On March 13, the President declared a national emergency in response to the COVID-19 pandemic.  Doing so activated the authorities available to the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§ 5121-5207 (the “Stafford Act”) to provide federal assistance to state and local governments responding to the emergency, including financial assistance.

The federal assistance is coordinated and provided through the Federal Emergency Management Agency (“FEMA”) under the National Response Framework.  Although the Stafford Act generally does not make funding directly available to private businesses, a large portion of the nearly $50 billion that the President said will be available to FEMA may be used to procure goods and services from contractors assisting the relief effort.

Stafford Act Authorities and the President’s Emergency Declaration

The Stafford Act authorizes the President to issue two types of declarations that allow the federal government to provide assistance to state and local governments in responding to an emergency.  An “emergency” is any situation in which the President determines that “federal assistance is needed to supplement State and local efforts …to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe….” 42 U.S.C. § 5122(1).  A “major disaster,” by contrast is any “natural catastrophe” that the President determines “causes damage of sufficient severity and magnitude to warrant major disaster assistance.”  42 U.S.C. § 5122(2).

The President’s March 13 letter to cabinet secretaries declared the COVID-19 pandemic to be an “emergency” triggering his Title V authorities, but left open the possibility that he may later declare a “major disaster.”

The major distinction between these two types of declarations is in the range of federal assistance that can be made available as a result of the declaration.

Under an emergency declaration, the President may direct federal agencies to use their resources to support state and local efforts, coordinate all disaster relief assistance, and assist in the distribution of medicine, food and other consumable supplies.  Direct financial assistance can also be provided to state and local governments through congressionally-appropriated funds in the Disaster Relief Fund.  This assistance generally is capped at $5,000,000 per emergency, but the President may authorize additional funds if he determines that (1) continued emergency assistance is immediately required; (2) there is a continuing and immediate risk to lives, property, public health or safety; and (3) necessary assistance will not otherwise be provided on a timely basis.  42 U.S.C. § 5193.

If the President subsequently declares a major disaster, additional federal assistance may be provided, including direct assistance to individuals and additional support such as crisis counseling services, relocation assistance, food distribution, and legal aid services, among other things.

Considerations for Companies that Want to Help

Unlike a natural disaster that causes damage in a defined geographic area, the COVID-19 pandemic is novel, causing widespread challenges throughout the United States.  In addition to those companies that may have capabilities in the pharmaceutical and medical supply industries, we may see immediate needs for local staff augmentation and call center services, logistics and technical support services, local food and consumer goods delivery services, home care services, decontamination services, and distribution of sanitary and household supplies, just to name a few.  Presumably, private sector companies that never before have conducted business with Federal funding will have a role in this effort.

To help with relief efforts, the Federal government likely will be procuring significant amounts of goods and services directly.  State and local governments inevitably will use their Federal funds to ramp up their purchases of required goods and services as well.  Companies that would like to help should consider taking steps now.

Companies that wish to assist with these efforts should register in the Disaster Response Registry in the Federal Government’s System for Award Management (SAM) to ensure that they are eligible for federal contract awards, and also monitor solicitations posted on SAM.gov.  Such contracts may be set aside for local firms.  See Federal Acquisition Regulation (FAR) 26.202 and 26.204.

Companies that wish to support state and local efforts can monitor similar state and local websites for new solicitations.  Those companies with novel solutions that governments may not otherwise contemplate should also consider submitting unsolicited proposals to the relevant authorities.

Companies new to federally funded contracting should be particularly mindful of the risks and responsibilities that accompany such contracts.  Public funding, and Federal funding in particular, is tied to numerous compliance obligations that do not apply in the commercial arena.  Federal contracts will be governed by the FAR and may require certification of compliance with numerous socio-economic, labor, and supply chain and cyber requirements, and in some cases, record keeping requirements, particularly regarding incurred costs.

State and local government issued contracts also impose compliance obligations pursuant to local statutes and regulations and, because of the use of federal funds, will impose additional federally-mandated requirements.  These may include record-keeping and government auditing requirements, compliance with “pay to play” laws, and unique accounting requirements.  Failure to comply with any of these triggers exposure under the federal False Claims Act and state equivalents.  Although these risks can present challenges to companies that do not have government contracting experience, they can be mitigated with careful upfront planning – including making certain that companies read and fully understand the contract before committing to the obligations.

