Priority-rated contracts and orders ("rated orders") can be used to ensure on-time delivery of materials and services from U.S. businesses to support: (1) State, local, tribal, and territorial (SLTT) government emergency preparedness, response, and recovery activities; and (2) protection or restoration of private sector critical infrastructure operations. A contract or order containing a priority rating requires the contractor to provide preferential treatment, when needed to fulfill the delivery requirements specified in the rated order.
Requesting Priority-Rating Authority
Priority-rating authority can be requested by SLTT governments to support emergency preparedness, response, and recovery activities and by owners or operators of critical infrastructure to support protection or restoration of critical infrastructure operations. In general, a request should be submitted through (and endorsed by) a federal agency with responsibilities for emergency preparedness or critical infrastructure security and resilience. For example, a SLTT government request could be submitted through the FEMA Federal Coordinating Officer at a Joint Field Office during a Presidentially-declared disaster. Or, a request involving protection or restoration of energy production or distribution facilities could be submitted through an official in the Department of Energy.
For assistance in requesting priority-rating authority contact the FEMA Defense Production Act (DPA) Division at: (202) 212-3441 or firstname.lastname@example.org.
Authorizing Use of Rated Orders
The priorities authority may only be used to support programs that are determined to be "necessary or appropriate to promote the national defense," which is defined in the Defense Production Act to include emergency preparedness, response, and recovery activities and critical infrastructure protection and restoration. FEMA is responsible for making this determination with respect to requests made by SLTT governments and private sector owners or operators of critical infrastructure (except requests involving energy production or distribution).
If FEMA makes a positive determination about a request, FEMA may authorize use of rated orders by the requesting SLTT government or DOC may authorize use of rated orders by the requesting owner/operator of critical infrastructure. In either case, written authorization is provided to the requestor, specifying how and for how long the requestor may use rated orders.
Use of Rated Orders
Anyone authorized to use rated orders is responsible for ensuring that such orders are placed in accordance with the authorizing documentation and the Defense Priorities and Allocations System (DPAS) regulation. Ordinarily, the authorizing documentation will specify limitations on the priority-rating authority (e.g., the types and quantities of materials and services that may be procured using rated orders and the time when the priority-rating authority will terminate). General standards and procedures that apply for use of rated orders are provided in the DPAS regulation.
Limitations on Rated Orders
There are general limitations on the use of DPAS rated orders:
- Jurisdictional limitations – DPAS rated orders may only be used for industrial resources. DPAS rated orders may not be used for procurement of food resources, energy, health resources, or civil transportation. Questions regarding whether resources to be procured fall within an organization’s priority-rating authority can be referred to the FEMA DPA Division at 202-212-2900 or email@example.com.
- Other limitations – DPAS rated orders may not be used to obtain:
- Delivery on a date earlier than needed;
- A greater quantity of the item than needed, except to obtain a minimum procurable quantity;
- Items in advance of the receipt of a rated order, except as specifically authorized by DOC or FEMA;
- Any of the following items, unless specific priority-rating authority has been obtained from DOC or FEMA:
- Items for plant improvement, expansion or construction, unless they will be physically incorporated into a construction project covered by a rated order; or
- Production or construction equipment or items to be used for the manufacture of production equipment;
- Items to be used primarily for administrative purposes, such as for personnel or financial management; or
- Any of the following items, unless authorized, specifically, by DOC: copper raw materials, crushed stone, gravel, sand, scrap, slag, steam heat (central), or waste paper.
Elements of a Rated Order
A contracting officer must include the following four elements in a contract or order to make it a rated order:
- A priority rating (generally, “DO-N2” for SLTT government rated orders or “DO-N7” for critical infrastructure rated orders);
- Specific delivery quantities and dates;
- A statement that the contract or order is a rated order certified for national defense use and that the recipient of the rated order is required to follow the provisions of the DPAS regulation; and
- The contracting officer’s signature, certifying that the rated order is authorized under the DPAS regulation.
Acceptance of a Rated Order
A business must accept a rated order, when: (a) the ordered material or service is normally sold by that business; and (b) the business can meet the specified delivery requirements. A business may not discriminate against a rated order in any manner, such as by charging higher prices or by imposing different terms and conditions than for comparable unrated orders.
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 an order specifying that date (or a later date).
If a business fails to accept a rated order without cause (as provided in the DPAS regulation for mandatory or optional rejection of the rated order), the authorized organization may request special priorities assistance (SPA) to remedy the situation and may seek assistance from the authorizing federal agency (i.e., either FEMA or DOC) in preparing a SPA request.
