The CARES Act: Ensuring Due-Diligence during the COVID Crisis

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Back in March, as the country began to feel the financial impact of COVID-19, Congress approved the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a bill that allotted $2.6 trillion to help provide direct financial relief to those impacted by the pandemic. Over $150 billion of this relief was allocated for direct assistance for state, territorial and tribal governments. 

Spending

The federal government released spending guidelines which clearly articulate the spirit of the funding. The relief is intended to cover costs that are directly related to the public health emergency, for example investments in testing supplies or personal protective equipment, or for secondary impacts, such as direct economic support for those who have lost jobs or business due to the pandemic.

States are spending this money in a number of different areas, including health, small business support, education, technology & broadband, and workforce development. New York, for example, has allotted $100 million for rental assistance programs to help keep low income families in their homes. Alabama has chosen to spend $100 million on education remote learning devices to equip students with the technology they need for distanced learning. First responders in Michigan will be receiving additional hazard pay from a pool of $100 million for the work they are doing. Many states, such as Kansas, Iowa, and Maryland, have set aside CARES Act funding for small businesses. 

Procurement

In addition to defining what the funding can be spent on, the guidelines also stipulate the deadline by which funds need to be spent—by or before the end of 2020. In an effort to spend down the funds ahead of that deadline, some states are choosing to award sole source contracts rather than follow the regular procurement process. We’ve heard of several instances of states taking this path in our space, which is concerning. When multiple options are not considered and proper due-diligence not conducted, there may be a tendency to overpay and possibly miss out on better solutions, which goes against the public’s best interest and value for the state. 

In our space, there are several vendors that offer a Closed-Loop Referral System as one of their products, many of which are used to address Social Determinants of Health (SDoH). The University of California, San Francisco’s Social Interventions Research and Evaluation Network (SIREN), in conjunction with the Episcopal Health Foundation in Houston, TX, understood this challenge and developed a guide that reviewed nine of the commonly used platforms across the space, with our product being one of them. Similarly KLAS Research, a healthcare IT data and insights company providing the industry with impartial research on the software and services used by providers and payers worldwide, reviewed Aunt Bertha conducting stakeholder and end-user interviews, yielding an A rating for customer experience in relation to price, platform, and customer service. 

While we empathize with the urgency for response to assist citizens, we also believe that good stewardship of limited and precious CARES Act funding is paramount for ensuring aid gets directed to those most in need.

Rather than relying on a no-bid sole source process or the regular lengthier procurement cycle, there is a middle ground that could be used—a streamlined approach that allows for evaluation of multiple solutions in a shorter period of time. For example, taking from the private sector, could a state identify specifications by issuing a one-page requirement document, seek responses by asking potential vendors to complete a checklist, set up virtual demonstrations within days, and make a final decision shortly thereafter? By following this process, both the state and the public are doing due diligence and ensuring they are getting the best value.

Oversight

We know the federal government is particularly concerned about this issue as well, as evidenced by creation of a special committee to monitor CARES Act spending. Because the Act involves a huge amount of money that’s expected to be spent in a short amount of time (by the end of 2020), the Act included standing up the Pandemic Response Accountability Committee (PRAC) to promote transparency and provide oversight of the funds. The Acting PRAC Chair, Michael E. Horowitz, IG at the Department of Justice states on their website, “The PRAC, working closely with all Federal Inspectors General, seeks to ensure that funds intended to support individuals, workers, healthcare professionals, businesses, and others affected by the pandemic are used efficiently, effectively, and in accordance with the law.” 

Even in a time of great uncertainty and considerable stress, State Leaders are still obligated to take time to ensure that agencies are using resources that deliver services in the most efficient and effective manner possible. While COVID has, in many ways, turned our lives upside down, we believe (as citizens) leadership still must maintain its commitment to maximizing the taxpayer funds that departments receive. 

In closing, this doesn’t need to be complicated. We believe this is a more open and fair process that benefits both the government and its constituents.