Industry groups are asking for an extension for the authority to reimburse defense contractors during the COVID-19 pandemic.
Defense contractors will need financial support from federal agencies through the end of 2021 if they are going to make it through the coronavirus pandemic, according to industry groups and lawmakers.
Section 3610 of the Coronavirus Aid, Relief and Economic Security, or CARES Act, provides a lifeline to the defense industrial base. It gives agencies the authority to reimburse contractors for costs related to COVID-19. The latest Republican aid proposal includes funding for its implementation, but unless Congress extends the deadline for Section 3610, that funding may not be enough.
Compensation for contractors who cannot always go into the office because of social distancing restrictions but also cannot do their work remotely is not guaranteed during the coronavirus pandemic. The CARES Act money enables federal agencies to reimburse contractors so that they can cover these costs, maintaining what’s known as a “ready state.”
Currently, Section 3610 is set to expire Sept. 30. The Professional Services Council told Nextgov last month that deadline is too soon—they asked for an extension until the end of the year. But now, PSC and other industry organizations, including the National Defense Industrial Association, are calling for an even longer extension.
On Friday, PSC, NDIA and six other industry organizations sent a letter to congressional leaders asking for the expiration date to be pushed back to Dec. 31, 2021. The same day, four Democratic senators sent a letter to Sens. Mitch McConnell, D-Ky., and Chuck Schumer, D-N.Y., repeating that request.
Sens. Mark Warner and Tim Kaine, Democrats from Virginia, joined with Sens. Ben Cardin and Chris Van Hollen, Democrats from Maryland, to request a deadline extension. Additionally, their letter asks for language that would require the Office of Federal Procurement Policy to create standards for calculating reimbursable expenses. This guidance would eliminate discrepancies that exist across different government agencies, they said in the letter.
“When Congress drafted the CARES Act, we had anticipated the pandemic would soon abate.That has not borne out, and we must prepare for a longer term struggle,” the senators’ letter reads. “Given the uncertainty of another legislative opportunity to amend the Section 3610 authority, we recommend providing maximal flexibility for its use and extending it until December 31, 2021.”
The letter goes on to say Congress should deal with appropriating funds for use under Section 3610 separately. The four senators represent states heavily populated by federal contracting companies.
The industry letter complimented Senate Republicans for including Section 3610 funding in the latest relief bill. The Republican Health, Economic Assistance, Liability Protection, and Schools, or HEALS, Act, includes $11 billion in reimbursements for contractors.
“Nonetheless, while the proposal answered the calls for additional funding through fiscal year 2021 for the Department of Defense and the National Aeronautics and Space Administration, it did not include the extension of the authority in Section 3610 beyond September 30, 2020, that is necessary to ensure the continuity of operations across the government as the pandemic continues,” the industry letter reads.
Kea Matory, director of legislative policy for NDIA, spoke with Nextgov ahead of the letter’s release. As coronavirus cases rise again around the country, defense contractors need to know they will get reimbursed, Matory said.
“We don’t know what the fall is going to bring as far as COVID shutdowns for our companies,” Matory said, noting that services-based contractors have been particularly hard hit in the pandemic.
The contracting community is a highly skilled workforce, and many have security clearances, so filling gaps in a workforce that may be depleted in the event of layoffs and business shutdowns may be challenging, Matory said.
“We don’t want to have to start over,” she said. “The government can’t afford to start afresh and have to get a new workforce as we’re trying to modernize [the Defense Department].”