COVID-19 Contracting: Opportunities to Improve Practices to Assess Prospective Vendors and Capture Lessons Learned

GAO-21-528 Published: Jul 29, 2021. Publicly Released: Jul 29, 2021.
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Fast Facts

As of May 2021, federal agencies had obligated billions of dollars in contracts for medical supplies and other pandemic-related goods and services. Most (88%) went to vendors with prior federal experience, but in 2020, the share of contracts going to vendors new to federal contracting was 5 times greater than in a typical year.

Contracting during an emergency can be challenging. For example, contracting officers had to buy things that their agencies don't usually buy, and faced pressure to award contracts quickly.

We recommended that agencies include contracting challenges as they collect and share lessons learned from COVID-19.

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Highlights

What GAO Found

As of May 31, 2021, agencies obligated $61.4 billion for contracts in response to the COVID-19 pandemic. Agencies cancelled $4 billion in obligations, in some cases due to contract terminations. The proportion of obligations to vendors with prior federal experience government-wide was 88 percent but varied by agency (see figure). In calendar year 2020, agencies awarded about 5 times as many contracts to vendors without prior federal contracting experience for COVID-19, as compared to contracts awarded overall in preceding calendar years.

COVID-19-Related Contract Obligations to Vendors with or without Prior Federal Contracting Experience for the Five Agencies with the Most Obligations, as of May 31, 2021

COVID-19-Related Contract Obligations to Vendors with or without Prior Federal Contracting Experience for the Five Agencies with the Most Obligations, as of May 31, 2021

For the selected contracts GAO reviewed across four agencies—the Departments of Defense (DOD), Health and Human Services (HHS), Agriculture (USDA), and Homeland Security (DHS)—contracting officials identified a number of challenges, including:

  • working with vendors new to federal contracting or vendors supplying products they had not previously provided;
  • operating under limited time frames to make awards; and
  • contracting for supplies and services the agency does not typically buy.

The four agencies are collecting and sharing lessons learned related to their COVID-19 response. However, HHS and DHS have not included contracting lessons learned, even though they identified contracting challenges. Collecting contracting lessons learned could inform future emergency response efforts. Furthermore, although interagency coordination was critical to the response, contracting lessons learned are at risk of not being reflected in formal interagency lessons learned efforts. Without a process to do so, federal agencies risk missing an opportunity to memorialize contracting and coordination practices that were successful, as well as those that were not, for future emergencies.

Why GAO Did This Study

In response to COVID-19, agencies awarded contracts for goods and services to vendors from a range of industries and with varying levels of federal contracting experience, but some vendors have been unable to deliver under those contracts.

The CARES Act included a provision for GAO to review COVID-19-related federal contracting under the act. This report addresses (1) COVID-19 contract obligations and characteristics of vendors, (2) contracting challenges, including with agency assessments of vendors, and (3) whether lessons learned efforts reflect those challenges.

GAO analyzed federal procurement data on agencies' reported COVID-19 contract obligations through May 31, 2021. GAO examined a nongeneralizable sample of 28 contracts with high dollar values or other characteristics from four agencies—DOD, HHS, USDA, and DHS. GAO interviewed officials, including Office of Management and Budget (OMB) officials about their emergency acquisition guidance.

