Supply chain jolts linked to coronavirus hit federal IT

One of the federal government's leading IT acquisition contracts is warning its agency customers that there might be some bumps ahead for their orders because of supply chains disrupted by the emerging outbreak of COVID-19.

The online portal of NASA's Services for Enterprise-Wide Procurement governmentwide acquisition contract posted a Feb. 25 warning at the top of its webpage about the shuttering of key IT component producers in areas of China hard-hit by COVID-19, the disease caused by an emergent strain of coronavirus.

"Delivery of orders may be impacted due to the spread of COVID-19 resulting in the shutdown of factories in affected areas," it read. The note also told customers to email or call with questions.

SEWP is hardly alone in its concern. In the last few days, big IT vendors and producers have been expressing unease about the impact of COVID-19 on supply chains, including Best Buy, Dell and Microsoft.

SEWP manager Joanne Woytek said that the COVID-19 outbreak counts as an "unexpected act of nature" under SEWP terms, which means that later than quoted deliveries are permissible without being counted as a performance issue.

"Federal IT managers should monitor the news and be aware that, even if a purchase is from a U.S. factory, there are many components in all IT products and some of those components are likely only available from Asia," Woytek said in an email.

"It stands to reason," procurement expert Larry Allen told FCW, the shuttering of tech factories in the hard hit area in China "will impact the ability to get components," he said. "Obviously, the longer the outbreak, the bigger the issue" for both federal and commercial consumers of IT hardware and systems.

In the near term, according to Allen, some federal contractors may have to exercise rights in some contracts that allow them increase pricing for some items or system in response to tightening competition and pricing for ever-smaller pools of components. The exact timing and duration of those actions, however, are extremely difficult to determine, he said. "It could be a couple of months before things turn around."

COVID-19's progression across the globe could have the effect of demonstrating to contractors and federal customers the links in the global supply chain that are most vulnerable to stress, according to David Berteau, president and CEO of the Professional Services Council.

"One of the real lessons" of the outbreak for federal agencies and contractors "is that we need to know more about all supply chains," Berteau told FCW.

Berteau said PSC is currently polling members to see how they plan to deal with operational and supply chain uncertainties arising from the COVID-19 outbreak. Those responses will help determine the path ahead, Berteau said, likening the situation to the monthlong government shutdown, when contractors and federal customers had to feel their way through some issues as back pay and work site access,

Berteau added that contractors and federal agencies should be asking themselves what they can do to protect their people; and how their contractors and subcontractors are preparing and responding.