Legislative update

federal legislative update

May 26, 2020

Overview

With 38.6 million filing for unemployment since March—a record unemployment rate of 14.7% in April that is the highest since the tail end of the Great Depression— and coronavirus impact in the U.S. reaching 1,709,243 cases, 99,883 deaths and 465,668 recovered, the economy, health status and ability to re-open remain front and center for government. The House is expected to return to Washington on Tuesday, May 26 and will hold floor votes on May 27 to focus on COVID-19 and recovery legislation, including changes to the Paycheck Protection Program. The Senate was back in DC with a focus on confirming President Trump’s nominations over the past week. Despite House Speaker Nancy Pelosi (D-CA) pushing through the $3 trillion coronavirus package on May 15, Senate Majority Leader Mitch McConnell (R-KY) stated his reluctance to move quickly on taking up the next COVID-19 package. The Senate is in recess during the week of Memorial Day. The House is starting to move on the 12 appropriations bills and the National Defense Authorization Act, with bill drafting happening now and markups expected in June and July.

Budget & Appropriations

A quick review of the legislative response to the Coronavirus includes:

March
  • $8.3B Emergency Supplemental Funding legislation is enacted
  • National Emergency Declared by President Trump
  • $3T Families First Coronavirus Response Act (FFCRA) is enacted
  • $2.3T Coronavirus Aid, Relief and Economic Security Act (CARES Act) is enacted, including $310 billion additional PPP funds
  • SBA’s EIDL Program is opened for submissions
April
  • Paycheck Protection Program islaunched and exhausted within two weeks
  • SBA EIDL submission process is updatedand clarified
  • Payroll Tax Credit is started
  • Paycheck Protection Program and HealthCare Enhancement Act, also called CARES 3.5, is enacted that replenishes PPP,EIDL and SBA Loan Programs
May-July
  • $3T HEROES Act is passed in the Houseonly, Senate is drafting a different bill
  • NDAA and Appropriations bills arebeing drafted
  • Expiring programs such as thetransportation bill called the FAST Act, NIH Reauthorization Act, WorkforceInnovation and Opportunity Act, Childcare Development Block Grant program,Early and Secondary Education Act and others are being drafted
FY21 Appropriations Bills

The COVID-19 pandemic has dramatically delayed the annual appropriations process of hearings and markups. Currently both chambers are working through subcommittees on their marks but it is still uncertain when either chambers’ full committees will take up these bills.  The House Appropriations Committee has indicated that they will not start moving their bills until the Senate acts on the next COVID-19 relief package, the 5th one since March.

Related to moving this legislation is the House’s unprecedented rule change established on May 22 that will allow members to designate a proxy to enable members with health concerns to still be able to vote without having to travel back to Washington. The new rule also allows committees to conduct remote and virtual hearings once they run several trial runs. This means the appropriations bills can be moved through subcommittee in the coming weeks.

Finally, many state budgets start July 1 and are cutting spending significantly due to COVID-19 causing severe revenue shortfalls and increased response spending. As a result, Congress is considering ways to include sending funding to state and local governments. The total state and local government budget shortfalls total $765 billion over a three-year period, according to the Center on Budget and Policy Priorities. Therefore, Senator Bob Menendez (D-NJ) and Senator Bill Cassidy (R-LA) introduced the SMART Act, which would provide $500 billion in state, local and tribal funding this fiscal year.

5th Coronavirus Legislative Package

On May 15, the House passed by 208-199, a $3 trillion COVID-19 relief package called the HEROES Act, which will not be voted on in the Senate as Senate Majority Leader McConnell stated his chamber will draft a less expensive bill and bring it to the floor in late June. The HEROES Act includes the following provisions:

