GSA Hosts Inaugural Meeting of Committee to Advise High Level Acquisition Changes

By Samantha Holt | Government Relations Analyst

Last month, the General Services Administration (GSA) held its inaugural meeting of the Acquisition Policy Federal Advisory Committee (GAP FAC). The GAP FAC advises GSA’s Administrator on how the agency’s acquisitions tools and authorities can drive positive regulatory, policy, and process changes. There are three things government contractors should take away from this meeting:

 

1.     While GAP FAC identified climate and sustainability federal acquisition issues as the initial focus, many committee members brought up challenges faced by small business contractors. The Small Business Administration’s (SBA) Deputy Associate Administrator of the Office of Government Contracting and Business Development, Antonio Doss, is part of the Committee and drove this discussion. Some of the issues identified were:

• Focusing on GSA schedule barriers of entry for small, disadvantaged businesses (SDBs)

• Creating policies that tackle the climate and sustainability issues but do not create new barriers for SDBs

• Constructing teaming framework that make it easier for small businesses to bid and win large contract opportunities

• Introducing strategies that support the longevity of small businesses within federal procurement

• Creating resources to support small, disadvantaged businesses with the climate and sustainability federal acquisition regulatory, policy, and process changes

 

2.     GSA expressed its willingness to support pushing these and other small business changes with the Federal Acquisition Regulatory (FAR) Council. This is important for the small business community because there are often significant lag times between SBA final rulemaking and implementation of these changes in the FAR. 

 

3.     All GAP FAC full committee and subcommittee meetings are open to the public. Written comments can be submitted at gapfac@gsa.gov. Additionally, there are three subcommittees – Policy and Practices, Industry Partnerships, and Acquisition Workforce. While subcommittee meetings have not been announced, keep an eye out for them here.

 
The next GAP FAC meeting is on October 27, 2022 from 1pm – 4pm EST. 

MSGI Congressional Hearing Recap - House Small Business Committee Hearing "CMMC Implementation: What It Means for Small Businesses"

 MSGI Congressional Hearing Recap

Committee: House Small Business Committee, Subcommittee on Oversight, Investigations, and Regulations

Hearing Title: CMMC Implementation: What It Means for Small Businesses

Subcommittee Chair: Representative Dean Phillips (D-MN)

Ranking Member: Representative Beth Van Duyne (R-TX)

Date: June 24, 2021

Witnesses

Mr. Jonathan T. Williams
Partner
PilieroMazza PLLC
Testimony

Mr. Scott Singer
President
CyberNINES
Testimony 

Ms. Tina Wilson
Chief Executive Officer
T47 International, Inc.
Testimony 

Mr. Michael Dunbar
President
Ryzhka International LLC
*Testifying on behalf of the HUBZone Contractors National Council
Testimony 

Main Issues Discussed

Cost of CMMC Implementation

• Chair Phillips (D-MN) Questions:
• Mr. Williams, the cost of CMMC can be burdensome, how can we strike a balance with cost and protecting cybersecurity?
• Response: Keep as many small businesses as possible at Level 1. The businesses will have adequate protections but will avoid the costs of Level 3. We need a controlled approach where small businesses don’t have to take on Level 3 information.
• Are there funding streams to help small businesses?
• Response: I am not aware of any, but it is a great idea. Smaller firms cannot afford the investment up front. Existing mentor protégé programs work very well, mentors can help with CMMC.  
• Ms. Wilson, what is your experience with CMMC?
• Response: I learned about it when attending an industry day, I understand how it works in a broader perspective. T-47, my business, must secure a specialist because CMMC is very complex.  

Overlapping Requirements

• Ranking Member Van Duyne (R-TX) Question:
• Mr. Dunbar, do you believe the CMMC duplicates any standards that are already present?
• Response: Yes, it is built on an existing standard. The reason behind CMMC is there was no third-party assessment. Why create an existing standard? Why not add on the third-party assessment to an existing standard?
• Rep. Evans (D-PA) Question:
• Ms. Wilson, can you mention just a few other certifications you have to comply with?
• Response: We have invested in the ISO certifications, SBA’s annual 8(a) certification, WOSB certification, defense counterintelligence security certification. The CMMC process has been the most challenging because there is no transparency.

