Covid-19-driven contracts point to the expected long-term duration of the crisis

24 July 2020 (Last Updated July 24th, 2020 17:00)

With the news that the US Department of Defense (DOD) has awarded Pall Corporation a firm contract action (not to exceed $4.9M) as part of efforts to increase the domestic industrial base capacity for ventilator filters, there is a clear reminder that the health consequences of the crisis are expected to endure.

Covid-19-driven contracts point to the expected long-term duration of the crisis

With the news that the US Department of Defense (DOD) has awarded Pall Corporation a firm contract action (not to exceed $4.9M) as part of efforts to increase the domestic industrial base capacity for ventilator filters, there is a clear reminder that the health consequences of the crisis are expected to endure. The contract will increase Pall’s production by a rate of 650k per month, from a prior level of 485k, starting from sixteen months post-award. The Department of Defense  is therefore preparing for this  demand to persist for a number of years.

Initial programs were orientated towards procurement and ramping up production. Actions such as use of the Defense Production Act were in order to rapidly respond to the unfolding crisis, while other programs  simultaneously pursued  procurements such as ventilator acquisitions from around the world. The issuing of contracts to increase critical component (for COVID-19 response) capacity for future production clearly represents a different response to the crisis, with the benefits evidently not to be seen in the short term.

Though funded by the CARES Act, the Air Force Life Cycle Management Center is the contracting party. A implication is that of the Department of Defense is engaging in long-term response preparation for the domestic health effects of the COVID-19 crisis. As we approach the point where the responses are no longer initial responses and reactions, we will now expect to see greater focus on general pandemic responses and long-term COVID-19 mitigation in defence and national security planning and funding.  Increased domestic capacity is also driven by the current reliance on China, as seen in the Personal Protection Equipment (PPE) and ventilator procurement scrambles.

Whilst contracts for longer-term preparedness and increasing domestic capacity are indicative of the longevity of this crisis,  the nature of such contracts points to a new recognition of the centrality of pandemic mitigation to national security and the necessity to fund future capacity.