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White House Weighs FEMA Takeover of Stockpile’s Virus Supplies

April 2, 2020, 8:53 PM

The Trump administration is expected to put FEMA in charge of obtaining medical supplies like masks and gloves for the Strategic National Stockpile, including deciding who receives federal contracts, according to two people familiar with the discussions.

The agreement isn’t yet in place because officials are still evaluating the scope of FEMA’s new authority such that it complies with federal contracting law and still is practicable, according to an administration official who spoke on condition of anonymity.

The contracting responsibility for purchasing supplies like ventilators, masks, and gloves normally resides with the Department of Health and Human Services. White House officials want to transfer that power to the Federal Emergency Management Agency because it can act more quickly.

The method that the administration is looking to use is an “interagency agreement,” a cooperative document between government agencies in which one agency does work for another. Typically, these agreements are used when one agency lacks a certain capability.

The Office of Management and Budget is proposing that the HHS execute a blanket agreement that allows FEMA full authority to contract for goods to add to the Strategic National Stockpile, a supply of drugs and medical supplies for use during a public health emergency.

Officials haven’t yet decided whether FEMA’s new authority would cover all stockpile funds or be limited solely to the purchase of personal protective equipment like gloves and masks. The Strategic National Stockpile received $16 billion in the most recent emergency coronavirus bill.

Interagency Agreements

There are concrete criteria that must be met for such a transfer of authority. The Department of Homeland Security’s directive for interagency agreements says that the services transferred from one agency to another need to be identified, must be “specific, definite, and clear,” and a ceiling amount of the financial obligation needs to be established.

Federal contracting law says such transfers can only occur if the servicing agency, in this case FEMA, states that the needed activities can’t be carried out because the original agency, in this case HHS, doesn’t have the “capability or expertise” to enter into such contracts. There could be legal questions about the administration’s proposal because HHS has been obtaining such supplies for the stockpile for for years.

There is also concern that FEMA may rush through the contracts and not follow all relevant laws. FEMA has a history of “systemic problems” in its management of disaster relief grants and funds, and it has problems with “improper contracting activities,” according to a 2018 Homeland Security Department Inspector General report. The Government Accountability Office has also repeatedly written about FEMA’s poor management of federal contracts.

FEMA’s own after-action report for the 2017 hurricane season said that its “logistics effort featured notable and persistent coordination challenges in resource prioritization, resource movement and tracking, commodity distribution efforts and contracting processing.”

Still, the HHS tends to be slower in contracting for supplies, which is why officials fighting the pandemic want FEMA to take the helm. The HHS gutted its contracting office last year.

HHS Expertise

The job involves ensuring procurement officers are ordering the right material and parts for the devices being stockpiled. They also must evaluate the scientific evidence to make sure the goods on order work as needed, former Strategic National Stockpile Director Greg Burel said in an interview. He retired from the HHS in January.

Without that expertise, “there’s no telling what they’ll buy,” Burel said.

The administration official said FEMA will need advice and expertise from HHS contracting officer representatives in carrying out the procurement activities.

The transfer of authority will likely face requests from Congress to keep HHS in the loop. Rep. Susan Brooks (R-Ind.) said in an interview that HHS’s Office of the Assistant Secretary for Preparedness and Response (ASPR) “needs to be very much in the lead role with respect to procurement and replenishment decisions when it comes to the medical supplies.”

Brooks told Bloomberg Law that she was aware of the discussions about transferring authority to FEMA but hadn’t been formally consulted. She led the negotiations for House Republicans last year in reauthorizing a pandemic preparedness response law.

She said ASPR officials should be “intimately involved in decision-making” for the stockpile.

—With assistance from Michaela Ross

To contact the reporter on this story: Shira Stein in Washington at sstein@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Jo-el J. Meyer at jmeyer@bloomberglaw.com

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