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Law360 (January 7, 2021, 5:57 PM EST) -- The Federal Emergency Management Agency on Thursday finalized a regulation establishing that health care and medical contracts supporting national defense can take priority over all other federal and private contracts, emphasizing the rule's broad scope.
The rule finalizes the new Emergency Management Priorities and Allocations System, or EMPAS, which will allow agencies to direct companies to give contracts for health and medical resources top priority whenever necessary.
"These regulations are part of FEMA's response to the ongoing COVID-19 emergency," the agency said.
Under EMPAS, federal agencies can place priority ratings on federal contracts and orders for items like personal protective equipment or ventilators, with the most important orders able to take precedence not only over private contracts but over other federal contracts as well, FEMA said in its May 2020 interim rule establishing the system. That includes contracts given a "DX" rating under the Defense Production Act, or DPA, meant for orders considered to be "of the highest national priority."
It also creates an unusual authority allowing orders for scarce or critical resources to be made using EMPAS on behalf of private parties like hospitals, and not just the government itself, attorneys told Law360 after FEMA issued its interim rule.
Although intended to help respond to the spread of COVID-19, EMPAS will continue to apply beyond the end of the pandemic, FEMA said, adding in its interim rule that it will also be able to be used in both emergency and nonemergency situations.
The agency made no changes from the interim rule other than minor edits to formatting and references. It rejected a suggestion from a commenter to implement a longer time period for companies to reply to emergency order requests, and responded to another to emphasize the scope of the rule.
The latter commenter had suggested that EMPAS be extended to include vaccine active ingredients, booster additions for vaccines and related "fit and finish" items like glass vials and packaging, and also to cover distribution systems and medical facilities for vaccine administration.
But all of those items are already within the scope of the rule, which uses a broad definition of "health and medical resources," FEMA said.
Representatives for several health care and contractor industry groups did not immediately respond to requests for comment on Thursday.
EMPAS will become part of the Federal Priorities and Allocations System, or FPAS, a broader body of regulations implementing Section 101(a) of the DPA, according to the rule.
Section 101(a) allows the president to compel companies to take federal contracts or orders related to national defense and give those orders priority over any other contract they may have. FEMA was delegated the ability to use that authority after being given the lead role in coordinating the federal response to the coronavirus.
The new system is intended to be consistent with current FPAS programs, such as the U.S. Department of Commerce's Defense Priorities and Allocations System and the U.S. Department of Health and Human Services' Health Resources Priorities and Allocations System, largely adopting aspects of those existing rules, FEMA said.
FEMA noted that if there was a clash between those existing FPAS rules, it had prioritized using rules that were more flexible and allowed for a speedier acquisition process.
--Editing by Steven Edelstone.
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