Performance and Contract Guidance After COVID-19

Continued Performance
Whether you, as a federal contractor may continue to carry out work under a federal contract will depend on whether the goods or services suppled are "Essential Business and Operations," including "Minimum Basic Operations." The definition of Essential Business and Operations is broad and provides for the following:
  • Stores that sell groceries and medicine;
  • Food, beverage, and licensed marijuana production and agriculture;
  • Organizations that provide charitable and social services;
  • Religious entities;
  • Media;
  • First Amendment protected speech;
  • Gas stations and businesses needed for transportation;
  • Financial and insurance institutions;
  • Hardware and supply stores;
  • Critical trades;
  • Mail, post, shipping logistics, delivery, and pick-up services;
  • Educational institutions;
  • Laundry services;
  • Restaurants for consumption off-premises;
  • Supplies to work from home;
  • Supplies for essential businesses and operations;
  • Transportation;
  • Home-based care and services;
  • Residential facilities and shelters;
  • Professional services;
  • Manufacture, distribution, and supply chain for critical products and industries;
  • Critical labor union functions;
  • Hotels and motels; and
  • Funeral services.
Shelter in place orders have been rolled out differently in different states. Some states have required cessation of all non-essential businesses and operations, some have  provided that non-essential businesses may continue to conduct Minimum Basic Operations. The term Minimum Basic Operations means:
  • Activities to maintain the value of the business' inventory, preserve the condition of the business' physical plant and equipment, ensure security, process payroll, and employee benefits or related functions; and
  • Activities to facilitate employees of the business being able to continue to work remotely from their residences.
Review Clauses
As a government contractor, you may find that while you provide essential services, you cannot perform because of significant interruptions in global supply chains, a decrease of available employees, etc. One source of relief to consider is a force majeure clause that is likely in your contract. A force majeure clause allows a party to suspend or terminate performance of a contractual duty due to extreme circumstances beyond the control of either party. You should review the contract to find the exact terms and conditions provided.
 
Generally, federal government contracts will include Federal Acquisition Regulation (FAR) 52.249-14 for excusable delay, which includes, among other things, acts of God, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather. One can also seek relief through other possible remedies such as the common law doctrines of impossibility and impracticability. Whether these doctrines apply will depend on the terms of a particular contract.
 
Another option for relief includes possibly having insurance coverage. You will want to closely review these and other options for relief and effectively communicate with the contracting officer. Otherwise, under a government contract, not performing will generally be considered a default that could have significant ramifications.
 
Defense Production Act
Earlier in the month, President Trump invoked a wartime law that makes the federal government the top priority for receiving medical equipment and supplies.
 
The Defense Production Act ("DPA") codified at 50 U.S.C. § 4501 et seq., and its implementing regulations, the Defense Priorities and Allocation System ("DPAS"), codified at 15 C.F.R. § 700 et seq., give the U.S. government the authority to "jump the line" and force contractors to prioritize sales of goods to the government before selling to consumers or other private purchasers.
 
Federal contractors should review any new and active government orders for DPAS ratings. DPAS-rated orders typically include a field indicating the level of DPAS rating, which is either "DX" or "DO." DX-rated orders must be provided over DO-rated orders, and DO-rated orders must be prioritized over non-DPAS-rated orders.
 
With a few narrow exceptions, government contractors must accept, prioritize, and perform DPAS-rated contracts and orders. If you are in receipt of such an order, pay attention as you must respond within a set amount of time to the issuing government agency.
 
Small Business Loans
One of the largest conundrums is how to help small businesses stay in business during this pandemic. If you are a small business, you can apply for low interest disaster loans from the Small Business Administration (SBA).
 
As of earlier in the week all states were approved for coronavirus disaster loans. The SBA will work directly with state governors to provide targeted, low-interest loans to small businesses and nonprofits that have been severely impacted by COVID-19. The SBA's Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Government contractors should be aware, however, that the SBA is experiencing high volume and the application process can take up to 21 days.
 
Recommendations
  • Review your government contracts to determine the types of relief that are included for pandemics and natural disasters.
  • Review your contract to determine if DPAS applies.
  • Devise a plan to comply with state/federal law.
  • Keep track of any costs incurred in excess of the contract for compliance during this time.
  • Communicate with the contracting officer to provide clear communication of your company's capabilities and any accommodations that it might need.
  • Submit requests for equitable adjustment as soon as possible to the contracting officer.
  • Make sure your sick leave policies are up to date and reinforce key messages to your employees, such as staying home when they are sick or have any COVID-19 symptoms.
  • Be prepared to change business plans if needed to maintain critical operations.

Additional NAGC COVID-19 Content

 



« Back to News




News & Tips
Government contractor news & industry tips from a source you can trust. Sign up for our weekly updates to stay informed and get involved. Easily unsubscribe at any time.
Email:



Training
Our Insider's Guide Series was developed as an easy-to-understand series of guides to assist you through the government procurement process.







About
Benefits
Members
National Association of Government Contractors
1250 Connecticut Ave NW
Suite 700
Washington, DC 20036
Phone: 202-465-3750
Toll Free: 1.800.979.NAGC
LinkedIn Facebook Twitter

iBooks
FedEx Shipping Discount
Office Depot Member Program
Dell Small Business
Avis Car Rental
GEICO Insurance

Privacy Policy | Subscriber Agreement & Terms of Use | Purchase Policy | Data & Cookies
Copyright © 2004 - 2020 National Association of Government Contractors.   All Rights Reserved.

Authorize.net Geotrust RapidSSL