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National Defense Resources Preparedness: Implications in the Coronavirus Era

Published: March 18, 2020

Federal Market AnalysisContracting TrendsCoronavirus (COVID-19) PandemicPolicy and Legislation

Contractors could find themselves called on to ramp up production capacity and personnel in response to the Coronavirus.

Key Takeaways

  • Agencies will be identifying emergency requirements, which may result in contract opportunities.
  • Inventory of resources and production capability, including services and critical technology, may be undertaken by agencies, which could result in the identification of unaddressed needs.
  • Industry partners could find agencies requesting help with the development of response plans, providing emergency personnel, and providing critical production capabilities.
  • Agencies may require R&D support and analytics, or other emerging technologies, to develop understanding of the Coronavirus’ spread through society, mortality rates by age cohort, etc. They are authorized under the E.O. to purchase any and all of these things, emerging technology included, if the situation requires it.
  • Contractors could find themselves called on to rapidly ramp up production capacity and personnel in order to meet evolving circumstances.

Eight years ago this month then President Barack Obama published Executive Order 13603 outlining actions the federal government could take in response to the outbreak of a national emergency like the one presently underway regarding the Coronavirus. Current President Donald Trump recently evoked the powers available under E.O. 13603, giving the White House broad authority to leverage agency resources for fighting the COVID-19 pandemic. Given this development, it is worth reviewing some of the more pertinent points of the National Defense Resources Preparedness (NDRP) E.O. and their potential implications for federal contractors.

The basic intent of E.O. 13603 was to update clauses in the Defense Production Act of 1950 that addressed the United States’ need for resources critical to defense in the event of a national security emergency. Considering that the spread of COVID-19 is causing companies and institutions across the broader economy to shut down, it is not impossible that the Coronavirus pandemic could be defined as a national security threat. This in mind, the NDRP E.O. authorizes agencies to implement the following measures:

  1. Identify requirements for meeting the emergency, including essential military and civilian demands.
  2. Evaluate the availability of critical resources and production sources, including subcontractors and suppliers, materials, skilled labor, and professional and technical personnel.
  3. Take actions necessary to ensure the availability of adequate resources and production capability, including services and critical technology, for national defense requirements.
  4. Improve the efficiency and responsiveness of the domestic industrial base to support national defense requirements.
  5. Foster cooperation between the defense and commercial sectors for research and development and for the acquisition of materials, services, components, and equipment to enhance industrial base efficiency and responsiveness.

Agencies are required to analyze the potential effect of the emergency on production capability, taking into account the entire production system, including shortages of resources, and develop recommended preparedness measures to strengthen capabilities for production increases in national emergencies.

In addition to requiring contractor support for analysis and evaluation services related to production and resource mobilization, industry partners could also find agencies requesting help with the development of response plans, providing emergency personnel, and providing critical production capabilities, such as the efforts now ramping up to develop test kits for COVID-19. Agencies may also require R&D support and analytics, or other emerging technologies, to develop understanding of the virus’ spread through society, mortality rates by age cohort, etc. They are authorized under the E.O. to purchase any and all of these things, emerging technology included, if circumstances require.

Despite the word “Defense” in the title of the E.O. it is important to remember that the order authorizes all agencies—Civilian and Defense—to take steps fostering national security within the bounds of their respective missions. Agriculture, for example, remains responsible for safe food production and distribution, Transportation for shipping, and Labor for the national workforce, etc. Each departmental secretary is authorized “to place priority ratings on contracts and orders for materials, services, and facilities” as they are needed. In other words, contractors working in areas not considered critical to national security could find funding re-directed from their work to efforts aligned with new agency priorities as circumstances dictate.

Moreover, in the event that funding is required to support the national security mission, each agency is authorized to act as its own fiscal agent when it comes to arranging guaranteed contracts. Agencies may even call on the Federal Reserve to help secure funding for contracts critical to emergency efforts. Agencies are also authorized to guarantee loans for the production of critical products. In other words, industry partners doing this work will be paid, which ought to provide some comfort in today’s extraordinary  circumstances.

Disruptions to ordinary business processes are to be expected in extreme situations like the one we face today. The NDRP E.O. provides a framework for the federal government to respond to these in coordination with valued industry partners. Should the powers granted in the E.O. become necessary, contractors could find themselves called on to rapidly ramp up production capacity and personnel in order to meet the evolving situation.