Did acquisition restrictions exacerbate PPE supply challenges?

In March, President Donald Trump declared a national emergency in light of the coronavirus pandemic that has ravaged the country. A key part of this emergency declaration was the enablement of special emergency procurement authorities under the Stafford Act.

These flexibilities included increases to the micro-purchase threshold (MPT), the simplified acquisition threshold (SAT) and the threshold for using simplified procedures for certain commercial items as detailed in OMB Memorandum M-20-18.

As noted by the Office of Management and Budget, these authorities “are designed to reduce friction for contractors, especially small businesses, and the government and enable more rapid response to the many pressing demands agencies face.”

In describing the value of these authorities in a time of crisis, OMB noted that “[t]he availability of these flexibilities does not mean they will always be suitable, and agencies should exercise sound fiscal prudence to maximize value for each taxpayer dollar spent. At the same time, the acquisition workforce should feel fully empowered to use the acquisition flexibilities, as needed, consistent with good business judgment in response to this national emergency.”

The need to streamline the acquisition process has been known for years, but in emergencies such as today’s, these critical flexibilities become a matter of life and death. As government has responded to the coronavirus crisis over the last few months, one area of particular concern relates to the acquisition of certain critical medical supplies and essential personal protective equipment (PPE). First responders around the country were often left desperate for these supplies, placing themselves and the American people at greater risk of infection. While there were many reasons for the challenges in acquiring PPE, including gaps in manufacturing, competition between states and the federal government and supply chain issues, it’s important to highlight the role that restrictions on the use of certain acquisition tools, including the prohibiting the use of reverse auctions to acquire PPE, may have played in furthering these challenges.

Reverse auctions, which the federal government uses to acquire an estimated $2 billion in commodity goods and simple services every year, allow pre-vetted vendors access to the federal market. Reverse Auctions, for those that are not familiar are akin to a “reverse E-Bay,” where a government order for a standard item is posted for bid, and vendors place competing bids to win the order, bidding down, rather than up to ensure that the government receives the best value for the specific acquisition. Reverse auctions are quick, with many bids posted and awarded within 24 hours, efficient, and highly favorable to small business vendors. Further, they work extremely well to meet rapid acquisition needs during emergencies.

Unfortunately, the Section 814 of the FY17 National Defense Authorization Act restricted the use of reverse auctions for the acquisition of personal protective equipment (PPE). This restriction was passed because of unfounded concerns that somehow the use of reverse auctions could lead to the acquisition of inferior equipment.

The more accurate target of regulations is, in fact, the criteria used by buyers to evaluate for award. Reverse auctions, when conducted properly, include rigorous vendor vetting, pre-qualification and quality assurance measures to ensure only the highest quality goods and services are offered. More often than not, the government acquires the identical good it would have received through a regular acquisition, but at a reduced cost.

Reverse auctions are a tool that automates price negotiation, and by definition, does not dictate lowest price technically acceptable (LPTA) evaluation criteria. It allows for more buys to be negotiated, which is always good for government.

Fast forward to the challenges of today’s environment and it’s easy to see how the use of reverse auctions to acquire personal protective equipment would have allowed for that equipment to get into the hands of those first responders more quickly and effectively.

At a time of national crisis, government must have all the tools available to obtain essential supplies such as PPE. Along with expanded use of other rapid acquisition techniques, Congress should consider rescinding the restriction on the use of reverse auctions to acquire PPE in the next coronavirus supplemental legislation and in doing so ensure that federal contracting officers are better able to meet the needs of our first responders.

Mike Hettinger is the president and founding principal of Hettinger Strategy Group and the former staff director of the House Oversight, Government Management Subcommittee.

Richard Beutel is the founder of Cyrus Analytics and was the senior policy advisor to Sen. Susan Collins (R-Maine) and the House Oversight and Government Reform Committee.


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