Bloomberg Government subscribers get the stories like this first. Act now and gain unlimited access to everything you need to know. Learn more.
U.S. Defense Dept acquisition chief Ellen Lord says the claims could stem from two provisions in the CARES Act.
- Section 3601 of the economic aid law allows agencies to reimburse contractors for payments tied to sustaining employees prevented from working due to Covid-19 facility closures or other restrictions, Lord tells a House Armed Services Committee hearing today, according to prepared testimony
- “Section 3610 authorized, but did not appropriate, the funds needed to make these reimbursements,” Lord says
- “Cost for 3610 is likely well beyond” the Pentagon’s current funding “without significantly jeopardizing” weapons “modernization or readiness efforts,” Lord says
- Just one major prime contractor estimates that 3610 impacts could be up to $1.5b for their company and their associated suppliers: Lord
- Separately, contractors will be able to seek Pentagon reimbursement for Covid-19 related costs associated with govt directed stop-work orders, purchase of personal protective equipment, cleaning and sterilization costs, and impacts from implementing CDC guidance, she says
- “As with section 3610, the department does not have the funding to cover these costs,” Lord says
- The same prime contractor forecasting $1.5b in potential Sec. 3610 claims estimates these additional costs “to be in excess” of $1b, Lord says