The Navy's acquisition executive is ordering contracting officers to take steps to increase cash flow to contractors and their supply chains in response to the coronavirus pandemic, according to a memo obtained by Inside Defense.
"Given the national security declaration by the president, it is imperative we keep the nation's, and the Navy's, defense industrial base from going into extremis during the current COVID-19 crisis," Hondo Geurts wrote in a March 20 memo to the systems command chiefs and program executive officers.
"A key element of this is to ensure companies, and in particular the underlying suppliers, remain solvent and available to support the Navy," he continued.
Geurts directs several actions, including reducing "retentions/withholds" to an "absolute minimum" as well as immediately paying out all settled requests for equitable adjustments.
"Where possible, accelerate negotiations and award future work including the use of [undefinitized contract actions] as necessary, including contract changes in the pipeline or existing contracts," he wrote.
Geurts' actions are intended to increase the flow of funding to Navy contractors as they encounter the consequences of the pandemic.
"My intent is that we remove barriers to maximize efficient execution of our existing contracts and award of our pending/future contracts," he wrote. "This includes immediate engagement on all activities to positively impact cash flow."
Capt. Danny Hernandez, a spokesman for Geurts, told Inside Defense today in a written statement the acquisition executive is talking with industry to “evaluate the health of the workforce.”
“One of the key topics in these discussions has been cash flow and the supplier base, both essential to what industry and our nation needs during this period. While balancing CDC measures to protect the workforce, the team is actively working together and applying resources to the highest priority efforts," Hernandez said.
Geurts' memo comes amid several other Defense Department directives meant to strengthen the defense industrial base during the pandemic. Kim Herrington, the Pentagon's acting principal director of defense pricing and contracting, last week ordered progress payment rates be increased, Inside Defense reported.
Pentagon acquisition chief Ellen Lord also has issued a memo deeming parts of the industrial base "critical" and expected to continue their regular work schedules.