  • Provides $500 billion in direct funding to state governments and $375 billion in direct funding to cities and local governments to assist with the fiscal impacts from the public health emergency caused by the coronavirus. 
  • Provides as much as $1,200 per individual and as many as three dependents under same income limits and phase-out as the CARES Act.
  • Extends the Pandemic Extended Unemployment Compensation (PEUC) and the supplement to state and federal unemployment benefits through January 31, 2021.
  • Extends refundable tax credits for paid sick and family leave through the end of 2021 and increases the limits on those paid leave credits.
  • Expands the plan’s reach to include priorities such as eliminating the tax code’s cap on state and local deductions for individuals, as well as expanded employee-retention tax credits.
  • Increases Federal Medical Assistance Percentage (FMAP) payments to state Medicaid programs by a total of 14 percentage points
  • Allows for $90 billion for an Education Department State Fiscal Stabilization Fund to support elementary and secondary schools, as well as public colleges and universities. The Education Department would cancel or repay as much as $10,000 on economically distressed borrowers’ student loans. It allows institutions receiving funds under the Perkins Career and Technical Education Act to retain funds that weren’t spent due to the outbreak.
  • Provides another $2.1 billion for worker training programs as well as providing $180 billion for grants to local, tribal, nonprofit, and private sector employers to provide “pandemic premium pay” to essential workers.
  • Increases monthly benefits for the Supplemental Nutrition Assistance Program by 15% from June through September.
  • Extends the authorization period for the Paycheck Protection Program from June 30 to December 31 and requires the Small Business Administration to set aside at least 25% of its Paycheck Protection Program funds to guarantee loans issued to eligible recipients with 10 or fewer employees and 25% of its funds to guarantee loans issued to nonprofits, at least half of which set aside for nonprofits with less than 500 employees. It also expands PPP’s eligibility rules to cover media outlets with physical locations that fall within SBA size limits and nonprofit organizations of any type or size, including 501(c)(4) social welfare organizations and 501(c)(6) trade associations. PPP loans could be used and forgiven to purchase PPE for employees and stipulates that CARES Act payments made by the SBA related to loans under the 7(a), 504, microloan, and emergency EIDL programs wouldn’t be designated as taxable income.
  • Provides $75 billion for a COVID-19 National Testing and Contact Tracing initiative and addresses the healthcare supply chain issues by allowing the FDA to destroy imported counterfeit devices, authorizing $100 million for the National Centers of Excellence in Continuous Pharmaceutical Manufacturing and directing the Biomedical Advanced Research and Development Authority (BARDA) to award contracts to enhance the manufacturing capacity of a COVID-19 vaccine.
  • $1 billion for HRSA grants to establish or expand medical schools in underserved areas or that are minority-serving institutions.
  • $175 million over two years for the Health and Human Services Department to establish a Public Health Workforce Loan Repayment Program.
  • Provides $500 million through fiscal 2023 to increase the medical supply chain and maintain domestic reserves of critical medical supplies and shore up the Strategic National Stockpile.
Small Business Provisions

The HEROES Act restricts collections of debts of nonprofit organizations and smalls businesses until 120 days after the end of the coronavirus national emergency declaration. Even then, creditors couldn’t add additional interest or fees on the unpaid debt at the end of the emergency. It also requires the Main Street Lending program to include non-profit organizations as eligible borrowers and be required to offer a low-cost loan option that may be forgiven for non-profits serving low-income communities. It makes some changes for the self-employed tax credit by providing a 90% refundable credit for individuals whose gross self-employment income in 2020 was less than 90% of the amount they received in 2019. The credit would be based on the individual’s income loss, over 10%, from 2019 to 2020, capped at $45,000.

health

Funding

HEROES Act

The $3 trillion HEROES Act that passed the House May 15 includes health provisions, but the Senate will not vote on this bill, but instead is working on a smaller package to enact late June. The health provisions include:

  • Provides $75 billion for a COVID-19 National Testing and Contact Tracing initiative and addresses the healthcare supply chain issues by allowing the FDA to destroy imported counterfeit devices, authorizing $100 million for the National Centers of Excellence in Continuous Pharmaceutical Manufacturing and directing the Biomedical Advanced Research and Development Authority (BARDA) to award contracts to enhance the manufacturing capacity of a COVID-19 vaccine.
  • Provides $500 million through fiscal 2023 to increase the medical supply chain and maintain domestic reserves of critical medical supplies and shore up the Strategic National Stockpile.
  • $1 billion for HRSA grants to establish or expand medical schools in underserved areas or that are minority-serving institutions.
  • $175 million over two years for the Health and Human Services Department to establish a Public Health Workforce Loan Repayment Program.

Vaccines

Operation Warp Speed

Trump named General Gustave Perna, who directs the U.S. Army Materiel Command, as chief operating officer of “Operation Warp Speed,” likening it to the Manhattan Project effort to develop the atomic bomb. Former GlaxoSmithKline executive Moncef Slaoui is the project’s chief scientist. As part of the administration’s Operation Warp Speed, the FDA is speeding clinical trials of 14 vaccines and aiming to whittle down the list further, according to President Trump. The government is simultaneously ramping up production of those vaccines in the hopes that some will be approved. Trump said the administration will pay to produce vaccines while they’re still being tested so they will be ready for broad use if approved, but it’s not clear whether the vaccines will be made at government-funded sites or drug company facilities. Government-funded sites, created by the Obama administration, have been criticized in the past as costly to maintain, but the U.S. would have more control over price if the vaccines were produced at those facilities.

