Is There Any End in Sight? 5 Reasons Why You Can’t Quit.

By Ann Sullivan

 

I was on a call recently with fellow business leaders and one of them articulated what I have been thinking. Is there any end in sight? Meaning COVID-19, meaning nasty politics and gridlock on important issues, meaning decreased revenues and meaning people in a pretty bad mood. If you are a business owner, you have dreams of simply walking away saying “I quit.” But you can’t—here are five reasons why.

 

1. You have invested too much into the business to walk away. As satisfying as walking away sounds, why would you throw away all that time and effort that it takes to build a business. More than 50% of businesses fail in the first year. If you made it past that mark, you overcame a big hurdle – the odds are with you.

 

2. You like being your own boss. In a study by Guidant Financial, 55% of respondents said being their own boss was their biggest motivation for owning their business. Business owners don’t necessarily excel in playing corporate politics – they live with the consequences of their own decisions. Plus, being your own boss has the potential for greater income than working for someone else.  

 

3. You’re in good company. Depending on what survey you choose, nearly 1/3 of all small businesses in the US are non-operational due to COVID. If you are in business, you’ve beat the odds, so chances are you’ll climb out of this.  

 

4. You have been given an unusual chance to reposition and get creative. This opportunity doesn’t happen very often but COVID-19 forced us to think about pursuing new business lines and add new capabilities. Not that we wanted to do this – life was pretty good when the revenues were strong, but every business needs a refresh at some point. 2020 just gave us the kick in the pants we probably needed.

 

5. You can’t fix the political world. Having been in the political arena for a long time, I remember when politicians were much more collegial. Even though you can’t fix the political divide, what you can do is vote, volunteer, contribute to candidates that share your views and work for a better future for you and your employees. 

Cybersecurity Certification Keeps Chugging Along

WIPP Works in Washington | September 2020

By Elizabeth Sullivan

The last time I wrote about the Department of Defense’s (DoD) Cybersecurity Maturity Model Certification (CMMC) was back in early March when the DoD released their final version to industry. The pandemic hit shortly after and turned things upside down…except for the rollout of CMMC, which has continued to move forward.

So, where does everything stand now?

A major step has been taken in moving this process along – training started at the end of August for certification assessors. These 73 assessors, however, are part of a “provisional program” and won’t actually be assigning the companies they evaluate a final CMMC level. Think of these initial assessments as more of a dry run, with the goal of providing feedback to the DoD and CMMC Accreditation Body (CMMC-AB)on any issues that need to be resolved before the real evaluations begin. As a reminder, the body providing the training – the CMMC-AB – is separate from the DoD. The AB is currently operating with a volunteer board and will eventually be a fully staffed organization. 

This step comes in the wake of a rift between the DoD and the CMMC-AB over a new contract that would supersede their existing Memoranda of Understanding (MOU). The tension between the two organizations over the new agreement is centered around responsibilities, which some AB board members felt was undermining their authority. The DoD has said this agreement is a new no-cost contract would provide a more binding relationship between the CMMC-AB and the Department. While this was slated to be resolved by the end of August, stay tuned for the final result.

In the meantime, CMMC requirements showed up in the General Services Administration’s (GSA) $50 billion 8(a) STARS III contract, where GSA indicated that it “reserves the right” to require certifications for small businesses awarded slots on the federal IT vehicle. Although CMMC is only a future requirement for the approximately 300,000 DoD contractors, it has been predicted that adoption of the certification could spill over into civilian acquisitions. The move by GSA is a prime example of this, but is also not very surprising – DoD was one of the biggest buyers on the predecessor contract, STARS II. 

