Proposed Rule2023-15952
Health Resources Priorities and Allocations System (HRPAS)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 16, 2023
Issuing agencies
Health and Human Services Department
Abstract
The Department of Health and Human Services (HHS) is issuing a Notice of Proposed Rule Making (NPRM) to establish standards and procedures by which it may require acceptance and priority performance of certain contracts or orders to promote the national defense over other contracts or orders with respect to health resources. This proposed rule also sets new standards and procedures by which HHS may allocate materials, services, and facilities to promote the national defense.
Full Text
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<title>Federal Register, Volume 88 Issue 157 (Wednesday, August 16, 2023)</title>
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[Federal Register Volume 88, Number 157 (Wednesday, August 16, 2023)]
[Proposed Rules]
[Pages 55613-55629]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-15952]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 101
RIN 0908-AA00
Health Resources Priorities and Allocations System (HRPAS)
AGENCY: Office of the Secretary, Department of Health and Human
Services.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Department of Health and Human Services (HHS) is issuing a
Notice of Proposed Rule Making (NPRM) to establish standards and
procedures by which it may require acceptance and priority performance
of certain contracts or orders to promote
[[Page 55614]]
the national defense over other contracts or orders with respect to
health resources. This proposed rule also sets new standards and
procedures by which HHS may allocate materials, services, and
facilities to promote the national defense.
DATES: Consideration will be given to comments received on or before
September 15, 2023.
ADDRESSES: Written comments may be submitted through one of three
methods:
<bullet> Electronic Submission: Comments may be submitted
electronically through the Federal Government eRulemaking portal at
<a href="https://www.regulations.gov">https://www.regulations.gov</a>. Electronic submission of comments allows
the commenter maximum time to prepare and submit a comment, ensures
timely receipt, and enables HHS to make the comments available to the
public.
<bullet> Mail: Send to U.S. Department of the Health and Human
Services, Attention: Paige Ezernack, Director, Defense Production Act--
Emergency Response Authorities Office, 400 7th Street SW, Washington DC
20024.
<bullet> Email: The Defense Production Act Resource Mailbox at
<a href="/cdn-cgi/l/email-protection#3f5e4c4f4d115b4f5e7f57574c11585049"><span class="__cf_email__" data-cfemail="0d6c7e7d7f23697d6c4d65657e236a627b">[email protected]</span></a>.
We encourage comments to be submitted via <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Please submit comments only and include your name
and company name (if any) and cite ``HEALTH RESOURCES PRIORITIES AND
ALLOCATIONS SYSTEM (HRPAS)'' in all correspondence. In general, the
Department of Health and Human Services will post all comments to
<a href="https://www.regulations.gov">https://www.regulations.gov</a> without change, including any business or
personal information provided, such as names, addresses, email
addresses, or telephone numbers. All comments received, including
attachments and other supporting material, will be part of the public
record and subject to public disclosure. You should only submit
information that you wish to make publicly available.
FOR FURTHER INFORMATION CONTACT: L. Paige Ezernack, telephone at (202)
260-0365 or via email at <a href="/cdn-cgi/l/email-protection#2c4d5f5c5e02485c4d6c44445f024b435a"><span class="__cf_email__" data-cfemail="6b0a181b19450f1b0a2b030318450c041d">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: This proposed rule implements HHS's
administration of priorities and allocations actions with respect to
health resources and establishes the Health Resources Priorities and
Allocations System (HRPAS). The HRPAS covers health resources pursuant
to the authority under section 101(a) of the Defense Production Act
(DPA) of 1950 as delegated to the Secretary of HHS (Secretary) by
Executive Order (E.O.) 13603. On September 26, 2022, the Secretary
delegated to the Assistant Secretary for Preparedness and Response (the
ASPR) within the Administration for Strategic Preparedness and Response
(ASPR), the authority under section 201 of E.O. 13603 to exercise
priorities authority under section 101 of the DPA. This delegation
authorized the ASPR, on behalf of the Secretary, to approve DO--[--[M1-
M9] priority rating requests for health resources that promote the
national defense. This delegation excludes the authority to approve all
priorities provisions for health resources that require DX--[--[M1-M9]
priority ratings. The Secretary retains all other authorities delegated
by the President in E.O. 13603.
The HRPAS has two principal components: priorities and allocations.
Under the priorities' component, the Secretary is authorized to place
priority ratings on contracts or orders for health resources to support
programs which have been determined by the Department of Defense,
Department of Energy, or Department of Homeland Security as necessary
or appropriate to promote the national defense in accordance with
section 202 of E.O. 13603. Through the HRPAS rule, HHS may also respond
to requests to place priority ratings on contracts or orders (requiring
priority performance of contracts or orders) for health resources, as
specified in the DPA, if the necessity arises. Under the priorities'
component, certain contracts or orders between the government and
private parties or between private parties for the production or
delivery of health resources are required to be prioritized over other
contracts or orders to facilitate expedited production or delivery in
promotion of the U.S. national defense. The Secretary retains the
authority for allocations. Under the allocations' component, materials,
services, and facilities may be allocated to promote the national
defense. Such requests must be determined as necessary or appropriate
to promote the national defense in accordance with section 202 of E.O.
13603. For both components, the term ``national defense'' is defined in
section 801(j) of E.O. 13603 as ``programs for military and energy
production or construction, military or critical infrastructure
assistance to any foreign nation, homeland security, stockpiling,
space, and any directly related activity.'' The term also includes
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.
See E.O. 13603, section 801(j). Other authorities delegated to the
Secretary in E.O. 13603, but not covered by this regulation may be re-
delegated by the Secretary.
I. Background
HHS published an interim final rule in the Federal Register at 80
FR 42408 on July 17, 2015, to comply with the Part II--Priorities and
Allocations, Sec 201(b) of E.O. 13603, dated March 16, 2012, and
section 101(d) of the DPA, 50 U.S.C. 4511(d), and received no public
comments. Based on the significant amount of time between the
publication of interim final rule in 2015, HHS is issuing this NPRM to
allow for comments based on the experience of utilizing this authority
to respond to COVID-19 and the infant formula shortage in 2022.
II. Discussion and Analysis
HRPAS is a program established in accordance with the DPA and E.O.
13603 that supports national defense needs (for health resources),
including emergency preparedness initiatives, by addressing essential
civilian needs through the placing of priority ratings on contracts and
orders for items and services or allocating resources, as necessary.
Although a specific Presidential disaster declaration is not required,
the ability to prioritize or allocate items or services requires a
determination be made in accordance with section 202 of E.O. 13603,
(except as provided in section 201(e) for use of the allocations
authority) that the program or programs are necessary or appropriate to
promote national defense, including emergency preparedness. The HRPAS
outlines several conditions that must be met in order for HHS to
undertake an allocation order, which include a finding under section
101(b) of the DPA that such a material is a scarce and critical
material essential to the national defense and that the requirements of
the national defense for such material cannot otherwise be met without
creating a significant dislocation of the normal distribution of such
material in the civilian market to such a degree as to create
appreciable hardship. The President must approve the finding, in
accordance with section 201(e) of E.O. 13603, before the Secretary may
use the allocation authority. Under section 702(14) of the DPA (50
U.S.C. 4552(14)), the term ``national defense'' includes emergency
preparedness activities conducted pursuant to the Stafford Act, and
critical infrastructure protection and restoration. Authority for
priorities
[[Page 55615]]
and allocations is specified in the DPA and further defined in E.O.
13603, ``National Defense Resources Preparedness,'' dated March 16,
2012. E.O. 13603 replaced E.O. 12919 and further defined jurisdictional
areas and national defense preparedness roles and responsibilities for
specific agencies. E.O. 13603 did not change the intent of the DPA as
it applies to HHS's functions in national defense, including emergency
preparedness. For the NPRM, only those sections in the ``Supplementary
Information'' part of the Interim Final Rule preamble that required
modifications due to E.O. 13603 or for other reasons are further
discussed in the Supplementary Information section of this NPRM. A more
thorough explanation of the HRPAS was published on July 17, 2015 (80 FR
42408-42423). We are not reiterating the Section-by-Section Changes of
the Rule. Any changes to those sections are discussed in this document.
Jurisdiction
E.O. 13603 authorizes jurisdictional areas for each agency
delegated title I authority under the DPA that is involved in national
defense, including emergency preparedness. HHS has jurisdiction for
items that fall under the category of health resources which is defined
in E.O. 13603 as ``drugs, biological products, medical devices,
materials, facilities, health supplies, services and equipment required
to diagnose, mitigate, or prevent the impairment of, improve, treat,
cure, or restore the physical or mental health conditions of the
population.'' HHS cannot use its DPA authority for items or services
not in its jurisdiction. Those entities in need of items or services
that do not fall under the jurisdiction of HHS should request
priorities assistance from the applicable resource department. HHS will
direct the requesters to the appropriate resource agency if the request
comes to HHS. HHS intends to work with other resource agencies to
address instances where HHS does not have jurisdiction--or where
jurisdiction may be overlapping or ambiguous--for items necessary to
complete the order. HHS intends to work with the other resource
agencies to request prioritization of contracts or orders for other
items or services necessary for use in support of programs approved for
use by HHS (see next section).
HRPAS Approved Programs
HHS is currently reviewing activities under the ``health
resources'' jurisdiction for priorities and allocations support to
promote the national defense, under the authority of the DPA and
Executive Order 13603. HHS may exercise its priorities and allocations
authorities for items or services that fall under the current approved
programs, while the review for activities under the ``health
resources'' jurisdiction is ongoing.
III. DPA Priorities and Allocations System Authority
The Defense Production Act Reauthorization (DPAR) of 2009 required
that HHS, and all other agencies that previously have been delegated
priorities and allocations authority under E.O. 13603, publish
regulations providing standards and procedures for prioritization of
contracts and orders and for allocation of materials, services, and
facilities to promote the national defense under both emergency and
nonemergency conditions. HHS's regulation, along with regulations
promulgated by other agencies, are part of the Federal Priorities and
Allocations System (FPAS).
On October 1, 2018, Congress amended the DPA through the John S.
McCain National Defense Authorization Act (Pub. L. 115-232) which
extended non-permanent provisions through September 30, 2025. Section
101(d) of the DPA, as amended, directs all agencies to which the
President has delegated priorities and allocations authority under E.O.
13603 to publish final rules establishing standards and procedures by
which that authority will be used to promote the national defense in
both emergency and non-emergency situations. The DPAR also required all
such agencies to consult with the heads of other Federal agencies as
appropriate and to the extent practicable to develop a consistent and
unified FPAS. This rulemaking is one of several rules published to
implement section 101 of the DPA. The rules of the agencies with such
authorities, which are the Departments of Commerce, Energy,
Transportation, Health and Human Services, Homeland Security, Defense,
and Agriculture, comprise the FPAS. HHS is publishing this NPRM rule in
compliance with section 101(d) of the DPA. HHS's HRPAS provisions are
consistent with the FPAS regulations issued by other agencies to the
extent practicable.