On May 20, HHS announced it will pay AstraZeneca $1.2 billion to research and make at least 300 million COVID-19 investigational vaccine doses, and the first doses could be delivered as early as October, though many say that’s probably an overly optimistic timeline. The vaccine, which Oxford University invented, will be made at a government-run facility built by the Obama administration under BARDA. By making the vaccine at a government-run facility, the U.S. government can keep the vaccine for domestic use amid global demand for limited doses. However, AstraZeneca says the 300 million doses are part of an initial delivery of 400 million doses – 100 million will go to the United Kingdom – and the company has the capacity to make 1 billion doses. AstraZeneca said it is working with the Coalition for Epidemic Preparedness Innovations (CEPI), Gavi the Vaccine Alliance and the World Health Organisation (WHO) are all working toward the fair allocation and distribution of the potential vaccine around the world. BARDA also awarded $483 million to Moderna to develop its vaccine and awarded $456 million to Johnson & Johnson’s subsidiary, Janssen, to develop a vaccine.

Meanwhile, last week, House Energy and Commerce Chairman Frank Pallone (D-NJ), Ranking Republican Greg Walden (R-OR), and Oversight and Investigations Subcommittee Chairwoman Diana DeGette (D-CO) sent a letter to the White House Coronavirus Task Force saying “a comprehensive COVID-19 vaccine plan must also take into account the decisions that will be necessary related to the allocation of a vaccine.” They requested a briefing on the White House’s vaccine development efforts by June 4.

Therapeutics

Development and Manufacturing

BARDA is also funding COVID-19 drug candidates and generic drugs used to treat hospitalized COVID-19 patients. Last week, BARDA awarded $354 to a Virginia start-up to make generic drug ingredients and finished products, $148 million to Janssen to develop antivirals, and $93 million to Regeneron to develop COVID-19 drugs. Despite this progress, many have found it a challenge to break through as over a 3-month period, BARDA has had 2,800 meeting requests and held 250 CoronaWatch meetings. It is overwhelmed with requests on a range of innovations to address COVID-19. However, it still has funding and is continuing to get through all requests and provide feedback before submissions for funding are made. Also, HHS will work with a team of private industry partners, led by Phlow, to establish critical generic drug and active pharmaceutical ingredient (API) manufacturing in the U.S. to mitigate drug shortages. Industry partners will work with the U.S. government to create a list of critically needed APIs and finished drug products and implement advanced manufacturing techniques, such as continuous manufacturing, to cut down on production costs and waste.

Testing

RADx

The National Institute of Biomedical Imaging and Bioengineering (NIBIB) is managing Rapid Acceleration of Diagnostics (RADx) and actively soliciting proposals. RADx plans to award up to $500 million across multiple projects to rapidly produce innovative SARS-CoV-2 diagnostic testing up to 100-fold above what is achievable with standard approaches by leveraging the NIH’s Point-of-Care Technology Research Network (POCTRN). G2G talked with RADx leadership and learned the program is solely concerned with rapid, accurate testing for positive or negative status, not whether a person had it in the past. Also, the plan is to fund many with small amounts of funding then filter down with more funding to a few. It is aiming to deliver innovative testing strategies as soon as late summer 2020 that can test every American. NIBIB is leveraging established partnerships with the FDA, CDC, CMS, and ASPR/BARDA.

RADx will financially support all phases of the product development pipeline, which includes early stage: transformative innovations based on novel testing strategies that have potential for major scale up as well as advanced stage: modification and optimization of existing SARS-CoV-2 testing approaches, including clinical laboratory tests, that can dramatically increase testing capacity. The optimal design features improve analytical performance, e.g., sensitivity, specificity, dynamic range, limit of detection, reliability, accuracy, speed (time to test result) and throughput; enhance operational performance through, e.g., development of a patient- and user-friendly design, use of alternative sampling strategies (e.g., saliva, exhaled breath), integration with mobile-devices, designs for home-based use or strategies to overcome bottlenecks with current testing approaches; and improve access and reduce the cost of testing.

Once notified of award, the award recipients are assigned a multi-disciplinary team of experts, the Deep Dive team or RADx team with extensive expertise in medical devices and diagnostics that can access additional resources from a diversity of technical, scientific, regulatory, and clinical experts in RADx’s growing network. The Deep Dive team will work to complete the GAITS assessment of the status of the project on a secure, dedicated website that will be created specifically for each project to support the planning process. In addition, VentureWell, a non-profit, will reach out within two business days of receipt of the award notification to facilitate the Participant Agreement and the RADx payment, which starts as low as $25,000. Within one week of starting the assessment, the Deep Dive team leader will decide when the project is ready to be reviewed by the full RADx Steering Panel. There are 4 possible outcomes of the review:

