Since May 2020, federal efforts to fast-track the development, manufacturing, and distribution of COVID-19 vaccines has been led by a joint effort between the Department of Health and Human Services (“HHS”) and the Department of Defense (“DoD”), formerly known as Operation Warp Speed but renamed the HHS-DoD COVID-19 Countermeasures Acceleration Group (“CAG”).  As of December 31, 2021, the CAG was dissolved, and the entire responsibility for managing the government’s vaccine efforts transitioned to HHS.  On January 19, 2022, the Government Accountability Office (“GAO”) released a report examining that transition, as part of its ongoing obligation under the CARES Act to monitor the federal government’s pandemic response.  The report includes a few key findings and recommendations that will be of interest to industry partners operating within this space.

GAO considered nine “lines of effort” for transitioning responsibility to HHS, ranging from vaccine and therapeutics development and manufacturing, distribution and administration of therapeutics, and research and clinical trials for vaccines and therapeutics, to external affairs, security and assistance, and supply, production, and distribution.  In essence, the lines of effort encompass all of the tasks that HHS will need to oversee or undertake to effectively manage the government’s COVID-19 vaccine initiative, including recent efforts relating to pediatric vaccinations and booster doses.  GAO found, however, that HHS had not finalized the strategic workforce planning needed to ensure that it has sufficient skilled personnel to take on all of these responsibilities, and did not have a clearly defined schedule adhering to best practices to manage these responsibilities.

For example, GAO found that HHS did not have the requisite workforce for the Security and Assurance line of effort, which includes programs to safeguard the development, manufacture, and distribution of vaccines and provide industrial security for vaccine companies’ supply chains.  HHS therefore had to outsource aspects of this function to multiple contractors.  GAO also concluded that HHS did not have sufficient personnel for the Supply, Production, and Distribution line of work, which entails coordinating supply chain management, distribution, operations, and administration.  As a result, GAO observed that HHS needed additional support from both contractors and DoD personnel to fulfill these functions.

GAO also cited a September 2020 report in which it found that, without appropriate planning, HHS may face difficulties hiring acquisition personnel experienced in relevant areas, such as the Defense Production Act and specialized or novel contracting methods.  Each of these areas could pose day-to-day challenges for vaccine companies, particularly their ability to safely and efficiently fulfill their contract requirements, to timely negotiate and administer new and existing contracts, and to communicate effectively and coordinate with the government.

Further, GAO found that HHS did not have a specific schedule to manage remaining COVID-19 vaccine-related responsibilities, including managing the distribution of doses for children and boosters, or responding to any emerging variants.  According to the GAO report, HHS informed GAO that it would rely on project coordination teams working closely with BARDA and industry, but GAO expressed concern that this may not result in a reliable schedule following best practices.

Based on these findings, GAO provided several recommendations for both HHS and DoD.  In broad strokes, GAO’s recommendations are aimed at two goals: positioning HHS to ensure that it has the workforce and skills to manage efforts going forward, and ensuring that industry and other agencies’ feedback is considered and incorporated as lessons learned.

As for the first goal, beyond recommending that HHS undertake strategic workforce planning, GAO recommended that DoD create a mechanism, such as an interagency agreement, to continue to provide support for acquisitions and other functions, so that HHS can continue to obtain the benefit of DoD’s expertise while developing its own.  According to the report, DoD will continue providing acquisition support to HHS through at least September 2023.

With respect to the second goal, GAO reviewed the CAG’s plan for a lessons learned analysis to assist with the transition of work to HHS and concluded that the plan failed to adopt a best practice of engaging with relevant external stakeholders.

GAO undertook its own preliminary review of lessons learned and determined that, in general, CAG’s efforts were viewed favorably by both the government and industry, particularly with respect to the flexibility afforded through special contracting methods.  GAO also commended the CAG for investing in multiple vaccine candidates before receiving complete data on their efficacy, which allowed for faster production and distribution than would have otherwise been possible.  In addition, GAO commended the CAG’s use of DoD’s programming, contracting, logistics, and contract management expertise in combination with the scientific, regulatory, and research expertise of various components of HHS.  Notably, GAO did not express any concerns with how the CAG had handled intellectual property rights in acquiring COVID-19 vaccines or suggest that HHS needed additional resources to handle negotiations on this topic.

But GAO also indicated that project coordination and communication with the government was not without its challenges, particularly highlighting a lack of coordination between agencies with respect to communications with contractors and their reporting obligations.  GAO recommended that HHS and DoD take advantage of this opportunity to gain from industry a comprehensive understanding of areas for improvement to ensure that the government can manage its remaining vaccine development, manufacturing, and distribution activities.

Companies working on COVID-19 vaccines, therapeutics, and diagnostics should expect that there may be significant changes in how HHS acquires products and services and manages contracts as this transition continues, particularly in connection with day-to-day coordination with HHS as it comes into its own.  Although HHS will continue to rely on DoD contracting support for some time, its ability to handle programming, security, and logistics needs for COVID-19 products may be reduced without ongoing support from DoD.  Further, intra-agency coordination challenges, similar to those experienced with the CAG, also could arise, risking delays in countermeasure distribution and response to emerging variants.

Industry stakeholders should follow HHS’s continuing implementation closely, and should consider sharing their insights with HHS and DoD as part of the lessons learned analysis.  They should also ensure that HHS continues to keep in mind the CAG successes that GAO highlighted with respect to flexible contracting methods and investments in multiple products before receiving complete efficacy data.

Photo of Tyler Evans Tyler Evans

Tyler Evans is a partner in the firm’s Washington, D.C. office and a member of the government contracts group.  His practice covers multiple subject-matter areas, including research and development, non-traditional contracting, intellectual property, contract negotiations, flow-down requirements, small business issues, sourcing restrictions, costs…

Tyler Evans is a partner in the firm’s Washington, D.C. office and a member of the government contracts group.  His practice covers multiple subject-matter areas, including research and development, non-traditional contracting, intellectual property, contract negotiations, flow-down requirements, small business issues, sourcing restrictions, costs, and compliance.

Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions…

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions as well as transactional and legislative issues. Her practice also includes bid protest and contract claims and appeals litigation before GAO, agency boards and the federal courts. Ms. Plitsch has particular expertise in advising clients in the pharmaceutical and biologics industry. She advises a range of pharmaceutical and biologics manufacturers on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as research and development contracts and grants with various federal agencies. She also has significant experience advising on the requirements of various programs under which vaccine products and biodefense medical countermeasures are procured by the Government.

Photo of Dan Johnson Dan Johnson

Dan Johnson represents government contractors and other clients in litigation and employment matters.  He has more than 30 years of experience litigating complex disputes and has successfully represented government contractors and other clients in large trade secret claims, contract claims, prime-sub disputes, software…

Dan Johnson represents government contractors and other clients in litigation and employment matters.  He has more than 30 years of experience litigating complex disputes and has successfully represented government contractors and other clients in large trade secret claims, contract claims, prime-sub disputes, software development disputes, and various business disputes arising from corporate transactions, joint ventures, sales of commercial goods, construction projects, and government procurements.  Mr. Johnson specializes in representing contractors in multi-million dollar litigation involving the alleged theft of data or the movement of key employees from one contractor to another.  His representation has resulted in multiple bench and jury verdicts in favor of his clients.  He also helps government contractors and other clients resolve a host of other employment issues.