The HRPAS, as part of the FPAS, has two principal components:
priorities and allocations. Under the priorities component, contracts
and orders between the government and private parties or between
private parties for the production or delivery of health resources are
required to be given priority over other contracts to facilitate
expedited production and delivery in promotion of the U.S. national
defense. Under the allocations component, materials, services, and
facilities may be allocated to promote the national defense. For both
components, the term ``national defense'' ' is defined broadly and
includes emergency preparedness activities conducted pursuant to title
VI of the Stafford Act and critical infrastructure protection and
restoration priorities authorities. Priorities, allocations, and other
authorities delegated to the Secretary in E.O. 13603, but not covered
by this regulation may be re-delegated by the Secretary. The Secretary
delegated the authority for DO priority ratings to the ASPR. The
Secretary retains the authority for DX priority ratings and for
allocations.
IV. Summary of Significant Changes to the Interim Final Rule
a. HHS's interim final rule had a 60-day comment period that ended
on September 15, 2015. HHS received no comments on the Interim Final
Rule. Based on interagency review and internal deliberations, HHS made
minor revisions to its Interim Final Rule and is issuing this NPRM to
seek public comments based on its use of these authorities to respond
to COVID-19 and the infant formula shortage.
(1) Section 101.1, Purpose, is revised to add livestock resources,
veterinary resources, and plant health resources.
(2) Section 101.20, Definitions, is revised to include a new
definition of priority rating and program identification symbol, and
add a definition of ``working day.''
(3) Section 101.30, Delegation of Authority, is revised to include
the delegation of DO priority rating authority of the DPA, and section
201 of E.O. 13603, from the Secretary of HHS to the Assistant Secretary
for Preparedness and Response (the ASPR).
(4) Section 101.63, Letters and Memoranda of Understanding is
revised to delete references to Memoranda.
b. Analysis of Technical Comments: Several editorial changes were
made to the rule and are summarized below.
(1) Placement of Rated Orders
(a) Section 101.33. The acceptance and rejection times for rated
orders are revised. The preamble section of the interim final rule was
inconsistent with the provisions in Sec. Sec. 101.32 and 101.33 with
respect to the time limits for acceptance and rejection of rated
orders. Most rated orders will continue to require acceptance or
rejection within 10 or 15 days depending on the type of rating. Rated
orders placed in support of
[[Page 55616]]
emergency preparedness requirements may require acceptance or rejection
within a shorter timeframe that is specified in the rated order. The
minimum times for acceptance or rejection that such orders may specify
are six (6) hours for emergencies that have occurred, or 12 hours if
needed to prepare for an imminent hazard. Also, ``time limit in'' has
been changed to ``minimum times,'' which is the correct terminology.
(b) Section 101.33(d)(2). Customer notification requirements
require persons who have accepted a rated order to give notice if
performance will be delayed. The time limit to provide written
confirmation of a verbal notice is five (working) days; the time limit
is revised to one (1) working day to provide written confirmation of a
verbal notice. HHS believes that the nature of rated orders supporting
national defense requirements, including COVID-19 response activities,
justifies expeditious communications and that once a verbal notice of
delayed performance has been given, putting that notice into writing
should not take more than one working day.
(2) Allocation Actions
Sections 101.51 and 101.51(a) are revised to conform with language
in the other FPAS regulations and comply with the requirement in
section 101(d)(2) of the DPA for the regulations to be consistent and
unified.
Section 101.53. Revised Sec. 101.53 to change ``is requiring'' to
``as established.'' The rationale for this change is that ``is
requiring'' implies that the allocations process is a constant
obligation.
(3) Elements of an Allocation Order
(a). Section 101.54(e) is revised to include a new element to be
included in an allocation order that gives constructive notice through
publication in the Federal Register. A statement that reads in
substance: ``This is an allocation order certified for national defense
use. [Insert the name(s) of the person(s) to whom the order applies or
a description of the class of persons to whom the order applies] is
(are) required to comply with this order, in accordance with the
provisions of the Health Resources Priorities and Allocations System
regulation (45 CFR part 101).
(4) Official Actions
(a) Section 101.63. ``Memorandums of Understanding'' (MOUs) are
universally known in the Federal Government as an agreement between
agencies/parties, sometimes completed under the Economy Act, and the
use of MOUs in implementing priorities authorities could cause
confusion. Therefore, the terms ``Memorandum of Understanding'' or
``Memoranda of Understanding'' in Sec. 101.63 and other sections in
the interim rule are deleted.
(b) Section 101.1 Purpose
Section 101.1 revises the sentence regarding guidance and
procedures for use of DPA authorities to include livestock, veterinary
resources, plant health resources, and all forms of energy. In
addition, HHS deleted reference to 32 CFR part 555, referring to
priorities and allocations for water resources.
(c) Section. 101.3 Program Eligibility
Section 101.3 is revised to delete ``deployment and sustainment of
military forces,'' to track with section 702(14) of the DPA.
(d) Section 101.20 Definitions
(1) Revise definition of ``National defense'' to delete ``health''
and add ``energy'' to track definition of ``national defense'' in
section 702(14) of the DPA.
(2) Add the following definition: ``Food resources'' means ``all
commodities and products (simple, mixed, or compound), or complements
to such commodities of products, that are capable of being ingested by
other human beings or animals, irrespective of other uses to which such
commodities or products may be put, at all stages of processing from
the raw commodity to the products thereof in vendible form for human or
animal consumption. `Food resources' also means potable water packaged
in commercially marketable containers, all starches, sugars, vegetable
and animal or marine fats and oils, seed, cotton, hemp, and flax fiber,
but does not mean any such material after it loses its identity as an
agricultural commodity or agriculture product.''
(3) Add the following definition: ``Farm equipment'' means
``equipment, machinery, and repair parts manufactured for use on farms
in connection with the production or preparation for market use of food
resources.''
(4) Add the following definition: ``Fertilizer'' means ``any
product or combination of products that contain one or more of the
elements nitrogen, phosphorous, and potassium for use as a plant
nutrient.''
(5) Add the following definition: ``Food resource facilities''
means ``plants, machinery, vehicles (including on farm), and other
facilities required for the production, processing, distribution, and
storage (including cold storage) of food resources, and for the
domestic distribution of farm equipment and fertilizer (excluding
transportation thereof).''
(6) Delete sentence stating, ``Natural resources such as oil and
gas,'' from the definition of ``Materials.''
(7) Revise definition of person to include, ``and for purposes of
administration of this part, includes the Federal Government and any
authorized foreign government or international organization or agency
thereof, delegated authority as provided in this part.''
(8) Add the following definition: ``Priority rating is an
identifying code assigned by a Delegate Agency or authorized person
placed on all rated orders and consisting of the rating symbol and
program identification symbol.''
(9) Add the following definition: ``Working day means any day that
the recipient of an order is open for business.''
e. Sec. 101.30 Delegations of Authority
Revised to change ``priority rating activities'' to ``priorities
authorities'' to track E.O. 13603.
f. Section 101.31 Priority ratings.
(1) Paragraph (a)(1), Levels of priority is revised to change
``Federal'' to ``Health Resources'' because agency regulations
establish priority levels.
g. Section 101.32 Elements of a rated order.
(2) Paragraph (d)(2)(i). The preamble discussion of Sec. 101.33 is
revised to correct the 2-day time frame for acceptance or rejection of
rated orders for emergency preparedness to be consistent with
Sec. Sec. 101.32 and 101.33.
h. Section 101.33 Acceptance and rejection of rated orders.
Paragraph (e). The discussion of Sec. 101.33 of the preamble of
the interim final rule is inconsistent with the 2-day time frame for
acceptance or rejection of rated orders in Sec. 101.33. The preamble
is revised to correct this inconsistency.
i. Section 101.37 Use of rated orders.
(1) Paragraph (a)(4) ``Facilities needed to produce rated orders,
and'' is deleted because ``facilities'' are considered an industrial
resource and not eligible for priorities and allocations under the HHS-
administered HRPAS regulation.
j. Section 101.38 Limitations on placing rated orders.
(1) Paragraph (b)(1). Revising paragraph (b)(1) to insert
``livestock resources, veterinary resources, and plant health
resources,'' to track E.O. 13603.
(2) Paragraph (b)(2). Revising paragraph (b)(2) to add ``All forms
of energy'' in lieu of ``Energy supplies,'' to track E.O. 13603.
(3) Paragraph (b)(5). Adding the following paragraph (5): ``All
materials,
[[Page 55617]]
services, and facilities, including construction materials (industrial
resources) for which the authority has not been delegated to other
agencies under E.O. 13603 (Resource agency with jurisdiction--
Department of Commerce)'' because Commerce was not mentioned in the
interim final rule and paragraph (5) is added.
(4) Paragraph (b)(6). Changing former paragraph (b)(5) (now
paragraph (b)(6)) to read as follows: ``The priorities and allocations
authority of this part may not be applied to communications services
(Resource agency with jurisdiction--National Communications System
under E.O. 13618 of July 6, 2012.)''
k. Section 101.40 General Provisions.
Paragraph (a). Revising the introductory sentence of paragraph(a)
to read ``Once a priority rating has been authorized pursuant to this
part, further action by the Department of Health and Human Services
generally is not needed.'' The rationale for this change is once a
rating is authorized, in most instances, no further action is required
by HHS.
l. Section 101.60 General Provisions.
Paragraph (b). Revising paragraph (b) to replace ``Memoranda'' of
Understanding with ``Letters.''
m. Section 101.62 Directives.
Paragraph (d). Deleting paragraph (d) relating to an Allocation
Directive,'' as it was deleted in the Department of Commerce's final
rule.
n. Section 101.63 Letters and Memoranda of Understanding.
Revising Sec. 101.63 to delete ``and Memoranda'' in paragraphs (a)
and (b).
o. Section 101.74 Violations, penalties, and remedies.
Paragraph (a). The sentence ``The maximum penalties provided by the
Selective Service Act and related statutes are a $50,000 fine, or three
years in prison, or both,'' is deleted because HHS has not been
delegated authority under the Selective Service Act, and the sentence,
as well as the reference to the Selective Service Act earlier in this
paragraph, have been deleted.
V. Regulatory Analysis
A. Review Under E.O. 12866, E.O. 13563
(1) Executive Orders 12866 (``Regulatory Planning and Review'') and
13563 (``Improving Regulation and Regulatory Review'') direct agencies
to assess the costs and benefits of available regulatory alternatives
and, if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
E.O. 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This NPRM has been drafted and reviewed in accordance with
E.O. 12866. This proposed rule has been designated a ``significant
regulatory action'' by the Office of Management and Budget's (OMB)
Office of Information and Regulatory Affairs, under section 3(f)(1)) of
E.O. 12866. Accordingly, the rulemaking has been reviewed by the OMB.
