COVID-19 Contracting: Actions Needed to Enhance Transparency and Oversight of Selected Awards
Fast Facts
Federal agencies used a variety of contracting methods to respond quickly to COVID-19. These methods allowed agencies to address a wide range of needs, including $8.9 billion in awards for vaccine development and manufacturing.
We found issues with how agencies reported some of these awards in the federal procurement database. For example, agencies did not always properly identify some pandemic-related awards, or provide information about award recipients. Agencies need to report award information accurately to ensure federal spending is transparent.
We recommended (among other things) that agencies improve how these awards are reported.
Highlights
What GAO Found
In response to COVID-19, as of March 2021, the Departments of Defense, Health and Human Services, and Homeland Security obligated at least $12.5 billion using a contracting mechanism that gave them the flexibility to quickly respond to urgent pandemic needs. This mechanism—known as an other transaction agreement—is not subject to certain federal contract laws and requirements but allowed the agencies to customize the agreements. Agencies cited the timeliness of awards as a major factor for using these agreements, including awards that accelerated COVID-19 vaccine manufacturing.
The Department of Defense used this mechanism to award $7.2 billion to consortium members—organizations and federal contractors organized around a specific topic area—through one consortium management firm (see figure).
Obligations on Other Transaction Agreements in Response to COVID-19 as of March 2021
GAO's analysis found two challenges with how the agencies tracked these agreements due to limitations with the federal procurement database. First, the three agencies did not properly identify at least $1.6 billion of the $12.5 billion as COVID-19-related agreements. Second, the Department of Defense reported that one consortium management firm received $7.2 billion in agreements, as noted above. In actuality, the management firm distributed nearly all of the awarded dollars to five pharmaceutical companies, with each receiving $450 million to $2 billion. The database is the only way for Congress and the public to track these obligations, but transparency is limited without accurate reporting.
Also, two agencies' policies on other transaction agreements did not address the requirement for enhanced oversight of certain activities that consortium management firms may perform, potentially posing risks to the government. 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. 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.
Why GAO Did This Study
In March 2020, Congress passed the CARES Act as part of the federal response to COVID-19. The act had certain provisions for federal contracting, including providing additional flexibilities. Contracting plays a critical role in the pandemic response as agencies obligate billions of dollars for goods and services.
The act also included a provision for GAO to review federal contracting in response to COVID-19. This report examines, among other objectives, the extent to which the Departments of Defense, Health and Human Services, and Homeland Security—the only agencies that reported using other transaction agreements in response to COVID-19 in the federal procurement database—used such agreements, including awards to consortia, and oversight of such use.
GAO analyzed federal procurement data as of March 2021; reviewed a nongeneralizable sample of 15 agreements selected based on high dollar amounts, agency, a mix of products and services, among other criteria; reviewed agency policies; and interviewed agency officials.
Recommendations
GAO is making 14 recommendations to selected agencies, to improve the transparency of agreement awards in the federal procurement database and update policies to improve the oversight of agreements awarded through consortium management firms. The agencies agreed with 11 of the recommendations and did not agree with three of them. GAO continues to believe the recommendations are valid, as discussed in the report.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense—in coordination with the change control board governing the Integrated Award Environment—should consider prioritizing the development and implementation of a systematic approach to consistently and accurately track other transaction agreements used for national interest events and the associated dollars obligated. (Recommendation 1) |
DOD partially agreed with this recommendation. In a February 2022 meeting, the change control board--which includes DOD, DHS, HHS, and GSA--discussed tracking other transaction agreements (OTA) related to disaster responses as part of the Integrated Award Environment's systems. According to DOD officials, none of the change control board members identified a need to consistently and accurately track OTAs related to disaster responses. By considering the need to systematically track these OTAs, which are a subset of OTAs related to national interest events, the change control board examined the business case for developing and implementing such a change and met the intent of our recommendation.
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| Department of Homeland Security | The Secretary of Homeland Security—in coordination with the change control board governing the Integrated Award Environment—should consider prioritizing the development and implementation of a systematic approach to consistently and accurately track other transaction agreements used for national interest events and the associated dollars obligated. (Recommendation 2) |
DHS did not agree with this recommendation. In a February 2022 meeting, the change control board--which includes DOD, DHS, HHS, and GSA--discussed tracking other transaction agreements (OTA) related to disaster responses as part of the Integrated Award Environment's systems. According to DOD officials, none of the change control board members identified a need to consistently and accurately track OTAs related to disaster responses. By considering the need to systematically track these OTAs, which are a subset of OTAs related to national interest events, the change control board examined the business case for developing and implementing such a change and met the intent of our recommendation.
