COVID-19 Response: Understanding Priority Rated Orders Under the Defense Production Act
Published: March 25, 2020
How high-priority contracts will be identified in federal acquisition systems.
- Effectively recognizing COVID-19 related priority federal contracts will help suppliers both support federal agency efforts and protect suppliers from running afoul of federal regulations.
- “Rated Orders” will be coded with both a priority rating as well as a Program Identification Symbol (PIS) that signifies the type of materials or services being procured. Each authorized department has department-specific PISs.
- Companies receiving rated orders are obligated to fulfill such orders above all others, with very limited parameters for refusal.
A colleague recently discussed the priority contracting processes under the Defense Production Act (DPA). The piece described the government’s use of rated orders as a means of prioritizing contracts for materials and services to meet pressing national security needs via the Federal Priorities and Allocations System (FPAS) under Regulation 15 CFR 700. The DPA originally authorize the Department of Commerce for such priority rated contracts, but White House Executive Order 13603 delegated that authority to the Departments of Defense, Homeland Security and Energy and the General Services Administration.
Areas Covered by Prioritized Rated Orders
The Federal Emergency Management Agency (FEMA) lists the various areas for which agencies may place rated orders under the Defense Production Act as:
- Civil Transportation
- Delegated Senior Official (DSO)
- Emergency Preparedness
- Food Resources
- Health Resources
- Industrial Resources
- National Defense
FEMA provides a broad but concise description of each of these areas as they were defined in E.O. 13603.
Rated Orders – Understanding the Syntax
As discussed earlier, these orders will be identified by the priority rating symbols “DO” or ”DX,” with DO orders taking preference over unrated orders and DX orders take preference over all other types of orders. If a company receives a DX rated order it must be fulfilled as a priority before lesser rated orders, regardless of the timing of the orders.
Further, rated orders will include a Program Identification Symbol (PIS) that signifies the type of materials or services being procured. For example, the Department of Defense (DOD) PIS for Aircraft is A1. Therefore, a rated order for aircraft from the DOD would begin with DO A1 or DX A1, where DO and DA signify the rating level and A1 signifies the PIS. Additional information on the specifics of the aircraft would follow in the order details.
Since priority rated orders have their origin in national security and the DPA, most of the codes were first established and maintained in the Defense Priorities & Allocations System (DPAS), with authorized departments having their respective PISs.
Department of Homeland Security Program Identification Symbols (PISs) under DPAS are:
- N1: Federal emergency preparedness, mitigation, response, and recovery
- N2: State, local, and tribal government emergency preparedness, mitigation, response, and recovery
- N3: Intelligence and warning systems
- N4: Border and transportation security
- N5: Domestic counter-terrorism, including law enforcement
- N6: Chemical, biological, radiological, and nuclear countermeasures
- N7: Critical infrastructure protection and restoration
- N8: Miscellaneous
According to a FEMA DPAS summary, FEMA states that most of their programs will use a DPAS priority rating of “DO-N1,” which is for Federal emergency preparedness, response, and recovery, but given FEMA’s lead role in federal COVID-19 response it is unclear if that rule will hold true over the course of the response effort.
Department of Defense PISs may include:
- A7: Electronic and communications equipment
- B1: Military building supplies
- B8: Production equipment (for defense contractor's account)
- B9: Production equipment (Government owned)
- C1: Food resources (combat rations)
- C2: Department of Defense construction
- C3: Maintenance, repair, and operating supplies (MRO) for Department of Defense facilities
- C9: Miscellaneous
Department of Commerce PISs may include:
- H1: Certain combined orders (see section 700.17(c) )
- H5: Private domestic production
- H6: Private domestic construction
- H7: Maintenance, repair, and operating supplies (MRO)
- H8: Designated Programs
General Services Administration PISs may include:
- K1: Federal supply items
The DCMA provides a complete list of DPAS Program Identification Symbols on their DPA page.
Health Resources Rated Orders
Since 2015, the Department of Health and Human Resources (HHS) was authorized to operate the Health Resources Priorities and Allocations System (HRPAS). Section 101.37 of the regulation states that health resource rated order will be signified by either DO-HR or DX-HR. Given the nature of the pandemic and the focus of the earliest response efforts to date I would expect a significant number of rated orders to come under the HR PIS.
Other Agency Priorities and Allocation Systems
Each department that was authorized in E.O. 13603 with DPA authority – Agriculture, Energy, HHS and Transportation – has their own Priorities and Allocations Systems (PAS) that together fall under the FPAS. FEMA provides a list of these departments and their respective PAS. It is possible that some coronavirus response orders could come via these systems.