(2) This NPRM adopts the interim final rule that established
standards and procedures by which HHS may require certain contracts or
orders that promote the national defense be given priority over other
contracts or orders and setting new standards and procedures by which
HHS may allocate materials, services, and facilities to promote the
national defense under emergency and non-emergency conditions pursuant
to section 101 of the DPA of 1950, as amended. Accordingly, relative to
a post-interim final rule baseline, this NPRM has limited economic
impact.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. HHS reviewed
this NPRM under the provisions of the Regulatory Flexibility Act and
has determined that this rulemaking, if promulgated, will not have a
significant impact on a substantial number of small entities.
(1) Number of Small Entities
(a) Small entities include small businesses, small organizations,
and small governmental jurisdictions. For purposes of assessing the
impacts of this final rule on small entities, a small business, as
described in the Small Business Administration's Table of Small
Business Size Standards Matched to North American Industry
Classification System Codes (January 2022 Edition), has a maximum
annual revenue of $33.5 million and a maximum of 1,500 employees (for
some business categories, these numbers are lower). A small
governmental jurisdiction is a government of a city, town, school
district or special district with a population of less than 50,000. A
small organization is any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.
(b) This rulemaking sets criteria under which HHS (or agencies to
which HHS delegates HHS's DPA authority to issue rated orders) will
authorize prioritization of certain contracts or orders for health
resources as well as criteria under which HHS will issue orders
allocating materials, services, and facilities. Because the rulemaking
affects specific commercial transactions, HHS believes that small non-
profit organizations and small governmental jurisdictions are unlikely
to be directly affected by this rulemaking.
(c) Prior to the COVID-19 pandemic, HHS had minimally exercised its
prioritization authority for contracts and orders and had not exercised
its allocation authorities. To date, HHS has exercised title I
priorities authorities approximately 70 times in responding to the
COVID-19 pandemic to prioritize contracts thus ensuring rapid
industrial mobilization for critical health resources (including N95
facemasks, vaccines, therapeutics, and diagnostics) to meet urgent
emergency preparedness and response requirements. In response to the
initial wave of the COVID-19 pandemic, HHS leveraged its allocations
authority, in conjunction with a DX rated order, to re-distribute N-95
facemasks that were seized by the U.S. Customs and Border Protection.
Several health resource materials have been identified as essential in
responding to the COVID-19 pandemic and these items, such as personal
protective equipment (PPE), ventilators, medical countermeasures, and
ancillary supplies are in high demand. Therefore, a priority rating was
necessary to provide the quantities of these health resources within a
specified timeframe to respond to the COVID-19 pandemic. Additionally,
in response to the infant formula shortage in the summer of 2023, HHS
issued three priority rated orders to help ensure timely delivery of
key ingredients to infant formula manufacturers.
(2) Impact
(a) The NPRM has two principal components: prioritization and
allocation. Under prioritization, HHS, or its Delegate Agency,
designates certain orders as one of two possible priority levels. Once
so designated, such orders are referred to as ``rated orders.'' The
recipient of a rated order must give it priority over an unrated order
or an order with a lower priority rating as necessary to meet the
delivery requirement of the rated order. A recipient of a rated order
must place
[[Page 55618]]
orders at the same priority level with suppliers and subcontractors for
supplies and services necessary to fulfill the recipient's rated order.
The suppliers and subcontractors must treat the request from the rated
order recipient as a rated order with the same priority level as the
original rated order. The rulemaking does not require recipients to
fulfill rated orders if the price or terms of sale are not consistent
with the price or terms of sale of similar non-rated orders. The
rulemaking provides protection against claims for actions taken in, or
inactions required for, compliance with the rulemaking.
(b) Although rated orders could require a firm to fill one order
prior to filling another, they will not necessarily require a reduction
in the total volume of orders. The regulations also do not require the
recipient of a rated order to reduce prices or provide rated orders
with more favorable terms than a similar non-rated order. Under these
circumstances, the economic effects on the rated order recipient of
substituting one order for another are likely to be mutually
offsetting, resulting in no net economic impact.
(c) Allocations could be used to control the general distribution
of materials or services in the civilian market. Specific allocation
actions that HHS might take are as follows:
1. Set-aside: an official action that requires a person to reserve
materials, services, or facilities capacity in anticipation of receipt
of rated orders.
2. Directive: an official action that requires a person to take or
refrain from taking certain actions in accordance with its provisions.
A directive can require a person to stop or reduce production of an
item; prohibit the use of selected materials, services, or facilities;
or divert the use of materials, services, or facilities from one
purpose to another.
3. Allotment: an official action that specifies the maximum
quantity of a material, service, or facility authorized for a specific
use to promote the national defense.
(d) In response to the initial wave of the COVID-19 pandemic, HHS
leveraged its allocations authority, in conjunction with a DX rated
order to re-distribute N-95 facemasks that were seized by the U.S.
Customs and Border Protection. Any future allocations actions would be
used only in extraordinary circumstances. As required by section
101(a)(2) of the DPA and by section 201(a)(3) of E.O. 13603, HHS may
implement allocations only if the materials, services, and facilities
are deemed necessary or appropriate to promote the national defense.
``National defense'' covers programs for military and energy production
or construction, military or critical infrastructure assistance to any
foreign nation, homeland security, stockpiling, space, and any related
activity. Such terms include emergency preparedness activities
conducted pursuant to title VI of the Stafford Act and critical
infrastructure protection and restoration.
(e) Any allocation actions taken by HHS must assure that small
business concerns shall be accorded, to the extent practicable, a fair
share of the materials or services covered by the allocation action, in
proportion to the share received by small business concerns under
normal conditions, giving such special consideration as may be possible
to emerging business concerns. 50 U.S.C. 4551(e).
Conclusion
(f) Although HHS cannot precisely determine the number of small
entities that will be affected by this rulemaking, HHS believes that
the overall impact on such entities will not be significant. In most
instances, rated contracts or orders will be fulfilled in addition to
other (unrated) contracts or orders and, in some instances might
actually increase the total amount of business of the firm that
receives a rated contract or order.
(g) Because allocations can be imposed only after a finding
required under section 101(b) of the DPA, and approved by the President
in accordance with section 201(e) of E.O. 13603, that such material is
a scarce and critical material essential to the national defense and
that the requirements of the national defense for such material cannot
otherwise be met without creating a significant dislocation of the
normal distribution of such material in the civilian market to such a
degree as to create appreciable hardship, and because HHS has only used
its allocations authority one time in response to the initial wave of
COVID-19, one can expect allocations will be ordered only in rare and
unique circumstances. Any allocation actions would also have to comply
with section 701(e) of DPA (50 U.S.C. 4551(e)), which provides that
small business concerns be accorded, to the extent practicable, a fair
share of the material, including services, in proportion to the share
received by such business concerns under normal conditions, giving such
special consideration as may be possible to emerging business concerns.
Therefore, HHS believes that the requirement for a finding under
section 101(b) of the DPA, and approved by the President in accordance
with section 201(e) of E.O. 13603, that such a material is a scarce and
critical material essential to the national defense and that the
requirements of the national defense for such material cannot otherwise
be met without creating a significant dislocation of the normal
distribution of such material in the civilian market to such a degree
as to create appreciable hardship and the provisions of section 701 of
the DPA indicate that any impact on small business will not be
significant.
(h) For the reasons set forth above, the Secretary of HHS certifies
that this NPRM will not have a significant economic impact on a
substantial number of small entities.
C. Review Under the Paperwork Reduction Act
Abstract: HRPAS will efficiently place priority ratings on
contracts or orders of health resources within its authority as
specified in the DPA, as amended, when necessary. Applicants will
request authorization from HHS/ASPR to place a rating on a contract for
health resources to support national defense activities. Applicants
must supply, at time of request, their name, location, contact
information, items for which the applicant is requesting assistance on,
quantity of items for which the applicant is requesting assistance on,
and delivery date. Applicants can submit the request by mail or email.
Estimate of Burden: Public reporting for this collection of
information is estimated to average 30 minutes per response.
Type of Respondents: Individuals, businesses, and agencies with
responsibilities for emergency preparedness and response.
Estimated Number of Respondents: 100.
Estimated Number of Responses per Respondents: 0.95.
Estimated Total Number of Respondents: 95.
Estimate Total Annual Burden Hours on Respondents: 50 hours.
We are requesting comments on all aspects of this information
collection to help us: (1) Evaluate whether the collection of
information is necessary for the proper performance of the functions of
HHS, including whether the information will have practical utility; (2)
Evaluate the accuracy of HHS's estimate of burden, including the
validity of the methodology and assumptions used; (3) Enhance the
quality, utility and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who
are to
[[Page 55619]]
respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology. All comments received in
response to this document, including names and addresses, when
provided, will be a matter of public record.
D. Review Under E.O. 13132
HHS reviewed this proposed rule pursuant to E.O. 13132,
``Federalism,'' 64 FR 43255 (August 4, 1999), which imposes certain
requirements on agencies formulating and implementing policies or
regulations that preempt State law or that have federalism
implications. HHS determined that the rulemaking will not have a
substantial direct effect on the States, on the relationship between
the National Government and the States, or on the distribution of power
and responsibilities among the various levels of Government.
E. Review Under Unfunded Mandates Reform Act
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA, Pub. L.
104-4) requires Federal agencies to assess the effects of their
regulatory actions on State, Local, Tribal, or Territorial governments
or the private sector. Agencies generally must prepare a written
statement, including a cost benefit analysis, for proposed and final
rules with Federal mandates that may result in expenditures of $100
million or more in any one year for State, Local, Tribal, or
Territorial governments, in the aggregate, or to the private sector.
This proposed rule contains no Federal mandates as defined by title II
of UMRA for State, local, or Tribal governments or for the private
sector; therefore, this proposed rule is not subject to the
requirements of sections 202 and 205 of Unfunded Mandate Reform Act.
F. Approval of the Office of the Secretary
The Secretary of Health and Human Services has approved publication
of this NPRM.
List of Subjects in 45 CFR Part 101
Administrative practice and procedure, Business and industry,
Government contracts, National defense, Reporting and recordkeeping
requirements, Strategic and critical materials.
For the reasons stated in the preamble, HHS is revising part 101 of
title 45 of the Code of Federal Regulations as follows:
PART 101--HEALTH RESOURCES PRIORITIES AND ALLOCATIONS SYSTEM
(HRPAS)
Subpart A--General
Sec.
