New Contracting Authorities and Preferences Established Under the CARES Act

Albert B. Krachman

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) creates several new contracting authorities that will present new business opportunities to firms offering COVID-19-related supplies and services. In some cases, the CARES Act also establishes specialized contracting priorities or preferences to contractors with particular service experience or qualifications, expertise, or ownership characteristics. The law also permits certain awards to be made without competition—in other words, sole source contracts—without the Justification and Approval normally required for such awards. This post surveys some of these new contracting authorities and award preferences.

New Contracting Authorities

The CARES Act delegates extensive new contracting authorities to the Department of Health and Human Services (“HHS”) and creates many new organizations with specific contracting authority. Here is a brief list of some of the key delegations and new organizations with contracting authority:

Blood Donor Awareness

The Act charges the Secretary of HHS with starting a national campaign about the importance of blood donation. Section 3226(b) of the Act gives the Secretary authority to contract with one or more public or private nonprofit entities to establish this campaign. These nonprofits will then engage advertising and public relations firms to execute the awareness programs. Media firms with public health communications experience will have an edge in securing this work.

Geriatric Healthcare

Unlike virtually all other provisions of the CARES Act, which grant discretion for making contract awards, Section 3403 uses mandatory language in the area of geriatric workforce training. The law provides that the Secretary of HHS “shall award grants, contracts or cooperative agreement to certain described entities, to establish or operate Geriatric Workforce Enhancement Programs.”

This Section also features a three-tiered priority for award of contracts, grants and cooperative agreements:

First tier: The Secretary must prioritize programs that have coordinated with other federal or state programs, or that benefit rural or underserved areas, including Tribes and Tribal Organizations.

Second tier: The Secretary must give special consideration to entities that provide services in areas with shortages of geriatric workforce professionals.

Third Tier: A third tier of discretionary priority applies to programs that integrate geriatric care with primary care or have another substantial connection with geriatric care. The law does not define the difference between priorities and special consideration, so this could create confusion in the award process.

Firms entitled to mandatory priority or special consideration will have a significant edge in winning this work. An organization that lacks this experience but is interested in pursuing this business could team with a firm entitled to priority to jointly participate.

Public Health and Social Services Emergency Fund

As part of the Public Health and Social Services Emergency Fund, the CARES Act authorizes the transfer to the Health Resources and Services Administration of $90 million for modifications to existing contracts, and supplements to existing grants and cooperative agreements, but goes further to specify that these supplements are “to be awarded using data driven methodology” as determined by HHS. This is an unusual prescription that will require clarification by the contracting offices.

Personal Services Contracts

Section 18108 authorizes HHS to award personal services contracts for COVID-19-related support services. These contracts have been exempted from pay caps applicable to other federal employees. Similar authority for award of personal services contracts has been granted to the Department of State and the Agency for International Development at Section 21010.

Emergency and Oversight Contracts

Congress granted itself contracting authority in Section 19003 to enter into emergency contracts for COVID-19-related services, and also authorized the newly created Office of the Special Inspector General for Pandemic Recovery, the Congressional Oversight Commission, and the Pandemic Response Accountability Committee, to enter into contracts to carry out their functions.

Telecommunications Contracts

Sections 20003 and 20004 call for the award of contracts to telecommunications providers to provide broadband services for expanded mental health services to isolated veterans through telehealth or VA Video Connect during the current public health emergency.

Non-Competitive or Sole Source Authority

The new authority delegations are generally silent on the applicability of the competition requirements under the Competition in Contracting Act. But in a few limited instances, the CARES Act expressly authorizes contract awards without competition:

    1. In the area of Public and Indian Housing, Tenant Based Rental Assistance, for example, the CARES Act allows certain unobligated funding balances to be used to award COVID-19-related contracts “without competition.”
    2. Likewise, for Indian Community Development Block Programs, the Act states that the Secretary “shall prioritize without competition allocation of amounts for activities and projects” for COVID-19 preparedness and response.
    3. In the area of community planning and development housing opportunities for people with AIDS, the CARES Act provides that two percent of funding may be used without competition to increase prior awards to existing technical service providers.
    4. Very broad flexibility has been granted in the area of Homeless Assistance Grants. Recipients of these grants are permitted to deviate from applicable procurement standards when procuring goods or services for COVID-19 responses.
    5. For technical assistance providers with experience in providing healthcare services to homeless populations, the Act allows one percent of the funding to be awarded to these organizations without competition.

From a big picture perspective, the CARES Act has created many new and valuable contracting opportunities, some targeted to specialized organizations, but many open to a broader base of qualified offerors. To best position themselves for these opportunities, organizations with the necessary capabilities should move quickly to identify and communicate with the relevant contracting authorities.

As COVID-19 issues permeate virtually all aspects of commerce nationally and internationally, we stand ready to help. Blank Rome’s Coronavirus (“COVID-19”) Task Force includes interdisciplinary resources across every business sector from insurance recovery to HR.