The Federal Priorities and Allocations System (FPAS) is a body of five regulations that establishes standards and procedures for implementing the President's priorities authority under Section 101(a) of the Defense Production Act (DPA). These regulations incorporate similar standards and procedures but are issued and administered, separately, by five federal departments with respect to resources within each department’s resource jurisdiction as specified in Section 201(a) of E.O. 13603.
What is the purpose of priority-rated contracts and orders (“rated orders”)?
Rated orders support on-time delivery of critical items and services to meet program requirements. When a rated order is placed with a business, the business must:
- Accept the rated order, if the ordered material or service is normally sold by that business,
- Provide preferential delivery or performance against the rated order, but only if necessary to meet the delivery or performance date(s) specified in the order, and
- Place rated orders with subcontractors and suppliers to ensure on-time delivery of the materials and services needed to support the rated order.
Subcontractors and suppliers, in turn, must place rated orders with their vendors and suppliers, and so on throughout the entire supply chain to ensure on-time delivery of materials and services needed to support the original rated order.
What is a rated order?
A contract or order must include four elements to qualify as a rated order:
- A priority rating;
- Specific delivery quantities and dates;
- A statement that identifies the governing FPAS regulation; and
- The signature of a Contracting Officer, certifying the rated order.
A priority rating consists of a rating – either “DO” or “DX” – and a program identification symbol (PIS), such as “N3.” PISs indicate which DHS Approved Program is supported by a rated order. For example, “N3” indicates that the rated order supports a program involving border and transportation security. A program identification symbol does not indicate any priority level. DO rated orders carry equal priority, regardless of their PISs.
Rated orders take precedence over all unrated orders, when necessary to meet delivery dates specified in the rated orders. Between priority ratings, DX rated orders take precedence over DO rated orders. Most rated orders carry the DO priority rating. DX ratings require senior-level approval (e.g. DHS Secretary)
When should a rated order be used?
Rated orders are used to ensure on-time performance of contracts and orders. A priority rating in a contract or order should be viewed as a form of insurance that comes into play when preferential treatment by a contractor is required to meet contracted delivery dates. Like insurance, it can be used to mitigate potential risks to contract performance. Rated orders should be used whenever a delay in contractor performance could undermine the effectiveness of a DHS Approved Program. Use of rated orders should not be limited to solving known supply problems or for compelling acceptance of a contract by a reluctant supplier.
Use of the priorities authority does not require a prior declaration of disaster or emergency by the President.
What is the DHS authority to place rated orders?
DHS is authorized to place rated orders for most materials, services, and facilities by Defense Priorities and Allocations System (DPAS) Delegation 4 from the Department of Commerce and for food resources by Agriculture Priorities and Allocations System (APAS) Delegation 2 from the Department of Agriculture (USDA). DPAS and APAS are two components of FPAS.
DHS is not, currently, authorized to place rated orders for the following resources: energy; health resources; or civil transportation. These other resources fall within the priorities jurisdiction of other FPAS regulations, administered by the Departments of Energy, Health and Human Services, and Transportation, respectively. A request for special priorities assistance can be made to obtain priority-rating authority for these other resources.
What DHS programs are eligible to be supported using rated orders?
Section 202 of E.O. 13603 provides that the priorities authority “may be used only to support programs that have been determined in writing as necessary or appropriate to promote the national defense.” Homeland security programs for which this determination has been made are referred to as “DHS Approved Programs.” In general, DHS Approved Programs include: programs to counter terrorism within the United States; emergency preparedness, response, and recovery activities conducted pursuant to title VI of the Stafford Act; measures to protect or restore critical infrastructure; and continuity of Government.
Who is responsible for placing rated orders?
Responsibility for and oversight of priorities authority within DHS is delegated by the Secretary to the FEMA Administrator. The Administrator has re-delegated, within FEMA and to the heads of seven other DHS Components, the authority to place rated orders for “industrial resources” under the jurisdiction of the Defense Priorities and Allocations System. This delegation also authorizes re-delegation to subordinates. Anyone who has been delegated authority to place rated orders is referred to as an “Authorized Component Official” or “ACO."
- An ACO:
- Determines if a program qualifies as a DHS Approved Program, eligible to be supported using rated orders;
- Determines if a material or service to be procured is eligible to be procured using a rated order; and
- Directs the Contracting Officer (CO) for the program to include a priority rating, with an appropriate PIS, in an eligible contract or order.
- The CO for the program:
- Includes the required priority-rating elements in the contract or order;
- Serves as the primary point of contact with the contractor regarding issues involving the rated order; and
- Provides information to the ACO, program officials (including the Contracting Officer’s Representative), and the Component FPAS Officer regarding such issues.
- FPAS Officers are responsible for supporting ACOs and COs in carrying out their responsibilities involving rated orders. Questions and issues regarding use of DPA priorities authority should be directed to FPAS Officers.
What are a contractor’s responsibilities for dealing with a rated order?
A business must accept a rated order, when the ordered material or service is normally sold by the business and the business is capable of meeting the specified delivery requirements. A business must reject a rated order if unable to fulfill the delivery requirements, even with priority treatment. However, the business 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.
The contractor must provide priority treatment for the order, when necessary to meet the delivery or performance date(s) specified in the order. The contractor is required to reschedule unrated orders, if fulfilling the unrated orders would prevent on-time performance of a rated order.
The contractor must place rated orders with subcontractors and suppliers to ensure timely delivery of the materials and services needed to support the rated order.
Contractors may 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.
How are problems with rated orders handled?
FPAS regulations provide special priorities assistance (SPA) procedures to deal with problems in procuring materials and services needed to support DHS Approved Programs. SPA can be requested for a wide variety of purposes, such as:
- To obtain priorities authority for resources not covered under existing delegations of FPAS authority
- To obtain priorities authority for organizations not covered under existing delegations of FPAS authority
- For assistance in identifying potential suppliers for needed materials and services.
- To resolve conflicts between/among competing orders
- To resolve other production or delivery problems that could prevent on-time performance of a rated order anywhere in the order’s supply chain
- For assistance in identifying potential supply chain vendors for needed materials and services
- For assistance in obtaining information from a contractor or businesses in the contractor’s supply chain regarding issues that could delay on-time performance of a rated order.
Anyone involved in use or proposed use of the priorities authority may request SPA. A request for SPA can originate from a program official, a Contracting Officer, a FPAS Officer, or a contractor, subcontractor, or lower-tier supplier.
When a SPA request cannot be resolved at the component level, it is signed by the FPAS Officer and submitted, along with any supporting information and documentation, to the DHS Lead FPAS Officer. The request continues to pass up the line to the DHS FPAS Coordinator and, eventually, to the appropriate Resource Department, until it can be resolved.