101.1 Purpose.
101.2 Priorities and allocations authority.
101.3 Program eligibility.
Subpart B--Definitions
101.20 Definitions.
Subpart C--Placement of Rated Orders
101.30 Delegations of authority.
101.31 Priority ratings.
101.32 Elements of a rated order.
101.33 Acceptance and rejection of rated orders.
101.34 Preferential scheduling.
101.35 Extension of priority ratings.
101.36 Changes or cancellations of priority ratings and rated
orders.
101.37 Use of rated orders.
101.38 Limitations on placing rated orders.
Subpart D--Special Priorities Assistance
101.40 General provisions.
101.41 Requests for priority rating authority.
101.42 Examples of assistance.
101.43 Criteria for assistance.
101.44 Instances where assistance may not be provided.
Subpart E--Allocation Actions
101.50 Policy.
101.51 General procedures.
101.52 Controlling the general distribution of a material in the
civilian market.
101.53 Types of allocation orders.
101.54 Elements of an allocation order.
101.55 Mandatory acceptance of an allocation order.
101.56 Changes or cancellations of an allocation order.
Subpart F--Official Actions
101.60 General provisions.
101.61 Rating Authorizations.
101.62 Directives.
101.63 Letters of Understanding.
Subpart G--Compliance
101.70 General provisions.
101.71 Audits and investigations.
101.72 Compulsory process.
101.73 Notification of failure to comply.
101.74 Violations, penalties, and remedies.
101.75 Compliance conflicts.
Subpart H--Adjustments, Exceptions, and Appeals
101.80 Adjustments or exceptions.
101.81 Appeals.
Subpart I--Miscellaneous Provisions
101.90 Protection against claims.
101.91 Records and reports.
101.92 Applicability of this part and official actions.
101.93 Communications.
Appendix A to Part 101--Approved Programs and Delegate Agencies
Authority: Defense Production Act of 1950, as amended (50 U.S.C.
4501, et seq.), and Executive Order 13603 (77 FR 16651, 3 CFR, March
16, 2012).
Subpart A--General
Sec. 101.1 Purpose.
This part provides guidance and procedures for use of Defense
Production Act (DPA) of 1950 section 101 priorities and allocations
authority with respect to health resources necessary or appropriate to
promote the national defense. The guidance and procedures in this part
are consistent with the guidance and procedures provided in other
regulations that form the Federal Priorities and Allocations System
(FPAS). Guidance and procedures for use of the DPA priorities and
allocations authority with respect to other types of resources are
provided for: food resources, food resource facilities, livestock
resources, veterinary resources, plant health resources, and the
domestic distribution of farm equipment and commercial fertilizer in 7
CFR part 789; all forms of energy in 10 CFR part 217; all forms of
civil transportation in 49 CFR part 33; and all other materials,
services, and facilities, including construction materials in 15 CFR
part 700.
Sec. 101.2 Priorities and allocations authority.
(a) Section 201 of Executive Order (E.O.) 13603, delegates the
President's priorities and allocations authority under section 101 of
the DPA. Section 101 of the DPA provides the President with authority
to require acceptance and priority performance of contracts and orders
(other than contracts of employment) to promote the national defense
over performance of any other contracts or orders, and to allocate
materials, services, and facilities as deemed necessary or appropriate
to promote the national defense to a number of agencies. Section 201 of
E.O. 13603 delegates the President's authority to specific agencies as
follows:
(1) The Secretary of Agriculture with respect to food resources,
food resource facilities, livestock resources, veterinary resources,
plant health resources, and the domestic distribution of farm equipment
and commercial fertilizer;
(2) The Secretary of Energy with respect to all forms of energy;
(3) The Secretary of Health and Human Services with respect to
health resources;
(4) The Secretary of Transportation with respect to all forms of
civil transportation;
[[Page 55620]]
(5) The Secretary of Defense with respect to water resources; and
(6) The Secretary of Commerce for all other materials, services,
and facilities, including construction materials.
(b) Section 202 of E.O. 13603 states that the authority delegated
in section 201, except as provided in section 201(e) of E.O. 13603, may
be used only to support programs that have been determined in writing
as necessary or appropriate to promote the national defense:
(1) By the Secretary of Defense with respect to military production
and construction, military assistance to foreign nations, military use
of civil transportation, stockpiles managed by the Department of
Defense, space, and directly related activities.
(2) By the Secretary of Energy with respect to energy production
and construction, distribution, and use, and directly related
activities; and
(3) By the Secretary of Homeland Security with respect to all other
national defense programs, including civil defense and continuity of
Government.
(c) Section 201(e) of E.O. 13603 provides that each department that
is delegated allocations authority under section 201(a) of E.O. 13603
may use this authority with respect to control of the general
distribution of any material (including applicable services) in the
civilian market only after:
(1) Making the finding required under section 101(b) of the DPA;
and
(2) The finding has been approved by the President.
Sec. 101.3 Program eligibility.
Certain programs to promote the national defense are approved for
priorities and allocations support. These include programs for military
and energy production or construction, military or critical
infrastructure assistance to any foreign nation, homeland security,
stockpiling, space, and any directly related activity. Other eligible
programs include emergency preparedness activities conducted pursuant
to title VI of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act [42 U.S.C. 5121 et seq.] and critical infrastructure
protection and restoration.
Subpart B--Definitions
Sec. 101.20 Definitions.
The following definitions pertain to all sections of this part:
Allocation means the control of the distribution of materials,
services, or facilities for a purpose deemed necessary or appropriate
to promote the national defense.
Allocation order means an official action to control the
distribution of materials, services, or facilities for a purpose deemed
necessary or appropriate to promote the national defense.
Allotment means an official action that specifies the maximum
quantity or use of a material, service, or facility authorized for a
specific use to promote the national defense.
Approved program means a program determined by the Secretary of
Defense, the Secretary of Energy, or the Secretary of Homeland Security
to be necessary or appropriate to promote the national defense, under
the authority of the Defense Production Act and in accordance with
section 202 of E.O. 13603.
Construction means the erection, addition, extension, or alteration
of any building, structure, or project, using materials or products
which are to be an integral and permanent part of the building,
structure, or project. Construction does not include maintenance and
repair.
Critical infrastructure means any systems and assets, whether
physical or cyber-based, so vital to the United States that the
degradation or destruction of such systems and assets would have a
debilitating impact on national security, including, but not limited
to, national economic security and national public health or safety.
Defense Production Act or DPA means the Defense Production Act of
1950, as amended (50 U.S.C. 4501 et seq.).
Delegate agency means a Federal Government agency authorized by
delegation from the Department of Health and Human Services (HHS) to
place priority ratings on contracts or orders needed to support
approved programs.
Directive means an official action that requires a person to take
or refrain from taking certain actions in accordance with its
provisions.
Emergency preparedness means all those activities and measures
designed or undertaken to prepare for or minimize the effects of a
hazard upon the civilian population, to deal with the immediate
emergency conditions which would be created by the hazard, and to
effectuate emergency repairs to, or the emergency restoration of, vital
utilities and facilities destroyed or damaged by the hazard.
``Emergency Preparedness'' includes the following:
(1) Measures to be undertaken in preparation for anticipated
hazards (including the establishment of appropriate organizations,
operational plans, and supporting agreements, the recruitment and
training of personnel, the conduct of research, the procurement and
stockpiling of necessary materials and supplies, the provision of
suitable warning systems, the construction or preparation of shelters,
shelter areas, and control centers, and, when appropriate, the
nonmilitary evacuation of the civilian population).
(2) Measures to be undertaken during a hazard (including the
enforcement of passive defense regulations prescribed by duly
established military or civil authorities, the evacuation of personnel
to shelter areas, the control of traffic and panic, and the control and
use of lighting and civil communications).
(3) Measures to be undertaken following a hazard (including
activities for firefighting; rescue; emergency medical, health and
sanitation services; monitoring for specific dangers of special
weapons; unexploded bomb reconnaissance; essential debris clearance;
emergency welfare measures; and immediately essential emergency repair
or restoration of damaged vital facilities).
Facilities includes all types of buildings, structures, or other
improvements to real property (but excluding farms, churches or other
places of worship, and private dwelling houses), and services relating
to the use of any such building, structure, or other improvement.
Farm equipment means equipment, machinery, and repair parts
manufactured for use on farms in connection with the production or
preparation for market use of food resources.
Fertilizer means any product or combination of products that
contain one or more of the elements nitrogen, phosphorous, and
potassium for use as a plant nutrient.
Food resources means all commodities and products, (simple, mixed,
or compound), or complements to such commodities of products, that are
capable of being ingested by other human beings or animals,
irrespective of other uses to which such commodities or products may be
put, at all stages of processing from the raw commodity to the products
thereof in vendible form for human or animal consumption. ``Food
resources'' also means potable water packaged in commercially
marketable containers, all starches, sugars, vegetable and animal or
marine fats and oils, seed, cotton, hemp, and flax fiber, but does not
mean any such material after it loses its identity as an agricultural
commodity or agriculture product.
Food resource facilities means plants, machinery, vehicles
(including on
[[Page 55621]]
farm), and other facilities required for the production, processing,
distribution, and storage (including cold storage) of food resources,
and for the domestic distribution of farm equipment and fertilizer
(excluding transportation thereof).
Hazard means an emergency or disaster resulting from:
(1) A natural disaster; or
(2) An accidental or man-caused event.
Health resources means drugs, biological products, medical devices,
materials, facilities, health supplies, services and equipment required
to diagnose, mitigate, or prevent the impairment of, improve, treat,
cure, or restore the physical or mental health conditions of the
population.
Homeland Security includes efforts--
(1) To prevent terrorist attacks within the United States;
(2) To reduce the vulnerability of the United States to terrorism;
(3) To minimize damage from a terrorist attack in the United
States; and
(4) To recover from a terrorist attack in the United States.
Industrial resource means all materials, services, and facilities,
including construction materials, the authority for which has not been
delegated to other agencies under E.O. 13603. The term ``Industrial
resource'' does not include food resources, food resource facilities,
livestock resources, veterinary resources, and the domestic
distribution of farm equipment and commercial fertilizer; all forms of
energy; health resources; all forms of civil transportation; and water
resources.
Item means any raw, in process, or manufactured material, article,
commodity, supply, equipment, component, accessory, part, assembly, or
product of any kind, technical information, process, or service.
Maintenance and Repair and/or Operating Supplies (MRO) includes the
following--
(1) ``Maintenance'' is the upkeep necessary to continue any plant,
facility, or equipment in working condition;
(2) ``Repair'' is the restoration of any plant, facility, or
equipment to working condition when it has been rendered unsafe or
unfit for service by wear and tear, damage, or failure of parts;
(3) ``Operating Supplies'' are any resources carried as operating
supplies according to a person's established accounting practice.
