Government contractors are playing a critical role providing essential goods and services to aid the Government's response to the COVID-19 pandemic. This client alert provides an overview for contractors and agency procurement officials of the most significant acquisition changes for sourcing goods and services more quickly given the urgent situation, which include increased simplified acquisition thresholds, pre-established commercial item status for specified goods and services essential to the pandemic response, relief from competition requirements, and easing of some administrative requirements for doing business with the federal government. There are also special avenues for contributing to the relief efforts, including the National Disaster Registry and a program granting state and local governments access to GSA and VA schedules for emergency relief.
On March 13, 2020, the President declared a national emergency in response to the pandemic under the Stafford Act. As a result of this emergency declaration, the flexibilities identified in FAR 18.202, "Defense or recovery from certain events," are available for use in supporting response efforts to COVID-19. OMB Memorandum M-20-18, dated March 20, 2020.
Notably, the COVID-19 emergency declaration is nationwide in scope. Emergency declarations under the Stafford Act typically specify an affected region, and contracting officers are then required to give preference to local firms in the designated area in the form of set-asides or an evaluation preference. See FAR 18.203. Here, however, OMB notes that "the declaration makes clear that the emergency created by the pandemic exists nationwide." For that reason, "there is no specific locally affected area, and therefore no current action required from the acquisition workforce to create preferences for local firms," though "[t]his issue will continue to be reviewed in light of ongoing response efforts." OMB does encourage agencies "to confer with OMB regarding potential circumstances where application of local set asides may make sense, especially for small business contractors." Thus, there is currently no limitation on companies that are not local to a hot spot contributing to the response effort, but companies in an area particularly affected by the pandemic, especially small businesses, may be able to advocate for local set-asides.
FAR 18.202, Emergency Acquisition Flexibilities, provides flexible acquisition procedures for use in national emergencies and in other urgent and compelling circumstances:
See FAR 8.202, FAR 2.101 and FAR 13.5.
These higher thresholds apply to goods and services procured for the COVID-19 pandemic response. See OMB Memorandum M-20-18, dated March 20, 2020. One notable exception applies to services procurements. Much lower statutory micro-purchase thresholds apply to services subject to the Service Contract Labor Standards statute ($2,500) and the Wage Requirements (Construction) statute ($2,000) (formerly the Service Contract Act and Davis Bacon Act, respectively). As of this writing, compliance with those statutes has not been waived for the COVID-19 pandemic response.
There is likely to be a very large volume of micro-purchases of goods made by contracting officials on the front lines responding to the pandemic. Micro-purchases are exempt from nearly all procurement laws and, with the exception of clauses for electronic funds transfer and unauthorized commitments, they do not require any FAR contract clauses or provisions. FAR 13.201(d). Use of the Governmentwide commercial purchase card is the preferred method of purchasing and paying for micro-purchases. FAR 13.201(b). Contracting officers often delegate authority for micro-purchases to agency end users. FAR 1.603-3(b).
Most higher-dollar purchases and services purchases are likely to be conducted using simplified acquisition procedures. Simplified acquisitions can be accomplished with imprest funds, purchase orders, blanket purchase agreements, or government commercial purchase cards, as appropriate. Simplified acquisitions are exempt from the full and open competition requirement of the Competition in Contracting Act, and need only provide for competition to the “maximum extent practicable,” taking into account the administrative costs of the purchase. FAR 13.104; see also FAR 13.106–1(a) (offering guidance on weighing the benefit of competition against other factors).
Agencies also have authority to use existing contracts and task and delivery orders to source goods or services, or increase quantities, to support the pandemic. See OMB Memorandum M-20-18, dated March 20, 2020 (OMB advises that "Agencies should… consider whether contracts that possess capabilities for addressing impending requirements such as security, logistics, or other function may be retooled for pandemic response consistent with the scope of the contract.").
A Department of Defense (DoD) memorandum entitled Determining and Making Commercial Item Procurements to Respond to the Corona virus Disease 2019 (COVID-19) dated March 30, 2020 provides that "[m]ost of the supplies and services required by [DoD] in response to [COVID-19] will be urgent commercial item procurements." With that in mind, the Defense Contract Management Agency (DCMA) issued a class Commercial Item Determination (CID) addressing items likely to be procured for the pandemic. The following items (as further detailed in the CID), if procured for the COVID-19 pandemic response, are determined to be commercial items:
Such items may be procured using simplified acquisition procedures up to a value of $13M. The DoD memo states that for services to fall within the scope of the CID they must be the same as those being offered to the general public and subject to similar terms and conditions.
The class CID is not exclusive and all-encompassing; other goods and services will qualify as commercial items to the extent that they meet the commercial item definition at FAR 2.101. DCMA will update the CID as they become aware of other commercial items being procured for the pandemic.
The FAR extends federal agencies flexibility to limit sourcing in a national emergency:
The COVID-19 pandemic response is a textbook example of "unusual and compelling urgency." The President's national emergency declaration and the legislative language in the CARES Act should assist agencies in drafting justifications and approvals.
FAR Part 18 also provides exemptions from certain standard administrative requirements for urgent procurements responding to an emergency:
The Department of Labor has also waived affirmative action obligations of supply and service and construction contracts for coronavirus relief efforts for a period of three months, from March 17, 2020 to June 17, 2020, subject to an extension. DOL Memorandum "Contracts for Coronavirus Relief Efforts," dated March 17, 2020.
Recent memoranda issued by OMB offer certain administrative relief to administrative assistance recipients as well, including, for example:
OMB Memorandum M-20-17, dated March 19, 2020; see also M-20-11, dated March 9, 2020. Note the above exemptions are subject to limitations set forth in the memoranda and are only representative; the memoranda contain many additional exemptions as well.
The federal government maintains a database of contractors available to provide emergency response goods and services. FAR 18.102(c) requires that "Contracting officers shall consult the Disaster Response Registry via https://www.sam.gov., Search Records, Advanced Search, Disaster Response Registry Search to determine the availability of contractors for debris removal, distribution of supplies, reconstruction, and other disaster or emergency relief activities inside the United States and outlying areas. (See 26.205)." Note that SAM registration is required for participation in the Registry.
The GSA Disaster Purchasing Program authorizes state and local governments to buy supplies and services from all GSA Schedules "to facilitate disaster preparation, response, or major disaster recovery" in response to a declared national emergency. Contractors with existing schedules may be able to use this program to provide assistance to state and local governments in communities most affected by the virus. Additional information is available here. Purchase from VA schedules is also authorized.
We will continue to closely monitor the evolving guidance being issued by agencies on emergency procurement authorities for the pandemic response. If you have any questions, please contact: