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Law360 (April 20, 2020, 4:26 PM EDT) --
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| Edmund Amorosi |
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| Stephen Knight |
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| Jonathan Shaffer |
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| Daniel Ramish |
This article 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, preestablished 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 General Services Administration and U.S. Department of Veterans Affairs schedules for emergency relief.
Authorization for Emergency Procurement
On March 13, the president declared a national emergency[1] in response to the pandemic under the Stafford Act. As a result of this emergency declaration, the flexibilities identified in Federal Acquisition Regulation 18.202, "Defense or recovery from certain events," are available for use in supporting response efforts to COVID-19.[2]
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.[3]
Here, however, the Office of Management and Budget 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."
The 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.
Increased Simplified Acquisition Thresholds
FAR Subpart 18.202, Emergency Acquisition Flexibilities, provides flexible acquisition procedures for use in national emergencies and in other urgent and compelling circumstances:[4]
- The micro-purchase threshold is raised from $10,000 to $20,000 for domestic purchases and to $30,000 for purchases outside the U.S.;
- The simplified acquisition threshold is raised from $250,000 to $750,000 for domestic purchases and $1. 5 million for purchases outside the U.S.; and
- Agencies may use simplified acquisition procedures up to $13 million for purchases of commercial items.
These higher thresholds apply to goods and services procured for the COVID-19 pandemic response.[5]
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.[6]
Use of the governmentwide commercial purchase card is the preferred method of purchasing and paying for micro-purchases.[7] Contracting officers often delegate authority for micro-purchases to agency end users.[8]
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.[9]
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. Per OMB Memorandum M-20-18, dated March 20, the OMB advises that "[a]gencies 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."
Commercial Item Procurements for the COVID-19 Response
A U.S. Department of Defense memorandum titled "Determining and Making Commercial Item Procurements to Respond to the Coronavirus Disease 2019 (COVID-19),"[10] dated March 30, provides that "[m]ost of the supplies and services required by [the DOD] in response to [COVID-19] will be urgent commercial item procurements."
With that in mind, the Defense Contract Management Agency, or DCMA, issued a class, Commercial Item Determination, or 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:
- Efforts associated with research and development or procurement of COVID-19 vaccination(s) or antiviral medication(s) approved by the U.S. Food and Drug Administration;
- Efforts associated with establishing and setting up temporary booths, testing stations or hospitals for possible COVID-19 surges (including efforts performed by the Red Cross) (those other than real property);
- Emergency medical supplies (e.g. ventilators, masks, gloves, disinfectants, thermometers, beds, blankets) and services for COVID-19 relief efforts; and
- Facility-related services such as contracts for orderly shutdown and associated building and equipment maintenance such as deep cleaning efforts.
Such items may be procured using simplified acquisition procedures up to a value of $13 million. 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 CID class 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 under FAR 2.101. DCMA will update the CID as they become aware of other commercial items being procured for the pandemic.
Relief From Competition Requirements
The FAR extends federal agencies flexibility to limit sourcing in a national emergency:
Simplified Acquisitions
Subpart 18.110 of FAR authorizes single-source simplified acquisitions based on urgency or reasonable availability of sources: "Contracting officers may solicit from one source if the contracting officer determines … only one source reasonably available (e.g., urgency … industrial mobilization)."[11]
GSA Schedule Orders
FAR Subpart 8.4 permits agencies to limit the sources for awards when "[a]n urgent and compelling need exists, and following the procedures would result in unacceptable delays" or when "[o]nly one source is capable of providing the supplies or services required at the level of quality required because the supplies or services are unique or highly specialized."[12]
Other Procurements
Part 6 of FAR permits other than full and open competition "[w]hen the agency's need for the supplies or services is of such an unusual and compelling urgency that the government would be seriously injured unless the agency is permitted to limit the number of sources."[13]
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 Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, should assist agencies in drafting justifications and approvals.
Relief From Administrative Requirements
FAR Part 18 also provides the following exemptions from certain standard administrative requirements for urgent procurements responding to an emergency:
- System for Award Management, or SAM, registration;[14]
- Synopsis of proposed contract actions;[15]
- AbilityOne advance notice;[16]
- Qualification list requirements;[17]
- Electronic funds transfer requirements.[18]
The U.S. 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 to June 17, subject to an extension.[19]
Recent memoranda issued by the OMB[20] offer certain administrative relief to administrative assistance recipients as well, including, for example:
- Flexibility with SAM registration;[21]
- Flexibility with application deadlines;[22]
- Waiver for publication of Notice of Funding Opportunities, or NOFOs;[23]
- Exemption of certain procurement requirements;[24]
- Prior approval requirement waivers.[25]
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.