``Operating Supplies'' may include hand tools and expendable tools,
jigs, dies, fixtures used on production equipment, lubricants,
cleaners, chemicals, and other expendable items; and
(4) MRO does not include items produced or obtained for sale to
other persons or for installation upon or attachment to the property of
another person, or items required for the production of such items;
items needed for the replacement of any plant, facility, or equipment;
or items for the improvement of any plant, facility, or equipment by
replacing items which are still in working condition with items of a
new or different kind, quality, or design.
Materials includes--
(1) Any raw materials (including minerals, metals, and advanced
processed materials), commodities, articles, components (including
critical components), products, and items of supply; and
(2) Any technical information or services ancillary to the use of
any such materials, commodities, articles, components, products, or
items.
National defense means programs for military and energy production
or construction, military or critical infrastructure assistance to any
foreign nation, homeland security, stockpiling, space, and any directly
related activity. Such term includes emergency preparedness activities
conducted pursuant to title VI of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5121, et seq.) and
critical infrastructure protection and restoration.
Official action means an action taken by HHS under the authority of
the DPA, E.O. 13603, and this part or another regulation under the
FPAS. Such actions include the issuance of Rating Authorizations,
Directives, Set Asides, Allotments, Letters of Understanding, and
Demands for Information, Inspection Authorizations, and Administrative
Subpoenas.
Person includes any individual, corporation, partnership,
association, or any other organized group of persons, or legal
successor or representative thereof; or any State or local government
or agency thereof; and for purposes of administration of this part,
includes the Federal Government and any authorized foreign government
or international organization or agency thereof, delegated authority as
provided in this part.
Priority rating is an identifying code assigned by HHS, a Delegate
Agency or authorized person placed on all rated orders for health
resources and consisting of the rating symbol and program
identification symbol.
Program Identification Symbols is an abbreviation used to indicate
which approved program is supported by a rated order.
Rated order means a prime contract, a subcontract, or a purchase
order in support of an approved program issued in accordance with the
provisions of this part.
Resource department means any agency delegated priorities and
allocations authority as specified in Sec. 101.2.
Secretary means the Secretary of HHS.
Services includes any effort that is needed for or incidental to--
(1) The development, production, processing, distribution,
delivery, or use of a health resource.
(2) The construction of facilities.
(3) Other national defense programs and activities.
Set-aside means an official action that requires a person to
reserve materials, services, or facilities capacity in anticipation of
the receipt of rated orders.
Stafford Act means title VI (Emergency Preparedness) of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act, as amended
(42 U.S.C. 5121 et seq.).
Water resources means all usable water, from all sources, within
the jurisdiction of the United States, that can be managed, controlled,
and allocated to meet emergency requirements, except ``water
resources'' do not include usable water that qualifies as ``food
resources''.
Working day means any day that the recipient of an order is open
for business.
Subpart C--Placement of Rated Orders
Sec. 101.30 Delegations of authority.
(a) The priorities and allocations authorities of the President
under section 101 of the DPA with respect to health resources have been
delegated to the Secretary under E.O. 13603. The Secretary may re-
delegate the Secretary's priorities authorities under the DPA to
authorize a Delegate Agency to assign priority ratings to orders for
health resources needed for use in approved programs.
(b) Pursuant to 87 FR 58363 published in the Federal Register on
September 26, 2022, the Secretary delegated to the Assistant Secretary
for Preparedness and Response (the ASPR) within the Administration for
Strategic Preparedness and Response (ASPR), the authority under section
201 of E.O. 13603 to exercise priorities authority under section 101 of
the DPA. This delegation authorized the ASPR, on behalf of the
Secretary, to approve DO--[--[M1-M9] priority rating requests for
health resources that promote the national defense, though this
delegation
[[Page 55622]]
excludes the authority to approve all priorities provisions for health
resources that require DX--[--[M1-M9] priority ratings.
Sec. 101.31 Priority ratings.
(a) Levels of priority. (1) There are two levels of priority
established by the HRPAS, identified by the rating symbols ``DO'' and
``DX''.
(2) All DO rated orders have equal priority with each other and
take precedence over unrated orders. All DX rated orders have equal
priority with each other and take precedence over DO rated orders and
unrated orders. (For resolution of conflicts among rated orders of
equal priority, see Sec. 101.34(c).)
(3) In addition, a Directive regarding priority treatment for a
given item issued by HHS for that item takes precedence over any DX
rated order, DO rated order, or unrated order, as stipulated in the
Directive. (For a full discussion of Directives, see Sec. 101.62.)
(b) Priority ratings. A priority rating is an identifying code
assigned by a Delegate Agency or authorized person placed on all rated
orders for health resources. It consists of the rating symbol and the
program identification symbol.
Sec. 101.32 Elements of a rated order.
(a) Each rated order must include:
(1) The appropriate priority rating (e.g., DO--[M1-M9 or DX--[--
[M1-M9];
(2) A required delivery date or dates. The words ``immediately'' or
``as soon as possible'' do not constitute a delivery date. A
``requirements contract,'' ``basic ordering agreement,'' ``prime vendor
contract,'' or similar procurement document bearing a priority rating
may contain no specific delivery date or dates and may provide for the
furnishing of items or service from time-to-time or within a stated
period against specific purchase orders, such as ``calls,''
``requisitions,'' and ``delivery orders.'' These purchase orders must
specify a required delivery date or dates and are to be considered as
rated as of the date of their receipt by the supplier and not as of the
date of the original procurement document;
(3) The written signature on a manually placed order, or the
digital signature or name on an electronically placed order, of an
individual authorized to sign rated orders for the person placing the
order. The signature or use of the name certifies that the rated order
is authorized under this part and that the requirements of this part
are being followed; and
(4) A statement that reads in substance:
(b) This is a rated order certified for national defense use, and
you are required to follow all the provisions of the Health Resources
Priorities and Allocations System regulation at 45 CFR part 101.
(c) Additional element required for certain emergency preparedness
rated orders. If the rated order is placed in support of emergency
preparedness requirements and expedited action is necessary and
appropriate to meet these requirements, the following statement must be
included in the order: ``This rated order is placed for the purpose of
emergency preparedness. It must be accepted or rejected within [Insert
a time limit no less than the minimum applicable time limit specified
in Sec. 101. 33(e)].
Sec. 101.33 Acceptance and rejection of rated orders.
(a) Mandatory acceptance. (1) Except as otherwise specified in this
section, a person shall accept every rated order received and must fill
such orders regardless of any other rated or unrated orders that have
been accepted.
(2) A person shall not discriminate against rated orders in any
manner such as by charging higher prices or by imposing different terms
and conditions than for comparable unrated orders.
(b) Mandatory rejection. Unless otherwise directed by HHS for a
rated order involving health resources:
(1) A person shall not accept a rated order for delivery on a
specific date if unable to fill the order by that date. However, the
person must inform the customer of the earliest date on which delivery
can be made and offer to accept the order on the basis of that date.
Scheduling conflicts with previously accepted lower rated or unrated
orders are not sufficient reason for rejection under this section.
(2) A person shall not accept a DO rated order for delivery on a
date which would interfere with delivery of any previously accepted DO
or DX rated orders. However, the person must offer to accept the order
based on the earliest delivery date otherwise possible.
(3) A person shall not accept a DX rated order for delivery on a
date which would interfere with delivery of any previously accepted DX
rated orders but must offer to accept the order based on the earliest
delivery date otherwise possible.
(4) If a person is unable to fill all of the rated orders of equal
priority status received on the same day, the person must accept, based
upon the earliest delivery dates, only those orders which can be
filled, and reject the other orders. For example, a person must accept
order A requiring delivery on December 15 before accepting order B
requiring delivery on December 31. However, the person must offer to
accept the rejected orders based on the earliest delivery dates
otherwise possible.
(c) Optional rejection. Unless otherwise directed by HHS for a
rated order involving health resources, rated orders may be rejected in
any of the following cases as long as a supplier does not discriminate
among customers:
(1) If the person placing the order is unwilling or unable to meet
regularly established terms of sale or payment;
(2) If the order is for an item not supplied or for a service not
capable of being performed;
(3) If the order is for an item or service produced, acquired, or
provided only for the supplier's own use for which no orders have been
filled for two years prior to the date of receipt of the rated order.
If, however, a supplier has sold some of these items or provided
similar services, the supplier is obligated to accept rated orders up
to that quantity or portion of production or service, whichever is
greater, sold or provided within the past two years;
(4) If the person placing the rated order, other than the U.S.
Government, makes the item or performs the service being ordered;
(5) If acceptance of a rated order or performance against a rated
order would violate any other regulation, official action, or order of
the HHS issued under the authority of the DPA or another relevant
statute.
(d) Customer notification requirements. (1) Except as provided in
paragraph (e) of this section, a person must accept or reject a rated
order in writing or electronically within fifteen (15) working days
after receipt of a DO-rated order and within ten (10) working days
after receipt of a DX-rated order. If the order is rejected, the person
must give reasons in writing or electronically for the rejection.
(2) If a person has accepted a rated order and subsequently finds
that shipment or performance will be delayed, the person must notify
the customer immediately, give the reasons for the delay, and advise of
a new shipment or performance date. If notification is given verbally,
written (hard copy) or electronic confirmation must be provided within
one (1) working day of the verbal notice.
(e) Exception for emergency response conditions. If the rated order
is placed for the purpose of emergency preparedness, and expedited
action is necessary or appropriate to meet these requirements and the
order includes the statement as set forth in Sec. 101.32(d)(2),
[[Page 55623]]
a person must accept or reject a rated order and transmit the
acceptance or rejection in writing or in an electronic format within
the time frame specified in the rated order (usually within two working
days after receipt of the order). The minimum times for acceptance or
rejection that such orders may specify are six (6) hours after receipt
if the order is issued by an authorized person in response to a hazard
that has occurred; or twelve (12) hours after receipt if the order is
issued by an authorized person to prepare for an imminent hazard.
Sec. 101.34 Preferential scheduling.
(a) A person must schedule operations, including the acquisition of
all needed production items or services, in a timely manner to satisfy
the delivery requirements of each rated order. Modifying production or
delivery schedules is necessary only when required delivery dates for
rated orders cannot otherwise be met.
(b) DO rated orders must be given production preference over
unrated orders, if necessary, to meet required delivery dates, even if
this requires the diversion of items being processed or ready for
delivery or services being performed against unrated orders. Similarly,
DX rated orders must be given preference over DO rated orders and
unrated orders. (Examples: If a person receives a DO rated order with a
delivery date of June 3 and if meeting that date would mean delaying
production or delivery of an item for an unrated order, the unrated
order must be delayed. If a DX rated order is received calling for
delivery on July 15 and a person has a DO rated order requiring
delivery on June 2 and operations can be scheduled to meet both
deliveries, there is no need to alter production schedules to give any
additional preference to the DX rated order. However, if business
operations cannot be altered to meet both the June 2 and July 15
delivery dates, then the DX rated order must be given priority over the
DO rated order.)
