A memo signed yesterday by a top Defense Department acquisition official says DOD agencies and the services should act to ensure the defense industrial base remains healthy despite the coronavirus outbreak.
The document, signed by Kim Herrington, acting principal director of defense pricing and contracting, says DOD must "work hand in hand" with contractors to recover from the pandemic.
"The effects of COVID-19 will affect the cost, schedule, and performance of many DOD contracts," Herrington writes. "Many contractors that ordinarily work side-by-side with the DOD workforce may be unable to access their work sites, and most contractors are coping with employees who are unavailable for work due to quarantine and state and local requests to restrict movement of their personnel."
"We must do our utmost to ensure that both the Department and the vital industrial base that support us remain healthy for the duration of this emergency and emerge as strong as ever from the challenges of this pandemic," he continues. "Fortunately, we have the regulatory tools to take action to address these impacts."
Herrington notes that Pentagon contracts include clauses that excuse performance delays as well as termination clauses.
"Each of these clauses provides that a contractor will not be in default because of a failure to perform the contract if the failure arises beyond the control and without the fault or negligence of the contractor," he writes. "In the event of such a delay, the contractor is entitled to an equitable adjustment of the contract schedule. Where the contracting officer directs changes in the terms of contract performance, which may include recognition of COVID-19 impacts on performance under that contract, the contractor may also be entitled to an equitable adjustment to contract price using the standard [federal acquisition regulation] changes clauses."
Herrington writes that requests for equitable adjustment should be considered on a "case-by-case basis."
"Equitable adjustments to the contract or reliance on an excusable delay should not negatively affect contractor performance ratings," he adds.
Herrington also said in the memo that the Coronavirus Aid, Relief, and Economic Security Act – signed into law last week -- includes a section that "provides discretion for the agency to modify the terms and conditions of the contract to reimburse paid leave where contractor employees could not access work sites or telework but actions were needed to keep such employees in a ready state."
Herrington said his department will provide implementing guidance "as soon as practicable."
"Both during and after the COVID-19 emergency, contracting officers must work closely with our industry partners to ensure continuity of operations and mission effectiveness, while protecting the continuing vitality of the DIB that is so critical to our national security," he added.