wearable diagnostics for
California, San Francisco / COVID-19 detection
Empatica / Sempulse / Fitbit /
Diomics / Silbel / Philips (through a
consortium)
DHS / Countering Weapons of 70RWMD20T00000006 Nonvaccine: COVID-19 23 million
Mass Destruction - American screening at U.S. Customs and
Medical Response (not through a Border Protection federal
consortium) inspection stations within ports
of entry
DHS / Transportation Security HSTS0116HRES950 Nonvaccine: COVID-19 4.9 million
Administration - City of Atlanta, cleaning and sanitation at the
Department of Aviation (not through Atlanta Airport
a consortium)
Page 62 GAO-21-501 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
Agency / component - vendor OTA number Description Obligations as of March
(consortium participation) 14, 2021 ($)
DOD / Air Force - Essentium Inc. FA86492099135 Nonvaccine: 3D printing for 4.25 million
(not through a consortium) replacement parts to support
the industrial baseb
DOD / Army Contracting Command W91CRB2090001 Nonvaccine: crisis response 11 million
- Augustine Consulting, Inc. (not communication kit
through a consortium)
HHS / ASPR - Regeneron HHSO100201700020C Nonvaccine: COVID-19 231 million
Pharmaceuticals (not through a therapeutic development
consortium)
DOD / Army Contracting Command W15QKN1691002 Nonvaccine: large scale 450 million
- Regeneron Pharmaceuticals, Inc. P00074a manufacturing of COVID-19
(through a consortium) therapeutic
ASPR - Office of the Assistant Secretary for Preparedness and Response
COVID-19 - Coronavirus Disease 2019
DHS - Department of Homeland Security
DOD - Department of Defense
HHS - Department of Health and Human Services
Source: GAO review of Federal Procurement Data System-Next Generation and agency information. | GAO-21-501
a
The OTA modification included two awards—one to Novavax and one to Regeneron.
b
The Air Force took actions to increase cash flow to the contractor to offset financial distress caused
by COVID-19.
The seven selected vaccine OTAs awarded by DOD and HHS account for
all $8.9 billion obligated on COVID-19 vaccine OTAs. The selected eight
nonvaccine OTAs awarded by DOD, HHS, and DHS accounted for an
additional $1.2 billion in COVID-19 obligations. Combined, these 15 OTAs
accounts for 81 percent of all obligation on COVID-19 OTAs as of March
14, 2021. For these selected cases, we analyzed OTA documents, such
as written determinations for OTA use, solicitation documents, and award
documents, and interviewed agreements officers and program officials.
As part of our analysis, we determined the extent to which these OTAs
used available CARES Act flexibilities. In addition, we reviewed agencies’
OTA policies and guidance and interviewed contracting policy officials at
DOD, HHS, and DHS.
To identify the extent to which DOD, HHS, and DHS awarded OTAs to
consortia in response to COVID-19, we analyzed the same data available
in the OTA module of FPDS-NG as discussed above but by vendor, and
we supplemented this analysis with reviews of publicly available
information and OTA documents. We determined that the information and
communication component of internal controls was significant to this
objective, along with the principle that management should externally
Page 63 GAO-21-501 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
communicate quality information to achieve objectives. We assessed
DOD’s, HHS’s, and DHS’s efforts to provide quality data on the
consortium members who performed significant work on OTAs to
congressional decision makers and the public. Of the 15 selected OTA
cases we reviewed, six were awarded to consortia, all by DOD. To
determine how DOD provided oversight for these six OTAs, we analyzed
OTA documents and interviewed agreements officers and program
officials to identify the extent to which these OTAs included analysis
required by the Office of Federal Procurement Policy’s Policy Letter 11-01
when contractors perform work closely associated with inherently
governmental functions. 5 We reviewed DOD, HHS, and DHS policies
related to OTAs awarded to consortia and these agencies’ reports to
congressional committees regarding OTA use. We also interviewed
officials from Advanced Technology International (ATI), the consortium
management firm that received the majority of COVID-19 OTA obligations
according to FPDS-NG data.
To identify the extent to which DOD, HHS, and DHS used undefinitized
contracts in response to COVID-19, we analyzed data available in the
procurement contract module of FPDS-NG as of March 14, 2021. 6 We
primarily identified these contract actions and associated obligations
related to the COVID-19 response by using the National Interest Action
code and supplementing this analysis by searching for “coronavirus” and
“COVID-19” in the description of requirement data field. 7 For the purposes
of our analysis, undefinitized contract obligations are associated with
contract actions identified in FPDS-NG as undefinitized, which includes
letter contracts. DOD, HHS, and DHS accounted for 96 percent of all
COVID-19-related undefinitized contract obligations reported across the
federal government in FPDS-NG over the time frame of our review, or
$4.9 billion. We analyzed the FPDS-NG data to identify the types of
goods or services procured by DOD, HHS, and DHS using undefinitized
5Office of Management and Budget, Office of Federal Procurement Policy, Performance of
Inherently Governmental and Critical Functions, Policy Letter 11-01, 76 Fed. Reg. 56,227
(Sept. 12, 2011).
6On April 12, 2021, in response to our review, HHS corrected information for an
undefinitized contract we reviewed by revising nine actions from being incorrectly
identified as undefinitized to correctly identified as definitized. We incorporated these
revisions into our March 14, 2021 data analysis, which resulted in a reduction of HHS
undefinitized contract obligations by $120 million.