(c)(1) If a person finds that delivery or performance against any
accepted rated orders conflicts with the delivery or performance
against other accepted rated orders of equal priority status, the
person shall give precedence to the conflicting orders in the sequence
in which they are to be delivered or performed (not to the receipt
dates). If the conflicting orders are scheduled to be delivered or
performed on the same day, the person shall give precedence to those
orders that have the earliest receipt dates.
(2) If a person is unable to resolve rated order delivery or
performance conflicts under this section, the person should promptly
seek special priorities assistance as provided in Sec. Sec. 101.40
through 101.44. If the person's customer objects to the rescheduling of
delivery or performance of a rated order, the customer should promptly
seek special priorities assistance as provided in Sec. Sec. 101.40
through 101.44. For any rated order against which delivery or
performance will be delayed, the person must notify the customer as
provided in Sec. 101.33(d)(2).
(d) If a person is unable to purchase needed production items in
time to fill a rated order by its required delivery date, the person
must fill the rated order by using inventoried production items. A
person who uses inventoried items to fill a rated order may replace
those items with the use of a rated order as provided in Sec.
101.37(b).
Sec. 101.35 Extension of priority ratings.
(a) A person must use rated orders with suppliers to obtain items
or services needed to fill a rated order. The person must use the
priority rating indicated on the customer's rated order, except as
otherwise provided in this part or as directed by HHS.
(b) The priority rating must be included on each successive order
placed to obtain items or services needed to fill a customer's rated
order. This continues from contractor to subcontractor to supplier
throughout the entire procurement chain.
Sec. 101.36 Changes or cancellations of priority ratings and rated
orders.
(a.) The priority rating on a rated order may be changed or
canceled by:
(1) An official action of HHS; or
(2) Written notification from the person who placed the rated order
(including a Delegate Agency).
(b) If an unrated order is amended to make it a rated order, or a
DO rating is changed to a DX rating, the supplier must give the
appropriate preferential treatment to the order as of the date the
change is received by the supplier.
(c) An amendment to a rated order that significantly alters a
supplier's original production or delivery schedule shall constitute a
new rated order as of the date of its receipt. The supplier must accept
or reject the amended order according to the provisions of Sec.
101.33.
(d) The following amendments do not constitute a new rated order: a
change in shipping destination; a reduction in the total amount of the
order; an increase in the total amount of the order which has
negligible impact upon deliveries; a minor variation in size or design
(prior to the start of production); or a change which is agreed upon
between the supplier and the customer.
(e) If a person no longer needs items or services to fill a rated
order, any rated orders placed with suppliers for the items or
services, or the priority rating on those orders, must be canceled.
(f) When a priority rating is added to an unrated order, or is
changed or canceled, all suppliers must be promptly notified in
writing.
Sec. 101.37 Use of rated orders.
(a) A person must use rated orders to obtain:
(1) Items which will be physically incorporated into other items to
fill rated orders, including that portion of such items normally
consumed or converted into scrap or by-products in the course of
processing;
(2) Containers or other packaging materials required to make
delivery of the finished items against rated orders;
(3) Services, other than contracts of employment, needed to fill
rated orders;
(4) MRO needed to produce the finished items to fill rated orders.
(b) A person may use a rated order to replace inventoried items
(including finished items) if such items were used to fill rated
orders, as follows:
(1) The order must be placed within 90 days of the date of use of
the inventory.
(2) A DO rating symbol and the program identification symbol
indicated on the customer's rated order must be used on the order. A DX
rating may not be used even if the inventory was used to fill a DX
rated order.
(3) If the priority ratings on rated orders from one customer or
several customers contain different program identification symbols, the
rated orders may be combined.
(c) A person may combine DX and DO rated orders from one customer
or several customers if the items or services covered by each level of
priority are identified separately and clearly.
(d) Combining rated and unrated orders.
(1) A person may combine rated and unrated order quantities on one
purchase order provided that:
(i) The rated quantities are separately and clearly identified; and
(ii) The four elements of a rated order, as required by Sec.
101.32, are included on the order with the statement required in Sec.
101.32(d) modified to read in substance: ``This purchase order contains
rated order quantities certified for national defense use, and you are
required to follow all applicable provisions of the Health Resources
Priorities and Allocations System regulations at 45 CFR part 101 only
as it pertains to the rated quantities''.
[[Page 55624]]
(2) A supplier must accept or reject the rated portion of the
purchase order as provided in Sec. 101.33 and give preferential
treatment only to the rated quantities as required by this part. This
part may not be used to require preferential treatment for the unrated
portion of the order.
(3) Any supplier who believes that rated and unrated orders are
being combined in a manner contrary to the intent of this part or in a
fashion that causes undue or exceptional hardship may submit a request
for adjustment or exception under Sec. 101.80.
(e) A person may place a rated order for the minimum commercially
procurable quantity even if the quantity needed to fill a rated order
is less than that minimum. However, a person must combine rated orders
as provided in paragraph (c) of this section, if possible, to obtain
minimum procurable quantities.
(f) A person is not required to place a priority rating on an order
for less than one-half of the Simplified Acquisition Threshold (as
established in the Federal Acquisition Regulation (FAR) (see 48 CFR
2.101) or in other authorized acquisition regulatory or management
systems) whichever amount is greater, provided that delivery can be
obtained in a timely fashion without the use of the priority rating.
Sec. 101.38 Limitations on placing rated orders.
(a) General limitations. (1) A person may not place a DO or DX
rated order pursuant to this part unless the person in receipt of the
rated order has been explicitly authorized to do so by HHS or a
Delegate Agency or is otherwise permitted to do so by this part.
(2) Rated orders may not be used to obtain:
(i) Delivery on a date earlier than needed;
(ii) A greater quantity of the item or services than needed, except
to obtain a minimum procurable quantity. Separate rated orders may not
be placed solely for the purpose of obtaining minimum procurable
quantities on each order;
(iii) Items or services in advance of the receipt of a rated order,
except as specifically authorized by HHS (see Sec. 101.41(c) for
information on obtaining authorization for a priority rating in advance
of a rated order);
(iv) Items that are not needed to fill a rated order, except as
specifically authorized by HHS, or as otherwise permitted by this part;
or
(v) Any of the following items unless specific priority rating
authority has been obtained from HHS, a Delegate Agency, or the
Department of Commerce, as appropriate:
(A) Items for plant improvement, expansion, or construction, unless
they will be physically incorporated into a construction project
covered by a rated order; or
(B) Production or construction equipment or items to be used for
the manufacture of production equipment. [For information on requesting
priority rating authority, see Sec. 101.41.]
(C) Any items related to the development of chemical or biological
warfare capabilities or the production of chemical or biological
weapons unless such development or production has been authorized by
the President or the Secretary of Defense. This provision does not
however prohibit the use of the priority and allocations authority to
acquire or produce qualified countermeasures that are necessary to
treat, identify, or prevent harm from any biological or chemical agent
that may pose a public health threat affecting national security.
(b) Jurisdictional limitations. Unless authorized by the resource
agency with jurisdiction, the provisions of this part are not
applicable to the following resources:
(1) Food resources, food resource facilities, livestock resources,
veterinary resources, plant health resources, and the domestic
distribution of farm equipment and commercial fertilizer (Resource
agency with jurisdiction--Department of Agriculture);
(2) All forms of energy (Resource agency with jurisdiction--
Department of Energy);
(3) All forms of civil transportation (Resource agency with
jurisdiction--Department of Transportation);
(4) Water resources (Resource agency with jurisdiction--Department
of Defense/U.S. Army Corps of Engineers);
(5) All materials, services, and facilities, including construction
materials (industrial resources) for which the authority has not been
delegated to other agencies under E.O. 13603 (Resource agency with
jurisdiction--Department of Commerce);
(6) The priorities and allocations authority of this part may not
be applied to communications services (Resource agency with
jurisdiction--National Communications System under E.O. 13618 of July
6, 2012).
Subpart D--Special Priorities Assistance
Sec. 101.40 General provisions.
(a) Once a priority rating has been authorized pursuant to this
part, further action by HHS is generally not needed. However, from
time-to-time, production or delivery problems will arise in connection
with rated orders for health resources as covered under this part. In
this event, a person should immediately contact ASPR for guidance, as
specified in Sec. 101.93. ASPR serves as the lead policy office for
emergency preparedness and response operations on behalf of HHS and
manages the Department's delegated DPA authorities. If ASPR is unable
to resolve the problem or to authorize the use of a priority rating and
believes additional assistance is warranted, ASPR may forward the
request to another agency with resource jurisdiction, such as the
Department of Commerce, as appropriate, for action. Special priorities
assistance is provided to alleviate problems that do arise.
(b) Special priorities assistance is available for any reason
consistent with this part. Generally, special priorities assistance is
provided to expedite deliveries, resolve delivery conflicts, place
rated orders, locate suppliers, or to verify information supplied by
customers and vendors. Special priorities assistance may also be used
to request rating authority for items that are not normally eligible
for priority treatment.
Sec. 101.41 Requests for priority rating authority.
(a) Rating authority for items or services not normally rated. If a
rated order is likely to be delayed because a person is unable to
obtain items or services not normally rated under this part, the person
may request the authority to use a priority rating in ordering the
needed items or services.
(b) Rating authority for production or construction equipment. (1)
A request for priority rating authority for production or construction
equipment must be submitted to the U.S. Department of Commerce on Form
BIS-999.
(2) When the use of a priority rating is authorized for the
procurement of production or construction equipment, a rated order may
be used either to purchase or to lease such equipment. However, in the
latter case, the equipment may be leased only from a person engaged in
the business of leasing such equipment or from a person willing to
lease rather than sell.
(c) Rating authority in advance of a rated prime contract. (1) In
certain cases, and upon specific request HHS may authorize a person to
place a priority rating on an order to a supplier in advance of the
issuance of a rated prime contract. In these instances, the person
requesting advance-rating authority must obtain sponsorship of
[[Page 55625]]
the request from HHS or the appropriate Delegate Agency. The person
shall also assume any business risk associated with the placing of
rated orders in the event the rated prime contract is not issued.
(2) The person must state the following in the request: It is
understood that the authorization of a priority rating in advance of
our receiving a rated prime contract from the Department of Health and
Human Services (HHS) and our use of that priority rating with our
suppliers in no way commits HHS or any other government agency to enter
into a contract or order or to expend funds. Further, we understand
that the Federal Government shall not be liable for any cancellation
charges, termination costs, or other damages that may accrue if a rated
prime contract is not eventually placed and, as a result, we must
subsequently cancel orders placed with the use of the priority rating
authorized as a result of this request.