So, where does this leave small business contractors? With a lot of remaining questions. Below are a few that come to mind: 

• As companies try to prepare for this assessment, who is credible to help them identify gaps to reach a readiness level? There has been a myriad of bad actors popping up, claiming they can guarantee a certain CMMC level with their analysis (which they can’t). 
• Once the CMMC-AB accredits assessors and their certified third-party assessment organizations (C3PAOs), companies can start to get assessed. What is the actual cost for companies get this assessment? Will all of the accreditors charge the same amount? 
• Once assessors are ready, what is the order in which the 300,000+ businesses will be assessed? Is there a cue? Will it be based on existing contracts? Are small businesses going to pushed to the bottom of the list?  

According to DoD, all contractors will have to be certified by 2025. Advocacy remains crucial on this issue, and WIPP’s Virtual Symposium on Cyber Resiliency (September 31-October 1) is focusing on these important policy changes for WOSB contractors. Check out the agenda for the Symposium and register here. 

Amidst the continuing pandemic one thing remains the same for all federal contractors– Section 889 implementation.

By Elizabeth Sullivan

Disclaimer: This is longer than our usual blog posts – the rule was 86 pages, so bear with me through this one.  

 

Section 889 – a name that does not mean much to the average person, but carries a lot of weight for contractors. This is a section in the FY2019 National Defense Authorization Act (NDAA) that seeks to eradicate Chinese telecom from the entire U.S. government supply chain. Why write about it now? The part that impacts federal contractors of all sizes (Part B) goes into effect in less than a month.

 

Earlier this year, the Department of Defense (DoD) held a public meeting to hear from industry. Of the salient points made, one resounding theme was that definitions will mean everything for implementation. However, industry hasn’t been able to share any definitional clarity because of the rule release delay. The FAR Council published their interim rule last week – Part B goes into effect before the comment period is over, which means contractors will have to comply with the rule starting on August 13, 2020. Public comments can be submitted until September 14. 

 

Here are the five key components for small/midsize business contractors to pay attention to.

 

You’ll have a new box to check in SAM. Contractors will need to annually check a box in SAM verifying that they do not use any covered telecommunications equipment or services. A contractor can choose to say yes, they do use some of these banned equipment/services, which would require an offer-by-offer representation for contracts and task/delivery orders under IDIQs. It is important to know this ban applies toany equipment, system, or service that uses the covered equipment or services as a substantial or essential component of any system, or as critical technology as part of any of a contractor’s systems. Think this rule does not apply to you? Think again – acquisitions of commercial items (including COTS) and contracts at or below the simplified acquisition threshold (SAT) must also adhere to this prohibition. 

 

Definitions are key. Definitions are critical to the implementation of this rule, which defines words such as “backhaul” and “roaming,” but leaves contractors with uncertainty over what constitutes a covered technology. FAR 4.2101 covers some of these definitions, however there was no further clarity in the rule regarding who is considered “any subsidiary or affiliate of such entities” of the five listed companies (Huawei, ZTE, Hytera, Hikvision and Dahua). It seems problematic that a small business contractor is expected to research all of the subsidiaries and affiliates of these companies to make sure they are not utilizing any prohibited components. Note to government: why not just provide a list? 

 

Another definitional bone I have to pick is the meaning of “reasonable inquiry.” The rule says that a company is compliant if a “reasonable inquiry” by the company does not show any use of the prohibited equipment or services. So, what exactly does that mean? According to the rule, a reasonable inquiry is something that is designed to uncover any use of these covered telecommunications equipment or services and does not need to be an internal or third-party audit. While I am not a lawyer, I can imagine that every procurement attorney would advise contractors to have some type of legitimate audit of systems in case compliance risks arise.

 

The waiver process is laborious. Although a waiver sounds reasonable and gives contractors added time to comply (until August 13, 2022), it doesn’t seem designed for small or midsize contractors. In order to get a one-time waiver, the head of an agency has to grant it. Before this happens, a senior agency official for supply chain risk management has to discuss the waiver with the Federal Acquisition Security Council (FASC). And consult with the Office of the Director of National Intelligence (ODNI) to make sure conditions are met. And provide notice to the ODNI and FASC 15 days before granting the waiver. And notify appropriate Congressional committees within 30 days. The FAR Council does acknowledge that this process could take a few weeks and advises to enter at your own risk because “agencies may reasonably choose not to initiate one and to move forward and make award to an offeror that does not require a waiver.” A quick data point: there are 387,967 companies registered is SAM, 74% of which are small. That would mean if every small company decided to submit an offer for a federal award and sought a waiver, that would be 287,096 waivers. 

