A Washington Post report published last week found that $1 billion in CARES Act funding intended for DOD public health use was, instead, diverted to weapons systems, uniforms, and engine parts.  The report is likely to be just one catalyst to the creation of oversight hearings and audits of how special money intended to combat COVID 19 was instead spent on other agency priorities.  Contractors are very likely to become part of the circus and should be prepared to show that they followed applicable laws and customer directives.  Congress has already started voicing its displeasure with the redirection, with the House Armed Services Committee stating, “The Committee’s expectation was that the Department would address the need for PPE industrial capacity rather than execute funding for the (defense industrial base)”.  

Despite DOD assurances that the money was appropriately re-focused, any future money intended to be spent in specific areas may come with additional strings attached to ensure that it goes to where Congress intends.  The impact won’t be limited to DOD spending, either.  Any agency that received emergency funding will be subject to increased scrutiny, as will the contractors that received such money.  

A new round of rules and regulations designed to end the diversion of funds could make the acquisition process more difficult for government and industry.  The Post report is the tip of the proverbial iceberg. A commission of federal Inspector’s General also commented last week on how even a “job well done” could have fraud, waste, and abuse attached.  Expect the issue of misuse of COVID 19 funds to be an area of major Congressional oversight in 2021 and be prepared.