“President Trump signed the Coronavirus Aid, Relief and Economic Security Act on March 27. Other than the employee retention and other relief available to all businesses that I’ll leave to my colleagues, here’s what that means and what it doesn’t mean for federal government contractors.”
“First, generally, CARES provides about $3.8 billion for the Defense Health Program (i.e., R&D, test and evaluation and operation and maintenance), about $1 billion for defense purchases pursuant to the TRICARE program and an additional $1 billion for Defense Production Act purchases, as well as funds to improve information technology services at numerous federal government departments.”
“These appropriations may relieve the tension in the government technology and other services business who may be falling behind because of delayed contract awards due to COVID-19.”
“Second, it gives various federal agencies and state/local governments significant financial assistance in countering COVID-19. That might be good for contractors providing those directly related COVID-19 goods or services, but it may also benefit other contractors such as those providing supporting or ancillary IT products and services, program management and facility operations-type services (i.e., much of what is the GovCon business around the Beltway).”
“Third, CARES provides funds to allow agencies to amend contracts, without legal consideration (meaning requiring something of value in return), to require the government to reimburse paid leave paid from Jan. 1 through Sept. 30. The reimbursement cannot exceed an average of 40 hours per week per employee and cannot exceed the contract’s minimum billing rates.”
“Also, to be considered for the reimbursement, the employee or subcontractor employee (1) cannot perform work on most government facilities due to closures or access restrictions; and (2) must be unable to telework because his or her job duties cannot be performed remotely during the emergency.”
“So far, this relief extends to Sept. 30. There are also some offsets for any credits received under CARES or the prior Families First Coronavirus Response Act. Put another way, Congress is agreeing to reimburse contractors to keep employees ‘in a ready state’ if the employee is unable to work at certain federal facilities or telework because their duties cannot be performed remotely.”
“But alas, this relief is not mandated by CARES, but rather it is within the agency’s discretion. And CARES doesn’t address other non-employee cost increases caused by COVID. That really means that any COVID related contract cost increase still need to pass muster under current FAR Cost Principles and the contract modification will still need formal contracting officer approval.”
“As I said in my last commentary, keep detailed documentation of your costs and efforts to minimize them for purposes of invoking the FAR Changes and Excusable Delays clauses…”
“Cutting to the chase: why not soften the ‘ llowability’ standards under the FAR Cost Principles to facilitate REAs or later claims for those contractors having sufficient documentation to show that it did its best (aka made good faith efforts) to mitigate those costs?” Read the full article here.
Source: CARES Act and the impact on contracting costs – By James Fontana, April 3, 2020. Washington Technology.