Lack of Transparent Information on CMMC

• Ranking Member Van Duyne (R-TX) Questions:
• Mr. Dunbar, where do you get the information on CMMC? How can we make it easier?
• Response: We get the information from LinkedIn. There is no consistent message or method coming from the Department of Defense (DOD). Even the CMMC FAQ page is not streamlined. 
• Is there a role for the SBA?
• Response: There should be a role for the SBA. I think the DOD has sidelined them in the same way that small businesses have been ignored.
• Mr. Singer, what is the penalty if a business doesn’t comply?
• Response: You are out of business with the DOD.
• Can you point to one or two things that would make understanding this easier for small businesses?
• Response from Mr. Singer: The prime contractors need to step up and play a bigger role, they have the resources and the teams to do so. There needs to be more support for the whole supply chain.
• Response from Ms. Wilson: To ensure that everyone has the same information there needs to be a concerted effort across all industries. 
• Response from Mr. Williams: Regarding the flow down of information, the prime contractor has a lot of power. The challenge is that the questions are not being answered on the main issues. 
• Response from Mr. Dunbar: A lot of small businesses work from home now. Small businesses will be subject to home inspections, the risk of this is incalculable. Small businesses need the ability to protect themselves. 
• Rep. Evans (D-PA) Question: 
• Mr. Dunbar, what is your recommendation to businesses just learning about CMMC?
• Response: I don’t have an answer. We are trying to find the information, which has not been clear.
• Response from Mr. Singer: It is important for companies to find reputable partners to help them through the process. I think Level 3 businesses, such as small manufactures, are just now starting to understand this. Businesses that qualify as Level 1's may not understand that CMMC will affect them yet.

Determining Levels for Small Businesses 

• Rep Evans (D-PA) Question: 
• Mr. Wilson, what would be the ideal way for small businesses to be taken care of?
• Response: Offer up costs to pay for Level 1 and Level 2 certifications. This way, DOD has some level of comfort. The other businesses can go out and secure other levels if needed. 
• Rep. Meuser (R-PA) Questions: 
• Mr. Dunbar, what is the DOD’s feedback on if Level 1 is satisfactory? What do they say about you, and suppliers like you, regarding Level 1?
• Response: Part of the problem is that we aren’t hearing a lot. We don’t know if we will we need to keep chasing technology as we go along. 
• What is the cost difference from Level 1 to Level 3?
• Response: 10 to 20-fold cost difference.
• How much more secure is Level 1 to Level 3?
• Response: From where I am currently, I am secure. 
• Rep. Hagedorn (R-MN) Question:
• Mr. Dunbar, wouldn’t it make more sense if the government imposed reasonable standards?
• Response: I agree, the key word is the definition of reasonable, DOD believes that these numbers are reasonable. My company has 6 people, this is not reasonable. 
• Chair Phillips (D-MN) Question:
• Mr. Singer, how likely is full CMMC implementation by 2026 when there is such a lack of assessors?
• Response: It will be very difficult to get there with the current progress of 100 provisional assessors and 2 C3PAOs. The timeline is very stretched, we need more than 8,000 assessment team members to make this happen. There needs to be flexibility for the third-party assessors. Not everyone needs to be at Level 3. There needs to be an understanding of risk to the supply chain. 
• Mr. Williams, how concerned are you that the CMMC initiative will be adopted by civilian agencies and become a baseline?
• Response: It is certainly a possibility. I would view what is happening at DOD as a trial.  

Five Things Small Businesses Want from the New President

By Ann Sullivan

 

1.  An effective vaccination program. Small businesses, especially vulnerable during the pandemic, need to get employees back to work and customers through their doors. Clear communication from the President and public health officials and a robust vaccination plan will accomplish just that.  

 

2. Capital to weather the pandemic. The Paycheck Protection Program (PPP) got lots of things right – the two rounds of loans assisted many small businesses. However, adjusting to changes caused or accelerated by the pandemic are far from over. Businesses have had to make significant changes, such as investments in technology infrastructure. This spans across industries – accommodating working from home or shifting to take out/delivery services, just to name a few. It is unclear if or when the workforce will return to their workplaces five days a week. 

 

While the second round of PPP funding passed in December expanded covered expenses, the need for capital has never been greater. The temptation by government is to simply pile money on top of existing programs. That has not necessarily been successful—women still get just 4% of all commercial capital and businesses in underserved communities were the last to receive PPP funds. Federal loan programs for these businesses need an overhaul.

 

3. Greater access to public sector contracts. During the pandemic, public sector (federal/state/local) contracting is a way to reposition successful commercial businesses. However, the current set of acquisition policies and federal agency initiatives are really designed to keep them out. Citing efficiency, the federal government buys in large quantities from large companies but in the process relegates smaller businesses to providing goods and services through large prime contractors, rather than buying directly from small businesses.  This strategy results in fewer small federal contractors – which has had a ripple effect on the economy. Access, by the way, does not mean a handout. It just means having a fair shot at winning the business.

 

4. Changing the tax code from “one size fits all.” Although the last tax rewrite made some much-needed changes for small businesses that are organized as pass-throughs as opposed to C corporations, considerable work remains. The Treasury Department should review every deduction/tax credit and its impact on small business vis-à-vis large businesses and make regulatory adjustments and recommended changes to the law that require Congressional action.

 

5. Make small businesses stakeholders in the clean energy future. If small businesses are not at the table, the new Administration’s goal to build a “modern, sustainable infrastructure and deliver an equitable clean energy future” won’t get much traction. If involved, they will find ways to create revenue and business growth. Their unique ability to pivot and innovate will give life to the opportunities the new Administration envisions.

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. 

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. 

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.

-----

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 

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.