Coronavirus (COVID-19) Policy and Guidance--Drinking from a Fire Hose

Historic. Unprecedented. Uncharted.

These words rapidly are losing their meaning as our nation struggles to cope with the ever-increasing complexities posed by the COVID-19 pandemic, not to mention the stresses that come from social distancing or being on the front lines of health care and first response, or, worse, being told to stop work. Indeed, the government contracting community is experiencing all of these scenarios.

In the midst of all this, many are searching for and sifting through mountains of directives, guidance memos, and (oh yeah) our contracts and the FAR. If you’d like to take a few sips from the fire hose, I have posted links to several compilations of federal COVID-19 procurement guidance at the bottom of this post.

One of the nagging questions is what will happen when (not if) contract work is disrupted in some manner. Contractor employees may be ill, or their family members may require care, or they might need to remain at home under self-quarantine. The new leave laws may require one’s company to provide extended periods of leave. Even if that’s not the case, workforce disruptions likely will lower productivity possibly at the risk of performance delays or, worse, defaults. The coronavirus leave laws will impose unplanned costs on many employers, particularly those with fewer than 500 employees. Even if a contractor’s workforce is ready and able, the company may find that it must cease performance because it has lost access to its facility or been issued a stop work order.

In the midst of this chaos, there’s more chaos. Contractors should be able to easily determine whether their operations must continue from a federal customer’s perspective, or whether they need to stand down in response to a state or local order. However, there may be confusion faced by contractors whose functions reside on the border of what is or is not deemed to be “essential critical infrastructure” contract activities. 

A recent DoD memorandum dated March 20, 2020 addressed to the acquisition leadership of the service branches and DoD component agencies provides that contractors and subcontractors performing what are known as “rated orders” under the Defense Priorities and Allocations System (“DPAS”) are doing critical work and “are considered to be part of the Essential Critical Infrastructure Workforce.” Thus, these contractors must continue their work, and their workers should continue to report for duty.

However, confusion may crop up for contractors that hold “unrated” orders when the determination of what functions “directly support mission readiness, national security” is made. A useful distinction is set forth in a memo issued to the “Defense Industrial Base” the subject of which is the “Defense Industrial Base Essential Critical Infrastructure Workforce.” Contractors engaged in services that support weapons systems or the infrastructure that supports those systems probably are part of the “Essential Critical Infrastructure”; however, contractors that provide “office supplies, recreational support, or lawn care” probably are not.

Decisions on unrated orders for the most part will be made by Contracting Officers with input/direction from the agency customer that is communicated to the contractor. However, inconsistency is likely. For example, in the civilian agency space there are service contracts in which orders under the same contract vehicle or GSA Schedule are placed on a regional level by locally based Contracting Officers without coordination from an agency Head of Contracting Activity. Ideally, the HCAs should be in communication with their regions to enhance the level of consistency across regional and/or administrative lines. Otherwise, a contractor performing task orders in Maryland might be doing essential work; however, task orders administered by another Contracting Officer in Montana may conclude that the contractor’s work is nonessential.

Yet, even contractors that know that their federal customers have deemed them essential may face challenges at the state and local level. So far, it seems that the states that have issued shelter-in-place orders are using DHS’s critical infrastructure as guidance for what is essential under their orders. However, determinations about whether someone may go to work will be made on the fly by law enforcement personnel called upon to make split second decisions regarding the credibility of a worker’s claim that his or workplace is essential.

Happily, it seems that the DoD acquisition leadership is cognizant of the chaos under their purview. On Monday (March 30) another memo was issued to the acquisition leadership of the service branches and DoD component agencies. Bearing the subject “Managing Defense Contracts Impacts of the Novel Coronavirus,” the memo notes that “[m]any contractors that ordinarily work side-by-side with the DoD workforce may be unable to access their work sites, and most contractors are coping with the employees who are unavailable for work due to quarantine and state and local requests to restrict movement of their personnel.” It urges contracting officers to remember various standard contract clauses “provide[] that a contractor will not be in default because of a failure to perform the contract if the failure arises beyond the control and without the fault or negligence of the contractor.” Where there are such schedule impacts, “the contractor is entitled to an equitable adjustment of the contract schedule” and “the contractor also may be entitled to an equitable adjustment to contract price” where a contracting officer directs changes, “which may include recognition of COVID-19 impacts on performance.” Further, agencies have discretion under the Coronavirus Aid, Relief, and Economic Security Act “to modify [contracts] to reimburse paid leave where contractor employees could not access work sites or telework but actions were needed to keep such employees in a ready state.”

The memo closes by stating that the Office of Management and Budget and various senior DoD procurement officials have “promulgated guidance regarding management of contract performance impacts of COVID-19” that, in turn, state that:

[C]ontracting Officers are trusted and empowered to make the difficult decisions on appropriate adjustment to each contract. Both during and after the COVID-19 emergency, contracting officers must work closely with our industry partners to ensure continuity of operations and mission effectiveness, while protecting the continuing vitality of the [Defense Industrial Base] that is so critical to our national security.

Hopefully, the sentiments stated in this memo will be taken to heart by both contracting officers and their contractor counterparts. And, I especially hope that GSA and the civilian agencies will follow suit and issue similar guidance.

USEFUL RESOURCES:

DoD and Civilian Agency Coronavirus acquisition policies:

Department of Defense Coronavirus guidance documents

Acquisition.gov Coronavirus acquisition guidance site

Department of Homeland Security Critical Infrastructure guidance documents:

“Identifying Critical Infrastructure during COVID-19”

“Guidance on the Essential Critical Infrastructure Workforce”