Contract obligations rise in response to COVID-19 pandemic

Federal contract obligations for the COVID-19 response span far and wide across the government, as data reveals a sharp increase.

Federal obligations are continuing to climb in response to the coronavirus pandemic even without considering the production agreements that have made the headlines.

Agencies have put nearly $2.38 billion toward equipment, supplies and services for their COVID-19 mitigation and overall response efforts over the past month, according to a new dashboard from market intelligence and supply chain data company 202 Group.

The actual to-date number is likely much higher given that unclassified Defense Department contract activity, which 202 Group estimated at $417.5 million so far, is reported to federal spending databases on a 90-day delay.

But as 202 Group Principal Sebastian Sobolev put it, a cursory glance beyond that top-line figure also shows the response has been spread out across the federal government and not tied up in single large procurements for the most part.

“We're seeing a lot of small awards as the government tries to purchase inventory from a broad network of distributors. The headline-making production increases by companies like Ford aren't coming up yet,” Sobolev told me.

More than 1,000 contracting officers across the government are making the purchases and “often buying similar supplies,” Sobolev added.

A large amount, but not all of the money is going to high-profile health equipment items either like ventilators and personal protective equipment. In its latest executive update from April 8, George Mason University's Center for Government Contracting estimated that non-defense agencies spent $825.8 million on research-and-development and $162 million on IT and remote capabilities.

In a late March webinar hosted by the GMU GovCon Center, analysts said COVID-19 obligations could very well hit a total north of $100 billion when it is all said and done.

Two large Army contract awards made last week also give a glimpse as to how and who the government is looking to for help in fighting COVID-19. The Army on Wednesday added $10 billion in contract modifications to a vehicle it originally awarded 10 companies in late September 2017 at a $990 million ceiling. Those businesses will build, design and alter existing public facilities into temporary alternate care facilities.

Next day: the Army added $5 billion on top of what was originally a $495 million vehicle “in support of the presidential national emergency declaration concerning the novel coronavirus disease.” Originally awarded in 2016 and with seven companies on it, this contract covers turnkey project support to equip and transition staff and patients associated with health care construction projects.

Those are just contracts that are of the traditional variety. The $2.2 trillion CARES Act stimulus legislation both expanded the authority and raises funding caps for DOD and the Health and Human Services Department to use Other Transaction Agreements, which agencies are increasingly looking to in the battle against COVID-19.

DOD then parlayed that into an April 6 memo that allows OTA contracts of up to $100 million for rapid prototyping and $500 million for follow-on production contracts “for the period covered by the COVID-19 emergency declaration.”