On January 25, 2021, President Joe Biden issued the Executive Order on Ensuring the Future Is Made in All of America by All of America's Workers (EO 14005). Aimed at maximizing the use of domestically produced goods, products and materials, and using services offered by U.S. companies, EO 14005 is very expansive. If and when fully implemented, EO 14005 could change the face of manufacturing and require businesses of all sizes and industries to reassess their supply chains if they do business with the federal government or provide products or services to companies that utilize them in federal government contracts. Of particular note, the executive order presents new and significant opportunities for small and mid-sized businesses that are able to produce goods, products and materials in the United States that meet federal procurement needs.
Pursuant to EO 14005, the Federal Acquisition Regulatory Council (FAR Council) must consider whether to propose several kinds of amendments to the Buy American Act (BAA), including:
- Increasing the numerical threshold for domestic content requirements for end products and construction materials;
- Raising the price preferences for domestic end products and domestic production materials; and
- Replacing the "component test" that is set forth under Part 25 of the Federal Acquisition Regulation with a test "under which domestic content is measured by the value that is added to the product through U.S.-based production or U.S. job-supporting economic activity[.]"
The FAR Council must make determinations as to whether to propose such amendments within 180 days from the issuance of EO 14005.
In the meantime, Section 7 of the executive order could prove to be a boon for small and mid-sized companies. Pursuant to Section 7, federal agencies are required to coordinate with the Hollings Manufacturing Extension Partnership to conduct "supplier scouting" in order to identify U.S. companies, including small and medium-sized companies, that are able to produce products and materials in the United States that meet federal procurement needs.
As a result of EO 14005, significant opportunities will exist for U.S. companies that manufacture personal protective equipment (PPE) and other essential products and supplies. In his remarks at the signing of the EO 14005, President Biden expressed his administration's intent on:
replenishing our stockpiles to enhance our national security. . We need to make our own protective equipment, essential products and supplies. And we'll work with our allies to make sure they have resilient supply chains as well. We'll also make historic investments in research and development [in] markets like battery technology, artificial intelligence, biotechnology, clean energy.
Such objectives are consistent with the goals set forth in the National Strategy for the COVID-19 Response and Pandemic Preparedness that the Biden administration issued on January 21, 2021, and the Executive Order on a Sustainable Health Supply Chain of January 21, 2021 (EO 14001). For example, in the National Strategy, it is stated that the U.S. government will seek to make manufacturing investments necessary to establish an adequate "manufacturing base in the United States," thereby "avoiding reliance on other countries for lifesaving medicines and supplies." In support of this goal, EO 14001 requires the heads of all federal agencies to review the availability of critical materials, treatments and supplies needed to combat COVID-19 (e.g., PPE and durable medical equipment; vaccine development and manufacturing; antigen and molecular-based testing; and therapeutics and key drugs), and to the extent that any such reviews identify shortfalls, the head of the applicable agency is directed to "take appropriate action using all available legal authorities, including the Defense Production Act, to fill those shortfalls as soon as practicable[.]" In addition, based on such reviews, the heads of federal agencies also may make recommendations to the president for additional use of the Defense Production Act.
Based on these goals, small and mid-sized businesses should look for contracting opportunities with the full spectrum of federal agencies tasked with maintaining national stockpiles and readiness reserves. These include the U.S. Department of Health and Human Services, which maintains the Strategic National Stockpile of medical supplies and equipment, and suppliers of PPE and medical devices and supplies, such as the Defense Logistics Agency (DLA). As one example, DLA's Medical Readiness Division will likely be called upon to help the Department of Defense "surge and sustain." Additional DLA opportunities can be found at the DLA Internet Bid Board System or "DIBBS."
In addition, the Department of Veterans Affairs (VA) is another federal entity that sources significant quantities of PPE and other items needed to combat COVID-19. The VA purchases such items on a national, regional and local level through a nationwide system of hospitals, clinics, Veterans Integrated Service Networks and data processing centers. The VA posts solicitations for such items via the System for Award Management.
The Department of Defense will likely seek to implement President Biden's call for investments in research and development through its Other Transaction Authority ( OTA). The department uses OTA agreements to quickly and flexibly adopt business practices that reflect commercial industry standards, while gaining access to state-of-the-art technology solutions from traditional and nontraditional defense contractors. Businesses should look for OTA opportunities with Pentagon entities like the Defense Innovation Unit and AFWERX.
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If you have any questions about this Alert, please contact Michael E. Barnicle, Geoffrey M. Goodale, Keith J. Feigenbaum, any attorney in the Government Contracts and International Trade Group or the attorney in the firm with whom you are regularly in contact.
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