Coronavirus spending heating up as March comes to a close

Stress and disruption are certainties in today's market but as the COVID-19 spending bill kicks in so is a rapid increase in related spending.

Stress and disruption are certainties government contractors and their agency customers must manage to navigate their way through the novel coronavirus pandemic.

Not that the spending is slowing down by federal agencies, not by a long shot. Federal obligations for the month of March in response to the spread of COVID-19 could top $100 billion if current trends hold, an analyst said Monday on a webcast hosted by George Mason University’s Center for Government Contracting.

The figure is not an exact measure and could very much be more, given how the contracting spend is tabulated in the Federal Procurement Data System that tracks those obligations and the standard 90-day lag in reporting unclassified Defense Department activity.

Research-and-development obligations of around $748.5 million by the Health and Human Services Department is taking the lion’s share of non-defense contracting activity, according to an accompanying presentation.

A majority of that is also going toward so-called “Other Transaction” contracts, said Eric Lofgren, a research fellow at the center. Those procurements are designed for speed and quick fielding of capabilities as they fall outside of traditional federal acquisition regulations.

Then there are the orders placed and also being solicited via sources sought notices for protection equipment to give health care workers, prototypes for treatments, ventilators and other machines, and other services such as testing and cleaning.

“These obligations have been growing fast… so if the current continues, potentially in a couple weeks, we’ll be north of $100 billion in obligations for COVID given the growth rates that have been going on,” Lofgren said.

Overall contract obligations by non-defense agencies have totaled $15 billion through March 27, which is on par with that of last year. But last week’s passage and signing of the $2 trillion CARES Act stimulus package also unlocks more funds and methods so agencies can put it to work faster.

The Defense Department has already tipped its hand to some extent in terms of looking to industry for prototype solutions. DOD earlier this month asked for white papers from industry and academia for new technologies and methods to prevent, contain, treat and detect the exposure of the COVID-19 virus and other emerging bio-threats.

DOD issued the notice in partnership with the Army and the Medical Technology Enterprise Consortium, which helps the Army manage OTA procurements and has focused in the past on battlefield injuries and other traumas.

That is a likely preview of more to come from DOD in its effort to support the federal government’s overall pandemic response.

Regarding industry, its response to that call for action stands to look very different than the norm for the time being at least. One slide from the webcast highlighted at least 30 contracting initiatives across the government for COVID-19 response that range from being in the sources sought or solicitation phases, to award notices and justifications and approvals for sole-source extensions.

“Initially, a lot of them were in the sources sought phase,” said Jerry McGinn, executive director of the GMU GovCon Center and former head of DOD’s manufacturing and industrial base policy office.

That largely meant agencies knew who their traditional providers were but were looking to see who else could fulfill the need.

“Now you’re starting to see they’re just going straight to solicitations,” McGinn added. “They’re publishing notices on one day and requiring responses the next, and this is just going to accelerate.”

NEXT STORY: Who made 2019's biggest deals?

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