Third Relief Bill Message to Federal Contractors: Keep Your Workforce Employed and Safe

By Elizabeth Sullivan

**Update: Check out the guidance/FAQs for both defense and civilian agencies on this provision here.

The President has signed the third negotiated COVID-19 relief package into law. It includes an important provision for government contractors:

Sec 3610. Federal Contractor Authority. Notwithstanding any other provision of law, and subject to the availability of appropriations, funds made available to an agency by this Act or any other Act may be used by such agency to modify the terms and conditions of a contract, or other agreement, without consideration, to reimburse at the minimum applicable contract billing rates not to exceed an average of 40 hours per week any paid leave, including 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, but in no event beyond September 30, 2020. Such authority shall apply only to a contractor whose employees or subcontractors cannot perform work on a site that has been approved by the Federal government, including a federally-owned or leased facility or site, due to facility closures or other restrictions, and who cannot telework because their job duties cannot be performed remotely during the public health emergency declared on January 31, 2020 for COVID–19: Provided, That the maximum reimbursement authorized by this section shall be reduced by the amount of credit a contractor is allowed pursuant to division G of Public Law 116–127 and any applicable credits a contractor is allowed under this Act.

A March 20 memo to the Defense Industrial Base (DIB) stated, “If you work in a critical infrastructure industry, as defined by the Department of Homeland Security, you have a special responsibility to maintain your normal work schedule,” which has caused massive issues for contractors. In order to stay in business, contractors have had no other choice other than to send their employees to work – sick or not. This doesn’t promote social distancing for millions of workers (the DIB employs almost 2.5 million) and puts an even larger population at risk. The above change solves this issue immediately by telling agencies to pay their contractors who cannot come to work until this pandemic is over.

Guidance for Federal Contractors During COVID-19

By Elizabeth Sullivan

Last Update: April 8, 2020

Multiple documents have been issued – and expect more in the coming days – with guidance for agencies and contractors on how to operate with the disruptions from COVID-19. GSA launched a site consolidating the governmentwide guidance: https://www.acquisition.gov/coronavirus. Additional guidance can also be found here: https://www.gsa.gov/policy-regulations/policy/acquisition-policy/acquisition-policy-library#ClassDeviations. 

Office of Management and Budget (OMB):

• Memorandum to the Heads of Executive Departments and Agencies on Managing Federal Contract Performance Issues Associated with the Novel Coronavirus (COVID-19) – Deputy Director for Management, Margaret Weichert
• Agencies should be flexible in providing extensions to performance dates if telework or other flexible work solutions, such as virtual work environments, are not possible, or if a contractor is unable to perform in a timely manner due to quarantining, social distancing, or other COVID-19 related interruptions
• Harnessing Technology to Support Mission Continuity – Deputy Director for Management, Margaret Weichert
• Administration directs that agencies utilize technology to the greatest extent practicable to support mission continuity
• Federal Agency Operational Alignment – Acting Director, Russell Vought
• Agencies should communicate with customers regarding delaying transactions that are not time-critical
• Additional OMB guidance

Department of Defense (DoD):

• Section 3610 guidance and class deviation
• Managing Defense Contracts Impacts of the Novel Coronavirus 
• Acknowledges Section 3610 of CARES Act, reiterates existing performance delay clauses and states future guidance will be issued "as soon as practicable"
• Class Deviation – Progress Payment Rates – Kim Herrington, Acting Principal Director for Defense Pricing and Contracting
• FAQ for implementation
• Pentagon will temporarily increase the percentages paid to contractors, known as periodic progress payments
• Increases the rate for contracts from 80% to 90% of incurred costs for large businesses
• For small businesses the rate will go from 90% to 95%

• Defense Industrial Base Essential Critical Infrastructure Workforce – Under Secretary for Defense for Acquisition and Sustainment, Ellen Lord 
• If you work in a critical infrastructure industry, as defined by the Department of Homeland Security, you have a special responsibility to maintain your normal work schedule
• The Essential Critical Infrastructure Workforce for the DIB includes workers who support the essential products and services required to meet national security commitments to the Federal Government and the U.S. Military

• Contract Place of Performance – Kim Herrington, Acting Principal Director for Defense Pricing and Contracting 
• DoD providing maximum telework flexibility for contractors 
• Determining and Making Commercial Item Procurements to Respond to COVID-19
• DoD SmartPay3 – Increases thresholds for micropurchase agreements to $20,000 for inside the U.S. and $30,000 outside the U.S. 

