Recently, the Defense Pricing and Contracting (“DPC”) unit under the Secretary of Defense issued draft implementation guidance for Department of Defense (“DoD”) contracting officers tasked with assessing contractor requests for reimbursement in accordance with Section 3610 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and applying the recent cost principle implemented by DFARS Class Deviation 2020-O0013—topics covered in depth by this blog. This draft guidance was first alluded to in the May 1, 2020, memorandum from Kim Herrington, the DPC Acting Director, to address “the reimbursement process from requesting the contracting officer’s determination of an ‘affected contractor’ to providing a checklist to guide collection[ ] and evaluation of costs from the [contractor] seeking reimbursement [under Section 3610].” Composed of general reimbursement implementation guidance along with two attachments—a checklist for review of a contractor’s reimbursement request and instructions for using the checklist—the DPC’s draft is, to date, the most comprehensive guidance addressing contractor requests for reimbursement under Section 3610 since the DFARS Class Deviation 2020-O0013 issued on April 8. The final guidance is expected to be released shortly.
The Evolution of Contract Financing: Resurrecting Performance-Based Payments Under Fixed-Price Contracts
Contracting with the Department of Defense (DoD) can provide healthy opportunities for businesses of all sizes. That said, it is no secret that contractors without the cash resources to finance their performance while awaiting payment from the Government may find themselves swallowed whole by their contractual obligations. Many defense contracts are long-term endeavors; consequently, a contractor’s sustainability and profitability can be impacted by the sapping of available manpower while also requiring significant capital investment to manage material, labor, overhead, and other expenses incurred when performing a contract. In many cases, the upfront financial investment required serves as a barrier to entry into the government marketplace for nontraditional defense contractors. However, the DoD has recently unearthed and reanimated one of the more impressive dinosaurs buried in the Federal Acquisition Regulation. Welcome to the world of performance-based payments (PBPs).
Borrowers Beware: GAO Ramps Up Efforts to Root Out Fraud Among CARES Act Loan Recipients
The Prospect of False Claims Act’s Treble Damages Requires Meticulous Recordkeeping Under the CARES Act
On April 10, 2020, the Government Accountability Office (GAO) announced its effort to root out fraud associated with the billions of dollars in payments promised under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Congressional watchdog is encouraging individuals – private citizens, government workers, contractors, etc. – to anonymously and confidentially report any allegations of fraud, waste, abuse, and mismanagement through FraudNet (the GAO’s fraud-reporting website), via e-mail or by calling 1-800-424-5454 (the GAO’s automated phone answering system). The GAO, of course, is seeking as much detail as possible about any allegations so the reports can be handed off to its own investigative unit, appropriate inspector general offices, or to the ultimate enforcer – the Department of Justice.
DoD CARES After All – New Cost Principle and DFARS Clause Implements CARES Act for Certain COVID-19 Costs
On April 8, 2020, the Department of Defense (“DoD”) issued a Class Deviation authorizing contracting officers to use a new cost principle – DFARS 231.205-79, CARES Act Section 3610 Implementation – to permit the reimbursement of certain leave-related costs incurred by contractors in accordance with Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136). Additional clarification regarding the application of the new cost principle was issued on April 9, 2020, through the publication of a “living” FAQ document intended to answer critical questions for contractors. While the FAQ information does not clarify the Government’s position on all potential issues associated with the implementation of Section 3610, it does provide a blueprint that contractors seeking reimbursement should follow.
DFARS Final Rule Establishes Goal of 15-Day Accelerated Payments for Small Business Contractors
On April 8, 2020, a final rule (the Rule) was issued amending the Defense Federal Acquisition Regulation Supplement (DFARS) and implementing Section 852 of the National Defense Authorization Act (NDAA) for FY 2019 to provide for accelerated payments to DoD’s small business prime contractors and subcontractors supporting DoD contracts. The Rule applies to contracts at or below the simplified acquisition threshold (SAT) – currently $250,000 for DoD contracts – and to contracts for the acquisition of commercial items including commercially available off-the-shelf (COTS) items. With an estimated 96% of DoD contracts valued at or under the SAT, the rule appears to reflect DoD’s recognition that it is in the best interests of the government and small business contractors alike to apply this Rule to contracts at or below the SAT and to accelerate payments to small business prime contractors and subcontractors.
FEMA Opens a Door and Closes a Window: A Primer on FEMA’s Broad Efforts to Obtain and Retain Medical Supplies to Combat COVID-19
FEMA Seeks All Comers to Supply Government with COVID-19 Supplies
Through its website, the Federal Emergency Management Association (“FEMA”) is encouraging the private sector to step up and support the agency in its response to COVID-19 in a variety of ways. In pertinent part, the website solicits donations of medical supplies and equipment, refers businesses with nonmedical good and/or services that can help the response to the Department of Homeland Security (“DHS”) Procurement Action Response team, and provides guidance to hospitals and healthcare providers in need of medical supplies.
General Services Administration Issues Class-Wide Waiver of Trade Agreements Act and Buy American Act for All GSA Contracts and Schedules for Supplies to Combat the COVID-19 Virus
In a Class Determination and Findings (CD&F) published on April 3, 2020, the GSA’s Senior Procurement Executive directed that certain limited supplies to combat the COVID-19 virus identified in the CD&F may be acquired without regard to the domestic preference restrictions imposed by the Trade Agreements Act (TAA) and the Buy American Act (BAA) clauses included in the GSA Schedule and GSA individual procurements. The Senior Procurement Executive concluded that waivers of the domestic preference restrictions were warranted based on scarcity in that the supplies were deemed “temporarily unavailable in sufficient quantity or satisfactory quality” or not “mined, produced, or manufactured in the United States in sufficient and reasonably commercial quantities of a satisfactory quality.”
Commerciality in the Time of Coronavirus—DCMA Issues New Class Commercial Item Determination and Guidance
On March 31, 2020, the Office of the Under Secretary of Defense for Acquisition and Sustainment issued a memorandum attaching a class Commercial Item Determination (CID) promulgated by the Defense Contract Management Agency Commercial Item Group (DCMA CIG) identifying as commercial items specific products and services needed by the Department of Defense (DoD) to address the COVID-19 pandemic (Memorandum). The Memorandum is specifically intended to “allow contracting officers maximum flexibility” in awarding critical contracts for supplies and services needed for the DoD to combat the COVID-19 pandemic. The Memorandum is expected to facilitate the award of “urgent commercial item procurements,” and the class CID is specifically “limited to the information pertaining to the 2020 COVID-19 pandemic.”
DoD Extends a Hand to Federal Contractors Navigating the Impacts of COVID-19
As most federal contractors know all too well, the United States Government is not always an easy customer. This is particularly true in circumstances where a contractor encounters performance impacts and seeks to recover increased costs and/or endeavors to secure a schedule extension. The Government’s negotiating posture in response to these types of requests is seldom inviting.
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COVID-19 Response — Locked In Paradise — Hawai`i Issues Robust Stay-at-Home and Mandatory Quarantine Orders for Visitors and Residents
This week, the State of Hawai`i instituted some of the most sweeping emergency orders in the country in the response to the COVID-19 pandemic. For tourists, tourism, federal employees, federal contractors, and the millions of island residents, this means a very different kind of stay while in paradise.