oversight

Defense Production Act: Opportunities Exist to Increase Transparency and Identify Future Actions to Mitigate Medical Supply Chain Issues:

Published by the Government Accountability Office on 2020-11-19.

This report is unreleased, or missing. Visit its landing page for more detail.

                United States Government Accountability Office
                Report to Congressional Committees




                DEFENSE
November 2020




                PRODUCTION ACT

                Opportunities Exist to
                Increase
                Transparency and
                Identify Future Actions
                to Mitigate Medical
                Supply Chain Issues




GAO-21-108
                                               November 2020

                                               DEFENSE PRODUCTION ACT
                                               Opportunities Exist to Increase Transparency and
                                               Identify Future Actions to Mitigate Medical Supply
Highlights of GAO-21-108, a report to
                                               Chain Issues
congressional committees




Why GAO Did This Study                         What GAO Found
COVID-19 has put the U.S. health care          Federal agencies used the Defense Production Act (DPA) to help address
system under severe strain, including          medical supply shortages from COVID-19. The DPA gives agencies the authority
affecting the federal government’s             to (1) prioritize contracts for medical supplies so those orders get preference over
ability to buy and maintain critical           others, and (2) expand domestic production of medical supplies. GAO identified
medical supplies to treat patients and         43 contracts and agreements—initially valued at about $3.9 billion—where
protect health care workers.                   agencies placed priority ratings on or funded domestic production expansion
In March 2020 agencies began using             projects for COVID-19 medical supplies (see figure). Department of Health and
DPA authorities to rapidly obtain and          Human Services (HHS) and Federal Emergency Management Agency (FEMA)
expand domestic production of medical          officials stated that nearly all the approximately 181,000 ventilators and 166.5
supplies for COVID-19. The CARES               million of the respirators they placed on priority rated contracts, respectively,
Act provided the Department of                 have been delivered as of September 2020.
Defense (DOD) $1 billion for DPA
purchases related to COVID-19. HHS             Federal Agencies’ Use of Defense Production Act and Similar Actions for Medical, Testing,
also reported using some of the $8.4           and Vaccine Supplies, March 2020-September 2020
billion it obligated to buy supplies and
replenish the Strategic National
Stockpile to increase domestic
production of medical supplies, which
GAO refers to as similar actions.
The CARES Act includes a provision
for GAO to monitor funds provided for
the COVID-19 pandemic. This report
examines (1) federal agencies’ use of
these actions to address COVID-19,
and (2) the federal approach for using
DPA and similar actions for medical
supplies, among other issues. GAO
analyzed agency announcements,
federal procurement data, contracts,
project data, and planning documents
from March 18 through September 30,
2020, and interviewed HHS, DOD, and            Note: One respirator contract included orders for powered air purifying respirator kits and goggles.
                                               We show these as three separate actions.
FEMA officials.

What GAO Recommends                            Federal agencies initially used a targeted DPA approach to address early
                                               COVID-19 medical supply issues, such as for ventilators and N95 respirators. By
GAO is making two recommendations,             September 2020, agencies increased use of DPA and similar actions to a total of
including that HHS identify how DPA            10 types of medical supplies, and additional DPA actions are likely for masks,
and similar actions will be used to            pharmaceuticals, screening and diagnostics, and personal protective equipment.
increase domestic production of                In light of COVID-19 supply issues, an August 2020 executive order also directed
essential medical supplies as part of          that agencies take steps to reduce U.S. reliance on foreign manufacturers of
efforts to reduce reliance on foreign          medical supplies and other items. To support this order, HHS is leading an effort
manufacturers. HHS concurred with              to identify and mitigate risks for increasing domestic production of medical
the recommendation.
                                               supplies, but the agency has not yet identified its plans. As HHS completes this
                                               effort, an opportunity exists to identify how the DPA and similar actions may be
View GAO-21-108. For more information,         needed to support the effort. Specifically, identifying further use of the DPA and
contact W. William Russell at (202) 512-4841   similar actions to increase domestic production of key medical supplies can help
or RussellW@gao.gov.                           alleviate national security risks from continued reliance on foreign manufacturers.

                                                                                                 United States Government Accountability Office
Contents


Letter                                                                                   1
              Background                                                                 4
              Agencies Have Used DPA and Similar Actions to Address COVID-
                19 and Increase Production of Medical Supplies, but Full Use of
                the Authorities Is Not Centrally Reported                              12
              Federal Agencies’ Approach to Using DPA and Similar Actions
                Have Helped Address Some Medical Supply Issues, But Future
                Actions Have Not Been Identified                                       19
              Agencies Have Begun Identifying Lessons Learned for Future
                Interagency Coordination and Use of DPA and Similar Actions            26
              Conclusions                                                              28
              Recommendations for Executive Action                                     29
              Agency Comments                                                          29

Appendix I    Priority Rated Medical Contracts and Domestic Production
              Expansion Projects for COVID-19                                          33



Appendix II   GAO Contact and Staff Acknowledgements                                   35



Tables
              Table 1: Executive Orders Related to Defense Production Act for
                      Medical Supplies, March 2020-August 2020                           7
              Table 2: Defense Production Act Title I Priority Rated Contracts
                      for Medical Supplies, March 2020-September 2020                  13
              Table 3: DOD and HHS Use of Defense Production Act Title III
                      and Other Contracts and Agreements for Increased
                      Domestic Production of Medical Resources as of
                      September 30, 2020                                               16
              Table 4: Priority Rated Medical Contracts for COVID-19, Defense
                      Production Act Title I                                           33
              Table 5: The Departments of Defense and Health and Human
                      Services Domestic Production Expansion Projects,
                      Defense Production Act Title III and Similar Actions             34




              Page i                                      GAO-21-108 Defense Production Act
Figures
          Figure 1: Process for Reviewing and Approving Federal Agencies’
                   Use of Defense Production Act (DPA) Authorities to
                   Address COVID-19 Medical Supply Chain Issues                                      9
          Figure 2: Use of Defense Production Act (DPA) or Similar Actions
                   to Address Critical Medical Item Shortages, March 2020-
                   September 2020                                                                   21
          Figure 3: Excerpts from the Department of Health and Human
                   Services Assistant Secretary for Preparedness and
                   Response’s Strategic Plan for 2020-2023                                          24




          Abbreviations

          COVID-19          Coronavirus Disease 2019
          DOD               Department of Defense
          DPA               Defense Production Act
          FEMA              Federal Emergency Management Agency
          FPDS-NG           Federal Procurement Data System-Next Generation
          HHS               Department of Health and Human Services
          OMB               Office of Management and Budget




          This is a work of the U.S. government and is not subject to copyright protection in the
          United States. The published product may be reproduced and distributed in its entirety
          without further permission from GAO. However, because this work may contain
          copyrighted images or other material, permission from the copyright holder may be
          necessary if you wish to reproduce this material separately.




          Page ii                                                GAO-21-108 Defense Production Act
                       Letter




441 G St. N.W.
Washington, DC 20548




                       November 19, 2020

                       Congressional Committees

                       The emergence of the Coronavirus Disease 2019 (COVID-19) pandemic
                       has put the U.S. health care system under severe strain, including
                       affecting the federal government’s ability to purchase and maintain
                       inventories of critical medical supplies. The supplies are needed to test
                       and treat patients, protect health care workers, and ensure that vials and
                       syringes are available once one or multiple vaccines are approved. In
                       March 2020, within 1 month of the start of the pandemic, the Department
                       of Health and Human Services (HHS) had distributed most of the
                       personal protective equipment supplies in the Strategic National Stockpile
                       to states and other entities. Moreover, the Federal Emergency
                       Management Agency (FEMA) received requests for millions of N95
                       respirators and gloves—from states, local, tribal, and territorial
                       governments—that far exceeded domestic supply. According to a FEMA
                       official, there was also concern that the inventory of ventilators would be
                       exhausted. The federal government struggled to meet medical supply
                       needs because the U.S. is dependent on foreign sources for many
                       personal protective equipment supplies such as gowns and gloves, and is
                       competing against countries all over the world for the same supplies
                       during this pandemic.

                       As early as March 2020, federal agencies began using authority
                       delegated under the Defense Production Act (DPA) to address medical
                       supply chain needs. Based on this delegation, federal agencies have the
                       authority to, among other things, place priority ratings on medical supply
                       contracts so that agencies’ orders would get preference over others, as
                       well as provide incentives to expand domestic production of medical
                       supplies so that the U.S. will be less dependent on foreign sources of
                       supply. 1 The CARES Act provided the Department of Defense (DOD) $1
                       billion specifically for DPA purchases to prevent, prepare for, and respond
                       to COVID-19, domestically or internationally. 2 DOD plans to use
                       approximately $213 million of this funding for medical supplies and $687
                       million to offset the financial distress in the defense industrial base
                       caused by COVID-19. DOD also plans to use $100 million to support DPA
                       loans, in collaboration with the U.S. International Development Finance

                       1Pub.    L. No. 81-774 (1950), codified at 50 U.S.C. App. §§ 4501 et seq., as amended.
                       2Pub.    L. No. 116-136, (2020).



                       Page 1                                                  GAO-21-108 Defense Production Act
Corporation under Executive Order 13922. HHS reported that it obligated
about $8.4 billion to buy supplies and replenish the Strategic National
Stockpile. HHS is obligating some of these funds to expand domestic
production of medical supplies. 3 Throughout the report, we refer to
actions for placing priority ratings on contracts and awarding contracts or
agreements for domestic production expansion projects (whether the
actions were taken with funds specifically designated for DPA purchases
or provided to HHS) as DPA and similar actions.

