CARES Act, Section 3610
Section 3610 of the CARES Act authorizes government agencies to reimburse contractors for paid leave required to keep the contractor workforce in a “ready state” when the employee was (1) unable to access a government facility; and (2) unable to work remotely.
The Act does not require agencies to pay for leave, but allows it. The Act does not provide funding—that is left to the agency and Contracting Officer. Agencies have responded differently, with various approaches. Brief summaries of major agency positions are below:
Department of Defense (DOD)
On April 8, DOD issued a class deviation to the DFARS, Part 31, that establishes a new cost principle and allows contractors to invoice, at the minimum applicable contract billing rates (not to exceed an average of 40 hours per week), any paid leave a contractor provides to keep its employees or subcontractors in a ready state. The class deviation provides an analysis framework, including CO considerations to authorize payment. Defense Pricing and Contracting issued more specific guidance on how eligible costs should be reimbursed under fixed-price, cost-reimbursement and time-and-materials contracts. Costs should be charged to a newly created cost category, Other Direct Costs (ODC) COVID-19, with costs from this pool “allocated to the applicable contracts based on some reasonable, agreed upon allocation.” The guidance also clarifies it would be improper to invoice for wages covered by PPP.
National Aeronautics and Space Administration (NASA)
NASA issued a FAQ stating that existing regulations cover Section 3610 situations. Impacted contractors can submit a REA under NASA FAR Supplement 1852.242-72, which allows NASA to consider REAs when the contractor is denied access to NASA facilities.
Department of Homeland Security (DHS)
The DHS Chief Procurement Officer issued a Message supporting Section 3610. The Message states contractors may be entitled to an equitable adjustment to contract price due to COVID-19 using the standard FAR changes clauses, FAR 52.243-1 or FAR 52.243-2. Requests for equitable adjustment are considered on a case-by-case basis.
Intelligence Community (IC)
ODNI released Guiding Principles for Section 3610, encouraging all IC agencies to modify contracts when Section 3610 requirements are met. Contractors must separately identify Section 3610 costs, and state whether CARES Act reimbursement is applicable.
Department of Energy (DOE)
DOE issued a Policy Flash (PF) on April 15, supporting Section 3610. The PF has an attachment with CO guidance, and a separate attachment with specific clauses the CO can insert into various contract types. This contract modification does not require consideration.
If you have questions regarding Section 3610 or any other federal contracting issues, contact the professionals at Williamson Law Group at (301) 788-8198 for confidential assistance and counsel, or e-mail Scott Williamson at firstname.lastname@example.org.
This Contract Compliance Update is to keep readers current on government contract matters and is not intended to be legal advice. If you have any questions, please contact Williamson Law Group for legal advice regarding your particular case.