Four agencies — Health and Human Services, Defense Department, Homeland Security, and Veterans Affairs — have accounted for 85 percent of the $17.8 billion in government contracts awarded in response to the COVID-19 pandemic, as of June 11 federal contract obligations.
The Government Accountability Office conducted its first in a series of reviews of the coronavirus funding per a provision in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). “Future GAO work will examine agencies’ planning and management of contracts awarded in response to the pandemic, including agencies’ use of contracting flexibilities provided by the CARES Act,” the report noted.
Out of contract actions with more than 6,200 vendors, the top 10 vendors accounted for about a third, or $5.6 billion, of total contract obligations. Twenty-nine percent of contract obligations, or about $5.1 billion, went to small businesses.
About 62 percent of the pandemic contracts awarded through June 11 were for personal protective and treatment equipment, including N95 respirators and ventilators. After that, the top goods or services provided were hospital and surgical clothing, advanced biomedical research and development, drugs and biologicals, and laboratory equipment and supplies. Contracts included about $3 billion for ventilators, about $1.3 billion for N95 respirators, about $1.2 billion for personal protective equipment like surgical gowns and gloves, and about $737 million for pharmaceuticals to treat COVID-19 patients and reagents used for administering COVID-19 tests.
Coronavirus contracting saw the greatest surge in the second half of March, with $4.3 billion in obligations by March 29. Contracting activity peaked when the U.S. had just passed 100,000 confirmed COVID-19 cases; today, there have been more than 4.5 million cases in the country and more than 153,000 deaths here.
“Government-wide, about $8.3 billion, or 47 percent, of contract obligations in response to COVID-19 were identified as competitively awarded as of June 11, 2020. Out of the approximately $9.4 billion identified as noncompetitive contract obligations, more than two-thirds, or about $6.9 billion, were reported as using the unusual and compelling urgency exception to full and open competition,” GAO said. “Awarding contracts under the unusual and compelling urgency exception to full and open competition can be necessary in certain circumstances, but our prior work has noted that promoting competition—even in a limited form—increases the potential for quality goods and services at a lower price in urgent situations.”
About 39 percent of obligations for goods were competed compared to about 61 percent of obligations for services, GAO found.
About $11.7 billion of the $17.8 billion awarded across all agencies consisted of new contracts; drugs and biologicals accounted of most of the pre-existing contract obligations. But contracts for the majority of goods procured were new contracts in response to the pandemic.
“Obligations on new contracts were competed less frequently than obligations on preexisting contracts, with about 34 percent of obligations on newly awarded contracts competed, compared to about 72 percent of obligations on pre-existing contracts,” GAO said. “Our prior work has noted that agencies can leverage contracts awarded in advance of a disaster to rapidly and cost-effectively mobilize resources, and that these contracts can help preclude the need to procure critical goods and services noncompetitively.”
Agencies made about $13.8 billion, or 78 percent, of all contract obligations on fixed-price contracts. About $3 billion, or 17 percent, of contract obligations were made on cost-reimbursement contracts.
Out of the top four awarding agencies, Veterans Affairs gave the highest percentage of contract obligations — 66 percent — to small businesses. The Defense Department awarded 37 percent to small businesses, DHS came in at 17 percent, and HHS at 15 percent.
“About $1.4 billion, or 85 percent, of DHS’s obligations in response to COVID-19 have been on contracts for goods. Almost 70 percent of DHS’s total obligations were on contracts for medical equipment and supplies, including reusable gowns and N95 respirators for medical professionals,” GAO reported. “According to federal procurement data, the $196 million DHS obligated for other medical services were on contracts for emergency management support services in New York and New Jersey.”
From March 17 through June 11, DHS made 34 awards for micro-purchases, 56 awards for simplified acquisitions, and 18 awards for commercial items under the special emergency procurement authority for COVID-19 contract obligations. Agencies are only required to report contract actions above the micro-purchase threshold in the Federal Procurement Data System-Next Generation per FAR 4.606, GAO noted, so some agencies have reported these actions in response to COVID-19, but the actions and obligations reported do not reflect all agency micro-purchases.