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Recommendations

GAO is making 10 recommendations, including that agencies establish processes to better collect and communicate contracting lessons learned during emergencies such as COVID-19. Agencies agreed with nine recommendations. OMB did not agree to establish time frames for updating its guidance. GAO continues to believe OMB should do so, as discussed in this report.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services The Secretary of Health and Human Services should direct the Assistant Secretary for Preparedness and Response to review and fully communicate the resources available to contracting officers for assessing prospective vendors—including resources to assess financial capability. (Recommendation 1)
Open
HHS agreed with this recommendation. As of September 2022, HHS officials said that the Assistant Secretary for Preparedness and Response is in the process of updating its Audit Review Standard Operating Procedure to provide additional guidance to staff on financial information and advice related to determining the effectiveness of contractor's financial operations. We will continue to monitor HHS's efforts to review and better communicate the resources available to contracting officers for assessing prospective vendors, including vendor's financial capabilities.
Department of Health and Human Services The Secretary of Health and Human Services should direct the Assistant Secretary for Preparedness and Response to develop internal guidance that includes information for contracting officers related to contracting and assessing prospective vendors during emergencies. (Recommendation 2)
Open
HHS agreed with this recommendation. As of September 2022, HHS officials said that the Health and Human Services Acquisition Regulation is in the process of being updated. Following that update, Assistant Secretary for Preparedness and Response officials expect to be able to finalize their guidance related to contracting and assessing vendors during an emergency. We will continue to monitor HHS's efforts to develop additional guidance.
Department of Agriculture The Secretary of Agriculture should direct the Administrator of the Agricultural Marketing Service to evaluate the contracting practices established to assess vendors and implement the Farmers to Families Food Box Program to determine what practices could be used for future emergency procurements and incorporate those practices into internal guidance. (Recommendation 3)
Closed – Implemented
USDA agreed with this recommendation and has since incorporated lessons learned from the Farmers to Families Food Box Program into the Emergency Food Assistance Program. For example, in April 2022, USDA released qualification requirements for prospective vendors interested in supplying fresh produce for the Emergency Food Assistance Program that are similar to those used to assess vendors during the implementation of the food box program, and updated certain requirements related to vendor registrations and licenses based on its earlier experiences. Further, USDA officials told us that the department will rely on the Emergency Food Assistance Program to administer any future emergency purchases of food boxes, and that based on their experiences with the food box program, they have established a produce food package that can be distributed to recipients nationwide by the Emergency Food Assistance Program network. In addition, in April 2022, USDA provided guidance to its contracting officers on using Basic Ordering Agreements for future emergency procurements based on its experiences using these agreements during the response to COVID-19. The guidance instructs contracting officials to use Basic Ordering Agreements in the event of an emergency where USDA needs to procure foods outside the scope of its existing vendors' capabilities in order to more quickly fulfill its needs.
Office of Federal Procurement Policy The Administrator of the Office of Federal Procurement Policy should revise the Emergency Acquisitions Guide, based on outreach to agencies involved in the COVID-19 response, to account for information on the obstacles contracting officers may face when assessing prospective vendors during an emergency and key practices or resources to address those obstacles, and communicate those revisions to agencies once complete. (Recommendation 4)
Open
OMB agreed with this recommendation, and as of August 2022, stated that it is in the process of revising the Emergency Acquisitions Guide. We will continue to monitor OMB's efforts to revise the guide to include obstacles contracting officers may face when assessing prospective vendors during an emergency, and key practices or resources to address them
Office of Federal Procurement Policy The Administrator of the Office of Federal Procurement Policy should establish a process and time frames for regularly updating the Emergency Acquisitions Guide to ensure resources and practices federal agencies can use when contracting during an emergency are current. (Recommendation 5)
Open
OMB did not agree with this recommendation, stating that there may be more efficient ways to share resources with the acquisition workforce than the Emergency Acquisitions Guide. In March 2022, OMB officials said that they plan to work closely with federal agencies to determine the mix of resources that would help to support the acquisition workforce in preparing for and responding to emergency situations, including the future role of the Emergency Acquisitions Guide. As of August 2022, OMB stated it planned to begin these discussion with agencies after updates to the Emergency Acquisitions Guide were complete. We continue to believe that establishing a process and time frames for updating the resources and practices that are available in the Emergency Acquisitions Guide-a tool agencies can use when contracting during emergencies that has not been updated since 2011-will ensure that federal agencies (particularly those not typically involved in emergency response activities) have the most up to date information to assist them.