 

Six contractor actions are necessary for compliance. A chunk of the rule outlines contractor compliance recommendations. After reading and re-reading these six actions in the rule, I’m left with the same feeling: small contractors need something more detailed than just general guidelines. Generalities like “read and understand the rule and necessary actions for compliance” and “corporate enterprise tracking” sound great, what exactly does that entail? During more normal times – let alone a pandemic – building out a compliance program can be complicated, not to mention costly. It is important contractors have the detailed information to get it right.

 

Finally, I see dollar signs. The rule completely underestimates the time it will take contractors to implement and remain compliant with this rule. A whole section is dedicated to this analysis – and quite a few estimates left me scratching my head (you can find these in Section III, Part D). Companies aware of the rule have been spending months trying to prepare and continue to evaluate the components in their government offerings. An important part of complying with the rule to highlight is that a company cannot use any of these prohibited systems/equipment, even if they are not used in its federal contracts. That means no split networks or having one system for U.S. federal business and a difference one for commercial or contracts with other countries. I see more dollar signs.

 

The FAR Council is seeking public comment on the rule – and federal contractors should respond. In Section IV of the rule you can find a list of questions the Council wants industry to answer, and it is worth taking a look at them. One that is also found in the beginning of the rule is whether an expansion of the prohibition should be made to include all company subsidiaries and affiliates. Feedback is also requested on subjects like challenges, costs and insight into existing systems.

 

One thing all contractors, regardless of size have in common – they want to be compliant so they can compete. Given the uphill battle small and midsize contractors face when it comes to compliance with Section 889 and many other contracting requirements, advocacy on this issue is critical. 

House Members Express Frustration About SBA’s EIDL Program

By Maya Shavit

MSGI Intern

 

Last week the House Small Business Committee heard from long-anticipated witness, James Rivera from the Small Business Association (SBA) Office of Disaster Assistance, testifying before Congress about the Economic Injury Disaster Loan Program (EIDL). The EIDL program is originally designed to provide economic relief to businesses experiencing difficult times. But in response to the hit many have felt from the COVID-19 pandemic, for the first-time small businesses nationally can apply for the relief. While in theory this seems like a surefire way to receive aid in this unprecedented time, business owners have faced tremendous frustration with the EIDL’s process and the little assistance they have received from the SBA. Throughout the hearing, the Committee Members highlighted the lack of transparency between the SBA and small business owners.

Every Member on the Committee was perplexed by SBA’s lack of communication. Chair Nydia Velázquez (D-NY) and Ranking Member Steve Chabot (R-OH) opened the hearing mentioning that small business owners were not updated on the progress of their loans. The EIDL portal used in the loan process confuses many business owners and its supposed “help centers” provide little to no support. Mr. Rivera contributed this flaw to the “angst to get it out” as the pandemic ramped up to injure businesses nationally and the SBA’s forced three stops through March and April. Of particular inconvenience was the sudden change by SBA to exclusively allow agricultural businesses to apply for the loans. Ranking Member Chabot later continued to address this point as he noted that the SBA should have run the decision by Congress, which Mr. Rivera agreed to. If Congress is left in the dark, the general public is even further removed and strained by a lack of information. Representative Angie Craig (D-MN) brought up a personal experience with the “lack of accountability” that her constituents experienced. After a constituent in her district was left with no response for weeks from the SBA about their loan, Representative Craig used the congressional “24hour” email line, where she also never received a response. If this was the response that she as a congressperson received, she could only sympathize with the upset of a small business owner waiting for weeks or months in the processing que.

