Pentagon acquisition chief Ellen Lord said today the Defense Department is working on a plan that could allow it to reimburse contractors experiencing pandemic-related hardships and inefficiencies with lump sums, rather than negotiate many smaller settlements.
Lord, speaking during a virtual event hosted by the Professional Services Council, said DOD has developed "a path to settle globally -- at a company or division level -- that will eliminate the need to have proposals and negotiations on a contract-by-contract basis."
Earlier this summer, Ken Possenriede, Lockheed Martin's chief financial officer, said the company was "exploring" whether to negotiate COVID-19 cost adjustments at the "corporate macro level.”
"We think this could be done equitably and allow for a faster resolution," he said at the time. "We're definitely in frankly unusual times and, from my perspective, it would be a way more efficient and effective way of getting this behind us.”
Lord said today DOD has also developed a "streamlined path for low-dollar-value reimbursements under $2 million."
The Pentagon recently sent Congress a white paper detailing a request for $11 billion in emergency supplemental funding to mitigate the impact of the COVID-19 pandemic across its acquisition programs and the U.S. defense industrial base.
The $11 billion would address Section 3610 of the Coronavirus Aid, Relief, and Economic Security Act, which allows contractors to claim reimbursement for the costs of remaining in a "ready state” during the pandemic. The funds would also pay for cost increases in programs "realized because of inefficiencies caused by COVID-19," according to the document obtained by Inside Defense.
Congress, however, has yet to appropriate funds to reimburse contractors under Section 3610 and some senior Democrats are opposed to giving DOD supplemental funds.
At present, contractors under Section 3610 may claim "ready state" reimbursements through Sept. 30, though industry associations are lobbying to extend the provision.
Lord said today DOD is in the process of developing final guidance on submitting 3610 reimbursement requests and plans to publish it "shortly."
An earlier draft document drew more than 300 comments from industry, many of which Lord said were incorporated into the final guidance.
"We had a call with industry recently discussing how we have adjusted our prior draft to address industry concerns," she said.
The final guidance, Lord added, is awaiting approval from the White Office of Management and Budget for clearance under the Paperwork Reduction Act.
"As soon as we secure OMB clearance, we will issue the policy," she said.