(3) In reviewing requests for rating authority in advance of a
rated prime contract, HHS will consider, among other things, the
following criteria:
(i) The probability that the prime contract will be awarded;
(ii) The impact of the resulting rated orders on suppliers and on
other authorized programs;
(iii) Whether the contractor is the sole source;
(iv) Whether the item being produced has a long lead time;
(v) The time period for which the rating is being requested;
(4) HHS may require periodic reports on the use of the rating
authority granted under paragraph (c) of this section.
(5) If a rated prime contract is not issued, the person shall
promptly notify all suppliers who have received rated orders pursuant
to the advanced rating authority that the priority rating on those
orders is cancelled.
Sec. 101.42 Examples of assistance.
(a) While special priorities assistance may be provided for any
reason in support of this part, it is usually provided in situations
where:
(1) A person is experiencing difficulty in obtaining delivery
against a rated order by the required delivery date; or
(2) A person cannot locate a supplier for an item or service needed
to fill a rated order.
(b) Other examples of special priorities assistance include:
(1) Ensuring that rated orders receive preferential treatment by
suppliers;
(2) Resolving production or delivery conflicts between various
rated orders;
(3) Assisting in placing rated orders with suppliers;
(4) Verifying the urgency of rated orders; and
(5) Determining the validity of rated orders.
Sec. 101.43 Criteria for assistance.
Requests for special priorities assistance should be timely, i.e.,
the request has been submitted promptly and enough time exists for HHS,
the Delegate Agency, or the Department of Commerce for industrial
resources to affect a meaningful resolution to the problem, and must
establish that:
(a) There is an urgent need for the item; and
(b) The applicant has made a reasonable effort to resolve the
problem.
Sec. 101.44 Instances where assistance may not be provided.
Special priorities assistance is provided at the discretion of HHS
or the Delegate Agency when it is determined that such assistance is
warranted to meet the objectives of this part. Examples where
assistance may not be provided include situations when a person is
attempting to:
(a) Secure a price advantage;
(b) Obtain delivery prior to the time required to fill a rated
order;
(c) Gain competitive advantage;
(d) Disrupt an industry apportionment program in a manner designed
to provide a person with an unwarranted share of scarce items; or
(e) Overcome a supplier's regularly established terms of sale or
conditions of doing business.
Subpart E--Allocation Actions
Sec. 101.50 Policy.
(a) Allocation orders will:
(1) Only be used when there is insufficient supply of a material,
service, or facility to satisfy national defense supply requirements
through the use of the priorities authority or when the use of the
priorities authority would cause a severe and prolonged disruption in
the supply of materials, services, or facilities available to support
normal U.S. economic activities; and
(2) Not be used to ration materials or services at the retail
level.
(b) Allocation orders, when used, will be distributed equitably
among the suppliers of the materials, services, or facilities being
allocated and not require any person to relinquish a disproportionate
share of the civilian market.
Sec. 101.51 General procedures.
Before the Department of Health and Human Services uses its
allocations authority to address a supply problem within its resource
jurisdiction, it will develop a plan that includes:
(a) A copy of the written determination made in accordance with
section 202 of Executive Order 13603, that the program or programs that
would be supported by the allocation action are necessary or
appropriate to promote the national defense.
(b) A detailed description of the situation to include any unusual
events or circumstances that have created the requirement for an
allocation action;
(c) A statement of the specific objective(s) of the allocation
action;
(d) A list of the materials, services, or facilities to be
allocated;
(e) A list of the sources of the materials, services, or facilities
that will be subject to the allocation action;
(f) A detailed description of the provisions that will be included
in the allocation orders, including the type(s) of allocation orders,
the percentages or quantity of capacity or output to be allocated for
each purpose, and the duration of the allocation action (i.e.,
anticipated start and end dates);
(g) An evaluation of the impact of the proposed allocation action
on the civilian market; and
(h) Proposed actions, if any, to mitigate disruptions to civilian
market operations.
Sec. 101.52 Controlling the general distribution of a material in the
civilian market.
No allocation action taken by HHS may be used to control the
general distribution of a material in the civilian market, unless the
Secretary has:
(a) Made a written finding that:
(1) Such material is a scarce and critical material essential to
the national defense, and
(2) The requirements of the national defense for such material
cannot otherwise be met without creating a significant dislocation of
the normal distribution of such material in the civilian market to such
a degree as to create appreciable hardship;
(b) Submitted the finding for the President's approval through the
Assistant to the President and National Security Advisor and the
Assistant to the President for Homeland Security and Counterterrorism;
and
(c) The President has approved the finding.
Sec. 101.53 Types of allocation orders.
There are three types of allocation orders available for
communicating allocation actions.
(a) Set-aside. An official action that requires a person to reserve
materials,
[[Page 55626]]
services, or facilities capacity in anticipation of the receipt of
rated orders.
(b) Directive. An official action that requires a person to take or
refrain from taking certain actions in accordance with its provisions.
A directive can require a person to: Stop or reduce production of an
item; prohibit the use of selected materials, services, or facilities;
or divert the use of materials, services, or facilities from one
purpose to another; and
(c) Allotment. An official action that specifies the maximum
quantity of a material, service, or facility authorized for a specific
use to promote the national defense.
Sec. 101.54 Elements of an allocation order.
Allocation orders may be issued directly to the affected persons or
by constructive notice through publication in the Federal Register.
This section describes the elements that each order must include.
(a) Each allocation order must include:
(1) A detailed description of the required allocation action(s),
including its relationship to any received DX rated orders, DO rated
orders, and unrated orders;
(2) Specific start and end calendar dates for each required
allocation action;
(3) The written signature on a manually placed order or the digital
signature on an electronically placed order of the Secretary of HHS.
(b)(1) Elements to be included in orders issued directly to
affected persons:
(2) A statement that reads in substance: ``This is an allocation
order certified for national defense use. [Insert the name of the
person receiving the order] is required to comply with this order, in
accordance with the provisions of the Health Resources Priorities and
Allocations System regulation (45 CFR part 101).
(c)(1) Elements to be included in an allocation order that gives
constructive notice through publication in the Federal Register:
(2) A statement that reads in substance: ``This is an allocation
order certified for national defense use. [Insert the name(s) of the
person(s) to whom the order applies or a description of the class of
persons to whom the order applies] is (are) required to comply with
this order, in accordance with the provisions of the Health Resources
Priorities and Allocations System regulation (45 CFR part 101).
Sec. 101.55 Mandatory acceptance of an allocation order.
(a) Except as otherwise specified in this section (see paragraph
(c) of this section), a person shall accept and comply with every
allocation order received.
(b) A person shall not discriminate against an allocation order in
any manner such as by charging higher prices for materials, services,
or facilities covered by the order or by imposing terms and conditions
for contracts and orders involving allocated materials, services, or
facilities that differ from the person's terms and conditions for
contracts and orders for the materials, services, or facilities prior
to receiving the allocation order.
(c) If a person is unable to comply fully with the required
action(s) specified in an allocation order, the person must notify the
ASPR, as specified in Sec. 101.93, immediately, explain the extent to
which compliance is possible, and give the reasons why full compliance
is not possible. If notification is given verbally, then written or
electronic confirmation must be provided within one (1) working day.
Such notification does not release the person from complying with the
order to the fullest extent possible, until the person is notified by
HHS that the order has been changed or cancelled.
Sec. 101.56 Changes or cancellations of an allocation order.
An allocation order may be changed or canceled by an official
action of HHS. Notice of such changes or cancellations may be provided
directly to persons to whom the order being cancelled or modified
applies or constructive notice may be provided by publication in the
Federal Register.
Subpart F--Official Actions
Sec. 101.60 General provisions.
(a) HHS may take specific official actions to implement the
provisions of this part.
(b) These official actions include, but are not limited to, Rating
Authorizations, Directives, and Letters of Understanding (See Sec.
101.20.)
Sec. 101.61 Rating Authorizations.
(a) A Rating Authorization is an official action granting specific
priority rating authority that:
(1) Permits a person to place a priority rating on an order for an
item or service not normally ratable under this part; or
(2) Authorizes a person to modify a priority rating on a specific
order or series of contracts or orders.
(b) To request priority rating authority, see Sec. 101.41.
Sec. 101.62 Directives.
(a) A Directive is an official action that requires a person to
take or refrain from taking certain actions in accordance with its
provisions.
(b) A person must comply with each Directive issued. However, a
person may not use or extend a Directive to obtain any items from a
supplier, unless expressly authorized to do so in the Directive.
(c) A Directive takes precedence over all DX rated orders, DO rated
orders, and unrated orders previously or subsequently received, unless
a contrary instruction appears in the Directive.
Sec. 101.63 Letters of Understanding.
(a) A Letter of Understanding is an official action that may be
issued in resolving special priorities assistance cases to reflect an
agreement reached by all parties including HHS, the Department of
Commerce (if applicable), a Delegate Agency (if applicable), the
supplier, and the customer.
(b) A Letter of Understanding is not used to alter scheduling
between rated orders, to authorize the use of priority ratings, to
impose restrictions under this part. Rather, Letters of Understanding
are used to confirm production or shipping schedules that do not
require modifications to other rated orders.
Subpart G--Compliance
Sec. 101.70 General provisions.
(a) HHS may take specific official actions for any reason necessary
or appropriate to the enforcement or the administration of the Defense
Production Act and other applicable statutes, this part, or an official
action. Such actions include Administrative Subpoenas, Demands for
Information, and Inspection Authorizations.
(b) Any person who places or receives a rated order or an
allocation order must comply with the provisions of this part.
(c) Willful violation of the provisions of title I or section 705
of the DPA and other applicable statutes, this part, or an official
action of HHS is a criminal act, punishable as provided in the DPA and
other applicable statutes, and as set forth in Sec. 101.74.
Sec. 101.71 Audits and investigations.
(a) Audits and investigations are official examinations of books,
records, documents, other writings, and information to ensure that the
provisions of the DPA and other applicable statutes, this part, and
official actions have been properly followed. An audit or investigation
may also include interviews and a systems evaluation to detect problems
or failures in the implementation of this part.
[[Page 55627]]
(b) When undertaking an audit or investigation, HHS shall:
(1) Define the scope and purpose in the official action given to
the person under investigation; and
(2) Have ascertained that the information sought, or other adequate
and authoritative data are not available from any Federal or other
responsible agency.
(c) In administering this part, HHS may issue the following
documents that constitute official actions:
(1) Administrative Subpoenas. An Administrative Subpoena requires a
person to appear as a witness before an official designated by HHS to
testify under oath on matters of which that person has knowledge
relating to the enforcement or the administration of the DPA and other
applicable statutes, this part, or official actions. An Administrative
Subpoena may also require the production of books, papers, records,
documents and physical objects or property.
(2) Demands for Information. A Demand for Information requires a
person to furnish to a duly authorized representative of HHS any
information necessary or appropriate to the enforcement or the
administration of the DPA and other applicable statutes, this part, or
official actions.