The CARES Act includes a provision for GAO to conduct monitoring and
oversight of the use of funds made available to prepare for, respond to,
and recover from the COVID-19 pandemic. 4 This report examines the
federal government’s use of DPA and similar actions to address COVID-
19 medical supply chain issues, including (1) the extent that federal
agencies have used DPA and similar actions; (2) the federal approach for
using DPA and similar actions for medical supplies; and (3) federal
agencies’ efforts to identify lessons learned on the use of the actions.
This is the first in a series of reports we plan to issue on the use of DPA
and similar actions for COVID-19.

To determine the extent that federal agencies have used DPA and similar
actions to address COVID-19 medical supply chain needs, we initially
relied on HHS, FEMA, and DOD agency announcements stating the use
of these authorities between March 18, 2020, and September 30, 2020.
We corroborated this information with contract and other data provided to
us by these agencies. We also verified whether the contracts and other
procurement actions were included in the federal government’s
procurement database, known as the Federal Procurement Data System-
Next Generation (FPDS-NG) and determined whether they were identified
as DPA actions in the database. HHS, FEMA, and DOD officials were
able to provide contracts or other information for 43 DPA or similar
actions that were mentioned in agency announcements. There were four
additional DPA or similar actions that were mentioned in agency
announcements or identified by HHS related to assays, diagnostic
systems, and ventilators. 5 HHS has not yet provided contract or other

3HHS  officials identified the Public Health and Social Services Emergency Fund as an
example of appropriations available to expand domestic production of medical supplies.
Pub. L. No 116-136, Division B, Title VIII.
4Pub.   L. No. 116-136, § 19010.
5An assay provides a sensitive, nucleic-acid-based diagnostic tool for evaluating
specimens from patients in the acute phase of an infection.




Page 2                                                 GAO-21-108 Defense Production Act
information to corroborate these. Therefore, we excluded these four
actions from our analysis. We plan to continue to seek this information
from the agency.

We used the contract and other documents to determine the type, dollar
value, and production timeframes of medical supplies where a priority
rating was placed on the contract, as well as the equipment being
purchased for domestic production expansion projects and the increased
production capacity expected. We also reviewed relevant standards for
internal control in the federal government, including those for information
and communication management. HHS also has other contracts to
procure medical supplies, which we did not include in this review because
they did not include a priority rating or were not for domestic production
expansion purposes. Lastly, our review focused on medical supplies and
did not include priority ratings or production expansion efforts for
pharmaceuticals, therapeutics, or vaccine research.

To determine the federal approach for using DPA and similar actions for
medical supplies, we analyzed information and interviewed officials from
HHS, FEMA, and DOD that serve on various task forces or are in
organizations that support the review, approval, and execution of DPA
authorities. This included officials from the Supply Chain Advisory Group,
Joint DPA Office, DOD’s Joint Acquisition Task Force, and DOD’s DPA
offices, which help award domestic expansion projects. We examined
pertinent documents, such as Executive Orders, HHS strategic planning
documents, and a leadership briefing to gain insight on how DPA
authorities have been and are intended to be used to address critical
supply needs. We also reviewed standards for internal control in the
federal government for managing change in order to identify opportunities
federal agencies may have as they respond to executive direction to
reduce foreign dependence for medical supplies.

To determine federal agency efforts to identify lessons learned on the use
of these actions, we analyzed available documentation from DOD, FEMA,
and HHS aimed at capturing lessons learned and interviewed agency
officials about ongoing efforts.

We conducted this performance audit from May 2020 to November 2020
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that



Page 3                                       GAO-21-108 Defense Production Act
                         the evidence obtained provides a reasonable basis for our findings and
                         conclusions based on our audit objectives.

                         During the Korean War, Congress enacted the Defense Production Act of
Background               1950 to ensure the availability of industrial resources to meet DOD’s
                         needs. 6 The DPA facilitates the supply and timely delivery of products,
                         materials, and services to military and civilian agencies in times of peace
                         as well as in times of war. Since it was enacted in 1950, Congress
                         amended the DPA to broaden its definition beyond military application
                         and expanded coverage to include crises resulting from natural disasters
                         or “man-caused events” not amounting to an armed attack on the U.S.
                         The definition of “national defense” in the Act has been amended to
                         include emergency preparedness activities conducted pursuant to Title VI
                         of the Robert T. Stafford Disaster Relief and Emergency Assistance Act
                         (Stafford Act) and critical infrastructure protection and restoration. 7 In
                         2018, Congress reauthorized the DPA through September 30, 2025. 8

Defense Production Act   There are three major authorities of the DPA that are currently in effect,
Provisions               DPA Titles I, III, and VII.

                         •    Title I: Priorities and Allocation Authority: authorizes the President
                              to require priority performance on contracts or orders and allocate
                              materials, services, and facilities as necessary or appropriate to
                              promote the national defense. 9 The President can delegate Title I
                              authority to various agencies, including the Departments of Homeland

                         6Pub.   L. No. 81-774 (1950), codified at 50 U.S.C. App. §§ 4501 et seq., as amended.
                         7A declaration under the National Emergencies Act authorizes the President to activate
                         existing emergency authorities in other statutes, and the President must cite the
                         authorities being exercised. 50 U.S.C. § 1621. A governor may request an emergency
                         declaration under the Stafford Act if the situation is of such severity and magnitude that
                         effective response is beyond the capabilities of the state and the affected local
                         governments, and federal assistance is necessary. 42 U.S.C. § 5191. According to the
                         Federal Emergency Management Agency, the President declared a nationwide
                         emergency pursuant to 42 U.S.C. § 5191(b) to avoid governors needing to request
                         individual emergency declarations. The Robert T. Stafford Disaster Relief and Emergency
                         Assistance Act, as amended, permits the President to declare a major disaster after a
                         state’s governor or chief executive of an affected Indian tribal government—a governing
                         body of an Indian or Alaska Native tribe, band, nation, pueblo, village, or community that is
                         federally recognized—finds that the emergency or major disaster is of such a severity and
                         magnitude beyond the State, Indian tribal government, and local government’s
                         capabilities. 42 U.S.C. § 5170. Governor means the chief executive of any state, which
                         includes, among others, Puerto Rico and the U.S. Virgin Islands. 42 U.S.C. § 5122 (4)(5).
                         8Pub. L. No. 115-232, §1791 (2018).

                         9Throughout   the report we use the term contracts to refer to both contracts and orders.




                         Page 4                                                  GAO-21-108 Defense Production Act
    Security, Commerce, Defense, and HHS, among others. The authority
    each department holds is based upon its area of expertise in different
    sectors such as industrial resources, water, or health resources.
    Title I authority allows priority-rated contracts or orders to take
    preference over any other unrated contracts or orders if a contractor
    cannot meet all required delivery dates. It also enables agencies to
    issue three types of allocation orders that require a person or
    corporation to (1) reserve resource capacity in anticipation of a rated
    order; (2) take or refrain from taking certain actions or divert use of
    materials, services, or facilities from one purpose to another; or (3)
    limit the amount of a resource to be used for a specific purpose.

    In 2008, we found that some agencies did not have a system or
    regulations in place for the priorities and allocations authority. 10 We
    recommended that several civilian agencies develop and implement a
    system for using the priorities and allocations authority for each
    agency’s respective resources. Since then, each agency that is
    designated as a resource department developed its own priorities and
    allocations systems. We also recommended that, to maximize
    effective use of the priorities and allocations authority, the Secretaries
    at the Departments of Agriculture, Energy, HHS, Homeland Security,
    and Transportation consider, in advance of an emergency, approving
    programs and placing priority ratings on contracts for items that are
    likely to be needed in an emergency. Agencies later informed GAO
    that processes and procedures for placing priority ratings on contracts
    prior to an emergency were either in place or being assessed.

•   Title III: Expansion of Productive Capacity and Supply: authorizes
    the President to provide a variety of financial incentives—loans, loan
    guarantees, direct purchases, and purchase commitments—to firms
    to meet a variety of national defense goals, including maintaining,
    restoring, and expanding the domestic industrial base. The financial
    incentives may be used only when certain conditions are met. For
    example, purchase commitments may generally be made when,
    among other conditions, the President finds that the U.S. industry
    cannot reasonably be expected to provide the capability for the
    needed industrial resources, material, or critical technology in a timely
    manner. Title III financial incentives can help reduce the risks for



10GAO, Defense Production Act: Agencies Lack Policies and Guidance for Use of Key
Authorities, GAO-08-854 (Washington, D.C.: June 26, 2008).