Disaster Relief Registry
The federal government maintains a database of contractors available to provide emergency response goods and services.
FAR 18.102(c) requires that "[c]ontracting 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 U.S. and outlying areas."[26]
Note that SAM registration is required for participation in the registry.
State and Local Authorization to Use GSA Schedules
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 through the U.S. GSA State and Local Disaster Purchasing Program website.[27] Purchase from VA schedules is also authorized.[28]
Best Practices for Contractors in Emergency Procurement Environment
Agencies such as the U.S. Department of the Treasury, the Federal Emergency Management Agency, and the Small Business Administration are scrambling to initiate massive relief programs in short time windows. Contractors who are in a position to support these and other agencies are wise to include in their approaches to contracting officials a list of contract vehicles and methods that agencies can use to place orders on a fast-track basis. For example, contractors should consider whether:
- New work orders can fit within the scope of existing contracts, avoiding the time and effort associated with placing new contracts, as OMB guidance permits;
- Existing orders can be placed against indefinite delivery/indefinite quantity contracts and GSA vehicles under fast-track methods in FAR Parts 8, 13 and 18 to streamline the acquisition and limit competition in some cases;
- The FAR provisions permitting exceptions to full and open competition are available for goods and services offered by the company;
- The dollar value of orders fits within the simplified acquisition thresholds, or can be justifiably managed to do so;
- The fast-track authorities apply to contracts for services as well as contracts for goods;
- The company has proper and adequate documentation, such as contract files, that will withstand the inevitable government audits and investigations, including documentation of the company's decision-making process to demonstrate reasonableness of its actions and allowability of its costs; and;
- The company is in frequent communications with contracting officers concerning performance issues relating to coronavirus, and the manner in which the company intends to address those issues.
Contractors are advised to continue to closely monitor the evolving guidance being issued by agencies on emergency procurement authorities for the pandemic response.
Edmund M. Amorosi is managing member, Stephen D. Knight and Jonathan D. Shaffer are members, and Daniel H. Ramish is an associate at Smith Pachter McWhorter PLC.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/.
[2] See OMB Memorandum M-20-18 , dated March 20, https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-18.pdf.
[3] See FAR 18.203.
[4] See FAR 8.202, FAR 2.101 and FAR 13.5.
[5] See OMB Memorandum M-20-18 , dated March 20. https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-18.pdf.
[6] FAR 13.201(d).
[7] FAR 13.201(b).
[8] FAR 1.603-3(b).
[9] FAR 13.104; see also FAR 13.106–1(a) (offering guidance on weighing the benefit of competition against other factors).
[10] https://www.acq.osd.mil/dpap/policy/policyvault/Determining_and_Making_Commercial_Item_Procurements_COVID-19_Memo_DPC.pdf.
[11] FAR 13.106-1(b)(1)(i).
[12] FAR 8.405-6.
[13] FAR 6.302-2.
[14] FAR 18.102; FAR 4.1102(a) (Note: In addition to waiver of SAM requirement for new offerors, M-20-18 available at https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-18.pdf, states "Current registrants in SAM with active registrations expiring before May 17 will be afforded a one-time extension of 60 days.").
[15] FAR 18.103; FAR 5.202(a)(2) (Note: Also requires threat of serious injury to the government).
[16] FAR 18.107; FAR 8.712(d).
[17] FAR 18.108; FAR 9.206-1(b).
[18] FAR 18.124; FAR 32.1103(e).
[19] See DOL Memorandum "Contracts for Coronavirus Relief Efforts," dated March 17, https://www.dol.gov/sites/dolgov/files/OFCCP/National-Interest-Exemption-Memo-Coronavirus-Relief-Efforts.pdf.
[20] OMB Memorandum M-20-17 , dated March 19, https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-17.pdf see also M-20-11 , dated March 9, https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-11.pdf.
[21] 2 CFR § 200.205.
[22] 2 CFR § 200.202.
[23] 2 CFR § 200.203.
[24] 2 CPR§ 200.319(b), 2 CPR§ 200.321.
[25] 2 CPR§ 200.407.
[26] See 26.205
[27] https://www.gsa.gov/buying-selling/purchasing-programs/gsa-schedules/schedule-buyers/state-and-local-governments/state-and-local-disaster-purchasing.
[28] http://thecgp.org/images/FSS-National-Emergency-Vendor-Guidance-3_20_2020-1.pdf.
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