• More DoD guidance can be found here

Department of Homeland Security

• Letter to DHS contractors encouraging them to talk to their contracting officers if contract performance is impacted due to COVID-19 
• Letter to DHS contractors on contract employees working in DHS facilities
• Guidance on the essential critical infrastructure workforce
• Letter to FEMA contractors regarding performance issues or delays due to COVID-19

General Services Administration (GSA):

• Class Deviation from the FAR – Provide for accelerated payments to small businesses and small business subcontractors
• Accelerated payments to GSA small business contractors and subcontractors
• Policy Guidance for GSA Essential Critical Infrastructure with FAQ
• FAR & GSAR Class Deviation – Debarring Official Notification to Contractors
• Disaster Response Registry – Contractors can register in SAM with COVID-19 related capability statements and product offerings

Small Business Administration (SBA):

• FAQ for Small Business Contractors – Office of Government Contracting
• Addresses potential performance interruptions, excusable delays and subcontractors 
• Extension in filing semi-annual Individual Subcontracting Reports (ISR)

Additional Agencies:

• Navy Intent and Direction Withholds and Retentions During COVID-19 – Navy DIB guidance
• Office of Personnel Management (OPM) – Five memos around agency operations
• Additional Office of Personnel Management guidance
• Environmental Protection Agency (EPA) FAQ for small business federal contractors

• USAID guidance for contractors on allowable costs around COVID-19
• NASA letter to contractors – More information can also be found here: https://nasapeople.nasa.gov/coronavirus/
• DLA Information for Suppliers – Contractors can report any issues related to COVID-1

Additional Resources:

• PilieroMazza did a webinar around COVID-19 impact for employers, and specifically federal contractors here. They also did a blog on additional agency guidance here.
• Guidance for grant recipients from Crowell & Moring

COVID-19: Expect New Employer Obligations

By Ann Sullivan

(Update 4/26/20: For more information, check out the DOL FAQ on these provisions here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions)

Legislation drafted in a hurry, like the Families First Coronavirus Response Act negotiated by Speaker Nancy Pelosi and Secretary of the Treasury Steven Mnuchin, can be confusing.  We are concentrating only on the employer/employee provisions in this comprehensive coronavirus response package. The President signed this bill into law on March 18.

There are two different employer requirements: emergency sick leave and emergency family leave.  Let’s talk about sick leave first.  Every employer under 500 employees is required to offer two weeks of paid sick leave to employees who are sick from the coronavirus, taking care of someone who is sick with the virus or are providing childcare due to cancelled school/daycare – without fear of losing their jobs.  Full time employees who are sick are allotted 80 hours of sick leave and part time employees/hourly workers are given the typical hours worked in a two-week period. Employers are required to pay employees their normal wages or the minimum wage at the federal/state/local level, whichever is the higher.  Employees who are taking care of others are entitled to two-thirds of their regular earnings.  As I read the current bill, these two weeks are in addition to an employer’s existing sick leave policy.  The bill allows the Secretary of Labor to issue regulations exempting businesses with fewer than 50 employees from the paid leave requirement if it would jeopardize the viability of the business. 

With respect to emergency family leave, which is an expansion of the Family and Medical Leave Act (FMLA), the bill expands FMLA availability to employers under 50 employees.  As context, the current law requires 12 weeks of FMLA for employees of companies above 50 employees.  In order to make FMLA applicable to dealing with the coronavirus, the bill expands the definition of who is eligible for FMLA by adding employees who are unable to work because they are providing childcare due to closed schools/daycare centers.  This change is effective through December 31, 2020.  Requirements for employers include paying employees two-thirds pay for a little more than 10 weeks.  The first 10 days of the 12-week period do not need to be paid.  Employers with less than 25 employees would be exempt from requirements to restore an employee's original position if it no longer exists due to changes in either economic conditions or a change in operations as a result of this public health emergency. The Labor Secretary is allowed to issue similar regulations as the family leave exemptions regarding businesses with fewer than 50 employees. In fact, DOL is looking for feedback from employers on compliance for these new rules through March 29.

So, how will this be paid for?  Employers offering this emergency sick leave and family leave will be able to get 100% payroll tax credit for these additional costs on a quarterly basis.  Employers may deduct up to $511 per day for sick employees or $200 per day for employees who are taking care of others.  The tax credit for family leave is up to $200 per day, not to exceed $10,000.  For the self-employed, these credits will be applied against the self-employment tax.  

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Employer Obligations in H.R. 6201: Families First Coronavirus Response Act

Emergency Paid Sick Leave:

• Requires private employers with fewer than 500 employees and all public employers to provide 80 hours of paid leave for full-time employees and part time employees/hourly workers are given the typical hours worked in a two-week period without fear of losing their job. 
• Reasons for this leave can be: 
• Comply with a federal, state, or local quarantine or isolation order.
• Self-quarantine per a health-care provider’s advice.
• Obtain a medical diagnosis for coronavirus.
• Care for an individual who is in quarantine or for a child whose school or day care has closed due to coronavirus.
• Bill caps per employee costs are $5,110 for an employee who is taking the leave for their own illness or $2,000 for employees caring for another individual or child.  
• Leave mandate sunsets on December 31, 2020 and commences 15 days after the bill is signed into law. 
• Allows the Secretary of Labor to issue regulations exempting businesses with fewer than 50 employees from the paid leave requirement if it would jeopardize the viability of the business.
• An employer cannot require a worker to use any other available paid leave before using the sick time or require a worker to find a replacement to cover their hours.