7National Interest Action codes were established in 2005 after Hurricane Katrina with the
purpose of tracking federal procurements for specific disasters, emergencies, or
contingency events.
Page 64 GAO-21-501 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
contracts. We assessed the reliability of the FPDS-NG data by reviewing
existing information about the FPDS-NG system and the data it collects,
such as the data dictionary and data validation rules; performing
electronic testing, and comparing reported data to source documents. We
determined the FPDS-NG data were sufficiently reliable for the purposes
of describing agencies’ reported undefinitized contract obligations in
response to COVID-19.
To identify how DOD, HHS, and DHS managed selected undefinitized
contracts, we selected a nongeneralizable sample of three undefinitized
contracts awarded between February 2020 and October 2020 based on
the FPDS-NG data, using the following criteria:
• Highest dollars obligated
• Representation of the contracting agencies with the majority of
undefinitized contract obligations (DOD and HHS)
• Mix of product or service acquired
• Definitization status and schedule
• Percentage of work completed before definitization
• Vendor
• Extent competed
When we selected our sample of undefinitized contracts, the obligations
on undefinitized contracts across the three agencies were 6 percent of
total obligations on all contracting mechanisms—OTAs and procurement
contracts.
See table 7 for details on the undefinitized contracts we selected.
Page 65 GAO-21-501 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
Table 7: Selected COVID-19 Undefinitized Contracts
Agency / component - vendor Contract number Description Obligations as of March 14,
2021 ($)
DOD / Air Force - General FA862618D0029 (base award), Foreign military sales of jet 353.6 million
Electric Company FA862620F0026 (delivery engines to four countries to
order), FA862620F0027 support the defense industrial
(delivery order), basea
FA862620F0028 (delivery
order), FA862620F0029
(delivery order)
DOD / Army Corps of Engineers W912DS20C0008 Construct an alternative care 154.6 million
- Turner Construction Company facility in Stony Brook, New
York
HHS / ASPR - American Red 75A50120C00045 Convalescent plasma 120.3 millionb
Cross coordination and distribution
ASPR - Office of the Assistant Secretary for Preparedness and Response
COVID-19 - Coronavirus Disease 2019
DOD - Department of Defense
HHS - Department of Health and Human Services
Source: GAO review of Federal Procurement Data System-Next Generation and agency information. | GAO-21-501
a
The Air Force took actions to increase cash flow to the contractor to offset financial distress caused
by COVID-19.
b
Of the $120.3 million in obligations, HHS obligated $750,000 prior to definitizing or finalizing the
contract and $119.6 million after definitizing the contract.
The three undefinitized contracts we selected were awarded by DOD and
HHS and had combined undefinitized contract obligations of $509 million
or about 10 percent of all COVID-19 undefinitized contract obligations.
For these selected cases, we analyzed contract documents, such as
written determinations and award documents, and interviewed contracting
officers and program officials. As part of our analysis, we determined the
extent to which DOD used available CARES Act flexibilities for its
undefinitized contracts. In addition, we reviewed the Federal Acquisition
Regulation, agencies’ federal acquisition regulation supplements, and
agency policies and guidance related to undefinitized contracts. We also
interviewed contracting policy officials at DOD, HHS, and DHS.
We conducted this performance audit from August 2020 to July 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.
Page 66 GAO-21-501 COVID-19 Contracting
Appendix II: Comments from the Department
Appendix II: Comments from the Department
of Defense
of Defense
Page 67 GAO-21-501 COVID-19 Contracting
Appendix II: Comments from the Department
of Defense
Page 68 GAO-21-501 COVID-19 Contracting
Appendix II: Comments from the Department
of Defense
Page 69 GAO-21-501 COVID-19 Contracting
Appendix III: Comments from the
Appendix III: Comments from the Department
of Health and Human Services
Department of Health and Human Services
Page 70 GAO-21-501 COVID-19 Contracting
Appendix III: Comments from the Department
of Health and Human Services
Page 71 GAO-21-501 COVID-19 Contracting
Appendix III: Comments from the Department
of Health and Human Services
Page 72 GAO-21-501 COVID-19 Contracting
Appendix IV: Comments from the
Appendix IV: Comments from the Department of Homeland
Security
Department of Homeland Security
Page 73 GAO-21-501 COVID-19 Contracting
Appendix IV: Comments from the Department of Homeland
Security
Page 74 GAO-21-501 COVID-19 Contracting
Appendix IV: Comments from the Department of Homeland
Security
Page 75 GAO-21-501 COVID-19 Contracting
Appendix IV: Comments from the Department of Homeland
Security
Page 76 GAO-21-501 COVID-19 Contracting
Appendix V: Comments from the General
Appendix V: Comments from the General
Services Administration
Services Administration
Page 77 GAO-21-501 COVID-19 Contracting
Appendix VI: GAO Contact and Staff
Acknowledgments
Marie A. Mak, 202-512-4841 or makm@gao.gov
GAO Contact
In addition to the contact named above, Penny Berrier (Assistant
Staff Director), Claire Li (Analyst in Charge), Ryan F. Braun, and Adie Lewis
Acknowledgments were principal contributors. In addition, the following people made
contributions to this report: Vinayak Balasubramanian, Lorraine Ettaro,
Laura Greifner, Kurt Gurka, Julia Kennon, Edward J. SanFilippo, and
Roxanna T. Sun.
(104497)
Page 78 GAO-21-501 COVID-19 Contracting
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