On March 20, 2020, the Office of Management and Budget (“OMB”) released guidance to agencies heads on managing federal contract performance issues impacted by COVID-19 [Linked here: M-20-18]. The memo and attached Frequently Asked Questions (“FAQs”) focus on the following main issues:
Telework: agencies are encouraged to maximize telework for contractor employees, wherever possible, to enable continued contract performance consistent with the health and safety of contractor and government personnel. This includes modifying contracts that do not currently allow for telework.
Mitigating Impact on Contractors: agencies are encouraged to be as “flexible as possible” in responding to the impacts of COVID-19 on contractors. The OMB specifically suggests that agencies extend performance dates if telework is not available. Agencies are also encouraged to consider whether it would be beneficial to keep skilled professionals or key personnel “in a mobile ready state” for activities deemed critical to national security or other high priorities, and whether contracts that possess capabilities for impending requirements (e.g., security, logistics) can be “retooled” for pandemic response within the scope of the contract. Of note, the FAQs note that requests for equitable adjustments (“REAs”) for costs associated with safety measures taken by contractors to protect their employees should be considered on a case-by-case basis. Agencies are to handle REAs in accordance with existing agency practices, taking into account whether the requested costs would be allowable or reasonable (e.g., did the contractor take actions consistent with CDC guidance; did the contractor reach out to the contracting officer or contracting officer representative to discuss appropriate actions).
Emergency Procurement: agencies are encouraged to leverage special emergency procurement flexibilities authorized in connection with the President’s declaration of a national emergency under the Stafford Act, including the flexibilities identified in FAR 18.202, Defense or recovery from certain events. The flexibilities include increases in certain thresholds for emergency procurements in support of COVID-19 response efforts:
- Micro-purchase threshold raised from $10,000 to $20,000 for domestic purchases and to $30,000 for purchases outside the United States;
- Simplified acquisition threshold raised from $250,000 to $750,000 for domestic purchases and $1.5 million for purchases outside the United States; and
- Agencies may use simplified acquisition procedures up to $13 million for purchases of commercial item buys.
In addition, because the pandemic is nationwide, acquisitions under the Stafford Act need not create preferences for local firms in areas impacted by the disaster.
SAM Re-registration Extension: Finally, while the guidance in the memo and FAQs are directed at agencies, the FAQs provide one concrete note of relief for contractors — those with active System of Award Management (“SAM”) registrations that are expiring before May 17, 2020 will be afforded a one-time extension of 60 days. It is not yet clear how this will be rolled out (e.g., automatically applied or by request), but contractors should be aware this extension as the impact of COVID-19 upends normal administrative functions.
Crowell & Moring is standing by to assist with COVID-related questions.