Page 5                                             GAO-21-108 Defense Production Act
      domestic suppliers associated with the capitalization and investments
      required to establish, expand, or preserve production capabilities.
      Executive Order 13603, signed in 2012, designated the authority to
      implement Title III actions to the Secretary of Defense and the heads
      of other federal agencies and designated the Secretary of Defense as
      the DPA Fund Manager. 11 According to DOD officials, the Deputy
      Assistant Secretary of Defense for Industrial Policy provides
      management, direction, and oversight of the DPA Title III program, on
      behalf of the Under Secretary of Defense for Acquisition and
      Sustainment. The Air Force serves as the Executive Agent for DOD’s
      Title III program and maintains a program office to execute the
      authority under the guidance of the Office of the Secretary of Defense.
      According to DOD Title III officials, DOD typically awards technology
      investment agreements for these projects. 12

•     Title VII: General Provisions: provides for a range of authorities,
      which include giving private firms that participate in voluntary
      agreements for preparedness programs limited protection from
      aspects of the antitrust laws and protecting contractors who honor
      priority-rated contracts from lawsuits brought by other customers. Title
      VII allows for establishing an executive reserve for employment in
      executive positions in the government during periods of national
      defense emergency. Title VII also provides for investigative authority
      to collect information on the U.S. industrial base. For example, the
      Department of Commerce completed assessments of the U.S. rocket
      propulsion industrial base and the U.S integrated circuit design and
      manufacturing industry in 2018 and 2019, respectively. It also
      completed an assessment of the impact of foreign sourcing on the
      health-related infrastructure in 2011, which Department of Commerce
      officials stated was its only assessment of health and medical
      resources as of June 2020.




11Exec.   Order No. 13603, 77 Fed. Reg. 16651 (March 22, 2012).
12A  technology investment agreement is an assistance instrument used to stimulate or
support research. It may be either a kind of cooperative agreement or a type of assistance
transaction other than a grant or cooperative agreement. The ultimate goal for using a
technology investment agreement is to foster the best technologies for future defense
needs. Technology investment agreements differ from and complement other assistance
instruments in that they address the goal by fostering civil-military integration. 32 C.F.R.
§§ 37.110 and 37.115.




Page 6                                                  GAO-21-108 Defense Production Act
Executive Orders Allowing                                       On March 13, 2020, the President declared COVID-19 a national
Use of DPA Authorities for                                      emergency under the National Emergencies Act and a nationwide
                                                                emergency under the Robert T. Stafford Disaster Relief and Emergency
COVID-19
                                                                Assistance Act. The President also approved major disaster declarations
                                                                under the Stafford Act for all 50 states, the District of Columbia, and five
                                                                territories. The President then issued several executive orders from
                                                                March 2020 through August 2020 allowing agencies to use DPA
                                                                authorities to mitigate COVID-19 supply chain issues. Table 1 provides a
                                                                description of the executive orders related to medical supplies.

Table 1: Executive Orders Related to Defense Production Act for Medical Supplies, March 2020-August 2020

 Executive Order
 Number                            Datea                          Description
 13909                             March 2020                     Provides authority to the Secretary of Health and Human Services to determine, in
                                                                  consultation with the Secretary of Commerce and the heads of other executive
                                                                  departments and agencies, proper nationwide priorities and allocations of all health and
                                                                  medical resources needed to respond to COVID-19 within the United States.
 13910                             March 2020                     Addresses prevention of hoarding and price gouging of resources such as personal
                                                                  protective equipment and disinfecting and sanitizing products.
 13911                             March 2020                     Provides the Secretary of Health and Human Services and the Secretary of Homeland
                                                                  Security the authority to expand production capacity of resources such as personal
                                                                  protective equipment and ventilators. Delegation of Defense Production Act Title VII
                                                                  authorities are also provided.
 13922                             May 2020                       Provides the Chief Executive Officer of the United States International Development
                                                                  Finance Corporation the authority to, among other things, make loans to create,
                                                                  maintain, protect, expand, and restore the domestic industrial base capabilities,
                                                                  including supply chains within the United States and its territories.
 13944                             August 2020                    Provides authority to the Secretary of Health and Human Services to determine priorities
                                                                  and allocations of essential medicines, medical countermeasures, and critical inputs,
                                                                  including active pharmaceutical ingredients.
Source: GAO analysis of Presidential Executive Orders. | GAO-21-108
                                                                a
                                                                 Exec. Order No. 13909, 85 Fed. Reg.16227 (Mar. 23, 2020); Exec. Order No. 13910, 85 Fed. Reg.
                                                                17001 (Mar. 26, 2020); Exec. Order No. 13911, 85 Fed. Reg. 18403 (Apr. 1, 2020); Exec. Order
                                                                No.13922, 85 Fed. Reg. 30583 (May 19, 2020); and Exec. Order No. 13944, 85 Fed. Reg. 49929
                                                                (Aug. 14, 2020).


Organizations That                                              According to FEMA and DOD officials, a process has been put in place
Approve and Assist with                                         for three organizations to review and approve agency requests to use
Execution of DPA
Authorities for COVID-19
Medical Supplies




                                                                Page 7                                                    GAO-21-108 Defense Production Act
DPA authorities in response to COVID-19. 13 These organizations include
the Joint DPA Office, the Unified Coordination Group, and the White
House Coronavirus Task Force. 14 Officials stated that the Joint DPA
Office and the Unified Coordination Group are jointly led by FEMA and
HHS officials. In addition, several DOD organizations support the
execution of these authorities—the Joint Acquisition Task Force, DPA
Title III Offices, and military service contracting offices. All of these
organizations were established from January through April 2020 to help
respond to COVID-19 with the exception of the DPA Title III offices and
the military service contracting offices, which were preexisting. Figure 1
describes the DPA review and approval process.




13According to FEMA officials, not all DPA requests underwent the review process as
some items, specifically ventilators, were approved directly through Presidential
Memorandum.
14According to a FEMA official, as of June 15, 2020, FEMA’s DPA program assumed
responsibilities of the Joint DPA Office.




Page 8                                               GAO-21-108 Defense Production Act
Figure 1: Process for Reviewing and Approving Federal Agencies’ Use of Defense Production Act (DPA) Authorities to
Address COVID-19 Medical Supply Chain Issues




                                        *Denotes organization created in response to COVID-19.


                                        According to FEMA officials, the White House Coronavirus Task Force
                                        makes the final decision on use of DPA authorities for medical supplies.
                                        Exceptions could occur under an expedited process. In these situations,
                                        the White House Coronavirus Task Force has 1 hour to review the
                                        request; if no objection is identified in that time frame, approval is granted.
                                        In determining whether to approve use of these authorities, a FEMA
                                        official stated that the White House Coronavirus Task Force considers
                                        existing business relationships that manufacturers have with healthcare
                                        providers, the capacity of the manufacturer to meet all customer needs,
                                        and the extent to which individual states are also procuring medical
                                        resources from some of these same manufacturers to meet their own
                                        needs.




                                        Page 9                                                   GAO-21-108 Defense Production Act
                       In addition to its role in the DPA review and approval process, the Unified
                       Coordination Group has responsibility for operational command,
                       leadership, and decision making for the COVID-19 pandemic response.
                       Eight operational task forces were established by the Unified
                       Coordination Group to provide operational guidance and secure
                       resources to coordinate the whole-of-government response to COVID-19,
                       including the Supply Chain Task Force. Initially this task force was
                       responsible for maximizing the nationwide availability of mission-essential
                       protective and lifesaving resources and equipment based on need. For
                       example, the task force launched Project Air Bridge on March 29, 2020,
                       to expedite the delivery of critical supplies from overseas manufacturers
                       to distribute them to areas of need in the U.S., reducing shipment time
                       from weeks to days, according to FEMA’s website. The task force has
                       since been renamed the Supply Chain Advisory Group and is responsible
                       for advising the procurement of medical supplies to replenish the
                       Strategic National Stockpile and assisting with the transition of
                       procurement responsibilities to other federal stakeholders.

Previous GAO Reports   In June 2020, we reported that HHS was using DPA authorities to
                       address supply chain needs and to help replenish the Strategic National
                       Stockpile for some items. 15 According to the President’s budget proposal
                       for fiscal year 2021, the Strategic National Stockpile is the largest
                       federally owned repository of pharmaceuticals, critical medical supplies,
                       federal medical stations, and medical equipment available for rapid
                       delivery to support the response to a public health emergency when state
                       and local supplies are depleted. 16 However, according to officials from
                       HHS’s Office of the Assistant Secretary for Preparedness and
                       Response—the organization that oversees the stockpile—the Strategic
                       National Stockpile did not have the capacity to provide states with
                       supplies at the scale necessary to respond to a nationwide event such as
                       the COVID-19 pandemic. For example, an HHS official stated that the
                       stockpile did not contain the number of N95 respirators that would be
                       needed in a severe pandemic.

                       The administration announced plans to restructure the Strategic National
                       Stockpile on May 14, 2020, based on lessons learned from recent
                       pandemics, including COVID-19. The HHS Office of the Assistant

                       15GAO,COVID-19: Opportunities to Improve Federal Response and Recovery Efforts,
                       GAO-20-625 (Washington, D.C.: June 25, 2020).
                       16Department of Health and Human Services, Fiscal Year 2021 Public Health and Social
                       Services Emergency Fund: Justification of Estimates for Appropriations Committee.




                       Page 10                                             GAO-21-108 Defense Production Act
Secretary for Preparedness and Response issued a request for
information to gather input from the private sector and other organizations
on how to restructure the stockpile and improve supply availability, among
other things. We have ongoing work examining the contents and
management of the Strategic National Stockpile.