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| Department of Health and Human Services | The Secretary of Health and Human Services—in coordination with the change control board governing the Integrated Award Environment—should consider prioritizing the development and implementation of a systematic approach to consistently and accurately track other transaction agreements used for national interest events and the associated dollars obligated. (Recommendation 3) |
HHS agreed with this recommendation. In a February 2022 meeting, the change control board--which includes DOD, DHS, HHS, and GSA--discussed tracking other transaction agreements (OTA) related to disaster responses as part of the Integrated Award Environment's systems. According to DOD officials, none of the change control board members identified a need to consistently and accurately track OTAs related to disaster responses. By considering the need to systematically track these OTAs, which are a subset of OTAs related to national interest events, the change control board examined the business case for developing and implementing such a change and met the intent of our recommendation.
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| General Services Administration | The Administrator of the General Services Administration—in coordination with the change control board governing the Integrated Award Environment—should consider prioritizing the development and implementation of a systematic approach to consistently and accurately track other transaction agreements used for national interest events and the associated dollars obligated. (Recommendation 4) |
GSA agreed with this recommendation. In a February 2022 meeting, the change control board--which includes DOD, DHS, HHS, and GSA--discussed tracking other transaction agreements (OTA) related to disaster responses as part of the Integrated Award Environment's systems. According to DOD officials, none of the change control board members identified a need to consistently and accurately track OTAs related to disaster responses. By considering the need to systematically track these OTAs, which are a subset of OTAs related to national interest events, the change control board examined the business case for developing and implementing such a change and met the intent of our recommendation.
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| Department of Homeland Security | Until a systematic approach to consistently and accurately track other transaction agreements used for national interest events is implemented, the Secretary of Homeland Security should update Department of Homeland Security guidance to clarify how other transaction agreements awarded in response to COVID-19 should be designated when reporting in the other transaction agreement module of the Federal Procurement Data System-Next Generation. (Recommendation 5) |
DHS did not agree with this recommendation. However, in January 2022, DHS issued interim guidance that directs contracting personnel to identify COVID-19-related other transaction agreements in the description of requirement field of the other transaction agreement module of the Federal Procurement Data System. DHS noted this will help ensure DHS other transaction agreements are consistently and accurately tracked when reported in FPDS.
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| Department of Defense | The Secretary of Defense—in coordination with the change control board governing the Integrated Award Environment—should consider prioritizing the development and implementation of a systematic approach to track the consortium members performing for each other transaction agreement awarded through a consortium or consortium management firm. (Recommendation 6) |
DOD agreed with this recommendation. In June 2022, the other transaction agreement (OTA) module of the Federal Procurement Data System-an Integrated Award Environment system-was updated to allow agencies to systematically track (1) whether an OTA was awarded to a consortium or not and (2) the consortium members performing on each OTA. Systematically tracking such data enables agencies to provide decision makers with better insight into which organizations are performing on OTAs and whether agencies are attracting nontraditional contractors-one of the main goals of OTAs.
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| Department of Homeland Security | The Secretary of Homeland Security—in coordination with the change control board governing the Integrated Award Environment—should consider prioritizing the development and implementation of a systematic approach to track the consortium members performing for each other transaction agreement awarded through a consortium or consortium management firm. (Recommendation 7) |
DHS agreed with this recommendation. In June 2022, the other transaction agreement (OTA) module of the Federal Procurement Data System--an Integrated Award Environment system--was updated to allow agencies to systematically track (1) whether an OTA was awarded to a consortium or not and (2) the consortium members performing on each OTA. Systematically tracking such data enables agencies to provide decision makers with better insight into which organizations are performing on OTAs and whether agencies are attracting nontraditional contractors-one of the main goals of OTAs.
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| Department of Health and Human Services | The Secretary of Health and Human Services—in coordination with the change control board governing the Integrated Award Environment—should consider prioritizing the development and implementation of a systematic approach to track the consortium members performing for each other transaction agreement awarded through a consortium or consortium management firm. (Recommendation 8) |
HHS agreed with this recommendation. In June 2022, the other transaction agreement (OTA) module of the Federal Procurement Data System--an Integrated Award Environment system--was updated to allow agencies to systematically track (1) whether an OTA was awarded to a consortium or not and (2) the consortium members performing on each OTA. Systematically tracking such data enables agencies to provide decision makers with better insight into which organizations are performing on OTAs and whether agencies are attracting nontraditional contractors-one of the main goals of OTAs.