Another issue highlighted by Representatives Judy Chu (D-CA) and Dwight Evans (D-PA) was that the program did not provide equal opportunity to minority-owned businesses. Congresswoman Chu indicated that while SBA has translated the EIDL program into 17 languages, this excludes many languages that the Asian American business owners with a lack of English proficiency can understand. Twenty-five million dollars was appropriated to the Agency specifically for program translation, yet no progress has been made. Additionally, Member Evans noted minority struggle as he asked Mr. Rivera to “rate the way African Americans have been given a chance,” to which Mr. Rivera could not answer his question. 

Concluding the hearing, Members of Congress asked Mr. Rivera how he thought the SBA was doing with EIDL. Representative Dan Bishop (R-NC) questioned why Mr. Rivera believed the 41-day average he noted to the Committee was more than adequate. He cited that while the “historically based” numbers are “much better” than they were in previous disasters, it is clear that the COVID-19 pandemic is not similar to previous national disasters and economic crises that the population has faced. SBA staff members focused on approving EIDL applications are allotted 15 minutes, far less than the hours spent before the COVID-19 pandemic. While there have been beneficial changes, there is no denying that there were many hurdles at the start of the new process and there still are many issues that the SBA is not fully aware of. 

While no members argued that those numbers were more satisfactory, the frustration in the room was not alleviated as, on both sides of the aisle, people were not excited by the answers provided. Ultimately, Mr. Rivera expressed that while EIDL had some difficulty getting off the ground, the SBA is proud of its progress, but it strives to do much better. Chair Velázquez concluded the discussion by noting that the SBA must do better, “Especially when it comes to the communication between the SBA, Congress, and the constituents.” The SBA must listen to the lost business owners and work with Congress members to improve the EIDL program.

Top Five Reasons to Support Advocacy Now More Than Ever

By Ann Sullivan | WIPP Works In Washington, July 2020

If you have been attending WIPP’s Monday webinars on all things COVID-19, it should be pretty obvious that WIPP is on top of Congressional and federal agency actions related to the pandemic that continues to plague us personally and professionally. Not as evident, perhaps, is the role of advocacy beyond reporting the latest news. We give you five reasons why your support for WIPP is important.

 

1.  There’s More to Come. The government isn’t finished providing assistance to businesses.  The Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) remain key to retaining employees and providing capital but expect another stimulus bill later this summer.

 

2.  If You’re Not at The Table, You’re on the Menu. In other words, there are consequences to sitting on the sidelines. If you aren’t represented in decision-making, you are vulnerable to adverse consequences—you are at risk. WIPP is at the table.

 

3.  Interpreting Federal Actions Requires Context. A perfect example of this are the actions the Small Business Administration (SBA) and the Department of Treasury issued on PPP. Much was made of an audit of loans over $2 million— Treasury guidance (see question #31) issued in response to high profile public companies who got the PPP loans. Unfortunately, small companies got scared of a government audit and returned money they needed and should have kept. This could have been avoided, had they understood the intent of the rule/Congress.

 

4.  Access to Decision-Makers Requires Consistent Attention. Advocacy requires constant communication with a consistent message. It is not all that different than a business relationship—you need to remind people who you are and what you offer. Cold calling during a crisis is unlikely to be effective. WIPP’s advocacy team keeps women business owners front and center so Congress turns to WIPP for its point of view during a crisis. Big difference.

 

5.  A Combined Voice is Far More Effective Than One Voice. The mission of WIPP is to provide a voice for women business owners. Its message resonates with policymakers because we represent women from all over the country, from different political views and every size of business. Your individual message to Congress is important. But as Helen Keller once said, “Alone we can do so little, but together we can do so much.”

Hearing Reveals Clues for Additional Small Business Relief

By Elizabeth Sullivan

The Senate Small Business Committee had a never-before-seen visitor yesterday: Treasury Secretary Steven Mnuchin. He joined Small Business Administration (SBA) Administrator Jovita Carranza in testifying before the Committee on the small business programs included in the CARES Act. The hearing revealed a few interesting pieces of information about how the programs have been run, as well as what the future may hold. Here were our team’s top takeaways.