In September 2020, we reported that the federal government had taken
steps to mitigate medical supply chain shortages. 17 However, we noted
that there are ongoing constraints around certain types of personal
protective equipment and testing supplies, such as nitrile gloves, surgical
gowns, N95 respirators, swabs, reagents, tubes, pipettes, and transport
media. Additionally, we noted that up to this point in the federal response,
responsibility for stabilizing and expanding the medical supply chain relied
on the coordination of multiple federal departments and their staff, many
of whom were temporarily assigned to support COVID-19 response
efforts. As the response evolves, many of these responsibilities—
including monitoring supply availability, acquiring supplies, and building a
resilient domestic manufacturing base—are transitioning or have recently
transitioned over to HHS. For example, the Supply Chain Advisory Group
is transitioning its medical supply chain management responsibilities to
HHS. Responsibility for procuring and distributing testing supplies to
states transitioned from FEMA to HHS in July 2020, according to HHS
officials. DOD also began transitioning acquisition responsibilities back to
HHS.

We made two recommendations to help facilitate future efforts to address
COVID-19 supply chain issues.

•   First, we recommended that HHS, in coordination with FEMA, should
    immediately document roles and responsibilities for supply chain
    management functions transitioning to HHS, including continued
    support from other federal partners, to ensure sufficient resources
    exist to sustain and make the necessary progress in stabilizing the
    supply chain, and address emergent supply issues for the duration of
    the COVID-19 pandemic.
•   Second, we recommended that HHS, in coordination with FEMA,
    further develop and communicate to stakeholders plans outlining
    specific actions the federal government will take to help mitigate
    remaining medical supply gaps necessary to respond to the

17GAO,  COVID-19: Federal Efforts Could Be Strengthened by Timely and Concerted
Actions, GAO-20-701 (Washington, D.C.: Sept. 21, 2020).




Page 11                                            GAO-21-108 Defense Production Act
                                  remainder of the pandemic, including through the use of Defense
                                  Production Act authorities.

                              HHS and FEMA both non-concurred with the recommendations. In
                              general, HHS and FEMA stated that they have established adequate lines
                              of communication and have taken significant action to meet federal, state,
                              local, tribal, and territorial government medical supply requests. We
                              acknowledged many of these efforts in the report, but reemphasized the
                              need for further action.

                              Federal agencies used priority ratings on contracts early in the pandemic
Agencies Have Used            to get needed medical supplies to healthcare providers as quickly as
DPA and Similar               possible, most notably ventilators and N95 respirators. HHS and DOD
                              also have domestic production expansion projects underway to increase
Actions to Address            production of N95 respirators and other supplies. GAO found 43 awards
COVID-19 and                  where DPA and similar actions were used. These awards were initially
                              valued at about $3.9 billion. Federal agencies do not centrally report all
Increase Production           DPA Title I actions in FPDS-NG, which among other things, makes it
of Medical Supplies,          difficult for federal agencies to assess the effectiveness of these
                              authorities in addressing medical supply chain needs. Appendix I includes
but Full Use of the           a list of the priority rated contracts and domestic production expansion
Authorities Is Not            projects that we identified.
Centrally Reported
HHS and FEMA Placed           HHS and FEMA used DPA Title I authorities to place priority ratings on 25
Priority Ratings on Medical   medical supply contracts as of September 30, 2020. The contracts were
                              initially valued at about $3.3 billion. HHS placed priority ratings on 19 and
Supply Contracts to
                              FEMA placed priority ratings on six. The majority of the contracts were
Address COVID-19              awarded from March through May 2020 and most of the ratings were
                              placed on contracts for ventilators and respirators. Table 2 provides
                              details on federal agencies’ use of DPA Title I authority to place priority
                              ratings on medical supply contracts.




                              Page 12                                       GAO-21-108 Defense Production Act
Table 2: Defense Production Act Title I Priority Rated Contracts for Medical Supplies, March 2020-September 2020

                                                                                                        Total Awarded Amount
                                                                        Number of
Type of Medical Resource                                     Prioritized Contracts                              (dollars in millions)                             Number of Units
Ventilators                                                                               9                                    2,340.4a                                  180,906a
Respirators (N95, K95, KN90)b                                                           12                                        623.5                               888,592,540
Air purifying respirator kits                                                             2                                       136.5                                    28,950
Goggles                                                                                   1                                           3.4                            Over 200,000
Syringes                                                                                  3                                       154.6                              Not Providedc
Totals                                                                                 25d                                      3,258.4                                       N/A
Source: GAO analysis of Department of Health and Human Services (HHS) and Federal Emergency Management Agency contract offices documentation data. | GAO-21-108
                                                              a
                                                               The contract award amount includes additional medical supplies than those indicated, such as hoods
                                                              and consumables. The figure also represents the initial contract value and number of ventilators
                                                              procured. According to HHS officials, it modified two contracts to procure fewer ventilators, but did not
                                                              provide us with updated ventilator contract values and quantity data.
                                                              b
                                                               The N95, KN90, and KN95 respirators model types provide a letter to indicate a resistance to oils
                                                              and the nation in which the respirator’s standards were approved, and a number to show the degree
                                                              to which the respirator filters airborne particles.
                                                              c
                                                                  HHS provided three syringe contracts but redacted information on the number of units procured.
                                                              d
                                                               One contract for N95 respirators also included orders for powered air purifying respirator kits and
                                                              goggles. We included the contract for the kits and goggles in the individual rows, but excluded them
                                                              from the total count to avoid double counting.


                                                              HHS placed priority ratings on nine contracts to initially procure over
                                                              180,000 ventilators. An HHS official stated that the agency recently
                                                              modified two of the contracts, to procure fewer ventilators due to
                                                              decreased demand. HHS, however, did not provide us with updated
                                                              information on those contract modifications. We plan to continue to seek
                                                              this information from the agency. Nearly 80,000—or about 44 percent of
                                                              the initial number of ventilators acquired through priority-rated contracts—
                                                              were to be produced through two contracts with traditional ventilator
                                                              manufacturers and automotive manufacturers that had excess capacity at
                                                              that time. Specifically, General Electric partnered with Ford Motor
                                                              Company for one contract, and Ventec Life Systems partnered with
                                                              General Motors for another contract. HHS did not provide detailed
                                                              delivery information, but an official stated that the majority of ventilators
                                                              acquired with priority rated contracts had been delivered by September
                                                              30, 2020.

                                                              HHS and FEMA placed priority ratings on 12 contracts and task orders
                                                              with five contractors to procure a total of about 889 million N95 and other
                                                              respirators. One of the HHS N95 respirator contracts also included
                                                              powered air purifying respirator kits and goggles. HHS has not yet
                                                              provided us with delivery information on the N95 respirators it ordered or


                                                              Page 13                                                                    GAO-21-108 Defense Production Act
the powered air purifying respirator kits and goggles. We plan to continue
to seek this information from the agency. An official from FEMA stated
that 166.5 million of the respirators it ordered had been delivered as of
September 10, 2020. HHS also awarded three contracts for syringes, but
has not yet been able to provide detailed information on the quantities
procured or delivered. We plan to continue to seek this information from
the agency .

FEMA issued an Allocation Order, published as a Temporary Final Rule,
to prohibit certain personal protection equipment items from being
inappropriately diverted abroad, consistent with the April 3, 2020,
Presidential Memorandum on “Allocating Certain Scarce or Threatened
Health and Medical Resources to Domestic Use”. FEMA’s initial
Temporary Final Rule was published on April 10, 2020, a Notification of
Exemptions was published on April 21, 2020, and an updated Temporary
Final Rule was published on August 10, 2020, effective through
December 31, 2020. 18 According to FEMA, as of September 4, 2020:

•      N95 respirators for medical use are still subject to high demand within
       the U.S., and supply is not expected to catch up with demand until
       January 2021. FEMA had open requests for over 2.7 million medical
       grade N95 respirators from state, local, tribal, and territorial
       jurisdictions.
•      Domestic supply of surgical masks does not meet current demands.
       FEMA had open requests for over 15.8 million surgical masks from
       state, local, tribal, and territorial jurisdictions.
•      Domestic supply for latex and vinyl examination and surgical gloves
       has largely caught up with demand, but there is still a significant
       shortage of nitrile gloves. 19 FEMA had open requests for over 149.3
       million nitrile gloves from state, local, tribal, and territorial jurisdictions.
•      FEMA had open requests for 8.8 million gowns from state, local, tribal,
       and territorial jurisdictions.




1885   Fed. Reg. 48113 (Aug. 10, 2020).
19Nitrile gloves are disposable gloves made of a non-latex synthetic material used to
reduce the risk of contamination between medical examiner and a patient.




Page 14                                                GAO-21-108 Defense Production Act
DOD and HHS Have        DOD and HHS are also using DPA Title III or similar actions to increase
Efforts Underway to     domestic production of personal protective equipment, testing, and
                        vaccine delivery supplies. For example, while priority ratings were placed
Increase Domestic
                        on N95 respirator contracts, agencies are also pursuing projects to
Production of Medical   increase domestic production of N95 respirators. According to HHS and
Supplies                DOD, the country’s ability to produce personal protective equipment
                        domestically is critical not only to respond to pandemics, but also to
                        ensure the security of the nation.

                        According to HHS and DOD officials, they plan to award $1.513 billion for
                        domestic production expansion projects for medical supplies using
                        CARES Act appropriations—$1.3 billion from funds HHS designated to
                        buy supplies for the COVID-19 response and replenish the Strategic
                        National Stockpile and approximately $213 million from funds provided to
                        DOD that were specifically designated for DPA Title III investments. 20
                        According to the Under Secretary of Defense for Acquisition and
                        Sustainment, DOD is using an additional $687 million in DPA Title III
                        CARES Act funding to offset the financial distress in the defense
                        industrial base caused by COVID-19, primarily in the aviation, space,
                        shipbuilding, and microelectronics sectors. We plan to examine these
                        other projects as part our future defense industrial base work.

