Infotech and the Law

On several occasions after Sept. 11, the government has used its special power under the Defense Priorities and Allocations System (DPAS) to meet national security demands. DPAS, which is administered by the Department of Commerce, requires companies to accept and perform certain contracts on a preferential or priority basis over all other contracts.For example, when the State Department's $6.5 billion program to upgrade U.S. embassies took on increased urgency after Sept. 11, the agency needed its procurements to be given top priority by U.S. contractors and suppliers. Therefore, it turned to the Department of Commerce and the Department of Defense and sought special procurement authority under DPAS.The State Department sought and obtained authorization to place priority orders in support of the embassy program. Although State normally lacks such authority, the linkage between national defense and the security of U.S. embassies was sufficiently clear that DPAS could be used to meet State's urgent needs.Similarly, the Commerce Department recently worked with the Federal Emergency Management Agency ? which has special authority to support emergency-preparedness initiatives in the United States ? to authorize the FBI's use of priority orders on the Trilogy program, a large project aimed at upgrading the FBI's communications and data processing capability.Commerce also is working with FEMA to provide the Department of Transportation with authority to issue priority orders. The Transportation Department has requested authority to support the expedited purchase of explosive-detection systems ? bomb-sensing equipment ? for airports throughout the country.Thus, following Sept. 11, the DPAS system has again proved capable of meeting its dual goals of assuring the timely availability of industrial resources to meet urgent national requirements and providing a system to support rapid industrial response in a national emergency. Indeed, without DPAS, the nation would lack the flexibility to respond as quickly as it does in matters of national security.But DPAS is not a novelty of wartime. In fact, DPAS is regularly invoked without fanfare on an estimated 300,000 Defense Department contract actions each year, plus an untold number of subordinate subcontracts and purchase orders.This enormous web of priority contracts is largely self-executing in both peacetime and in times of war or national emergency. In other words, contractors routinely account for priority ratings in their contracts simply by agreeing to the particular schedule requirements of those contracts.In most cases, these requirements can be met without disrupting commitments made under other contracts, so special DPAS procedures never come into play.Nonetheless, in rare cases, and particularly during periods of war or national emergency, the government's requirements take on increased urgency and special DPAS procedures must be implemented. For instance, a company might be directed to accept new orders for priority shipment of items, to accelerate deliveries on an existing contract, or even to continue performing a contract that the company would prefer to breach.In most cases, the contractor is adequately compensated for the new or additional work occasioned by special DPAS orders. This can be accomplished either through special "premium" pricing of an order or through a contract adjustment under the "Changes" clause.A special DPAS provision also provides contractors with a defense against any breach-of-contract claims from other customers whose orders are displaced by the government's priority order. But a special DPAS order can be disruptive, and contractors have not always been made whole for the effects of such disruption.Companies affected by a special DPAS order should understand their rights. The government must be able to use its special DPAS authority to meet critical defense and emergency-preparedness needs, but it should be expected to do so with minimal harm to the contractor. nRichard Rector is a partner in the government contracts group at