With the COVID-19 pandemic front and center, this month has seen several developments that impact government contractors, including notable legislative and regulatory updates, the publication of various reports, and modifications to the procedures and operations of courts and administrative bodies. This article provides an overview of these events from March 2020.
Many Venable practice groups are providing updates regarding various aspects of the impacts of COVID-19 that affect our clients. To keep abreast of all pandemic-relevant content, please visit our COVID-19 webpage.
Legislative Developments
- On March 27, 2020, Congress passed and President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), Pub. L. No. 116-136, which includes loans that may be forgiven under certain circumstances to small businesses and cost relief to contractors who have been prevented from working. Moreover, Section 3610 encourages federal agencies to modify the terms and conditions of their contracts with business concerns of all sizes to reimburse contractors for keeping their personnel in a ready state (as opposed to terminating them), based on "the minimum applicable contract billing rates not to exceed 40 hours" a week of leave. For more information on how the CARES Act will impact government contracts, please see our detailed article on the topic.
Regulatory Developments
- Defense Pricing and Contracting (DPC), which is responsible for all pricing, contracting, and procurement policy matters in the Department of Defense (DoD), has provided a website where industry stakeholders can provide input relative to the implementation of the CARES Act.
- DoD is working toward implementation of Executive Order (EO) 13911, Delegating Additional Authority Under the Defense Production Act with Respect to Health and Medical Resources to Respond to the Spread of COVID-19. In conjunction with EO 13909 and 13910, this EO gives the U.S. Department of Health and Human Services (HHS) and Federal Emergency Management Agency (FEMA) (as an agency of the Department of Homeland Security) lead on all personal protective equipment (PPE) and medical equipment DPA priorities and rating authorities related to COVID-19.
- Federal government agencies are streamlining and waiving or expanding certain requirements in light of COVID-19, and contractors may be eligible for certain sole-source or other awards that are conducted without full-and-open competition. In particular, FEMA is accepting unsolicited proposals and generating leads for HHS to award contracts to industry supporting the COVID-19 response. FEMA's website includes specific information on how the private sector can submit unsolicited proposals.
- On March 30, 2020, the Department of Defense published a memorandum addressing how agencies should handle contractor Requests for Equitable Adjustment (REAs) and other performance issues in light of the COVID-19 crisis. DOD's guidance addresses ways to provide relief to contractors, such as through the Excusable Delays clause at Federal Acquisition Regulation (FAR) 52.249-14. DOD has also directed contracting officials to consider REAs in light of Section 3610 of the CARES Act, which provides agencies discretion to use "funds made available to the agency" by Congress to modify any contract or other agreement to reimburse contractors for workers' lost time up to September 30, 2020, if the contractor provides leave to its employees or subcontractors "to protect the life and safety of Government and contractor personnel."
Reports and Other Memoranda
- On Friday, March 20, 2020, the U.S. Office of Management and Budget (OMB) issued government contractor-specific guidance to all executive departments and agencies regarding the federal government's management of federal contract performance issues occurring as a result of COVID-19: Managing Federal Contract Performance Issues Associated with the Novel Coronavirus (COVID-19). In the memorandum, the White House "encouraged [agencies] to leverage the special emergency procurement authorities authorized in connection with the President's emergency declaration under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§ 5121-5207 (the "Stafford Act")." The memorandum specifies that "[t]hese flexibilities include increasing the micro-purchase threshold, the simplified acquisition threshold, and the threshold for using simplified procedures for certain commercial items, all of which are designed to reduce friction for contractors, especially small businesses, and the government and enable more rapid response to the many pressing demands agencies face." For more information on how the CARES Act will impact government contracts, please see our detailed article on the topic.
- On March 28, 2020, the Department of Homeland Security (DHS) and the Department of Defense (DoD) issued guidance to clarify that the Defense Industrial Base (DIB) and other "Critical Infrastructure Sectors" are expected to maintain their normal work schedules during the COVID-19 outbreak. To slow the spread of COVID-19, many states and localities have issued "stay-at-home" orders and similar restrictions on normal economic activity that have forced many businesses to temporarily close or, to the extent possible, continue operations remotely. These orders have generally exempted Critical Infrastructure Sectors, including the DIB. As a result, many contractors will be expected to maintain normal operations even in those areas where a "stay-at-home" order applies. Contractors should regularly check all applicable state and local guidance, as the requirements continue to evolve at a rapid pace.