                        As of September 30, 2020, DOD awarded more than $637 million on 18
                        medical supply domestic production expansion projects—or nearly 40
                        percent of the planned funding. DOD awarded some of these projects on
                        behalf of HHS. 21 These projects help to address some of the current and
                        projected supply chain needs for personal protective equipment, materials
                        for N95 respirators and ventilators, testing materials, and vaccine delivery
                        supplies.

                        The projects are being completed by companies that are already
                        manufacturing these supplies in the U.S. An official from the DOD DPA
                        Title III office stated that companies submitted domestic production

                        20DOD   told us they are making the DPA Title investments under the authority of 50 U.S.C.
                        4533. DOD also told us that it allocated $100 million in CARES Act appropriations to
                        support domestic loans under the authority of 50 U.S.C. 4532, in collaboration with the
                        United States International Development Finance Cooperation, to increase the domestic
                        production of N95 respirators, other personal protective equipment, pharmaceuticals,
                        ventilators, airway management consumables, and testing supplies.
                        21For example, the Economy Act authorizes agencies to obtain supplies or services from
                        another agency or from other major organizational units within an agency. 31 U.S.C. §
                        1535.




                        Page 15                                                GAO-21-108 Defense Production Act
                                        expansion proposals that balanced the companies’ ability to meet the
                                        country’s increased demand for certain supplies while also being able to
                                        maintain profitability over a longer period. The companies are using the
                                        funding to, among other things, procure additional equipment and
                                        materials, as well as to expand or build new facilities in some cases.
                                        Table 3 provides additional details of the domestic expansion efforts for
                                        medical resources.

Table 3: DOD and HHS Use of Defense Production Act Title III and Other Contracts and Agreements for Increased Domestic
Production of Medical Resources as of September 30, 2020

                                                         Maximum
                                                    Contract Value                                                           Projected annual full rate
                                  Number of             (dollars in                  Projected production                         production increase
Medical Item                        Awards               millions)a              increase by January 2021                                     quantity
Personal Protective Equipment
N95 Respirators                             5                      278.7                                450 million                                 822 million
Gloves                                      1                       22.4                                225 million                                 450 million
Surgical Masks                              1                         3.5              No production increase                                       100 million
                                                                                        expected by this time
Materials needed to produce Personal Protective Equipment
Ventilator Components                       1                         4.9              No production increase                                        7.8 million
                                                                                        expected by this time
Filter Media                                3                       18.2
               N95 Respirators                                                                          637 million                              1,957 million
                  Face Masks                                                                          2,304 million                             6,648 millionb
                    Ventilators                                                                         330 million                                 330 million
Testing Materials
Swabs                                       3                      136.7                              422.4 million                              952.8 million
Test Kits                                   3                       35.1                                  73 million                         over 120 million
Vaccine Supplies
Syringes                                    1                        138                                540 million                                 540 million
                                        Source: GAO analysis of Department of Defense (DOD) and Department of Health and Human Services (HHS) data. | GAO-21-108

                                        Note: Filter media helps prevent virus particles from passing through N95 respirators, face masks,
                                        and ventilators.
                                        Contract values in table represent the government’s portion of total award.
                                        a

                                        b
                                         According to the agreement language, the filter media will be used for either face masks or
                                        respirators.


                                        Our analysis of data for the 18 projects shows that six projects, including
                                        syringes and filter media for ventilators, are scheduled to be completed by
                                        the end of 2020. The remaining 12 are scheduled to be completed
                                        between January 2021 and November 2021. DOD officials said that the


                                        Page 16                                                                    GAO-21-108 Defense Production Act
                               agency tracks the delivery of equipment to monitor progress of domestic
                               production expansion projects. They also stated that DOD officials have
                               visited some contractor facilities to assess progress. We plan to examine
                               the status of these medical supply expansion efforts and the extent to
                               which they help meet projected demand for the items as part of our future
                               work assessing the use of DPA authorities in response to COVID-19.

Use of DPA Title I Authority   We determined that there is no data field in FPDS-NG—the federal
is Not Fully Reported in       government’s central repository for procurement actions—that identifies
                               when DPA rated contracts have been awarded in response to COVID-19.
the Federal Procurement
                               In April 2020, the Office of Management and Budget (OMB) directed
Data System                    federal agencies to use a special code in FPDS-NG that indicates when
                               procurement actions were issued in response to COVID-19. 22 This
                               included new contract awards for supplies and services as well as
                               modifications, irrespective of whether the contract being modified was
                               originally awarded to address COVID-19. The memorandum stated that
                               these actions were intended to promote full, clear, and consistent
                               transparency in the tracking of COVID-related procurement actions. OMB
                               did not provide any additional reporting guidance for tracking the use of
                               DPA authorities or similar actions to fund domestic production expansion
                               projects. For example, federal agencies were not required to include
                               additional information in the description of requirements data field when a
                               priority rating was placed on a contract.

                               As of September 30, 2020, we found that over 72,000 contract actions
                               reported in FPDS-NG were related to COVID-19, and only four of the 25
                               priority rated contracts actions we identified indicated in FPDS-NG that a
                               priority rating was placed on the contract. Specifically, the FPDS-NG
                               description field for four of six task orders FEMA placed on an indefinite
                               delivery, indefinite quantity contract for N95 respirators indicated that they
                               were a DPA order. 23 HHS and FEMA officials stated that they do not
                               require their contracting officers to identify priority ratings in the
                               description field for procurement actions because OMB guidance does
                               not specifically direct them to identify these actions. FEMA officials stated




                               22OMB  required agencies to use National Interest Action code P20C for COVID-19 actions
                               in FPDS-NG.
                               23Indefinite
                                          delivery indefinite quantity contracts are awarded to one or more contractors
                               when the exact quantities and timing for products or services are not known at the time of
                               award.




                               Page 17                                                GAO-21-108 Defense Production Act
that contracting officers added more detailed information in the FPDS-NG
description field for the four task orders on their own volition.

By contrast, OMB provided updated guidance to federal agencies on April
17, 2020, to take additional steps to identify when agencies reimburse a
contractor for the cost of paid leave incurred during COVID-19. For
example, federal agencies are directed to enter “COVID-19 3610” at the
beginning of the FPDS-NG description in the requirements data field on
the contract action report for the modification. The guidance states that
central collection of these data will support federal-wide analysis of
contractor payments and implementation oversight, as well as help
safeguard taxpayer dollars against duplicative and wasteful spending.

In the absence of additional clarifying direction to federal agencies to
identify DPA rated contracts in FPDS-NG, OMB will miss an important
opportunity to help agencies further promote full, clear, and transparent
tracking of COVID-related actions, and federal agencies would not have
complete information to support federal-wide analysis of the effectiveness
of the DPA and similar actions to address medical supply needs.
Moreover, Congress will not be able to fully track related procurement
data and assess the overall effectiveness of these actions. Standards for
Internal Control in the Federal Government states that agencies should
obtain relevant data in a timely manner for management to make
informed decisions and evaluate the agency’s performance in achieving
key objectives and addressing risks. 24




24GAO, Standards for Internal Control in the Federal Government, GAO-14-704G
(Washington, D.C.: September 2014).




Page 18                                            GAO-21-108 Defense Production Act
Federal Agencies’
Approach to Using
DPA and Similar
Actions Have Helped
Address Some
Medical Supply
Issues, But Future
Actions Have Not
Been Identified
Initial Actions to Address   Federal agencies used DPA and similar actions to target limited types of
COVID-19 Were Focused        medical supplies—such as ventilators and N95 respirators early in the
                             COVID-19 response—but later took actions for other personal protective
on Ventilators and N95
                             equipment and testing supplies. Part of the reason is because, according
Respirators, but Have        to the head of the Supply Chain Advisory Group, the pandemic caught the
Expanded to Other Types      federal government off guard and the government has been playing
of Supplies                  catch-up ever since. In addition, HHS, FEMA, and DOD officials also
                             stated that since COVID-19 began, the White House Coronavirus Task
                             Force has advocated using a tailored approach when using the DPA to
                             ensure that health institutions are sufficiently equipped while also
                             minimizing disruptions to private industry.

                             Most of the DPA actions taken as of September 30, 2020, were targeted
                             at addressing critical medical item shortages to treat patients and protect
                             healthcare providers based on requests from state, local, tribal, and
                             territorial governments. As previously noted, these included actions to
                             quickly place priority ratings on contracts or to increase domestic
                             production of ventilators and N95 respirators, and filter media projects,
                             which are expected to take several months or more than a year to
                             complete.

                             Federal agencies also used DPA Title I authorities to allocate and prevent
                             hoarding of N95 respirators, as well as other critical medical supplies for
                             COVID-19. The Department of Justice established a COVID-19 Hoarding
                             and Price Gouging Task Force to develop effective enforcement
                             measures, establish best practices, and coordinate nationwide
                             investigations into allegations of individuals violating the allocation order.
                             The Department of Justice made at least two announcements where it



                             Page 19                                        GAO-21-108 Defense Production Act
charged individuals for hoarding medical supplies and devices. 25 In one
instance, it announced charges against an individual for hoarding
personal protective equipment and seized more than 100,000 facemasks,
10,000 surgical gowns, nearly 2,500 full-body isolation suits, and more
than 500,000 pairs of disposable gloves.

