Agencies Struggle to Implement Mass Testing for Unvaccinated Feds

For example, of the $12.5 billion awarded using other transaction authorities, nearly 60% was funneled through a single consortium management company.

Coronavirus
Procurement
Oversight

Congress allocated trillions of dollars to federal agencies to combat the COVID-19 pandemic and, in an effort to get that money out the door quickly, the top three spenders awarded more than $12.5 billion using an opaque acquisition method known as other transaction authorities, or OTAs, according to a government analysis.

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The unique procurement authority is based on the legal language used in the establishment of NASA in 1958 and later used to fund cutting-edge research through the Defense Advanced Research Projects Agency in 1989. The authority was later broadened to encompass most of the Defense Department, as well as other federal research and national security bodies, such as the departments of Energy, Health and Human Services, Homeland Security and Transportation, as well as the Federal Aviation Administration, Transportation Security Administration, National Institutes of Health, Domestic Nuclear Detection Office and Advanced Research Projects Agency-Energy.

OTAs offer agencies flexibility in the design of contracts, enabling officials to develop phased funding or negotiate intellectual property rights outside of the stringent Federal Acquisition Regulation. But the added flexibility also results in less oversight and issues with proper reporting, according to a new report from the Government Accountability Office.

The use of OTAs to speed pandemic response over the last year was encouraged by Congress, which relaxed some reporting and approval requirements for such contracts for funding coming from the first $2 trillion spending package, the CARES Act. But that use, combined with already lax reporting and oversight structures for OTAs, has made it difficult to track that $12.5 billion in CARES Act funding, GAO said.

For instance, $7.2 billion—more than half of the $12.5 billion—was awarded through a single consortium management organization, Advanced Technology International, the contracts for which could only be seen and bid on by consortium members. However, GAO noted OTA contracts do not require agencies to report which consortium members are awarded funding.

“When federal agencies award OTAs to consortia, they do not report which consortia members received the awards because the OTA module of [the Federal Procurement Data System] does not currently have the capability to allow for this reporting,” GAO’s report states. “Instead, the OTA module tracks the top-level awardee—the consortium or consortium management firm—but is opaque beyond that.”

GAO was able to determine that funding awarded through ATI-managed consortia was ultimately disbursed among five pharmaceutical companies that pay dues to be members of those groups, with each receiving between $450 million and $2 billion.

The report also notes DOD and HHS did not have policies in place to ensure oversight of awards made through consortia.

“According to Office of Federal Procurement Policy guidance, these types of activities require enhanced oversight because they can closely support tasks fundamental to the public interest, such as the award of contracts,” auditors wrote. “By not addressing such oversight in their policies, agencies may not fully consider the range of actions they should take to mitigate risks of inappropriate influence for government decisions.”

Similarly, incorrect categorizing of spending figures to federal databases led to the three agencies not properly identifying at least $1.6 billion spent through OTAs as being for COVID-related efforts, according to the report.

HHS’ Office of the Assistant Secretary for Preparedness and Response, or ASPR, “was responsible for a majority of the inaccurate reporting of COVID-19 OTA dollars,” GAO wrote, citing a report issued earlier this year that found ASPR was reporting OTAs as procurement contracts instead of using the appropriate identifier.

Overall, DOD spent at least $10.9 billion on COVID response through OTAs, including the $7.2 billion noted above; HHS used the procurement method to spend $1.6 billion; and DHS spent $57 million.

The majority of that spending—$8.9 billion—was put toward vaccine development and manufacturing, including:

Development, awarded by HHS ASPR: $1.1 billion to Janssen and $126 million to AstraZeneca.
Manufacturing, awarded by the Army: $1 billion to Janssen, $1.2 billion to AstraZeneca, $1.8 billion to Sanofi, $1.6 billion to Novavax and $2 billion to Pfizer.

“The remaining $3.6 billion was for medical research and development and other nonvaccine products and services,” according to GAO.

GAO made 14 recommendations based on these findings, targeted toward DHS, DOD, HHS and the General Services Administration, which manages the FPDS reporting tools. The agencies agreed with 11 of the recommendations, but DOD only partially agreed with one and DHS disagreed with two.

DOD agreed with three recommendations provided by GAO but balked at the idea of prioritizing means of tracking OTA spending for national emergencies.

“In its written comments, DOD noted that it understands the importance of being able to quickly identify awards made in support of national emergencies, such as the response to the COVID-19 pandemic, for the public,” the report states. However, “DOD further notes that the federal response to COVID-19 is very unique, and it is unlikely that OTAs will be used to respond to national emergencies, natural disasters, or contingency actions in the future. As a result, DOD stated it does not believe expending resources on system changes to FPDS-NG is warranted.”

GAO fundamentally disagreed.

DHS outright disagreed with that recommendation, as well as another asking the agency to update its guidance for reporting OTA awards for COVID-19.

“In its response, DHS noted that additional guidance is not necessary because designation of OTAs is addressed in its July 2019 OTA guide, and that only research and prototype OTAs are required to be reported in FPDS-NG,” the report states. “However, DHS’s response does not address the primary purpose of the recommendation—to provide the public with better transparency on the dollars obligated on COVID-19 OTAs.”

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