 

1.    Small businesses need additional relief. While we have heard this feedback from small business owners countless times over the past month – we weren’t quite sure Congress got the message. Despite the rule changes made in H.R. 7010, many businesses that received Paycheck Protection Program (PPP) dollars are about to reach the end of their forgiveness portion. Meaning, although there was an extension of the forgiveness timeline to 24 weeks, many businesses planned for the 8-weeks and are about to/have reached the end of their funds. Therefore, another round of layoffs is to be expected this month, as many do not have the cashflow to keep their employees on the payroll. This issue was echoed by Senators on both sides of the aisle during the hearing and even the Treasury Secretary said that yes, there was going to need to be some type of additional support.

When asked by Senator Kennedy (R-LA) if relief for investors such as capital gains tax changes were on the table, the Treasury Secretary gave a lukewarm response and echoed the need to focus on getting people back to work. When further asked if he were “king for a day” what he would do moving forward, Mnuchin said, “I definitely think we are going to need another bipartisan legislation to put more money into the economy.” He suggested three things could be on the table: another round of direct payments to individuals, fixing unemployment, and more money to encourage businesses to re-hire, with targeted efforts to industries that are most impacted by COVID-19 such as  hospitality and tourism.

 

2.  Targeted relief is needed for minority-owned and women-owned businesses. Senator Maria Cantwell (D-WA) and Chair Marco Rubio (R-FL) were among many to call for targeted relief to underserved communities who traditionally struggle to access capital and resources. Senator Cantwell sent a letter to both witnesses, pushing for prioritization of these communities and smaller (10 or fewer employees) businesses in existing relief loans and any future  COVID-19-related assistance. 

 

Senior Committee Democrats Ranking Member Cardin (MD), Senator Coons (DE) and Senator Shaheen (NH) announced their intention to introduce the Prioritized Paycheck Protection Program (P4) Act. The bill authorizes new lending under the PPP to small businesses with 100 employees or less, including sole proprietorships and the self-employed. In order to be eligible, businesses must have already depleted an initial PPP loan or be on pace to exhaust the funding and must demonstrate a revenue loss of 50% or more due to the COVID-19 pandemic. This is a step in the right direction.

 

3.  SBA’s abrupt changes to the EIDL program were not random. SBA Administrator Carranza revealed the math behind the $1,000 per employee cap for Economic Injury Disaster Loan (EIDL) advances and $150,000 loan cap for EIDL loans. Based on the number of applications, SBA calculated that in order to lend to all applicants, these limits were necessary.  Ranking Member Cardin (D-MD) and others pushed her to  explain why she didn’t tell Congress more money was needed to be appropriated. She said in the hearing that all 5.4 million applications will be in the EIDL loan portal by next week. For context, a loan officer in the EIDL program typically processed 3-5 loans a day and now handles 50+ loans a day. “Into the portal” doesn’t necessarily mean all the loans will be approved by next week, but they will be out of the EIDL purgatory and processing will begin. Stay tuned.

 

4.  Changing PPP rules to allow small business owners with criminal records to apply for loans could be coming soon. Current rules on the PPP program from the Treasury Department prohibit business owners with felony convictions or who are currently on parole/probation from receiving PPP loans. In his questioning, Senator Booker (D-NJ) asked if the Secretary would be open to changing the program’s rules. The Senator highlighted his legislation, which has bipartisan support and will remove the ban on individuals with non-financial fraud felony convictions. The Treasury Secretary said rules scaling back the criminal conviction from the past five years to the past three years were going to be published shortly. However, Secretary Mnuchin also indicated that if there was bipartisan consensus, he would open to the change proposed by Senator Booker and others. 