More recently, DPA and similar actions have been used to address
supply shortages for other personal protective equipment and testing
supplies, as well as to ensure that supplies, such as syringes, are on
hand to support the delivery of a vaccine once available. We have
ongoing work examining efforts to increase testing capacity and data
collection, as well as vaccine development and delivery efforts that will be
performed through project Operation Warp Speed. 26 Figure 2 provides an
overview of federal agencies’ actions to address a total of 10 types of
COVID-19 medical supply needs through September 30, 2020.




25HHS,   in accordance with Executive Order 13910, identified medical supplies and
devices that were scarce and may not be accumulated (1) in excess of the reasonable
demands of business, personal, or home consumption, or (2) for the purpose of resale at
prices in excess of prevailing market prices. These supplies included N95 filtering
facepiece respirators, powered air purifying respirators, portable ventilators, chloroquine
phosphate or hydroxychloroquine, disinfecting devices and other sanitizing and
disinfecting products suitable for use in a clinical setting, medical gowns or apparel (e.g.,
surgical gowns or isolation gowns), and personal protective equipment such as coveralls,
face masks, surgical masks, and gloves or surgical gloves.
26On May 15, 2020, the President announced Operation Warp Speed. This is a joint HHS
and DOD effort, with coordination from other agencies, to achieve the priority goal of
accelerating development, production, and distribution of effective diagnostics,
therapeutics, and vaccines to counter COVID-19.



Page 20                                                  GAO-21-108 Defense Production Act
Figure 2: Use of Defense Production Act (DPA) or Similar Actions to Address Critical Medical Item Shortages, March 2020-
September 2020




                                         Note: One contract for N95 respirators also included orders for powered air purifying respirator kits
                                         and goggles. We included the contract for the kits and goggles as separate actions.




                                         Page 21                                                        GAO-21-108 Defense Production Act
                            Additional DPA actions are likely to be taken by agencies. The Joint
                            Acquisition Task Force reached out to industry between July 10, 2020
                            and August 15, 2020, for domestic production expansion proposals for
                            masks, pharmaceuticals, screening and diagnostics, and personal
                            protective equipment. According to task force officials, as of August 28,
                            2020, teams of experts were reviewing and ranking the proposals.

                            The federal government recently announced that it will be using Title VII
                            authorities—voluntary agreements with private firms—to address longer
                            term medical supply needs. With required approval from the U.S. Attorney
                            General, on August 17, 2020, FEMA established a voluntary agreement
                            for enhanced coordination and cooperation with private sector
                            manufacturers, distributors, and industry representatives to provide
                            critical healthcare resources to respond to a pandemic, including
                            expediting the distribution of needed medical supplies throughout the U.S.
                            This voluntary agreement establishes the Committee for the Distribution
                            of Healthcare Resources Necessary to Respond to a Pandemic, which
                            consists of a chairperson, representatives from FEMA, HHS, Department
                            of Justice, and other federal agencies with equities in the agreement, and
                            participants who have substantive capabilities to carry out the purpose of
                            the agreement.

                            The FEMA Administrator appoints the chairperson from FEMA senior
                            executives. Among other things, and as directed by the chairperson, the
                            committee members will collectively identify and resolve the allocation of
                            scarce resources amongst all necessary public and private sector
                            domestic needs. The chairperson makes decisions and may create and
                            execute specific plans of action. Participants to the agreement receive
                            limited protection from antitrust liability for specific actions taken under the
                            agreement.

Opportunities Exist for     An HHS strategic plan and a recently issued Executive Order identified
HHS to Identify How DPA     reliance on foreign manufacturers as a risk to the U.S. healthcare supply
                            chain and stated that steps should be taken to increase domestic
and Similar Actions Could
                            production of medical supplies. HHS has not yet identified how DPA and
Further Reduce the Risk     similar actions could be used to address this risk.
of U.S. Reliance on
Foreign Manufacturers of    HHS’s Office of the Assistant Secretary for Preparedness and Response
Medical Supplies            is the principal advisor to the Secretary of HHS on matters related to
                            federal public health and medical preparedness and response for public
                            health emergencies. In April 2020, the office issued its Strategic Plan for
                            2020-2023. The plan states that in an increasingly complex and
                            dangerous world, being ready and able to protect the health of all


                            Page 22                                         GAO-21-108 Defense Production Act
Americans is paramount to U.S. national security. The plan described the
risk environment for the medical supply chain as follows:

   Supply Chain Disruption and Corruption: Highly efficient supply chains have resulted in
   a “just-in-time” approach regarding day-to-day healthcare capabilities throughout the
   U.S. and globally, as well as surge medical capacities in an emergency. This situation
   may leave health-related facilities and systems with limited inventories and the rapid
   onset of cascading impacts in the event of a supply chain disruption or corruption.
   Strategically, the biggest risk to healthcare sector supply chains is the U.S.
   dependency on foreign sources of pharmaceuticals, precursor ingredients or materials,
   and finished medical products or devices. When such commodities — including
   ordinary items such as protective masks and surgical gloves — are unavailable, or if
   reach-back support is significantly affected, patients will be directly impacted by
   accompanying disruptions and delays in the provision of key medical services.
   Interruption of foreign supply chains as a result of significant natural disasters, regional
   military or political conflicts, or trade disputes compounds the risk of disruptions that
   can directly impact healthcare provision in the U.S.

As shown in figure 3, the strategic plan lays out four priority goals. Priority
Goal 3 provides a general approach for addressing the potential for
supply chain disruptions, including the risks of foreign ownership of
medical countermeasures, such as personal protective equipment.




Page 23                                                  GAO-21-108 Defense Production Act
Figure 3: Excerpts from the Department of Health and Human Services Assistant Secretary for Preparedness and Response’s
Strategic Plan for 2020-2023




                                       Note: According to the Centers for Disease Control and Prevention, medical countermeasures are
                                       life-saving medicines and medical supplies regulated by the U.S. Food and Drug Administration that
                                       can be used to diagnose, prevent, protect from, or treat conditions associated with chemical,
                                       biological, radiological, or nuclear threats, emerging infectious diseases, or a natural disaster.


                                       Efforts to increase domestic production of critical medical supplies are
                                       included in the Office of the Assistant Secretary for Preparedness and
                                       Response’s planned restructuring of the Strategic National Stockpile. As
                                       stated earlier, the office issued a request for information in May 2020 to
                                       gather input from the private sector and other organizations on how to
                                       restructure the stockpile and improve supply availability. Among other
                                       things, manufacturers that responded to the request for information were
                                       asked to answer questions about strategies their company could employ
                                       to increase domestic production capability. For example, this included
                                       questions about how many shifts they could add, how long it would take
                                       to add a new production line, and if there were steps the government
                                       could take to encourage the company to transition activities domestically.
                                       Responses were due by May 29, 2020. Officials from the Office of the




                                       Page 24                                                     GAO-21-108 Defense Production Act
Assistant Secretary for Preparedness and Response stated that they are
currently evaluating the responses.

Executive Order 13944, which was issued on August 6, 2020, further
emphasized the need to reduce U.S. dependence on foreign
manufacturers of medical supplies, particularly with the development of
needed medicines and medical countermeasures. For example, the
Executive Order states, among other things, that it is the policy of the
U.S. to

•   accelerate the development of cost-effective and efficient domestic
    production of essential medicines and medical countermeasures and
    have adequate redundancy built into the domestic supply chain for
    essential medicines, medical countermeasures, and critical inputs;
    and
•   create, maintain, and maximize domestic production capabilities for
    critical inputs, finished drug products, and finished devices that are
    essential to protect public safety and human health and to provide for
    the national defense.

The Executive Order requires federal agencies to take swift action in
some cases to implement the policy. For example, federal agencies are
required within 90 days of the date of the order to develop and implement
procurement strategies to strengthen and mobilize the domestic industrial
base for essential medicines, medical countermeasures, and critical
inputs. In addition, the Secretary of HHS, in coordination with the Food
and Drug Administration and in consultation with the Director of OMB, is
required within 180 days of the date of the order to take all necessary and
appropriate action to identify supply chain vulnerabilities for these items
and to mitigate those vulnerabilities. The Executive Order states that this
could include proposing regulations on the collection of information from
manufacturers on the sources of finished products and devices and the
use of any scarce inputs, as well as determining whether any Food and
Drug Administration regulations may be a barrier to domestic production,
among other things.

The DPA and similar actions are powerful tools that can help HHS meet
the strategic plan goal of reducing reliance on foreign manufacturers and
the related Executive Order policy of increasing domestic production of
essential medical items. As discussed earlier in this report, HHS has been
using these tools to address COVID-19 by increasing domestic
production of medical supplies, such as N95 respirators, ventilator
components, and the filter media needed for use in these items. While it


Page 25                                      GAO-21-108 Defense Production Act
                       is likely that HHS would use them to meet the strategic plan goal and
                       Executive Order policy, HHS has not yet specifically identified how DPA
                       or similar actions would be used.

                       As the HHS Office of the Assistant Secretary for Preparedness and
                       Response completes its 180-day effort to identify and mitigate supply
                       chain vulnerabilities for essential medical items, an opportunity exists for
                       the HHS to identify how DPA and similar actions may be needed to
                       support the effort. Standards for Internal Control in the Federal
                       Government states that when an agency is affected by changes in
                       external conditions, such as the recognition that the U.S. is over reliant on
                       foreign sources, it should identify, analyze, and respond to the changes
                       on a timely basis, which includes identifying the necessary actions to
                       address the changing conditions. 27 Identifying further use of the DPA and
                       similar actions can help inform efforts to reduce reliance on foreign
                       manufacturers and increase domestic production of essential medical
                       items to address this national security concern.

