In November, we published a post on potential Biden administration use of the Defense Production Act of 1950 (DPA) in response to the COVID-19 pandemic. In his first week in office, President Biden invoked the DPA and signed an executive order to secure a sustainable public health supply chain. The executive order gives insight into how the Biden administration may use the DPA going forward. The following explains the Biden administration’s goals for pandemic preparedness and potential DPA use and identifies key considerations for government contractors.
President Biden’s “Executive Order on a Sustainable Public Health Supply Chain” (EO) instructs the Secretary of State, the Secretary of Defense, the Secretary of Health and Human Services, the Secretary of Homeland Security, and the heads of appropriate agencies to review the availability of critical materials, treatments, and supplies needed to combat COVID-19. These supplies include personal protective equipment, respiratory devices, and resources needed to produce and distribute tests and vaccinations.
In addition, the EO highlights the development of a long-term strategy for securing a reliable supply chain for products for future pandemics and biological threats. It also asks that agency heads “take appropriate action using all available legal authorities, including the Defense Production Act, to fill . . . shortfalls as soon as practicable by acquiring additional stockpiles, improving distribution systems, building market capacity, or expanding the industrial base.” Using the DPA to obtain supplies during a public health crisis will likely remain an overarching goal for the Biden administration while it focuses on building the infrastructure for implementing a rapid and efficient pandemic response plan.
President Biden’s plan will impact federal contractors in a variety of ways. Because of the focus on strengthening U.S. supply chains and prioritizing spending on U.S. infrastructure, it is likely that there will be an abundance of federal contracting opportunities. Government contractors should keep the following in mind when bidding on these contracts.
- Rated Orders Under the DPA: Contractors need to be aware of how rated orders under the DPA work. If you receive a rated order, you are generally required to accept the order if it calls for equipment or supplies normally sold by your business and you can meet the delivery requirements. A contractor who receives a rated order must schedule operations, including the acquisition of all needed production items or services, to satisfy the delivery requirements of the rated order. If for some reason a DPA order cannot be satisfied, the contractor should fully document the obstacles and promptly communicate those reasons to the issuing agencies.
- Domestic Production and Green Measures: To ensure competitiveness when submitting proposals related to the public health supply chain, contractors should take into account the Biden administration’s emphasis on American-made products and environmental impacts. Contractors should pay close attention to such requirements in future solicitations and review whether their products or services meet domestic content restrictions, as well as any “green measures” they are taking.
- Increased Oversight: With the new administration, there will likely be additional oversight of federal procurement. Thus, it will be important to maintain detailed records of acceptance and completion of rated orders, as well as any problems with compliance that arise during performance of those orders.