Redstone Government Consulting Blog (44)

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.

Although the COVID-19 Pandemic and its impact on everyone is absolutely serious business, the nature of this “special day” blog is not necessarily serious business.   At times like these we hope that an element of levity will be accepted for what it is and not be misinterpreted as diminishing the serious nature of the pandemic. We also hope that everyone reading this is safe, healthy and adhering to the federal guidelines to limit the spread of COVID-19.

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:

Courtney and Asa go to extreme lengths to avoid answering hard and uncomfortable questions on this month's Dish or Dish.

The Office of the Under Secretary of Defense for Acquisition and Sustainment (OUSD(A&S)) is still in the process of working with DoD stakeholders and industry to finalize the development of the Cybersecurity Maturity Model Certification (CMMC). A stated on the OUSD(A&S) website: “The CMMC effort builds upon existing regulation (DFARS 252.204-7012) that is based on trust by adding a verification component with respect to cybersecurity requirements.” On March 13, 2020, Under Secretary of Defense Ellen Lord issued a statement on misleading cybersecurity certification information. She stated, “some third-party entities have made public representations of being able to provide CMMC certifications to enable contracting with DoD.” This is not a factual statement as “[t]he requirements for becoming a CMMC third-party assessment organization (C3PAO) have not yet been finalized.”

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.