Emergency Paid Family Leave: 

• Requires all employers with fewer than 500 employees to provide to up to 12-weeks of job-protected leave under FMLA for employees who are unable to work or telework because they have to care for a child younger than 18 whose school or day care has closed because of the coronavirus.
• First 10 days of leave could be unpaid, though a worker could choose to use accrued vacation days, personal leave, or other available paid leave for unpaid time off.
• Following the first 10 days, workers would receive a benefit from their employers that will be at least two-thirds of their normal pay rate.
• Per employee cap on costs for the leave are set at $200 per day or $10,000 total. 
• Leave mandate sunsets on December 31, 2020 and commences 15 days after the bill is signed into law. 
• Employers with less than 25 employees would be exempt from requirements to restore an employee's original position if it no longer exists due to changes in either economic conditions or a change in operations as a result of this public health emergency.
• Allows the Secretary of Labor to issue regulations exempting businesses with fewer than 50 employees from the paid leave requirement if it would jeopardize the viability of the business. 

Employer Tax Credits:

• Employers offering this emergency sick leave and family leave will be able to get 100% payroll tax credit for these additional costs on a quarterly basis. 
• Emergency sick leave credit:
• For each employee the credit would be for wages of as much as $511 per day while the employee is receiving paid sick leave because they are quarantined, or $200 if they are caring for someone else who is quarantined or their child’s school is closed.
• Emergency family leave credit:
• As much as $200 per day while the employee is receiving paid leave, or a total of $10,000.
• The credit would be in effect for wages through the end of 2020.
• For self-employed, there is a similar credit applied against the self-employment tax.

Hey Defense Contractors: DoD’s CMMC is Moving Full Steam Ahead With or Without You

WIPP Works in Washington, March 2020

By Elizabeth Sullivan, WIPP's Advocacy Team

If you need a quick refresher on CMMC before reading this, you can find it here and here.

The final model for the Department of Defense’s (DoD) Cybersecurity Maturity Model Certification (CMMC) came out earlier this year. So, what’s next for businesses? 

Let’s talk certification. Now that version 1.0 of CMMC was released – the final version– DoD is moving full steam ahead. The “accreditation body” has been formed, which is an independent, non-profit group that is responsible for developing the training and assessment standards for the certification. The next step in the certification journey for DoD is forming a Memoranda of Understanding (MOU) with the accreditation body, which will outline the roles and responsibilities of each of the parties. Finally, “accreditors” – of which there are none currently – will be responsible for evaluating businesses and assigning them a CMMC certification level. If all of this third-party stuff leaves you scratching your head, just know that DoD is outsourcing the accreditation of over 300,000 contractors with plans for substantial oversight.

Substantial questions remain for contractors. One of the biggest is the timing of the certification rollout. The Department has said that they will issue 10 “pathfinder” solicitations that require various CMMC levels, including a few that will require level 4 or 5 certifications. Since these will be substantial contracts, if you are a small business tapped to subcontract on one of these – when will you get certified? Will there be some type of cue, where the biggest companies go first? Or will it be ranked by the amount of anticipated work? This remains to be determined.

Let’s talk levels. While the CMMC levels have been refined throughout the DoD’s drafting process, it is important to know that there are five levels. Any contractor, regardless of the type of work they do that wants to do business with DoD will need at least a level one. Level one is the most basic cyber hygiene, which has some noteworthy differences from NIST 800-171. The Defense Department has said that most small businesses only need a level one. But I wouldn’t take that assessment at face value. It is important for small/midsize companies to determine the appropriate level they want to prepare for based on the work they do, or plan to do, for the DoD. For example, if your company handles any Controlled Unclassified Information (CUI) you will need at least a level three. By the way, these levels will also apply to subcontracts. Which brings me into the next section of this article – unknowns. 

Let's talk unknowns. I was recently on a panel at the Women Leaders in Defense & Aerospace Law & Compliance Conference, where I shared the stage with the other two sides of the CMMC equation – a lawyer and prime. One of the things that I learned is that concerns span all business sizes—small businesses aren’t the only ones with questions. First and foremost is how the DoD will handle CMMC certification levels for subcontracted work. There has been a lot of conflicting information about this component flying around, but the latest and greatest (as of the time this is published) is that the program managers for both the DoD and prime contractor will work together to determine the appropriate CMMC levels for the components of subcontracted work.

Another unknown is how a company can dispute an assigned level by an accreditor. While the accreditation body will have some sort of mechanism to address this, DoD’s involvement in this process is unclear. This is an important question because certification levels will be assigned for a three-year period. Finally – and this is a big one – the total cost for contractors remains to be seen. DoD has not yet provided any specific information on the cost of obtaining the certification. Some good news is that something that is known (and has been for a while) is that DoD will not seek levels retroactively – meaning that no current contracts will be modified to require a certain certification level. All of this is to say, stay tuned.

Moral of the story is – as a federal contractor, it is time to pay attention if you aren’t already. WIPP recently offered a webinar on this issue, and we intend to continue to provide the most updated education on this certification roll-out. Although CMMC is only for the DoD supply chain, in the future it could impact civilian agencies as well. So, get ready – it’s moving full steam ahead, with or without you.