  • Work Package 1: Less than about 4 weeks, will address any key significant risks or questions that need to be fully addressed before the solution effort can move into full development mode (Work Package 2).
  • Work Package 2: This intense effort is focused on developing a solution and deploying it on RADx’s aggressive timeline.
  • Refine the Plan: If the panel decides the plan is not ready, they will ask for refinement in specific areas.
  • Do not Proceed: The combination of time pressure and performance requirements make the criteria for RADx projects exceedingly difficult to meet.
FDA Pulls 27 Antibody Tests

On May 21, the FDA listed 27 COVID-19 antibody tests that no longer are on the market under FDA’s March 16 policy that allowed tests to be marketed and distributed without FDA authorization. Antibody tests on this new removal list include those voluntarily withdrawn from the notification list by the test’s commercial manufacturer and those for which there is not a pending or issued Emergency Use Authorization (EUA). FDA expects that the tests on the removal list will not be marketed or distributed. On May 4, the FDA announced a revised guidance recommending that commercial manufacturers of antibody tests submit an EUA request within 10 business days from the date they notified FDA of their test validation or the date of publication of the revised policy, whichever was later. The FDA expects to continually update the removal list.

Home Testing

On May 20, Timothy Stenzel, head of FDA’s Office of Health Technology, announced it is open to authorizing COVID-19 at-home sample collection kits for over-the-counter (OTC) use, as long as sponsors demonstrate consumers can easily use the tests and interpret results without a healthcare professional’s oversight at an FDA Virtual Town Hall. This willingness to support OTC tests comes as the Government Accountability Office (GAO) states FDA approval of more at-home sample collection kits could help expand test access since currently, consumers must be prescribed a COVID-19 test, but also warns of potential accuracy issues. On May 16, the FDA granted an EUA to Everlywell’s test kit, the first standalone at-home COVID-19 test kit. Consumers who want the test must first be screened for COVID-19 symptoms or exposure to the disease using an online questionnaire that’s reviewed by a healthcare provider. The company then sends a test kit containing nasal swabs and a saline-filled tube to the consumer who self-collects a nasal sample at home. Patients send the sample overnight to a specific CLIA-certified lab so the sample can then be tested on either the LabCorp or Rutgers test platform. The two labs are authorized to test specimens collected using Everlywell’s kit are Fulgent Therapeutics and Assurance Scientific Laboratories. Patients access their results through Everlywell’s physician network and online portal. The test kit will cost $109 and is available to consumers this month.

Testing and Nursing Homes

The Centers for Medicare and Medicaid (CMS) is giving Medicare Administrative Contractors (MACs) broad authority to set payment rates for COVID-19-related tests in their respective jurisdictions until the agency comes up with national Medicare payment rates. There is generally no cost-sharing for Medicare patients receiving these tests, but nursing homes are struggling to obtain sufficient testing. On May 18, CMS recommended that all nursing home residents and staff receive COVID-19 testing before reopening, which has spurred new calls from the nursing home lobby for additional funding as they continue to face difficulties obtaining tests. CMS is not mandating testing, instead leaving the decision up to the states, but is claiming that testing should be done proactively in nursing homes and points out that the agency recently offered a pay rate of $100 for labs that do rapid-testing for COVID-19. In April, CMS called for states to work closely with nursing homes on acquiring tests and PPE. CMS Administrator Seema Verma thinks states have sufficient testing for all nursing home residents, while some in Congress and in states are calling to mandate testing in nursing homes. Some states, including New York and South Carolina, have already done so. On May 21, Chair Susan Collins (R-ME) and several senators on her Senate Special Committee on Aging expressed support for universal testing. Ranking Senator Bob Casey (D-PA) recently introduced a bill with Senator Sheldon Whitehouse (D-RI) to provide $20 billion in emergency funding to states, territories and tribal governments to support staffing, testing and PPE in nursing homes and other long-term care facilities. Whether mandated or not, to truly change nursing home coronavirus incidence rates requires funding as it would cost $440 million to test all nursing home residents and staff in the nation just once, according to the American Health Care Association and National Center for Assisted Living.

CURES 2.0

On  April 27,  Reps. Diana DeGette (D-CO) and Fred Upton (R-MI) released the concept paper for their bipartisan “Cures 2.0.” The 12-page concept paper unveils high-level areas of focus for Cures 2.0, which will look to safely and efficiently modernize the delivery of health care in the wake of the coronavirus pandemic by addressing the following six areas:

