How the Coronavirus Pandemic is Impacting Contractors

[To learn more about guidance, opportunities, and spending disbursed by the federal government, download our special report, Covid-19 Government Contractor Guidance.]

Federal agency guidance for contractors

The Small Business Administration released guidance to address concerns that small businesses performing on federal contracts may have related to the impact of Covid-19.

Highlights from the FAQ document include:

  • The government reserves the right to terminate contracts due to delays in deliverables.
  • Contractors should maintain communication with agencies and contracting officers about delays and should review contract language for allowable delays, which can include pandemics.
  • Contractors should communicate in advance with agencies and assess the effects, if it is possible that government employees will not be at their worksites and won’t be able to supervise a contract properly.
  • Subcontractors are encouraged to review agreements with their prime contractor representative to fully understand their obligations and recourse options if the coronavirus has an impact on their performance.

Department of Defense issued guidance to contractors to work with their contracting officer to determine what is mission-essential and what can be accomplished remotely via telework.

Among the topics:

  • The definition of “mission-essential functions” means those organizational activities that must be performed under all circumstances to achieve DOD component missions or responsibilities.
  • If a contract does not include telework language or does not allow for telework, the Contracting Officer Representative (COR) can contact the contracting officer to initiate a contract modification.
    • Only contracting officers, not CORs, are authorized to change the terms of any contract.
    • If the contract cannot be performed remotely, then the contracting office may issue a stop-work order (or partial stop-work order) or a Suspension of Work.
  • In the event of a facility closure, the contracting officer will contact the contractor to discuss support requirements.

Homeland Security Department sent a letter to contractors on March 6 addressing how to deal with contract employees working in DHS facilities.

  • If employees must travel to Covid-19-affected areas, they are encouraged to telework or pursue leave options.
  • Employees should notify managers if they have been in close contact with a person known to have Covid-19, or if they went through airport screening upon their return to the U.S. and were told to self-observe or self-quarantine.
  • If contract performance is affected by the Covid-19 situation, such as a need for alternate work locations, or travel or schedule changes, the contracting officer is the authority to discuss this with your company.

Contract opportunities and spending

The Centers for Disease Control and Prevention (CDC) on March 11 issued a Broad Agency Announcement for research related to Covid-19, seeking proposals in five areas, including household transmission, diagnostics development, and immune response.

The Medical Technology Enterprise Consortium released a pre-announcement on a potential Request for Project Proposals (RPP) for prototypes of medical and information technologies to combat Covid-19.

The Trump administration requested more fiscal 2020 funding, including:

  • $17.7 billion for Veterans Affairs and other civil defense programs
  • $11.5 billion for the Health and Human Services Department
  • $8.3 billion for the Defense Department
  • $3.2 billion for Homeland Security
  • $3 billion for a new unanticipated needs account at OMB

The White House also adjusted its fiscal 2021 budget to request extra funds, including:

  • $1.3 billion for various CDC programs
  • $439.6 million for the NIH for vaccine development and other applied research

[Watch BGOV’s webinar for expert analysis on how federal agencies are proposing to protect contractors and maintain economic stability.]

What’s coming next?

Contract payments are likely to be stalled, not stopped.

Payments to federal contractors by federal agencies are almost certainly going to be negatively impacted, but loss of payment is unlikely on existing agreements.

Contractors are advised to continue work unless a stop-work order is formally issued by the contracting officer.

Expect telework supplies and services to spike.

Telework at government agencies may bring increased information technology contract spending in order to secure data and networks and other technology required to work from home.

BGOV expects agencies to purchase products to aid telework, to include: virtual private networks (VPNs), remote desktop access, user authentication mechanisms, and more.

Use of telemedicine is likely to increase – on March 17, the Trump administration announced that Medicare beneficiaries can take advantage of telehealth at no additional cost. The Health and Human Services and Veterans Affairs departments may require additional IT products to fulfill this need.

Classified site activity is likely to dip.

Contractors with classified contracts may have trouble fulfilling requirements without access to a secure site. Possible solutions include: allowing contractors to work in an alternate secure location or delaying any additional work on those contracts. It’s unlikely that this work could be done remotely, even with additional technology.

[To learn more about guidance, opportunities, and spending disbursed by the federal government, download our special report, Covid-19 Government Contractor Guidance.]