 

All of the Senators gave accolades to the agency leaders and their staffs for implementing these unprecedented small business loan programs. They pushed for more timely responses from the SBA to the Committee. So, the question that remains – will there be further action: what will it look like and when? Committee Members expressed a sense of urgency for additional small business relief. 

 

Our suggestion – make this bill about relief and recovery. Put policy changes in place that will also have a lasting effect on the economy. For example, changes to sole source rules for individually-owned 8(a), WOSBs, SDVOSBs and HUBZone companies that have been passed in the House and were included in the draft Senate SBA reauthorization bill would get help contracts get into the hands of small businesses during recovery and into the future. Additionally, allowing equity investment in 8(a) and WOSB firms could give them a boost of capital to remain sustainable. The clock is ticking, and small businesses need these bipartisan solutions as soon as possible. 

COVID-19 Fatigue – What About All the Other Issues

By Ann Sullivan

WIPP Works in Washington June 2020

The newness of COVID-19 has worn off and, although little attention has been paid to other issues Congress must address, they haven’t gone away. Although congressional staff and Members are working remotely, business is still being conducted. I would be remiss if I did not mention the potential for social justice reform, due to protests over the weekend. However, there has been no federal action as of this writing. Here’s what to expect:

Funding the Government for FY21.The government calendar for funding has not changed. The fiscal year still ends on September 30 and Congress must pass appropriations legislation to continue to fund the government. Although the schedule has been pushed back due to the pandemic, House leadership says it plans to pass all of its appropriations bills by August. As usual, the Senate schedule is less ambitious, but the Senate Appropriations Committee plans to start deliberations in late June. 

Authorizing Defense Department Programs. The National Defense Authorization Act (NDAA) guides every defense program and sets priorities for the following fiscal year. It doesn’t fund the programs—it leaves that to the appropriators but authorizes and recommends the funding levels. Often Included in this bill are changes to small business contracting programs that are deemed important to the defense supplier base. The Senate Armed Services Committee expects to have completed its bill by the end of June/early July. The House Armed Services Committee schedule follows roughly the same timeline.

Infrastructure Funding. In addition to roads, trains and ships, water infrastructure is also on the list to fund and authorize. Although it was initially thought to be a massive recovery initiative, it now appears the Congress may tackle this piece by piece. Either way, a number of the programs expire unless Congress takes action by September 30. 

Tax Extenders. Tax deductions and credits have expiration dates. Unless Congress extends them, they expire. Action is necessary to keep them intact and the list of expiring tax cuts since 2018 is pretty long. The Joint Tax Committee publishes the list here.

Although COVID-19 related actions will continue to be front and center for the Congress, it cannot neglect its other duties. Let’s not forget that there is an election coming in November which includes the entire House of Representatives, 1/3 of the Senate and the Presidency. The Congress, adapting to the ban of large group gatherings, will spend a significant amount of time campaigning for the November elections. In the end, the government still needs to be funded, the need for a strong defense and services taxpayers expect from their government do not go away in a pandemic. Despite the public disheartening partisan rhetoric, the Congress will quietly work together to get things done.  

Opportunities in the Face of Challenge

By Elizabeth Sullivan 

While many segments of the economy are experiencing unprecedented loss, one sector of the economy, the federal government, is rapidly increasing its spending to combat the COVID-19 virus. Reported spending obligations for COVID-19 as of May 4 are about $8.5 billion and are expected to increase in the coming weeks (note: every time the numbers are updated, the previous link will reflect those updates). Here are a few of the numbers you should be aware of as a federal contractor.

Agencies flowing the most dollars to small businesses are the Departments of Veterans Affairs (VA), Small Business Administration (SBA), Health and Human Services (HHS), Homeland Security (DHS) and Justice (DOJ). Veterans Affairs has awarded over $580 million, while HHS and SBA are tied for second with $417 million. For the Department of Justice – of the total dollars spent so far on coronavirus, 63.5% was awarded to small businesses. That is a little over $39 million of the total $62 million spent as of May 4, 2020. 