- The U.S. Senate Committee on Small Business & Entrepreneurship published "The Small Business Owner's Guide to the CARES Act," which provides guidance on major programs and initiatives that will soon be available from the Small Business Administration (SBA), as well as some tax provisions of the CARES Act that are outside the scope of the SBA.
- On March 31, 2020, the Office of the Under Secretary of Defense released a memorandum, "Determining and Making Commercial Item Procurements to Respond to the Coronavirus Disease (COVID-19)," which provides a list of items that meet requirements of the commercial item definition under FAR 2.101 and are determined to be commercial items. The memorandum notes that "[m]ost of the supplies and services required by the Department of Defense (DoD) in response to the Novel Coronavirus (COVID-19) will be urgent commercial item procurements," and specifies that "[t]he items listed in the class CID meet the requirements of the commercial item definition under Federal Acquisition Regulation 2.101 and are determined to be commercial items."
- Also on March 31, 2020, the Office of the Under Secretary of Defense released a memorandum, "Reporting COVID-19 Related Actions to the Federal Procurement Data System," that requests that all agencies use National Interest Action (NIA) code (P20C), added to the Federal Procurement Data System (FPDS) on March 13, 2020, on all contract actions issued in response to the pandemic. Such actions will include "a significant number of new awards for supplies and services, as well as modifications to existing awards." This new code will enable the government to track contract obligations relating to COVID-19 actions.
- The U.S. National Institute of Standards and Technology (NIST) issued guidance for employers and employees on best practices for teleworking securely in light of the dramatic increase in remote work due to COVID-19. This guidance should be read in conjunction with the Cybersecurity and Infrastructure Security Agency (CISA) memorandum on identifying essential workers, including IT and cybersecurity personnel, in critical infrastructure sectors that should maintain normal work schedules if possible.
From the Courts, Boards, and the GAO
- Courts and administrative bodies in jurisdictions across the country have issued standing orders restricting physical access to courthouses, delaying proceedings, altering and extending discovery schedules, and staying non-essential hearings. Below is a summary of the latest announcements that may be relevant to government contractors:
- The United States Court of Appeals for the Federal Circuit (CAFC) issued an order on March 16, 2020 restricting public access to the Howard T. Markey National Courts Building and connected buildings, with limited exceptions for days in which a court proceeding is scheduled. The Court also notified litigants that that all cases scheduled for argument during the April 2020 sitting will now be conducted by telephonic conference, and no in-person hearings will be held. In an order dated March 20, 2020, CAFC also implemented additional temporary modifications to court operations, including suspending the filing of certain paper copies, establishing modified filing and service procedures for parties appearing pro se, authorizing changes to how the Clerk's Office provides assistance to the public, and providing additional guidance to counsel concerning the scheduling of future court hearings.
- The United States Court of Federal Claims (COFC), which is located in the same building as CAFC, also issued an order on March 16, 2020 restricting public access to the Howard T. Markey National Courts Building. COFC has not issued any broad-based orders altering or extending deadlines, but parties may request extensions where appropriate.
- The Armed Services Board of Contract Appeals (ASBCA) issued an announcement on its webpage stating: "Effective March 16, 2020, until further notice: Due to covid-19 related restrictions, the Board is open with most employees working remotely. The best way to communicate with the Board is by email at asbca.recorder@mail.mil or by telephone at 703-681-8502."
- The Civilian Board of Contract Appeals (CBCA) issued an announcement on its webpage stating: "The CBCA is OPEN to accept efilings. As a result of the ongoing COVID-19 pandemic, effective March 30, 2020, and until further notice, the CBCA will no longer receive or accept mail, packages, or in-person deliveries. Mail or packages sent via U.S. postal service will be held by the post office until the Board's physical office reopens. Fed Ex and UPS packages will be returned to sender." The CBCA also noted that "[w]ith the exception of statutory deadlines, each judge has the discretion to modify the deadlines established in a specific case. All hearings, mediations, and arbitrations in March and April will be rescheduled or held by video, web conferencing, or telephone."
- The Government Accountability Office (GAO) has not issued guidance concerning changes to the bid protest process in light of the ongoing COVID-19 pandemic, but endeavors to continue operations in a manner that is as normal as possible. Individual GAO attorneys have discretion to modify non-statutory deadlines upon request by the parties, for good cause shown.