Page 28 - FCW, August 2020

NICK WAKEMAN is editor- Commentary|BY NICK WAKEMAN in-chiefofWashington
Technology.
COVID response drives billions in no-bid contracts
Agencies used ‘unusual and compelling urgency’ to bypass full and open competitions, raising concerns about quality and cost-effectiveness
Through June 11, the federal government had spent $17.8 billion on contracts in response to the COVID-19 pandemic, according to the latest data from the Government Accountability Office. That number does not include loans and payouts through initiatives such as the Paycheck Protection Program.
Sixty-two percent of the money bought medical and surgical equipment such as masks, ventilators and gowns. That makes sense given that most of the money has been spent through the Department of Health and Human Services, with $8.9 billion in contract obligations.
Next was the Defense Department at $3 billion, followed by the Department of Homeland Security at $1.7 billion and the Department
of Veterans Affairs at $1.5 billion. Another $2.7 billion has been spent by 38 other agencies combined.
My main area of potential concern relates to the rate of competition. Of the $17.8 billion in contract awards, only 47% were awarded through competition. That means $9.4 billion was awarded noncompetitively. For two-thirds of those awards, agencies used the “unusual and compelling urgency exception to full and open competition,” GAO’s report states, adding that the exception “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.”
Purchases of products and goods saw the least competition. Only 39% were competed, compared
to 61% for services. Furthermore, 78% of the contract obligations were made through fixed-price contracts, which makes sense given how many products and goods were being purchased. Another
17% were awarded through cost- reimbursement contracts. Cost- reimbursement and time-and- materials/labor-hour contracts were used on 48% of the services awards.
In addition, GAO found that $11.7 billion was spent through new contractors, compared to $6.1 billion through pre-existing vehicles. The new contracts saw less competition. About 34% were competed while 72% of the work that went through existing contracts was competed.
This might be an area GAO explores further. “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,” auditors wrote.
Obligations went to more than 6,200 vendors, but the top 10 recipients accounted for one-third — or $5.6 billion in obligations. Those 10 reflect the product-heavy nature of the spending as well as the need to acquire drugs and biologics for test kits:
1. Philips Electronics North
America — $702.7 million
2. Emergent BioSolutions —
$642.8 million
3. Janssen Pharmaceutical —
$607.1 million
4. Hamilton Bonaduz AG — $596.8
million
5. Parkdale Advanced Materials
Inc. — $595.1 million
6. Thermo Fisher Scientific — $539
million
7. Hanesbrands — $523.5 million
8. RER Solutions — $500 million
9. General Motors — $476.1 million 10. ModernaTX — $430.3 million Auditors said they plan to take
a closer look at how agencies acquired goods and services.
That scrutiny will cover the
use of “undefinitized contract actions,” which allow contractors to begin work before reaching a final agreement on all terms and conditions, and “other transaction authority” actions.
They will also evaluate how closely agencies followed the government’s guidance on buying during the pandemic and how agencies
used their authority to reimburse contractors so they could maintain readiness. Therefore, unsurprisingly, there is more to come. ■
28 August 2020 FCW.COM
Washington Technology, a sister publication to FCW, covers all the ins and outs of the IT contracting community. Learn more at WashingtonTechnology.com.