Dollars are also being awarded to women-owned small businesses (WOSBs). Across all agencies, since March, over $490 million has been awarded to WOSBs to assist with COVID-19 relief. Just for some context – this number has exceeded the total dollars awarded for WOSBs in FY2018, which was $473.1 million. So, in a matter of months, the dollars awarded have exceeded an entire fiscal year’s previous spend. This increase has been across small business programs – service-disabled veteran-owned small businesses (SDVOSBs) also have been awarded $493 million and HUBZone companies $90 million. 

A few examples of how what federal agencies are pursuing COVID-19 assistance include HHS refocusing its research contracts to seek assistance with COVID-19 and the Army is seeking new technology to help prevent, treat and manage the coronavirus.The SBA is on a hiring spree given their new responsibility to process $620 billion in loans to small businesses.

So, how can you take advantage of this new spending? In addition to working with your existing federal customers, there are two other ways to showcase your capabilities to assist with COVID-19. The first is to sign up on the Disaster Response Registry in SAM, where you can submit your COVID-19 related capability statements and product offerings. This registry is used agency-wide. The second is to submit inquiries to the DHS Procurement Action Innovative Response (PAIR) Team. DHS created this in response to the surge of incoming industry offers of help and innovative ideas to support the fight against COVID-19. 

By the time you read this, more dollars will have been spent. Make sure you are taking advantage of these opportunities now. 

What’s Next?

By Ann Sullivan, WIPP Chief Advocate

WIPP Works in Washington May 2020

COVID-19 relief took the form of four bills passed by Congress in the last two months. All of this is centered around relief for workers and employers hit by COVID-19, including small business loan and forgiveness programs, aid to hospitals and money for test deployment, employer required sick leave, and direct payments to Americans. 

A staggering $2 trillion was spent in these four bills and the Federal Reserve Bank spent an estimated additional $4 trillion on relief. We learned the demand from small businesses for the Paycheck Protection Program (PPP) and the Economic Injury Disaster loans (EIDL) far exceeded available funding. Everyone is curious about the direction of future aid for obvious reasons. What’s going to be in the next bill or is there going to be a next bill?  

My best guess is that the next Congressional bill will be a hybrid of relief and recovery. Much is left to do on the relief side and refinement of the programs put in place by previous legislation. When programs are drafted in a hurry, unexpected issues arise that need to be addressed.  Evidence is the number of guidance documents issued by the Small Business Administration (SBA) and the Treasury/IRS surrounding small business loan programs. For federal contractors, implementation of Section 3610 relief has generated extensive documentation. The next bill will most certainly contain changes to existing programs.

Is Congress going to deliver additional relief by providing additional funding for the PPP or EIDL programs? Senate Majority Leader Mitch McConnell (R-KY) suggested that Congress slow down future relief, saying "until we can begin to open up the economy, we can’t spend enough money to solve the problem." Relief to state and localities has yet to materialize but is widely considered to be a major part of any future bill.

As Governors start loosening restrictions on stay-at-home orders and industry starts to slowly reopen, the focus is slowly shifting toward economic recovery. Congressional leaders are looking at successful programs deployed during the Great Recession (2007-2009) that could be helpful during this pandemic. Another much talked about idea is a stimulus, such as a massive infrastructure program. This would not only cover shovel ready construction projects, but broadband, telecommunications and technology infrastructure. Also bubbling up are tax deductions and credits for businesses who will need relief for many months to come. Businesses are asking for special liability restrictions due to COVID-19 in order to feel comfortable bringing employees back to work and opening their doors to consumers. The Senate has signaled this as a priority, but their House counterparts are not so sure. Lastly, the federal marketplace offers a tremendous opportunity for small business recovery, but the rules need to change to allow more dollars to flow to these businesses.

The “What’s Next” list is overwhelming because the need is so great. Our advocacy team is dedicated to ensuring women business owners have a voice in all of these deliberations. That’s the mission of WIPP – we intend on keeping it that way.

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