  • Public Health and Pandemic Preparedness: Address the nation’s pandemic surveillance and testing capabilities, support antimicrobial resistance product commercialization, expand vaccine education and surveillance, and create a COVID-19 Rare Disease Support Program and grants to help pay for medical care involving pandemics.
  • Caregiver Integration: With many Americans receiving care at home, Cures 2.0 may create educational programs/training for caregivers to learn skills that enhance clinical visits.
  • Patient Engagement: Aim to improve health literacy and access to health information, and thus empower patients in decision-making and taking steps to get well.
  • Diversity in Clinical Trials: Essential to ensuring medical products are safer and more effective for patients, this provision works with regulators, industry, patients and researchers.
  • FDA Modernization: The first Cures Act accelerated the development of digital health technologies through inclusion of the Software Act, but Cures 2.0 aims to ensure FDA’s regulatory framework is collaborative and inclusive of the various centers within the agency. This provision may also fund grants for innovative clinical trial design and patient-focused drug development and improve use of real-world data (RWD) and real-world evidence (RWE).
  • CMS Modernization: Additional stakeholder feedback is sought on how the U.S. can keep pace with technological and scientific advances, and what specific provisions must be included in the final Cures 2.0 package.
Telemedicine

CMS issued a new rule to increase access to telehealth services, providing more coverage options for Medicare beneficiaries with kidney failure, and offering wider benefits for others with chronic diseases. The wide-ranging rule released May 22 is expected to save an estimated $3.65 billion over ten years. It encourages private plans that cover Medicare beneficiaries to increase telehealth offerings for those living in rural areas and allows patients with end-stage renal disease to access coverage through those Medicare Advantage plans. The rule implements changes made under the 21st Century Cures Act, which allows all Medicare beneficiaries with end-stage renal disease to enroll in a Medicare Advantage plan next year.

BARDA Politics

During his four-hour testimony before the House Energy and Commerce Health Subcommittee on May 14, Rick Bright, who was removed as head of HHS’ Biomedical Advanced Research and Development Authority (BARDA) last month and demoted to a smaller role at the NIH, told lawmakers the pandemic will worsen and the administration does not have an adequate plan for distributing COVID-19 vaccines and drugs. The previous week, Bright filed a whistleblower complaint alleging that he was demoted over his refusal to fall in line with the president’s assertions that hydroxychloroquine cures COVID-19. While Republican members led by Rep. Michael Burgess, MD (TX) tried to push Trump’s theory that hydroxychloroquine could be effective, Democrats highlighted Bright’s claims that Trump’s focus on hydroxychloroquine slowed the development of COVID-19 vaccines and drugs with real promise, such as remdesivir, because it distracted dozens of federal scientists, forcing them to set aside all other projects to put together the protocol in the 48-hour directive time period. Bright said the administration should finish plans for scaling up remdesivir production and his warnings of the need for a plan to distribute remdesivir were ignored and resulted in him being shut out from relevant meetings. He cautioned it may take longer to make a COVID-19 vaccine than many are anticipating despite some members of the White House Coronavirus Task Force say they expect a vaccine in a year and a half. Gary Disbrow, PhD, Bright’s deputy, is now the Acting BARDA Director and is following the direction of Assistant Secretary for Preparedness and Response Robert Kadlec, MD and HHS Secretary Alex Azar.

CDC Confusion

By combining test results that diagnose current coronavirus infections with test results that measure whether someone has ever had the virus, the Centers for Disease Control and Prevention (CDC) has conflated the results of two different types of coronavirus tests, distorting several important metrics and providing an inaccurate picture of the state of the pandemic. As a result, it overstates the country’s ability to test people who are sick with COVID-19. States have set quantitative guidelines for reopening their economies based on these flawed data points. Several states—including Pennsylvania, the site of one of the country’s largest outbreaks, as well as Texas, Georgia, and Vermont—are blending the data in the same way. Virginia was as well until mid-May, but it reversed course and Governor Ralph Northam (D), who is a doctor, apologized for the practice. Maine similarly started separating its data last week. Vermont authorities said they didn’t even know they were doing this. The absence of national guidelines has led to confusion about how testing data should be reported and this current practice that aggregates both kinds of testing suggests much broader diagnostic testing has occurred. If even a third of the country’s increase in testing is from expanded antibody testing, not viral testing, then the ability to detect an outbreak is much smaller than it seems. Unless the most populous states, such as Texas, Georgia, and Pennsylvania break down and share their data, there is no way to know how much of the recent increase in testing informs our understanding of the incidence rate versus the prevalence rate, where and at what pace to reopen, and how best to prepare and respond.

Defense

Funding

Of the $10.5 billion provided to the DoD aspart of the CARES Act, the department is spending the funding as follows:

  • $1.4B for the deployment of up to 20,000 National Guard for the next six months to support state and local response efforts.
  • $1B for the Defense Production Act in order to invest in manufacturing capabilities that are key to increasing the production rate of PPE and medical equipment to meet the demand of the nationwide health workforce.
  • $415M for the Military medical research programs to develop vaccines and anti-viral drugs.
  • $1.5B for the expansion of military hospitals to alleviate the strain on both the military and civilian healthcare systems.
  • $300M to procure IT equipment and increase bandwidth in order to facilitate telework.

