Thursday, April 9, 2020

DoD Issues Class Deviation on Section 3610 Implementation

By Elizabeth Sullivan 

**UPDATE (4/17/20): OMB has released guidance on Section 3610 implementation that can be found here. The CAAC has issued a class deviation here.

Kim Herrington, Acting Principal Director, Defense Pricing and Contracting at the Department of Defense has issued a class deviation for implementation of Section 3610 of the CARES Act. Class deviations can be issued when necessary to allow agencies to deviate from the FAR and DFARS. To read the document, click here. The DoD's FAQ can be found here.

This deviation allows contracting officers to use DFARS 231.205-79 (page 5 of the document) as a framework for implementation of Section 3610. As a reminder, Section 3610 of the CARES Act allows agencies to reimburse at the minimum applicable contract billing rates (not to exceed an average of 40 hours per week) any paid/sick leave a contractor provides to keep its employees or subcontractors in a ready state, including to protect the life and safety of Government and contractor personnel during the public health emergency declared for COVID–19 (January 31- September 30, 2020). 

Acknowledged in the letter, many DoD contractors are struggling to maintain a mission-ready workforce due to work site issues related to COVID-19. Therefore, the class deviation lays out the implementation of 3610 in DFARS 231.205-79. 

All contractors, especially small businesses, should pay attention to the following from the letter: 
  • Some contractors may receive compensation from other provisions of the CARES Act, or other COVID-19 relief scenarios, including tax credits, and contracting officers must avoid duplication of payments. For example, the Paycheck Protection Program (PPP) established in the CARES Act may provide, in some cases, a direct means for a small business to obtain relief. A small business contractor that is sheltering-in-place and unable to telework could use the PPP to pay its employees and then have the PPP loan forgiven, pursuant to the criteria established in the interim rule published by the Small Business Administration. In such a case, the small business should not seek reimbursement for the payment from DoD using the provisions of section 3610. (*Note: Contractors should consult their legal counsel - SBA has said that just because you have applied for PPP does not necessarily mean you can not seek relief from this provision)
  • Contractors are responsible for supporting any claimed costs, including claimed leave costs for their employees, with appropriate documentation and for identifying credits that may reduce reimbursement under section 3610. Contracting officers are encouraged to work with contractors to understand how they are using or plan to use the COVID-19 relief provisions and encourage contractors to use existing contract terms or the relief provisions available to them in response to COVID-19. 
  • It is important that contracting officers secure representations from contractors regarding any other relief claimed or received stemming from COVID-19, including an affirmation that the contractor has not or will not pursue reimbursement for the same costs accounted for under their request, to support their requests for reimbursement under section 3610. 
  • When implementing section 3610, contracting officers shall consider the immediacy of the specific circumstances of the contractor involved and respond accordingly.

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Additional information/guidance:
  • FAQ from DoD
  • Memo from the Office of the Director of National Intelligence (ODNI)
  • Letter from U.S. Senator Mark Warner to OMB on implementation 
  • Letter from Ohio's congressional delegation to DoD on implementation 

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