Procurement rules can trip up agencies in emergencies, but permissions exist

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Buying in urgent or emergency situations – procurement laws and regulations allow for it. But risk averse agencies and contracting officers are often stuck at times like these. For some advice on how the Stafford Act and related declarations can help, Federal Drive with Tom Temin turned to Smith Pachter McWhorter member attorney Edmund Amorosi.

Interview transcript:

Tom Temin: Mr. Amorosi, good to have you on.

Edmund Amorosi: Thank you, Tom. Nice to be here. Thank you for having me.

Tom Temin: And it seems like every time there’s a, not so much a pandemic but some kind of national emergency, this comes up again: Why can’t the government be more fluid in rapid acquisition because of the allowances they have already under statute and regulation? Review for us the Stafford Act for the purposes of procurement and how it applies now into specifically to Section 18 of the FAR.

Edmund Amorosi: Sure, so thank you for that question. The Stafford Act is a statute that provides a framework for federal disaster relief. I think the unfamiliarity with it comes from not using it regularly. It’s like a muscle that needs to be exercised and these only come up every so often these disasters in certain a pandemic like we have now has never really been seen before. So it takes some refreshing of the rules to use them normally. So here the Stafford Act allows for federal government to assume 75% or more at the cost of relief. In the event of a declaration, the president issues in emergency declaration and major disaster declarations which then allow the special authorities that are included in the FAR for emergency procurements to be invoked by the various federal agencies that are involved in the disaster relief. Here with the coronavirus we have both types of declarations in place. We have both an emergency declaration and a major disaster declaration, which is an unusual situation. But of course we’re dealing with a very unusual situation here.

Tom Temin: And when it is regional, say like Hurricane Katrina or something, and they had to buy trailers or whatever it was – versus national, does that have some bearing on how agencies can do their procurement?

Edmund Amorosi: Sure. This declaration of course as you indicate is different because the disaster is different. The typical declarations deal with tornadoes, natural disasters, floods, hurricanes, earthquakes, that sort of things that are localized to an area. And in those situations, the FAR provisions in the statute place an emphasis on local procurements. So there’s a preference for say, if there’s a hurricane in Florida for contractors in the Florida region, to participate in the recovery efforts. Here, you don’t have that local preference because you have a national emergency declaration. So federal agencies can go anywhere in the nation to source the services and supplies they need in order to respond from the declaration. So it’s essential here, because this epidemic is across the nation, of course. So it’s appropriate that it’s not viewed as a regional but more of a national issue.

Tom Temin: And what are the specific flexibilities that come into place, for example, lower threshold or higher thresholds for micro purchases, that kind of thing?

Edmund Amorosi: Sure. So if you’re a contracting officer or a contractor who’s interested in responding to the crisis, you would want to look at FAR 18.202. And there are threshold increases to the micro purchase threshold, those are increased to 20,000 for domestic purchases. And those micro purchases are exempt from nearly all procurement laws. They have very few FAR contract clauses or provisions that are associated with those purchases, and they use governmentwide purchase cards as the preferred method. So it’s an efficient, quick way to buy supplies that are needed on an urgent basis. There are also increases in thresholds for simplified acquisition procedures. That is increased to $750,000 for domestic purchases. And in the event, there are international purchases that need to be made, the threshold is increased to 1.5 million and so there’s substantial threshold increases that have give great flexibility to contracting officers to respond. There also are relief from the normal full and open competition requirements that usually apply to federal procurements in simplified acquisition. And FAR 18.1, it authorizes single-source simplified acquisitions based on the urgency of the situation or the reasonable availability of sources. There are also expedited procedures for GSA Schedule orders in FAR subpart 8.4, as well as the normal provisions in FAR 6.3, allowing for departures from the full and open competition rules in the event of usual and compelling urgencies. There are also agency specific relaxations of rules that one should be looking at if you’re dealing with HHS, for example, or some other agency that is intimately involved in the response. There also relief from administrative requirements in the FAR 18.1. Some of the registration and red tape requirements that normally are associated with a federal RFP written solicitations, that sort of thing, are relaxed or not necessary. One good example is you can have an oral RFP in this situation where you don’t have to have a written RFP issued. You can just do it over the phone and place an order that way. So those are some of the examples of the flexibilities are available now given the emergency declaration that’s been placed.

Tom Temin: We’re speaking with Edmund Amorosi. He’s an attorney and managing member of the law firm Smith Pachter McWhorter. And what are some of the guardrails that CEOs need to be worried about? Because, for example, is there an accounting that might be called for afterwards to justify once the emergency is over?

Edmund Amorosi: While there are certainly are robust oversight measures in place in the CARES Act and the various other statutes that have been passed to respond to the crisis. In addition, there are the default rules right now for the inspectors general and the auditors who can come in after the fact and second guess decisions that were made at the time. So it’s always important to document the file and make sure you have the paperwork in place to explain why you made decisions that you made. The Department of Justice has also announced that they have a COVID-19 anti-fraud task force. And there was recently a press release from DOJ announcing the prosecution of two people who were engaged in fraud involving the Paycheck Protection Program application that they submitted for fun. So the fact that there’s been an emergency declaration means you need to be urgent and get the work done, but you also need to be careful and follow the rules as well at the same time.

Tom Temin: And in practice where do these requirements tend to originate within an agency? The contracting officer does the fulfillment, but the use of these flexibilities – is that something that the contracting officer decides on or maybe higher up or somewhere else in the agency?

Edmund Amorosi: Well, contracting officers generally do not need any additional authorization within the agencies to use the emergency procurement authorit, granted under the FAR, since the Stafford Act declarations have been issued by the president. There is however an orchestrated governmentwide response effort in partnership with the states, spearheaded really by FEMA, on behalf of the task force, and the way they describe – the White House described in this it’s a locally executed, state managed and federally supported. And there are any number of agency initiatives relating to the pandemic coming from HHS, VA, SBA, DHS and DoD. So if you’re a contracting officer in one of those agencies, you already have authority to respond and use these emergency authorities and a lot of them probably are already doing that. And if you’re a contractor out there who wants to approach an agency, you should be aware, too, of these emergency procurement authorities because they can expedite the placement of an order or contract to you. And you can do two good things: You can help with the response, and you can also help your company at a time when a lot of companies are having trouble. So it’s good to be aware of these things right now. And you can go ahead and make that, make yourself – make them available to you now. There’s no further authorization that you need to get.

Tom Temin: And in general, this all applies to commercial items. That is to say, DoD couldn’t use it for Some weapons program that has nothing to do with the response to the emergency?

Edmund Amorosi: That’s correct. You know, the procurements that are placed should be related to the response and relief effort, you know, respirators, masks, personal protective equipment, the type of material that you would need to respond to the emergency and not IT services that you want to sneak under the emergency declaration, of course, unless they’re necessary for the response. Yeah, that’s exactly right. You need to be sure that they’re on point for the – within the scope of the emergency declaration.

Tom Temin: Edmund Amorosi is an attorney and managing member of the law firm Smith Pachter McWhorter. Thanks so much for joining me.

Edmund Amorosi: Glad to be here. Thanks, Tom.

Tom Temin: We’ll post this interview along with a link to his article at Hear the Federal Drive on demand and on your device. Subscribe at Apple Podcasts or Podcastone.

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