                       DOD, HHS, and FEMA officials stated that they are beginning to collect
Agencies Have          lessons learned about actions needed to improve future COVID-19
Begun Identifying      response efforts and national emergencies, including use of DPA. For
                       example, while DOD officials stated the agency has not developed a
Lessons Learned for    complete list, on June 10, 2020, the Under Secretary of Defense for
Future Interagency     Acquisition and Sustainment testified that individual agencies are working
                       to memorialize lessons learned over the course of the COVID-19
Coordination and Use   pandemic response to enable swift interagency action and alignment in
of DPA and Similar     future national emergencies. 28 The Under Secretary mentioned difficulties
                       in facilitating the timely execution and interagency transfer of funding from
Actions                HHS to DOD, which generally must be made for an order under the
                       Economy Act.

                       The Under Secretary stated that DOD and HHS have since come to
                       understand the interworking of DPA authorities and how to legally assist
                       each other in acquisition and distribution, and ensure proper
                       documentation is in place so coordination efforts can be activated quickly.
                       HHS and DOD signed a memorandum of understanding on April 23,
                       2020, documenting the procedures that would be used to transfer funds
                       from HHS to DOD and how DOD would assist HHS in the acquisition of

                       27GAO-14-704G.

                       28House Committee on Armed Services. “Department of Defense COVID-19 Response to
                       Industrial Base Challenges.” Wednesday, June 10, 2020.




                       Page 26                                          GAO-21-108 Defense Production Act
supplies and services in response to COVID-19. In addition, as of August
2020, DOD officials stated they were in the process of creating a new
policy office that will provide policy guidance and oversight of future DOD
support to interagency partners. According to DOD officials, lessons
learned will also be codified into the existing Joint Rapid Acquisition
Office interagency support processes as it takes over the Joint Acquisition
Task Force’s current role and responsibilities to establish a more
permanent interagency focal point.

In addition, the HHS Office of the Assistant Secretary for Preparedness
and Response indicated that it has also identified lessons learned and is
considering:

•   Adding a clause to contracts that indicates a priority rating is possible,
    which would make it more efficient to place a priority rating on a
    contract in the future. This is in line with a recommendation we made
    in a 2008 report on the use of DPA authorities. 29 HHS stated in a
    written response to our inquiry that it had not previously placed priority
    ratings on contracts in advance of an emergency because there were
    no limitations to accessing needed supplies in the commercial market.
•   Providing both regular and just in time training on DPA Title I
    authority, which includes written guidance, to its contracting officers.
    In a written response, HHS officials noted that three of 20 contracting
    officers had experience using DPA Title I authorities and that there
    was no formal training in using this authority prior to the COVID-19
    pandemic.

It should also be noted that prior to COVID-19, HHS conducted
emergency exercises throughout 2019. In August 2019, these exercises
culminated in what is known as the Crimson Contagion Functional
Exercise, which among other things, identified lessons learned in using
DPA authorities. These exercises reviewed the nation’s ability to respond
to a large-scale outbreak of a novel virus that quickly spreads around the
world and included representatives from multiple federal agencies
including HHS, FEMA, DOD, and the White House. In the exercises’
after-action report, HHS indicated that participants were not clear on the
applicability or use of DPA authorities to mitigate medical supply
shortages. In response, HHS recommended that agencies should clarify
the possible uses of the DPA by (1) examining the applicability of Title III
and Title VII authorities to address supply chain and material shortages

29GAO-08-854.




Page 27                                        GAO-21-108 Defense Production Act
              during a pandemic response, and (2) providing an educational briefing on
              DPA authorities and its possible uses in different kinds of incidents. In
              June 2020, HHS officials told us that they had not implemented actions to
              address the recommendations from the Crimson Contagion exercise prior
              to the pandemic response.

              According to FEMA officials, the agency is also developing initial
              observations about COVID-19 response efforts and national
              emergencies—to include the use of DPA—and is working with its
              program offices to collect additional information, augment analysis, and
              revise observations. They stated that the final lessons learned will be
              included in the after-action report, which will be published in 2021.
              According to officials, given the size, scale, and ongoing nature of the
              response, as well as the necessity of distributing accurate information,
              FEMA intends to share these findings once they have been fully
              validated.

              The DPA can be a powerful tool for federal agencies to mitigate medical
Conclusions   supply chain issues and protect our national security during the time of an
              emergency. In the case of COVID-19, agencies have efforts underway to
              expedite deliveries and expand medical supply production from the U.S.
              industrial base through DPA and similar actions.

              Much is unknown about how effective the use of DPA and similar actions
              will be in meeting projected COVID-19 needs because complete
              information on use of the authorities is not centrally reported in FPDS-NG.
              OMB directed federal agencies to identify COVID-related procurement
              actions in FPDS-NG, but did not direct agencies to further identify their
              use of DPA Title I in FPDS-NG. The lack of clarity could be rectified by
              having contracting officials more clearly identify their use of DPA Title I in
              FPDS-NG. This would promote full, clear, and consistent transparency in
              the tracking of COVID-related actions, and federal agencies would have
              complete information to support federal-wide analysis of the effectiveness
              of the DPA and similar actions.

              It is also unclear how DPA and similar actions will be used to more
              broadly reduce the risk of U.S. dependence on foreign manufacturers of
              medical supplies, which the administration has determined to be a
              national security threat. This is because HHS has not yet identified how
              DPA and similar actions could be used to address this risk and meet the
              U.S. policy of increasing domestic production of essential medical items.
              This could also be rectified as HHS leads a 180-day effort to identify and



              Page 28                                        GAO-21-108 Defense Production Act
                      mitigate supply chain vulnerabilities for essential medical items in
                      response to an Executive Order.

                      We are making the following two recommendations to OMB and the
Recommendations for   HHS’s Assistant Secretary for Preparedness Response, respectively:
Executive Action
                      OMB should direct the Office of Federal Procurement Policy to develop
                      appropriate agency reporting guidance to provide greater transparency on
                      the use of DPA Title I authorities for COVID purposes. The reporting
                      guidance should enable taxpayers and other interested stakeholders to
                      see where a priority rating was placed on the contract or contract
                      modification for COVID-19 purposes. (Recommendation 1)

                      The HHS Assistant Secretary for Preparedness and Response should
                      identify how DPA and similar actions will be used to increase domestic
                      production of medical supplies going forward. This could be included in
                      HHS’s 180-day effort to identify and mitigate vulnerabilities for essential
                      medicines, medical countermeasures, and critical inputs that is required
                      to support Executive Order 13944, which is aimed at reducing reliance on
                      foreign manufacturers of medical supplies. (Recommendation 2)

                      We requested comments on a draft of this product from the Office of
Agency Comments       Federal Procurement Policy within the Office of Management and Budget,
                      HHS, FEMA, and DOD. The Office of Federal Procurement Policy and
                      HHS provided email comments that are summarized below. FEMA and
                      DOD provided technical comments that we incorporated in the report, as
                      appropriate.

                      The Office of Federal Procurement Policy concurred with our
                      recommendation to develop appropriate agency reporting guidance to
                      provide greater transparency on the use of DPA Title I authorities for
                      COVID purposes. In its response, staff from the Office of Federal
                      Procurement Policy noted that the ability to identify contracts or actions
                      using the DPA is a shared objective and that the office welcomes the
                      opportunity to consider how to track such actions.

                      HHS concurred with our recommendation to identify how DPA and similar
                      actions will be used to increase domestic production going forward. An
                      official from the Assistant Secretary for Preparedness and Response
                      office that has responsibility for the DPA stated that HHS has established
                      a Supply Chain and Industrial Base Assurance Steering Committee to
                      assure a viable and resilient medical countermeasure supply chain and
                      industrial base. The official also stated that in an assessment of lessons


                      Page 29                                        GAO-21-108 Defense Production Act
learned, HHS identified a need to establish a DPA program office, similar
to those in DOD, the National Aeronautics and Space Administration and
the Departments of Homeland Security, Commerce, and Transportation.
Further, the official stated that the Office of the Assistant Secretary for
Preparedness and Response has created a new branch to lead and
coordinate use of DPA authorities for HHS, which will include finalizing
the Health Resources Priorities and Allocations System and establishing
a program office that will develop guidance and templates for use, training
for contracting officers and program managers, all on a new HHS
webpage.

We are sending copies of this report to the appropriate congressional
committees, the Secretary of Health and Human Services; the Secretary
of Homeland Security; the Secretary of Defense; and the Director of the
Office of Management and Budget. In addition, the report is available at
no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-4841 or russellw@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to this
report are listed in appendix II.