The HEROES Act that passed the House on May 15 contained $200 billion for “essential” workers, including medical staff and first responders as well as workers at defense plants with key Pentagon contracts, like Electric Boat. While this bill is not being considered in the senate, some of that funding may make it into a negotiated bill expected in late June or early July.

National Defense Authorization Act

The Senate Armed Services Committee is planning to pass its version of the National Defense Authorization Act (NDAA) before the July 4th holiday. The Committee is planning to mark up its version of the bill the week of June 8. Unlike the House, which marks up its version of the annual NDAA in a marathon open markup, the Senate typically speeds through the process behind closed doors. The House Committee has not set a specific date, but now that the proxy voting is allowed in that chamber, the dates will be set soon. As for details of the bills, both chairmen are keeping quiet. As for funding levels, Ranking Rep. Mac Thornberry (R-TX) favors maxing out the 2021 NDAA to $740 billion, the level approved by Congress and the White House last year in a bipartisan budget agreement that did away with the final two years of sequestration cuts from 2011 while Chairman Adam Smith (D-WA) is more reserved on those top numbers. In addition, to COVID-19 response, the bill will include several cybersecurity initiatives that were recommended in the recently announced report issued by the Solarium Commission headed by Senator Angus King (I-ME) and Mike Gallagher (R-WI) report that advocates a new strategic approach to cybersecurity of layered cyber deterrence. The desired end state of layered cyber deterrence is a reduced probability and impact of cyberattacks of significant consequence by shaping behavior, denying benefits and imposing costs.

Air Force

Lockheed Martin said it will temporarily slow production of the F-35, the Pentagon’s costliest weapons system, because of subcontractor parts being delayed as a result of the coronavirus pandemic. Starting last week and possibly continuing through August, Lockheed said it will divide around 2,500 union workers at its plant in Fort Worth, Texas, into three teams, each working shifts of two weeks and one week off to avert layoffs.

Women are being encouraged to pursue pilot positions as the height and weight requirements are being eliminated within the Air Force. Previously, the requirement of 5'4" to 6'5" in height and 34 to 40 inches in sitting height could be waived, the restrictions eliminated about 44% of the U.S. female population ages 20 to 29. Instead of the height standards, medical and operations teams will now apply an anthropometric screening process (that takes into account weight, body mass index, body circumferences, and skinfold thickness) to applicants to place them in an aircraft that they can safely fly.

Navy

The Senate by unanimous consent confirmed Kenneth Braithwaite to be secretary of the Navy and USS Theodore Roosevelt is underway for the first time since its deployment was interrupted for 55 days due to a COVID-19 outbreak that infected almost a quarter of the crew. With more than half of its crew (all of whom had to test negative twice in order to re-board the ship), the aircraft carrier left the pier at Naval Base Guam for drills and training to return to deployment under new procedures. These procedures include constant disinfection of the ship, as well as having each of the 3,000 sailors aboard wear a mask and fill out a daily questionnaire that can help identify flu-like symptoms and contain any possible infections aboard the ship. Despite this crackdown, last week 14 sailors had once again tested positive for the virus, weeks after they had cleared their self-isolation and twice tested negative, indicating the asymptomatic stage can be the most dangerous as it enables broad spread of the virus. The outbreak initially infected 1,200 of the 4,865 sailors aboard and resulted in the death of Aviation Ordnanceman Chief Petty Officer Charles Robert Thacker Jr. The service is in the midst of an investigation into the firing of former TR commander Capt. Brett Crozier for sharing his concerns about the COVID-19 outbreak outside the chain of command after he received no order to dock following his initial reports of the virus on the carrier as well as issues surrounding the wider operational chain of command. The report is due to Chief of Naval Operations Adm. Mike Gilday on May 27.

Treaty Withdrawal

President Trump will withdraw the U.S. from the Open Skies Treaty, citing repeated Russian violations of the agreement going back as far as 2005. Withdrawal from the treaty, an agreement among 35 nations including the U.K., Russia, and Germany to permit surveillance flights over members’ territories to encourage transparency, will take effect in six months.  U.S. consulted allies before making the decision to withdraw, however, leading congressional Democrats in April urged Trump not to withdraw from the treaty. This follows Trump’s decision last year to pull out of the Intermediate-Range Nuclear Forces Treaty, a Cold War pact banning short- and medium-range missiles, as well as the Iran nuclear agreement. The remaining and only arms control treaty between the U.S. and Russia, the New START, which limits the number of nuclear missiles each nation can deploy, expires in February 2021 and there is uncertainty how the administration would handle it next year.

