Supporting The Response To COVID-19 While Growing Your Business: An overview of new funding actions and resources for small businesses

The developments of the last month have been unnerving—feeling frantic and yet too slow, all at the same time.   Over a three-week span in March 2020, Congress passed three major spending bills, pumping trillions of dollars into the economy to address the coronavirus crisis.  While much of the funding will address direct economic losses that individuals and businesses have incurred in recent weeks, federal agencies will also be spending billions through grants, contracts, and other agreements to deal with both the immediate and long-term needs related to the pandemic.  With proper guidance and preparation, companies may be able to take advantage of these new funding streams to help their communities while simultaneously growing their business.

Three Massive Spending Acts Disperse Trillions of Dollars Across Multiple Agencies

The spending packages passed in March 2020 include the following government funding provisions:[1]

The Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 (signed March 6, 2020) provided $8.3 billion in emergency funding, of which—

  • $2 billion was allocated to the Biomedical Advanced Research and Development Authority (BARDA) for investment in research and development of vaccines, therapeutics, and diagnostics.
  • $61 million will be administered by the Food and Drug Administration (FDA) to develop vaccines, to track the manufacture of medical products, and monitor the manufacturing supply chains.
  • $10 million was set aside for the National Institutes of Health (NIH) to provide training to hospital workers and other first responders.
  • $950 million was appropriated for the Centers for Disease Control (CDC) to administer grants and cooperative agreements with states, localities, and tribal authorities.
  • $435 million was earmarked for international disaster assistance, which may address relevant economic and security issues, to be administered by the U.S. Agency for International Development (USAID).

A second supplemental appropriation of funds was finalized on March 18, 2020 under the Families First Coronavirus Response Act (FFCRA). While this piece of legislation made headlines primarily for requiring employers to provide paid sick leave, it also allocated funds to the Department of Agriculture to expand grants to states in support of emergency food aid programs, and to the Department of Health and Human Services (HHS) in support of home-delivered meal assistance to the elderly and disabled.

The historic, $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020.  The primary aim of the CARES Act was to provide immediate financial relief to individuals and small businesses impacted by the coronavirus crisis, but it further allocated funds for government agency spending, including—

  • $1 billion was reserved for anticipated Department of Defense (DoD) procurements under the Defense Production Act (DPA). The DPA allows the government to set priorities for contractors performing under a “rated order”—that is, a DPA-designated contract must be performed ahead of all other government or commercial contract obligations.
  • The Defense Health Agency (DHA), which manages the military health programs, received $3.8 billion, including $415 million earmarked for research and development and testing efforts. An additional $1 billion was set aside for spending on TRICARE contracts.
  • Funds for information technology (IT) enhancements were set aside for several sub-agencies, including the Veterans Health Administration (VHA) ($2.15 billion), the Coast Guard (from a total appropriation of $140.8 million), FEMA ($44.9 million), and the Indian Health Service (IHS) ($1 billion).

Potential Opportunities For Companies Seeking To Sell To The Government

Businesses that can provide the goods, supplies, or services needed to respond to the coronavirus crisis can find opportunities to pursue government business from these funding packages, and others that are likely to follow.  General information about the federal government’s response to coronavirus can be found at https://www.acquisition.gov/coronavirus.

Specific federal contracting opportunities are published at https://beta.SAM.gov.  Announcements about federal grant announcements related to COVID-19 can be found at NIH (https://grants.nih.gov/grants/natural_disasters/corona-virus.htm) and the CDC (https://www.cdc.gov/grants/public-health-emergencies/covid-19/index.html).

Individual agency websites devoted to coronavirus efforts are also good sources of information:

In addition, because large amounts of funding will be channeled to states and localities dealing with the crisis, there will be opportunities to partner with local government authorities.  State health authorities are likely be at the forefront in issuing awards related to coronavirus, but businesses should consult their state procurement resources for more information.

Companies Must Be Prepared To Enter The Highly Regulated Government Market

Some of the usual rules and requirements around government contracting have been relaxed or amended to deal with the immediacy of the current circumstances—for example, the micro-purchase threshold for commercial items has been raised from $10,000 to $20,000.  This means that authorized purchasing officials in the government can use simplified acquisition procedures[2] to buy items that are needed quickly, often using a government purchase card (i.e., a credit card) for payment.  One-off, emergency purchases are likely to occur near and around the agencies that have received funding for large research, healthcare, and construction projects related to COVID-19, and will require vendors mainly to anticipate commercial item needs and be proactive and/or responsive to government requests.

Companies that are interested in working on government procurements on a more sustained basis, whether as a prime/direct contractor or as a vendor/subcontractor to another entity, can put themselves in a better position for these jobs by establishing themselves as government contractors.  At a minimum, this requires registering with the System for Award Management (SAM) (https://sam.gov).

Along with having a good product or service to provide the government, and registering in SAM, companies wading into this space should take the time to understand the regulatory environment and the particular risks that it presents.  “Men must turn square corners when they deal with the Government” is a foundational principle in this space.  Contractors are expected to have systems and procedures in place to ensure that they are adhering to their obligations, some of which are based on public policy, not commercial reasonableness.

On top of that, government contractors are subject to regulatory oversight and law enforcement actions.  As just one example, the CARES Act allocated $20 million to the DoD Office of Inspector General alone,[3] “to be used for conducting audits and investigations of projects and activities carried out with funds made available … to prevent, prepare for, and respond to coronavirus ….”

Bottom line:  The federal government is going to be spending money to combat the immediate COVID-19 threat, and beyond that, to enhance the country’s ability to respond to similar crises that could arise in the future.  Where those federal dollars flow, opportunities for private sector support through contracts, grants, and other sales will follow.  Companies should think creatively about how they might assist, yet proceed with appropriate caution before diving into doing business with the government.  KaiserDillon is available to partner with your business to navigate these challenges and maximize new opportunities.

 

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[1] These are only some highlights from the referenced legislation for purposes of illustrating where certain funds are being directed.  This summary is not intended to be a comprehensive analysis of the three bills, each of which is lengthy and multi-faceted.

[2] While the simplified acquisition procedures, outlined in Federal Acquisition Regulation (FAR) Part 13, are designed to streamline the acquisition process, the government contracting or purchasing agent must still adhere to certain guidelines, such as assuring that the price is reasonable.

[3] A number of agency Offices of Inspector General received funding to monitor and enforce conduct around the coronavirus efforts.  Additionally, the Department of Justice has announced several initiatives and has set up task forces around the country to combat fraud and abuse around coronavirus response.

April 2, 2020