Resources Available to Contractors Impacted by COVID-19

Like many other industries and professions, government contractors are experiencing difficulties due to COVID-19 and its resulting quarantine.  It has caused work to stop and delay the completion of projects.  The U.S. government has recognized the challenges contractors have been facing due to the pandemic and has made efforts to help them in this unique time.  Resources and other information government contractors should know about are described below.

Recovery for Contractors Affected by COVID-19

            Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides relief for government contractors facing delays and additional costs as a result of employees being unable to work due to COVID-19 restrictions.  It allows federal agencies to use funding made available from the Act to reimburse contractors for the costs of providing “paid leave… to keep employees or subcontractors in a ready state” if they are unable to enter a government work-site due to closure from COVID-19 restrictions.

Contractors should be aware of Section 3610’s limitations below:

1. Reimbursement is limited to “minimum applicable contract billing rates.”
2. Reimbursement is only available if employees’ job duties “cannot be performed remotely.”
3. Reimbursement will not be made for costs made after September 30, 2020.
4. Payments will be offset by the amount of refundable tax credits employers may receive under the Families First Coronavirus Response Act (FFCRA).

U.S. Department of Defense office of Defense Pricing and Contracting

            A Memorandum by the Department of Defense’s office of Defense Pricing and Contracting dated March 30, 2020 advised contracting officers on how to minimize the impacts of COVID-19.  In the memo, Margaret M. Weichert, Deputy Director for Management at the Office of Management and Budget identified steps to ensure the safety of federal contractors

            Deputy Director Weichert stated it was important to continue communication between agencies and their respected contractors.  Agencies are urged to maximize telework for contractor employees.  It is also recommended that they be flexible and provide extensions to performance dates if telework and other flexible work solutions are not possible.  Contractors unable to accomplish their duties in a timely manner due to quarantining, social distancing, or other COVID-19 related interruptions need to be taken into consideration.  Agencies are encouraged to use the special emergency procurement authorized by the President’s emergency declaration under the Stafford Act.  This allows for increases in thresholds to enable faster response to varied demands the agencies encounter.  It is also recommended that agencies consider whether contracts with requirements such as security and logistics be “retooled for pandemic response consistent with the scope of the contract.”

            Deputy Director Weichert also addressed a list of questions that many government contractors may be concerned with. These include the following:

• May government contracts be extended or altered if contractor personnel must be quarantined due to the virus-exposure?

            Yes.  Government contracts provide for excusable delays that include quarantine restrictions due to COVID-19 exposure.  The contracting officer and contractor must communicate with each other to determine the best course of action.  Such actions will be taken for the convenience of the government and without impacting the contractor’s performance rating.  Excusable delays due to the COVID-19 pandemic resulting in adjustments to the contractor’s delivery schedule are not to negatively impact the contractor’s performance ratings.

• How will repair work in government buildings be addressed if they are closed to the general public for social distancing?

            The continuation or stoppage of work will be addressed on a case-by-case basis.  The health and safety of government and contractor employees will be taken into consideration when making this decision.  The Center for Disease Control (CDC) and local public health officials will help determine what steps are needed to protect workers and whether work needs to be stopped.

• Will agencies postpone or perform virtual meetings for activities typically done face-to-face?

            Agencies will determine whether meetings will be conducted face-to-face on a case-by-case basis with guidance from the CDC and local public health authorities.

• How will agencies enhance communications with their contracting partners?

           Agencies may enhance their communications efforts with contractors by coordinating outreach activities with their industry liaisons.  Contact information for liaisons can be found at https://hallways.cap.gsa.gov/app/#/gateway/acquisition.  Information on small and disadvantaged business utilization, and acquisition innovation advocates is located at https://hallways.cap.gsa.gov/app/%23/gateway/%20acquisition-innovation/7822/acquisition-innovation-advocates-aia-directory.

• What procurement flexibilities are available to contractors?

            The President’s declaration of a national emergency due to COVID-19 allows for flexibilities available from FAR § 18.202, “Defense or recovery from certain events.”  These flexibilities allow for increases in the following thresholds:

1. The micro-purchase threshold is raised from $10,000 to $20,000 for domestic purchases and $30,000 for purchases outside the U.S.
2. The simplified acquisition threshold is raised from $250,000 to $750,000 for domestic purchases and $1.5 million for purchases outside the U.S.
3. Agencies may use simplified acquisition procedures up to $13 million for purchases of commercial item buys.
4. How will agencies address preferences and set-asides for local firms?

            When an emergency declaration is made, contracting officers are expected to give preferences to local firms in the area designated in the declaration.  The declaration made is caused by the global pandemic.  Because there is no specific locally affected area, there is no requirement for the preferences of workforce from local firms. 

For more information on assistance for government contracts, contact Whitcomb Selinsky PC at (303) 534-1958.