Department of Health and Human Services The Secretary of Health and Human Services should ensure that, as part of the Exercise, Evaluation and After Actions Division's ongoing after-action reporting and corrective action program, contracting lessons learned in response to COVID-19 and future emergency response efforts are collected, analyzed, validated, archived, and shared to inform HHS's contracting efforts in response to ongoing and future emergencies. (Recommendation 6)
Open
HHS agreed with this recommendation. As of September 2022, HHS officials from the Exercise, Evaluation, and After Actions Division said they continue to collect data related to the COVID-19 response. Once finalized, the Division plans to share collected observations as part of a monthly working group to determine, analyze, and validate corrective actions, which will then be reported and shared as part of an Improvement Plan. We will continue to monitor HHS's efforts to ensure that contracting lessons learned are collected, analyzed, and shared to inform ongoing and future response efforts.
Federal Emergency Management Agency The Administrator of the Federal Emergency Management Agency should direct the Head of Contracting Activity to establish a formal process to (1) collect contracting lessons learned from COVID-19 and future emergency response efforts; and (2) ensure contracting lessons learned are shared with the Continuous Improvement Program for inclusion in FEMA's formal lessons learned process to inform FEMA's contracting efforts in response to ongoing and future emergencies. (Recommendation 7)
Open – Partially Addressed
FEMA agreed with this recommendation. In September 2021, FEMA officials told us they conduct annual disaster webinar training for its procurement staff that includes acquisition topics and lessons learned. FEMA officials also stated that as their Policy and Quality Control Branch identifies potential lessons learned during their review of solicitations and contract awards, these lessons learned will be added to future training. In February 2022, FEMA conducted a survey and collected lessons learned and suggestions for improving future emergency response efforts from contracting officials. According to FEMA procurement officials, the information collected in the survey will be analyzed and included in subsequent disaster contracting webinars, and they will coordinate with the Continuous Improvement Program to ensure that any applicable issues or concerns identified in the annual survey are incorporated and considered as part of relevant after-action review efforts. As of August 2022, FEMA had not identified any additional steps it had taken. We will continue to monitor FEMA's efforts to establish a process to collect lessons learned through the survey or other means, and communicate contracting lessons learned from emergency response efforts.
Department of Defense The Secretary of Defense, in coordination with the Secretaries of Homeland Security and Health and Human Services, should ensure that input from contracting officials on interagency contracting lessons learned in response to COVID-19 is collected and shared as part of government-wide efforts to collect, analyze, and report on lessons learned. (Recommendation 8)
Open – Partially Addressed
DOD agreed with this recommendation. As of August 2022, DOD had identified several interagency contracting lessons learned and a DOD official stated the department had shared those with DHS. However, the official said DOD and DHS are awaiting input on lessons learned from HHS to determine next steps and how best to share all three agencies' contracting lessons learned as part of government-wide efforts to collect and report on lessons learned. We will continue to monitor the agencies' efforts to share interagency contracting lessons learned.
Department of Health and Human Services The Secretary of Health and Human Services, in coordination with the Secretaries of Defense and Homeland Security, should ensure that input from contracting officials on interagency contracting lessons learned in response to COVID-19 is collected and shared as part of government-wide efforts to collect, analyze, and report on lessons learned. (Recommendation 9)
Open
HHS agreed with this recommendation. As of September 2022, HHS officials said that they are still in the process of collecting data on the COVID-19 response. Once finalized, HHS plans to share collected observations as part of a monthly working group to determine, analyze, and validate corrective actions, which will then be reported and shared as part of an Improvement Plan. At that time, officials said they would share any cross-cutting interagency lessons learned with the appropriate agencies. We will continue to monitor HHS's efforts to collect and share interagency contracting lessons learned as part of government-wide reporting efforts.
Department of Homeland Security The Secretary of Homeland Security, in coordination with the Secretaries of Defense and Health and Human Services, should ensure that input from contracting officials on interagency contracting lessons learned in response to COVID-19 is collected and shared as part of government-wide efforts to collect, analyze, and report on lessons learned. (Recommendation 10)
Open – Partially Addressed
DHS agreed with this recommendation, and as of January 2022 DHS had identified several interagency contracting lessons learned that DHS officials stated they had collected from the Federal Emergency Management Agency, and DHS had shared those with DOD and HHS to develop a consolidated list of interagency lessons learned. As of August 2022, DHS and DOD are awaiting input on lessons learned from HHS to determine next steps and how best to share all three agencies' contracting lessons learned as part of government-wide efforts to collect and report on lessons learned. We will continue to monitor the agencies' efforts to share interagency contracting lessons learned.

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