W. William Russell
Director, Contracting and National Security Acquisitions




Page 30                                      GAO-21-108 Defense Production Act
List of Committees

The Honorable Richard C. Shelby
Chairman
The Honorable Patrick J. Leahy
Vice Chairman
Committee on Appropriations
United States Senate

The Honorable Lamar Alexander
Chairman
The Honorable Patty Murray
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate

The Honorable Ron Johnson
Chairman
The Honorable Gary C. Peters
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable James Lankford
Chairman
The Honorable Kyrsten Sinema
Ranking Member
Subcommittee on Regulatory Affairs and Federal Management
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable Nita M. Lowey
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives




Page 31                                   GAO-21-108 Defense Production Act
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Greg Walden
Republican Leader
Committee on Energy and Commerce
House of Representatives

The Honorable Bennie Thompson
Chairman
The Honorable Mike D. Rogers
Ranking Member
Committee on Homeland Security
House of Representatives

The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James R. Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives




Page 32                             GAO-21-108 Defense Production Act
Appendix I: Priority Rated Medical Contracts                 Appendix I: Priority Rated Medical Contracts
                                                             and Domestic Production Expansion Projects


and Domestic Production Expansion
                                                             for COVID-19




Projects for COVID-19
Table 4: Priority Rated Medical Contracts for COVID-19, Defense Production Act Title I

                                                                                                                                      Contract Award Amountb
Medical Supply                        Contractor                                                         Award    Datea                      (dollars in millions)
Department of Health and Human Services
Ventilators                           Philips North America LLC.                                              4/7/2020                                         646.7
                                      ResMed Corp.                                                            4/8/2020                                          32.0
                                      Hill-Rom Company Inc.                                                   4/8/2020                                          20.1
                                      Medtronic Public Limited Company                                       4/10/2020                                            9.1
                                      Vyaire Medical, Inc.                                                   4/10/2020                                         408.0
                                      General Electric-Datex-Ohmeda                                          4/14/2020                                         336.0
                                      Zoll Medical Corp.                                                      4/9/2020                                         350.0
                                      General Motors Company                                                  5/4/2020                                         476.1
                                      Combat Medical Systems                                                 7/10/2020                                          62.5
N95 Respirators                       Honeywell Safety Products USA Inc.                                     3/28/2020                                         168.5
                                      Honeywell Safety Products USA Inc.                                     4/20/2020                                            4.4
                                      3M Company                                                             3/26/2020                                         172.9
                                      O&M Halyard, Inc.                                                      3/30/2020                                          62.3
                                      Draeger, Inc.                                                           4/7/2020                                          31.2
                                      Moldex-Metric, Inc.                                                     4/6/2020                                          49.9
Air Purifying Respirator              Honeywell Safety Products USA Inc.                                     4/20/2020                                          26.5
Kits                                  Bio-Medical Devices International                                      8/20/2020                                         110.0
Goggles                               Honeywell Safety Products USA Inc.                                     4/20/2020                                            3.4
Vaccine Supplies                      Becton, Dickinson and Company                                          5/27/2020                                          11.7
                                      Marathon Medical Corp.                                                  5/1/2020                                          27.4
                                      Retractable Technologies Inc.                                           5/1/2020                                          83.8
Department of Homeland Security, Federal Emergency Management Agency
N95 Respirators                       3M Company                                                             4/15/2020                                            4.0
                                      3M Company                                                             4/21/2020                                          18.8
                                      3M Company                                                             4/28/2020                                          49.5
                                      3M Company                                                              7/7/2020                                            6.1
                                      3M Company                                                             7/24/2020                                          22.4
                                      3M Company                                                             8/29/2020                                            3.5
Source: Based on GAO analysis of agency data. | GAO-21-108

                                                             Due to incomplete information, we were unable to verify all award dates.
                                                             a

                                                             b
                                                              The contract award amount covers medical supplies and associated components or consumables
                                                             that facilitate operation. The figure also represents the initial contract value. According to HHS
                                                             officials, it modified two contracts to procure fewer ventilators, but did not provide us with updated
                                                             ventilator contract value and quantity data.




                                                             Page 33                                                         GAO-21-108 Defense Production Act
                                                             Appendix I: Priority Rated Medical Contracts
                                                             and Domestic Production Expansion Projects
                                                             for COVID-19




Table 5: The Departments of Defense and Health and Human Services Domestic Production Expansion Projects, Defense
Production Act Title III and Similar Actions

                                                                                                           Maximum
Medical                                                                                            Contract Valueb                         Annual Capacity
Supply                  Contractor                                         Award Datea           (dollars in millions)            Increase After Completion
N95 Respirators
                        Moldex-Metric, Inc.                                     5/8/2020                         20.1                              60,000,000
                        3M Company                                              5/1/2020                        126.0                            312,000,000
                        3M Company                                            4/17/2020                          76.0                            156,000,000
                        Honeywell Safety Products USA                         4/15/2020                          27.3                            144,000,000
                        Inc.
                        O&M Halyard, Inc.                                     4/15/2020                          29.3                            150,000,000
Surgical Masks
                        Crosstex International, Inc.                          7/17/2020                            3.5                           100,000,000
Filter Media for N95 Respirators and Ventilators
                        Lydall Performance Materials, Inc.                    6/19/2020                          13.5               4,608,000,000 (Masks) or
                                                                                                                                         1,200,000,000 (N95)
                        National Packaging Services                           7/24/2020                            2.8              2,040,000,000 (Masks) or
                        (NPS) Corp.                                                                                                        720,000,000 (N95)
                        Hollingsworth & Vose Company                          5/19/2020                            1.9              330,000,000 (Ventilators)
                                                                                                                               38,000,000 (N95 Face Masks)
Ventilator Components
                        Pall Biomedical Inc.                                  7/21/2020                            4.9                              7,800,000
Gloves
                        Renco Corp.                                           7/14/2020                          22.4                            500,000,000
Syringes
                        ApiJect Systems America, Inc.                           5/8/2020                        138.0                            540,000,000
Swabs
                        Hardwood Products Company LP                          7/29/2020                          51.2                            540,000,000
                        and Puritan Medical Products
                        Hardwood Products Company LP                          4/28/2020                          75.5                            240,000,000
                        and Puritan Medical Products
                        Copan Industries, Inc.                                8/31/2020                          10.0                            172,800,000
Test Kits
                        Hologic Inc.                                          7/25/2020                            7.6                             24,000,000
                        Becton, Dickinson and Company                         7/30/2020                          24.4                            156,000,000
                        BioFire Defense, LLC.                                   8/7/2020                           3.1    Information is not for public release
Source: Based on GAO analysis of agency data. | GAO-21-108

                                                             Due to incomplete information, we were unable to verify all award dates.
                                                             a


                                                             Contract values in table represent the government’s portion of total award.
                                                             b




                                                             Page 34                                                      GAO-21-108 Defense Production Act
Appendix II: GAO Contact and Staff
                   Appendix II: GAO Contact and Staff
                   Acknowledgements


Acknowledgements

                   W. William Russell, (202) 512-4841 or russellw@gao.gov
GAO Contact
                   In addition to the contact named above, Cheryl Andrew, Assistant
Staff              Director; Sameena Ismailjee, Analyst-in-Charge; Christopher Allison;
Acknowledgements   Philip Farah; Lori Fields; Kurt Gurka; Stephanie Gustafson; Julia Kennon;
                   Tim Moss; and Megan Setser made key contributions to this report.




(104315)
                   Page 35                                     GAO-21-108 Defense Production Act
                         The Government Accountability Office, the audit, evaluation, and investigative
GAO’s Mission            arm of Congress, exists to support Congress in meeting its constitutional
                         responsibilities and to help improve the performance and accountability of the
                         federal government for the American people. GAO examines the use of public
                         funds; evaluates federal programs and policies; and provides analyses,
                         recommendations, and other assistance to help Congress make informed
                         oversight, policy, and funding decisions. GAO’s commitment to good government
                         is reflected in its core values of accountability, integrity, and reliability.

                         The fastest and easiest way to obtain copies of GAO documents at no cost is
Obtaining Copies of      through our website. Each weekday afternoon, GAO posts on its website newly
GAO Reports and          released reports, testimony, and correspondence. You can also subscribe to
                         GAO’s email updates to receive notification of newly posted products.
Testimony
Order by Phone           The price of each GAO publication reflects GAO’s actual cost of production and
                         distribution and depends on the number of pages in the publication and whether
                         the publication is printed in color or black and white. Pricing and ordering
                         information is posted on GAO’s website, https://www.gao.gov/ordering.htm.
                         Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
                         TDD (202) 512-2537.
                         Orders may be paid for using American Express, Discover Card, MasterCard,
                         Visa, check, or money order. Call for additional information.

                         Connect with GAO on Facebook, Flickr, Twitter, and YouTube.
Connect with GAO         Subscribe to our RSS Feeds or Email Updates. Listen to our Podcasts.
                         Visit GAO on the web at https://www.gao.gov.

                         Contact FraudNet:
To Report Fraud,
                         Website: https://www.gao.gov/fraudnet/fraudnet.htm
Waste, and Abuse in
                         Automated answering system: (800) 424-5454 or (202) 512-7700
Federal Programs
                         Orice Williams Brown, Managing Director, WilliamsO@gao.gov, (202) 512-4400,
Congressional            U.S. Government Accountability Office, 441 G Street NW, Room 7125,
Relations                Washington, DC 20548

                         Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800
Public Affairs           U.S. Government Accountability Office, 441 G Street NW, Room 7149
                         Washington, DC 20548

                         Stephen J. Sanford, Acting Managing Director, spel@gao.gov, (202) 512-4707
Strategic Planning and   U.S. Government Accountability Office, 441 G Street NW, Room 7814,
External Liaison         Washington, DC 20548




                            Please Print on Recycled Paper.
                                                                                                          1