Tag: Defense Production Act

Biden Administration Prioritizing Domestic Production of Pharmaceuticals . . . Again?

Merle M. DeLancey, Jr. ●

On November 27, the Administration announced another blue-ribbon panel to bolster the domestic manufacturing of pharmaceuticals. This one is called the Supply Chain Resilience Council. Co-chairs of the Council are Lael Brainard, Director of the White House National Economic Council, and Jake Sullivan, the White House National Security Advisor. Among the other 25 Council members are multiple agency Secretaries; the U.S. Trade Representative; the Chair of the White House Council of Economic Advisers; and the Directors of National Intelligence, the Office of Management and Budget, and the Office of Science and Technology Policy. The Council does not include any industry representatives.

A major part of the Council’s plan to bolster domestic manufacturing is providing the Department of Health and Human Services (“HHS”) with expanded authorities under Title III of the Defense Production Act (“DPA”) to invest in domestic manufacturing of essential medicines, medical countermeasures, and other critical inputs deemed crucial for national security. HHS will be granted DPA authority beyond what it was given during the COVID pandemic.

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The Government Will Likely Look to the Defense Production Act to Fulfill Its 500 Million COVID-19 Rapid, At-Home Test Kits Requirement

Merle M. DeLancey Jr. and John M. Clerici*


Last week, in response to the Omicron variant, President Biden announced the Government intends to purchase 500 million at-home, rapid COVID-19 tests for distribution to Americans. According to the announcement, Americans will be able to order test kits to be delivered to their homes starting in January. While this may have been a good sound bite, as discussed below, it does not appear realistic. More likely, while Americans may be able to place orders in January, those orders may not be filled until several months into 2022.

As widely reported, rapid COVID-19 at-home test kits are already in short supply. Moreover, the Government has yet to enter into additional contracts beyond the limited contracts to a small number of suppliers previously announced by the Defense Logistics Agency (“DLA”) and a handful of “prototype” contracts finalized in 2020 under the Trump administration. The Government has not made any recent additional contract awards for rapid COVID-19 at-home test kits.

On December 22, one day after the president’s announcement, the Department of Defense (“DoD”), on behalf of the Department of Health and Human Services (“HHS”), issued a Request for Information (“RFI”) seeking information to assess market availability and sourcing for rapid COVID-19 at-home tests. The RFI, however, is not an actual procurement nor contract award and merely seeks information for 500,000 test kits for agency “personnel use.” Responses were due by 3:00 p.m. on December 24. (See, Rapid COVID-19 Antigen Test Kits.) Proposals to supply test kits are unlikely until after a Request for Proposal (“RFP”) has been issued. As of today, no RFP has been issued.

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Defense Production Act: Government Contractor Cheat Sheet

Merle M. DeLancey Jr.

On March 18, 2020, by Executive Order (“E.O.”), President Trump invoked the Defense Production Act of 1950 (“DPA”). The E.O. delegates DPA authority to the Secretary of the Department of Health and Human Services with respect to “all health and medical resources needed to respond to the spread of COVID-19 within the United States.” This means that the performance of rated contracts and orders (i.e., certain contracts and orders in support of programs covered by the DPA, as explained below) must be prioritized over competing commercial or non-rated governmental obligations—even if doing so could result in a breach of other obligations.

Set forth below is a checklist for contractors that have received (or believe they may receive) a rated order from a federal government agency:

1. Memorialize Standard Operating Procedures (“SOP”)

Effectively managing rated orders requires careful attention, particularly given the operational disruptions from coronavirus COVID-19. A company should consider establishing (or updating) SOPs for rated orders covering the following:

      • Designating a Point of Contact (“POC”) Responsible for Rated Orders. Publicize the POC within the company so that management and employees (e.g., C-Suite, Sales, and Marketing) who do not normally handle government contracting matters know who to contact.
      • Establish a Process to Communicate with Subcontractors. A prime contractor in receipt of a rated order stands in the shoes of the federal government and is required to notify applicable subcontractors of compliance with the rated order. Consider notifying subcontractors of the possibility of receiving a rated order and provide background on the DPA so they are not caught by surprise.
      • Establish a Commercial Customer Communications Plan. Because a rated order can delay or interfere with performance of commercial contracts, consider keeping commercial customers aware of potential impacts in the event that the government issues a rated order.
      • Frequent Communication with Contracting Officers. If the company believes it might receive a rated order, establish clear lines of communication with your Contracting Officers. Provide or re-confirm contact information for the company’s POC for rated orders.

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