Veterans

The number of Veterans Affairs patients who have died from coronavirus complications rose to more than 1,000 one week ago, even as the number of active cases of the illness within the department’s medical system continued to decline. That number excludes the 30 VA employees who have died from the illness. More than 12,000 VA patients have contracted the COVID-19 virus since early March. That total increased almost 11 percent in one week alone mid-May.

Regenerative Medicine

Outside of COVID-19, critical combat care and prolonged field care remain top priorities for the Army Futures Command. G2G talked with several portfolio managers within DoD over the past few weeks and heard the same message about priorities, directing of funding and the upcoming MHSRS that is still planned to take place mid-August in Florida. With 53,000 veterans having suffered significant physical injuries from explosions and gunshot wounds, many need surgeries, long-term rehabilitation and requisite medical  devices and tools. Four in five of these injured veterans will have complex head, neck and extremity trauma for the rest of their lives. While improvements in military gear, armor, training and medicine have drastically reduced the death rates of service members, there has been an increase in lifelong injuries, which account for nearly two-thirds of discharges from the military in recent conflicts and nearly two-thirds of the dollars devoted to health care for veterans and service members. Recognizing there are still too few treatment options for these traumas, the military is investing in regenerative medicine therapeutics and tissue-engineering implants for wounded warriors. The Congressionally Directed Medical Research Programs (CDMRP) and initiatives such as the Multi-Agency Tissue Engineering Science (MATES) Interagency Working Group have laid the groundwork for DoD, VA, NIH and NSF to make these investments. Together, they have engaged in, conceptualized and coordinated their efforts to invest nearly $3 billion in the promise of complex, multidisciplinary projects and solutions that may make it possible to one day regenerate limbs and grow new organs in place of injured body parts. As programs, such as ARMI/BioFabLab and the JPC-8/CRMRP which runs the $10 million Regenerative Medicine Focused Research Award (RMFRA) as its next iteration of the Armed Forces Institute of Regenerative Medicine (AFIRM), AFIRM III, DoD will continue to support the development of regenerative medicine solutions.

stem & innovation

Science-Led Decision-Making

The HEROES Act that passed the House on May 15 would require agencies to adopt a policy that prevents employees from misconduct, interference with releasing scientific findings and barriers to cooperating with scientists who operate outside of the federal agency. The bill would also require scientific conclusions to be nonpartisan. While this bill is not up for consideration in the Senate, several members of Congress are pushing for this language is likely to be included in the next version of the coronavirus legislation.

Department of Education

The HEROES Act would allocate $90 billion for the K-12 and higher education, $58 billion of which would go directly to local school districts. The bill would also authorize $13 billion for serving special education students during the pandemic and $2 billion to reimburse schools for purchasing laptops, tablets, hotspots and other devices for students and teachers. Similar support for education funding exists in the senate, but at lower levels so a compromised version of the next coronavirus package will likely include lower funding levels.

Department of Energy

The DOE’s “National Virtual Biotechnology Laboratory” (NVBL) is a virtual lab designed to be a single point of contact for national laboratories to gain access to COVID-19 experts and research tools. The goal of this lab is to improve coordinated efforts to combat COVID-19. Due to the lab, researchers will be able to virtually access sequencing and bio-characterization facilities, high-performance computing assets and other valuable resources, as well as computing, diagnostics, and epidemiology teams.

The DOE’s Office of Science has created the position of principal deputy director, and the post will be filled by Steven Binkley, formerly the Deputy Director for Science Programs. The principal deputy director will supervise a set of new offices that will focus on diversity and inclusion, crosscutting research, accelerator technology development, research security and other policy priorities as well as performance management, budgeting and acting as advisor to the Office of Science Director.

National Science Foundation

The National Science Foundation is funding a new research project that will measure the negative impact on kids’ reading levels as a result of school closures caused by COVID-19. It will involve 100 educators and measure reading levels in in 2,000 K-2 students and compare them with pre-pandemic levels. The studied students will utilize a digital learning tool to play reading games for 20 minutes per day, 5 days a week for 12 weeks.

economic development

Taxes

The IRS expects to tell some employees in Kentucky, Texas, and Utah to return to their worksites starting June 1. Certain employees, including those at a higher risk of serious health complications from COVID-19 and those who can work from home won’t be subject to the latest recall, which will affect about 11,000 employees in the three states. The action moves beyond the agency’s previous call for volunteers to staff offices amid the pandemic. The agency previously offered incentive pay to employees who were willing to voluntarily return to their office to perform tasks such as opening mail, processing paper tax returns, and taking phone calls.