(3) Inspection Authorizations. An Inspection Authorization requires
a person to permit a duly authorized representative of HHS to interview
the person's employees or agents, to inspect books, records, documents,
other writings, and information, including electronically-stored
information, in the person's possession or control at the place where
that person usually keeps them or otherwise, and to inspect a person's
property when such interviews and inspections are necessary or
appropriate to the enforcement or the administration of the DPA and
related statutes, this part, or official actions.
(d) The production of books, records, documents, other writings,
and information will not be required at any place other than where they
are usually kept, if, prior to the return date specified in the
Administrative Subpoena or Demand for Information, a duly authorized
official of HHS is furnished with copies of such material that are
certified under oath to be true copies. As an alternative, a duly
authorized representative of HHS may enter into a stipulation with a
person as to the content of the material.
(e) An Administrative Subpoena, Demand for Information, or
Inspection Authorization shall include the name, title, or official
position of the person to be served, the evidence sought to be adduced,
and its general relevance to the scope and purpose of the audit,
investigation, or other inquiry. If employees or agents are to be
interviewed; if books, records, documents, other writings, or
information are to be produced; or if property is to be inspected; the
Administrative Subpoena, Demand for Information, or Inspection
Authorization will describe them with particularity.
(f) Service of documents shall be made in the following manner:
(1) Service of a Demand for Information or Inspection Authorization
shall be made personally, or by Certified Mail-Return Receipt Requested
at the person's last known address. Service of an Administrative
Subpoena shall be made personally. Personal service may also be made by
leaving a copy of the document with someone at least 18 years old at
the person's last known dwelling or place of business.
(2) Service upon other than an individual may be made by serving a
partner, corporate officer, or a managing or general agent authorized
by appointment or by law to accept service of process. If an agent is
served, a copy of the document shall be mailed to the person named in
the document.
(3) Any individual 18 years of age or over may serve an
Administrative Subpoena, Demand for Information, or Inspection
Authorization. When personal service is made, the individual making the
service shall prepare an affidavit as to the manner in which service
was made and the identity of the person served, and return the
affidavit, and in the case of subpoenas, the original document, to the
issuing officer. In case of failure to make service, the reasons for
the failure shall be stated on the original document.
Sec. 101.72 Compulsory process.
(a) If a person refuses to permit a duly authorized representative
of HHS to have access to any premises or to the source of information
necessary to the administration or the enforcement of the DPA and other
applicable statutes, this part, or official actions, HHS, through its
authorized representative may seek compulsory process. Compulsory
process means the institution of appropriate legal action, including ex
parte application for an inspection warrant or its equivalent, in any
forum of appropriate jurisdiction.
(b) Compulsory process may be sought in advance of an audit,
investigation, or other inquiry, if, in the judgment of the Secretary
there is reason to believe that a person will refuse to permit an
audit, investigation, or other inquiry, or that other circumstances
exist which make such process desirable or necessary.
Sec. 101.73 Notification of failure to comply.
(a) At the conclusion of an audit, investigation, or other inquiry,
or at any other time, HHS may inform the person in writing of HHS's
position regarding that person's non-compliance with the requirements
of the DPA and other applicable statutes, this part, or an official
action.
(b) In cases where HHS determines that failure to comply with the
provisions of the DPA and other applicable statutes, this part, or an
official action was inadvertent, the person may be informed in writing
of the particulars involved and the corrective action to be taken.
Failure to take corrective action may then be construed as a willful
violation of the DPA and other applicable statutes, this part, or an
official action.
Sec. 101.74 Violations, penalties, and remedies.
(a) Willful violation of the provisions of the DPA, and related
statutes (when applicable), this part, or an official action, is a
crime and upon conviction, a person may be punished by fine or
imprisonment, or both. The maximum penalties provided by the DPA are a
$10,000 fine, or one year in prison, or both.
(b) The Government may also seek an injunction from a court of
appropriate jurisdiction to prohibit the continuance of any violation
of, or to enforce compliance with, the DPA, this part, or an official
action.
(c) In order to secure the effective enforcement of the DPA and
other applicable statutes, this part, and official actions, the
following are prohibited:
(1) No person may solicit, influence, or permit another person to
perform any act prohibited by, or to omit any act required by, the DPA
and other applicable statutes, this part, or an official action.
(2) No person may conspire or act in concert with any other person
to perform any act prohibited by, or to omit any act required by, the
DPA and other applicable statutes, this part, or an official action.
(3) No person shall deliver any item if the person knows or has
reason to believe that the item will be accepted, redelivered, held, or
used in violation of the DPA and other applicable statutes, this part,
or an official action. In such instances, the person must immediately
notify HHS that, in accordance with this provision, delivery has not
been made.
[[Page 55628]]
Sec. 101.75 Compliance conflicts.
If compliance with any provision of the DPA and other applicable
statutes, this part, or an official action would prevent a person from
filling a rated order or from complying with another provision of the
DPA and other applicable statutes, this part, or an official action,
the person must immediately notify HHS, as specified in Sec. 101.93,
for resolution of the conflict.
Subpart H--Adjustments, Exceptions, and Appeals
Sec. 101.80 Adjustments or exceptions.
(a) A person may submit a request to HHS for an adjustment or
exception on the ground that:
(1) A provision of this part or an official action results in an
undue or exceptional hardship on that person not suffered generally by
others in similar situations and circumstances; or
(2) The consequences of following a provision of this part or an
official action are contrary to the intent of the DPA and other
applicable statutes, or this part.
(b) Each request for adjustment or exception must be in writing and
contain a complete statement of all the facts and circumstances related
to the provision of this part or official action from which adjustment
is sought and a full and precise statement of the reasons why relief
should be provided.
(c) The submission of a request for adjustment or exception shall
not relieve any person from the obligation of complying with the
provision of this part or official action in question while the request
is being considered unless such interim relief is granted in writing by
the Secretary or the Secretary's designated representative.
(d) A decision of the Secretary or the Secretary's designated
representative under this section may be appealed to the Secretary.
(For information on the appeal procedure, see Sec. 101.81.)
Sec. 101.81 Appeals.
(a) Any person whose request for adjustment or exception was denied
by the Secretary or the Secretary's designated representative under
Sec. 101.80, may appeal to the Secretary who, through the Secretary's
designated representative, shall review and reconsider the denial.
(b)(1) Except as provided in paragraph (b)(2) of this section, an
appeal must be received by the Secretary no later than 45 days after
receipt of a written notice of denial. After this 45-day period, an
appeal may be accepted at the discretion of the Secretary.
(2) For requests for adjustment or exception involving rated orders
placed for the purpose of emergency preparedness (see Sec. 101.33(e)),
an appeal must be received by the Secretary, no later than 15 days
after receipt of a written notice of denial. Contract performance under
the order shall not be stayed pending resolution of the appeal.
(c) Each appeal must be in writing and contain a complete statement
of all the facts and circumstances related to the action appealed from
and a full and precise statement of the reasons the decision should be
modified or reversed.
(d) In addition to the written materials submitted in support of an
appeal, an appellant may request, in writing, an opportunity for an
informal hearing. This request may be granted or denied at the
discretion of the Secretary or the Secretary's designated
representative.
(e) When a hearing is granted, the Secretary may designate an HHS
employee to act as the Secretary's representative and hearing officer
to conduct the hearing and to prepare a report. The hearing officer
shall determine all procedural questions and impose such time or other
limitations deemed reasonable. In the event that the hearing officer
decides that a printed transcript is necessary, all expenses shall be
borne by the appellant.
(f) When determining an appeal, the Secretary may consider all
information submitted during the appeal as well as any recommendations,
reports, or other relevant information and documents available to HHS
or consult with any other persons or groups.
(g) The submission of an appeal under this section shall not
relieve any person from the obligation of complying with the provision
of this part or official action in question while the appeal is being
considered unless such relief is granted in writing by the Secretary.
Subpart I--Miscellaneous Provisions
Sec. 101.90 Protection against claims.
A person shall not be held liable for damages or penalties for any
act or failure to act resulting directly or indirectly from compliance
with any provision of this part, or an official action, notwithstanding
that such provision or action shall subsequently be declared invalid by
judicial or other competent authority.
Sec. 101.91 Records and reports.
(a) Persons are required to make and preserve for at least three
years, accurate and complete records of any transaction covered by this
part or an official action.
(b) Records must be maintained in sufficient detail to permit the
determination, upon examination, of whether each transaction complies
with the provisions of this part or any official action. However, this
part does not specify any method or system to be used.
(c) Records required to be maintained by this part must be made
available for examination on demand by duly authorized representatives
of HHS as provided in Sec. 101.71.
(d) In addition, persons must develop, maintain, and submit any
other records and reports to HHS that may be required for the
administration of the DPA and other applicable statutes, and this part.
(e) DPA section 705(d), as implemented by E.O. 13603, provides that
information obtained under this section which the Secretary deems
confidential, or with reference to which a request for confidential
treatment is made by the person furnishing such information, shall not
be published or disclosed unless the Secretary determines that the
withholding of this information is contrary to the interest of the
national defense. Information required to be submitted to HHS in
connection with the enforcement or administration of the DPA, this
part, or an official action, is deemed to be confidential under DPA
section 705(d) and shall be handled in accordance with applicable
Federal law.
Sec. 101.92 Applicability of this part and official actions.
(a) This part and all official actions, unless specifically stated
otherwise, apply to transactions in any state, territory, or possession
of the United States and the District of Columbia.
(b) This part and all official actions apply not only to deliveries
to other persons but also include deliveries to affiliates and
subsidiaries of a person and deliveries from one branch, division, or
section of a single entity to another branch, division, or section
under common ownership or control.
(c) This part shall not be construed to affect any administrative
actions taken by HHS, or any outstanding contracts or orders placed
pursuant to any of the regulations, orders, schedules, or delegations
of authority previously issued by HHS pursuant to authority granted to
HHS, by the President under the DPA and E.O. 13603. Such actions,
contracts, or orders shall continue in full force and effect under this
part unless modified or terminated by proper authority.
Sec. 101.93 Communications.
All communications concerning this part, including requests for
copies of the part and explanatory information,
[[Page 55629]]
requests for guidance or clarification, and requests for adjustment or
exception shall be addressed to the Administration for Strategic
Preparedness and Response, U.S. Department of Health and Human
Services, Washington, DC 20201. Ref: HRPAS, or email <a href="/cdn-cgi/l/email-protection#7c1d0f0c0e52180c1d3c14140f521b130a"><span class="__cf_email__" data-cfemail="45243635376b213524052d2d366b222a33">[email protected]</span></a>.
Dated: July 24, 2023.
Xavier Becerra,
Secretary, U.S. Department of Health, and Human Services.
[FR Doc. 2023-15952 Filed 8-15-23; 8:45 am]
BILLING CODE 4150-37-P
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