Performance of a Rated Order
The DPAS regulation requires several actions by a business to ensure that rated orders are fulfilled on time. These include:
- Preferential scheduling. A business must schedule operations, including the acquisition of all needed production items, 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 be met, otherwise. The DPAS regulation provides guidance on how a business must deal with conflicts among competing rated orders.
- Extension of priority ratings to suppliers. A business must use rated orders with suppliers to obtain items needed to fill a rated order. This requirement extends to all businesses in the supply chain for the rated order. However, the use of rated orders with suppliers is subject to the same limitations as apply to the prime contract. For example, a DPAS priority rating may only be extended for items that fall within the jurisdiction of the DPAS regulation.
- Use of rated orders. A contractor must use rated orders to obtain:
- Items that will be physically incorporated into other items to fulfill a rated order;
- Containers or other packaging materials required to make delivery of the finished items against a rated order;
- Services, other than contracts of employment, needed to fulfill a rated order; and
- Maintenance, repair, and operating supplies needed to fulfill a rated order.
- Additional information. See the DPAS regulation for additional information regarding requirements for contractors to ensure on-time performance to fulfill rated orders.
Special Priorities Assistance
The DPAS regulation provides for special priorities assistance (SPA) to address issues in procuring materials and services needed to support an authorized program.
Anyone involved in use of a rated order to support activities specified in the authorizing documentation may request SPA to resolve an issue connected with the rated order. This includes:
- SLTT governments, in connection with the use of rated orders to support their emergency preparedness, response, and recovery activities;
- Owners and operators of critical infrastructure, in connection with the use of rated orders to support protection or restoration of operations; and
- Businesses that have received rated orders.
Issues Eligible for SPA
SPA may be requested for a wide variety of purposes. Before a rated order is placed, SPA may be requested, for example:
- To obtain priorities authority for resources not covered under an existing authorization; or
- For assistance in identifying potential suppliers for needed materials and services.
After a rated order is placed, SPA may be requested, for example:
- To resolve conflicts between competing orders;
- To resolve other production or delivery issues 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; or
- 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.
Issues Not Eligible for SPA
SPA is provided at the discretion of FEMA or DOC, when it is determined that such assistance is warranted. Examples where assistance is not appropriate include assisting a business in:
- Securing a price advantage;
- Obtaining delivery prior to the time required to fulfill a rated order;
- Gaining a competitive advantage;
- Disrupting an industry apportionment program in a manner designed to provide a person with an unwarranted share of scarce items; or
- Overcoming a supplier’s established terms of sale or conditions of doing business.
Process for Requesting SPA
Prior to making a SPA request, a reasonable effort should be made to resolve the issue to be addressed in the request. If needed, the assistance of a FEMA FPAS Officer can be sought to resolve the issue.
If a supply issue cannot be resolved, actions taken to resolve the issue are documented in a SPA request form. Assistance of a FEMA FPAS Officer can be sought in preparing the SPA request. All requests for SPA must be fully documented to demonstrate a need for the requested assistance. The request should:
- Provide evidence that there is an urgent need for the resource(s) addressed in the request to meet program requirements;
- State the consequences of failure to obtain timely delivery of the resource(s);
- Demonstrate that the required resource(s) cannot be replaced by other resource(s) that could serve the same purpose;
- Demonstrate that the contractor cannot sustain the necessary production without timely delivery of the needed resource(s);
- Document all issues for which SPA is being requested; and
- Confirm, when applicable, that provisions for mandatory or optional rejection of a rated order, as set forth in the DPAS regulation, do not apply and that assistance is not prohibited.
- Agriculture Priorities and Allocations System (APAS), involving food resources – Form AD-2102;
- Energy Priorities and Allocations System (EPAS), involving energy – Form DOE F 544 (05-11);
- Health Resources Priorities and Allocations System (HRPAS), involving health resources – no form; contact a DHS Component FPAS Officer for assistance; and
- Transportation Priorities and Allocations System (TPAS), involving civil transportation – Form OST F 1254.
Information Documented in a SPA Request Form
A SPA request form is generally prepared by the person with the most information on the issue, with support from a FPAS Officer. The applicant provides contact information, a description of the supply issue, and the need for assistance to resolve the issue. The form also contains information about the Government sponsor of the request, the impact of the supply issue on the sponsor’s program, and Government attempts to resolve the issue addressed by the request. All information provided in the request form should be unclassified. If classified information must be included, such material must be transmitted and handled according to appropriate security procedures.
The form may also be used to request new or additional priorities authority for the applicant.
Submitting a SPA Request
The completed SPA request form is submitted through a FEMA FPAS Officer to the FEMA DPA Division at 202-212-2900 or firstname.lastname@example.org.