Regulations

Trump signed an executive order last week directing federal agencies to ease up on businesses that make good-faith attempts to follow agency guidance and regulations during the coronavirus pandemic. The extent to which the order would provide protection for businesses against pandemic-related liability would be limited as legislation would be needed to guard against lawsuits, but it would shield companies from fines for civil regulatory violations. With around 38 million people filing for unemployment, the administration is aiming at other means to help businesses keep workers employed and stay afloat during the pandemic. While it addresses business community demands, it leaves the more complicated task of negotiating greater liability protections for businesses to Congress as it works on the next coronavirus legislative package in the Republican-controlled Senate.

Small Business Aid Extension

On May 21, the Senate voted under unanimous consent for the Small Business Lending Continuity Act, led by Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, and Senators Tammy Duckworth (D-IL), Chris Coons (D-DE) and James Risch (R-ID). The bill would fix an error in the CARES Act that inadvertently results in the SBA’s flagship 7(a) Loan Guarantee Program shutting down whenever the newly-created Paycheck Protection Program (PPP) runs out of funding. If left unfixed, SBA’s 7(a) Loan Guarantee Program’s FY2020 $30 billion authorization cap would be void until July 1, 2020. The program runs the risk of shutting down if PPP reaches its authorization cap of $310 billion. The bill is now under consideration in the House, which plans to vote on related legislation that extends the length of time PPP dollars can be used.

The House will vote after Memorial Day on the Paycheck Protection Flexibility Act, which was introduced by Reps. Dean Phillips (D-MN) and Chip Roy (R-TX). The legislation responds to companies requesting the ability to use the funds for rent and other expenses and expressing concerns about running out of money to pay employees. Most of all, this legislation changes the program’s original intent from keeping workers on small business payrolls to helping the companies themselves recover from the crisis and endure the economy’s slow re-opening. It has bipartisan support and would:

  • Extend the period businesses need to use their loan funds to qualify for forgiveness from 8 to 24 weeks
  • Allow businesses to rehire employees and qualify for loan forgiveness under the program beyond the existing June 30 deadline
  • Extend the period for paying back portions of the loans that aren’t forgiven beyond two years because although the law that created the program allowed the loan terms to be up to 10 years, SBA instead put a two-year due date on them
  • Eliminate the “75-25 rule” implemented by the administration that says businesses have to spend at least 75% of the loan on payroll costs and no more than 25% on other expenses like rent and utilities
  • Ensure businesses obtaining money under the program can defer payroll taxes under the Families First Coronavirus Response Act (FFCRA), eliminating a restriction on “double dipping” imposed by that law

After initial delays, most of the small business that applied for the PPP have now received funding. However, according to a new survey, many are struggling to meet the strict criteria to turn the loans into grants. A National Federation of Independent Business poll revealed 75% of businesses that received PPP loans found it very or somewhat difficult to understand its terms and conditions, and almost 40% reported that it would be difficult to spend the required 75% of the proceeds on payroll.

Stimulus Talks

While many agree on the need for stimulus legislation, they differ widely on details. The U.S. Chamber of Commerce is backing proposals for aid to state and local governments but Republicans fear the additional aid could delay re-openings, and instead want to see how state and local governments will use funds that have already been appropriated. Treasury Secretary Steve Mnuchin said Congress will likely need to pass more stimulus legislation, although not immediately. Mnunchin also added that the U.S. Postal Service may not need the $10 billion loan that Congress originally appropriated due to an increase in business. Senate Majority Leader Mitch McConnell (R-KY) wants to wait and see how the economy looks in late June/July and determine the best package then.

Main Street Lending

The economic hardship in the U.S. is projected to last at least through June as the country copes with the coronavirus hardship. Since more than 38 million Americans have already reportedly filed for unemployment, President Trump’s economic advisors warn that the economy could shrink another 40% for the second quarter through June. A bipartisan congressional oversight panel concluded that the U.S. Federal Reserve bank has dragged the launch of the Main Street Lending Program for small businesses. After the central bank received over 2,000 comments between April 9 – April 30, it announced broadening the program to include more businesses. Fed Chair Jerome Powell disputed the notion that the central bank could be moving more quickly and says the lending program will be operational by early June. The oversight panel wants to ensure lending programs benefit small and medium-sized business most in need, and the Fed emphasized that participants should make reasonable efforts to refrain from laying off workers.

Economic Hits on Airports and Produce

Airports across America had 2.5 million fewer operations amid the pandemic. In April alone, flights into and out of the 520 U.S. airports with air-traffic towers fell 54.5% compared with the same month last year, according to Federal Aviation Administration data. Meanwhile, produce companies that go between farmers, restaurants and schools, lost 80% of their business overnight due to the coronavirus and subsequent shutdown of operations. Distribution companies continue to struggle and are seeking government funding relief, similar to what has been provided to others along the agricultural supply chain.