Reed Smith Client Alerts

The ability to take immediate action to respond to a national emergency is vital. On March 13, 2020, President Trump issued the Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak. This declaration triggered the Stafford Act, 42 U.S.C. ch. 68 § 5121 et seq, and Federal Acquisition Regulation (FAR) Part 18, Emergency Acquisitions.

The Stafford Act created the current system by which a presidential disaster declaration or an emergency declaration triggers financial and physical assistance through the Department of Homeland Security's Federal Emergency Management Agency (FEMA). FEMA Administrator Peter T. Gaynor is empowered to coordinate and direct other federal agencies in providing needed assistance under the Stafford Act, subject to the Department of Health and Human Services' role as the lead federal agency for the federal government's response to COVID-19.

FAR Part 18, Emergency Acquisitions, as it currently exists, is a result of the 2005 Atlantic hurricane season and Hurricane Katrina in particular. FAR Subpart 18.1 includes one group of emergency acquisition flexibilities that may be used anytime and do not require an emergency declaration. The second group of emergency acquisition flexibilities, found at FAR Subpart 18.2, includes flexibilities that may be used only after an official emergency declaration or designation has been made. Emergency acquisition flexibilities are further divided into three subgroups: contingency operation; defense or recovery from certain attacks; and incidents of national significance, emergency declarations, or major disaster declarations.

The flexibilities provided under the Stafford Act and FAR Part 18 will expedite the delivery of critical supplies and services in response to the COVID-19 pandemic. Accordingly, companies that do business with the federal government may already be seeing the impact of executive agencies' use of these emergency acquisition flexibilities as new contracts and task/delivery orders are issued and executed. However, with the increase of contracts and task/delivery orders being executed pursuant to the Stafford Act and FAR Part 18 flexibilities, there likely will be an increased possibility of fraud schemes - analogous to those reported on during Hurricane Katrina - perpetrated by individuals seeking to take advantage of the COVID-19 pandemic realities.