For the past 10+ weeks, we have focused on how to work remotely, compensate employees who are unable to work due to COVID-19 related reasons, and how to interpret and implement the new laws applicable to the pandemic, such as the Families First Coronavirus Response Act, the Paycheck Protection Program, and CARES. As many states begin to loosen the “shelter at home/social distancing” guidelines, it is time to consider – how do we return to work safely?
For those of you who may have thought there could be a silver lining to coronavirus restrictions from reduced audit effort, think again! Actual postponement of audits will be rare.
UPDATE: On May 5th, SBA added FAQ #43 extending the safe harbor to May 14, 2020 and stating “SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.”
On April 8, 2020, Acting Principal Director for Defense Pricing and Contracting issued a memo providing guidance in support of DFARS Class Deviation 2020-O0013 – CARES Act Section 3610 Implementation. The Class Deviation provides language for DFARS 231.205-79, CARES Act Section 3610 – Implementation. The cost principle language makes costs of paid leave (including sick leave) allowable at the appropriate rates under the contract for up to an average of 40 hours per week and may be charged as direct to a contract.
On March 20, 2020, Acting Principal Director for Defense Pricing and Contracting issued a memo increasing the progress payment rate from 80% to 90% for large businesses and 90% to 95% for small businesses. The intent to increase cash flow to contractors running low on cash due to the impact of COVID-19. See DoD Class Deviation 2020-O0010 for details. The Defense Contract Management Agency is working to modify contracts as efficiently as possible. Clients may want to contact their respective ACO to assist by providing a complete listing of all impacted contracts.
The President has announced he has invoked the 1950 Defense Production Act (DPA). This act provides the Government with the ability to direct businesses to accept contracts and increase the production of necessary goods and services. The act has been used numerous times since 1950 to support emergencies, including natural disasters and the war on terrorism. The current fight with COVID-19 has necessitated it once again. A July 28, 2014, Congressional Research Service paper titled “The Defense Production Act of 1950: History, Authorities, and Reauthorization” summarized the current act to include:
As every government contractor is no doubt aware, no business is immune (no pun intended) from the potentially devastating economic impact of the global coronavirus outbreak. As we confront new restrictions, with the possibility of more to come, on both businesses and employees that could last for months, the costs continue to mount.
In our line of work supporting government contractors, we get to see on a first-hand basis the level of our preparedness as a Nation to deal with the most complex challenges the world can throw at us. We are reminded of similar challenges our Nation has faced over its relatively short existence and the ingenuity, speed, and compassion for our fellow Americans that was put into the response to those efforts. In every instance, we have weathered the storm and come out on the other side stronger for it. No disaster response will ever be perfect; if they were, we wouldn’t call them disasters, emergencies, or other terms denoting their unexpected and undefined nature.
Redstone GCI is currently monitoring the Families First Coronavirus Response Act bill passed by the House over the weekend, which will provide a number of economic, policy, and regulatory benefits in response to COVID-19. We are closely following the bill as it progresses through the regulatory process to be finalized.