Trump Administration Releases Guidance to Clarify Coronavirus Relief Act’s Contracting Provisions

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Agencies can use CARES Act funds to reimburse contractors from March 27 to September 30, 2020.

On Friday the Trump administration released guidance to clarify how and when agencies can reimburse contractors as outlined in the recently enacted novel coronavirus economic relief legislation. 

The Office of Management and Budget published a memo to supplement Section 3610 of the $2.2 trillion CARES Act, which allows federal agencies to use their funds to give contractors sick or paid leave during the pandemic if they are not able to access their worksites or telework. Although the administration advised agencies to “maximize telework” for contractors, that is not possible for many contractor jobs, including some involving sensitive or classified work. Trade associations that represent federal contractors previously welcomed this provision, but then asked for more clarification. 

For applicable contractors, agencies can “modify the terms and conditions of a contract, or other agreement” to “reimburse at the minimum applicable contract billing rates” up to an “average of 40 hours per week [for] any paid leave (including sick leave) a contractor provides to keep its employees or subcontractors in a ready state,” according to the legislation. The new guidance says agencies can use their funds to reimburse contractors from the period of March 27 (when the CARE Act was signed) to September 30, 2020. Initially, the bill did not give a start date. 

Additionally,  the Office of Federal Procurement Policy within OMB “has developed [the] guidance to help agencies make rational business decisions that balance the need for contractor resiliency with the need for good stewardship,” Michael Wooten, OFPP administrator, told Government Executive on Friday.  This includes being mindful of the challenges small businesses face and helping contractors secure the correct documentation they need for reimbursement. 

The guidance came a day after nine trade organizations wrote to acting OMB Director Russell Vought asking for more guidance on Section 3610. “Consistent implementation of this provision is critical to the viability of the hundreds of thousands of companies that make up our nation’s critical infrastructure and defense industrial base supply chains, and that must retain a ready workforce throughout the COVID-19 national emergency,” they wrote.

While they applauded the Defense Department and some intelligence agencies for publishing their own guidance related to Section 3610, they said there has been “inconsistent or contradictory implementation” so far. For example, the Defense guidance said agencies could reimburse contractors from the period of January 31 to September 30, 2020. 

When asked about the new guidance, the National Defense Industrial Association (one of the trade organizations) told Government Executive

“We think some of the facility language was good, but the process piece will be difficult.  We are disappointed the OMB guidance did not include the retroactive date used by DoD of January 31st, or even the date of the declaration of the National Emergency (when many companies felt the impact widespread), but rather the date of enactment of the CARES Act which is March 27th.

OMB’s guidance does not include the language regarding childcare closures' impact on the need to stay at home and it encourages contracting officers to use a case-by-case basis rather than establishing a uniform applicability, which was our request in the letter.  It reinforces cautions to contracting officers to be good stewards and gives a lot of latitude in their determinations of applying 3610. Furthermore, it enforces agencies should make determinations in the best interest of the government when making discretion for reimbursement.  This may have the negative impact of making contracting officers leery of applying [Section] 3610. We still believe the DoD guidance was more helpful to industry.”

The Professional Services Council, which represents over 400 companies that contract with the federal government and another co-signer of the letter, did not immediately respond for comment.

OMB said it will continue to update guidance as needed on the CARES Act or any other pandemic-related matter. It also reminded agencies to follow its other recent guidance on balancing expediency in distributing funds while also ensuring transparency and accountability to protect taxpayer dollars.

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