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| General Services Administration | The Administrator of the General Services Administration—in coordination with the change control board governing the Integrated Award Environment—should consider prioritizing the development and implementation of a systematic approach to track the consortium members performing for each other transaction agreement awarded through a consortium or consortium management firm. (Recommendation 9) |
GSA agreed with this recommendation. In June 2022, the other transaction agreement (OTA) module of the Federal Procurement Data System--an Integrated Award Environment system--was updated to allow agencies to systematically track (1) whether an OTA was awarded to a consortium or not and (2) the consortium members performing on each OTA. Systematically tracking such data enables agencies to provide decision makers with better insight into which organizations are performing on OTAs and whether agencies are attracting nontraditional contractors-one of the main goals of OTAs.
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| Department of Defense | Until a systematic approach to track consortium members for other transaction agreements awarded through a consortium or consortium management firm is implemented, the Secretary of Defense should provide information to the public and congressional decision makers on the consortium members performing on each other transaction agreement awarded through a consortium or consortium management firm, such as by including this information in the description of requirement field in the other transaction agreement module of the Federal Procurement Data System-Next Generation. (Recommendation 10) |
DOD agreed with this recommendation. In June 2022, the other transaction agreement (OTA) module of the Federal Procurement Data System--an Integrated Award environment system--was updated to allow agencies to systemically track the consortium members performing on each OTA. FPDS's new capability allows DOD to provide information to the public and congressional decision makers on the consortium members performing on each OTA and meets the intent of the recommendation.
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| Department of Health and Human Services | Until a systematic approach to track consortium members for other transaction agreements awarded through a consortium or consortium management firm is implemented, the Secretary of Health and Human Services should direct the Office of the Assistant Secretary for Preparedness and Response to provide information to the public and congressional decision makers on the consortium members performing on each other transaction agreement awarded through a consortium or consortium management firm, such as by including this information in the description of requirement field in the other transaction agreement module of the Federal Procurement Data System-Next Generation. (Recommendation 11) |
HHS agreed with this recommendation. In June 2022, the other transaction agreement (OTA) module of the Federal Procurement Data System--an Integrated Award Environment system--was updated to allow agencies to systemically track the consortium members performing on each OTA. FPDS's new capability allows HHS to provide information to the public and congressional decision makers on the consortium members performing on each OTA and meets the intent of the recommendation.
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| Department of Homeland Security | Until a systematic approach to track consortium members for other transaction agreements awarded through a consortium or consortium management firm is implemented across agencies, the Secretary of Homeland Security should provide information to the public on the consortium members performing on each other transaction agreement awarded through a consortium or consortium management firm, such as by including this information in the description of requirement field in the other transaction agreement module of Federal Procurement Data System-Next Generation. (Recommendation 12) |
DHS agreed with this recommendation. In August 2021, DHS issued interim guidance on other transaction agreements that directs contracting personnel to identify consortium members performing other transaction agreements in the description of requirement field of the other transaction agreement module of the Federal Procurement Data System.
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| Department of Defense | The Secretary of Defense should direct the Director of Defense Pricing and Contracting to update the Department of Defense's other transaction agreement guidance to include what agreement officers should consider when planning to use a consortium management firm to support acquisition-related activities, such as assessing the extent to which a consortium management firm is closely supporting inherently governmental functions and, for firms that do so, what enhanced management oversight activities are appropriate, if any. (Recommendation 13) |
DOD agreed with this recommendation. In July 2023, DOD updated its other transaction agreement (OTA) guide and included additional information for agreements officers to consider when awarding and administering consortium-based OTAs. Such information included asking agreements officers to consider whether any of the contracted functions are inappropriate for the consortium or consortium manager to perform, such as those considered to be inherently governmental. While DOD's OTA guide addresses inherently governmental functions, which contractors are prohibited from performing, the guide does not address services that closely support inherently governmental functions, which contractors, including consortium managers, can perform but require enhanced oversight. Specifically, the guide does not address how consortium managers perform acquisition-support services that can closely support inherently governmental functions. The guide also does not address the potential enhanced oversight needed to help ensure that consortium managers that perform acquisition-support services are not inappropriately influencing the government's authority for decisions. In April 2024, DOD noted that it plans to issue a policy memorandum to address these issues by summer 2024. We will continue to follow up with DOD to determine if it takes additional actions that meet the intent of this recommendation.
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| Department of Health and Human Services | The Secretary of Health and Human Services should direct the Assistant Secretary for Preparedness and Response to update the Department of Health and Human Services' other transaction agreement guidance to include what agreement officers should consider when planning to use a consortium management firm to support acquisition-related activities, such as assessing the extent to which a consortium management firm is closely supporting inherently governmental functions and, for firms that do so, what enhanced management oversight activities are appropriate, if any. (Recommendation 14) |
HHS agreed with this recommendation. As of April 2024, HHS officials stated they are working towards implementing the recommendation.
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