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Photo of Frederic Levy Frederic Levy

Fred Levy is senior counsel in the firm’s Government Contracts and White Collar Defense and Investigations Practice Groups. He is a leading suspension and debarment lawyer, focusing his practice on the resolution of complex compliance and ethics issues. He has successfully represented numerous…

Fred Levy is senior counsel in the firm’s Government Contracts and White Collar Defense and Investigations Practice Groups. He is a leading suspension and debarment lawyer, focusing his practice on the resolution of complex compliance and ethics issues. He has successfully represented numerous high-profile corporations and individuals under investigation by the government in civil and criminal matters, including False Claims Act cases, and in suspension and debarment proceedings to ensure their continued eligibility to participate in federal programs. He has also conducted numerous internal investigations on behalf of corporate clients and advises corporations on voluntary or mandatory disclosures to federal agencies. Fred regularly counsels clients on government contract performance issues, claims and terminations, and litigates matters before the boards of contract appeals and in the Federal Circuit.

Related to his work involving program fraud, Fred counsels clients in the area of contractor “responsibility.” He is involved in the development and implementation of contractor ethics and compliance programs that meet the standards of the Federal Acquisition Regulation, Federal Sentencing Guidelines, and Sarbanes-Oxley, and he regularly conducts ethics and compliance training.

Fred is a principal editor of Guide to the Mandatory Disclosure Rule, and of The Practitioner’s Guide to Suspension and Debarment, 4th Edition. He is a vice-chair of the Debarment and Suspension Committee of the ABA Public Contract Law Section, and a former co-chair of that committee and of the Procurement Fraud Committee. He is a graduate of Columbia College and Columbia Law School.

Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

Photo of Ryan Burnette Ryan Burnette

Ryan Burnette is a government contracts and technology-focused lawyer that advises on federal contracting compliance requirements and on government and internal investigations that stem from these obligations. Ryan has particular experience with defense and intelligence contracting, as well as with cybersecurity, supply chain…

Ryan Burnette is a government contracts and technology-focused lawyer that advises on federal contracting compliance requirements and on government and internal investigations that stem from these obligations. Ryan has particular experience with defense and intelligence contracting, as well as with cybersecurity, supply chain, artificial intelligence, and software development requirements.

Ryan also advises on Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) compliance, public policy matters, agency disputes, and government cost accounting, drawing on his prior experience in providing overall direction for the federal contracting system to offer insight on the practical implications of regulations. He has assisted industry clients with the resolution of complex civil and criminal investigations by the Department of Justice, and he regularly speaks and writes on government contracts, cybersecurity, national security, and emerging technology topics.

Ryan is especially experienced with:

  • Government cybersecurity standards, including the Federal Risk and Authorization Management Program (FedRAMP); DFARS 252.204-7012, DFARS 252.204-7020, and other agency cybersecurity requirements; National Institute of Standards and Technology (NIST) publications, such as NIST SP 800-171; and the Cybersecurity Maturity Model Certification (CMMC) program.
  • Software and artificial intelligence (AI) requirements, including federal secure software development frameworks and software security attestations; software bill of materials requirements; and current and forthcoming AI data disclosure, validation, and configuration requirements, including unique requirements that are applicable to the use of large language models (LLMs) and dual use foundation models.
  • Supply chain requirements, including Section 889 of the FY19 National Defense Authorization Act; restrictions on covered semiconductors and printed circuit boards; Information and Communications Technology and Services (ICTS) restrictions; and federal exclusionary authorities, such as matters relating to the Federal Acquisition Security Council (FASC).
  • Information handling, marking, and dissemination requirements, including those relating to Covered Defense Information (CDI) and Controlled Unclassified Information (CUI).
  • Federal Cost Accounting Standards and FAR Part 31 allocation and reimbursement requirements.

Prior to joining Covington, Ryan served in the Office of Federal Procurement Policy in the Executive Office of the President, where he focused on the development and implementation of government-wide contracting regulations and administrative actions affecting more than $400 billion dollars’ worth of goods and services each year.  While in government, Ryan helped develop several contracting-related Executive Orders, and worked with White House and agency officials on regulatory and policy matters affecting contractor disclosure and agency responsibility determinations, labor and employment issues, IT contracting, commercial item acquisitions, performance contracting, schedule contracting and interagency acquisitions, competition requirements, and suspension and debarment, among others.  Additionally, Ryan was selected to serve on a core team that led reform of security processes affecting federal background investigations for cleared federal employees and contractors in the wake of significant issues affecting the program.  These efforts resulted in the establishment of a semi-autonomous U.S. Government agency to conduct and manage background investigations.