Defense Department Provides COVID-19 Guidance

Last week, John Mattox wrote of OMB’s guidance to contracting officers in dealing with the extraordinary challenges caused by COVID-19. Among other things, OMB instructed agencies to be flexible in providing extensions on performance deadline and encouraged open communication with industry partners on the response to COVID-19.

Now, the Department of Defense—the federal government’s largest purchasing unit—has issued its own guidance to constituent agencies.

Overall, DoD’s guidance echoes much of what OMB provided, as we’ve discussed in previous posts. For example, DoD notes that its contract “contain clauses that excuse performance delays” and that prevent a contractor from being held 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.” In such cases, DoD instructs that the contractor should be given an equitable adjustment to the contract schedule and, perhaps, the contract price.

Though DoD’s guidance acknowledges that requests for equitable adjustment are no doubt forthcoming, it instructs agencies to consider them “on a case-by-case basis, in consideration of the particular circumstances of each contract, impacts realized from COVID-19, applicable law and regulations, and inclusive of any relief that may be authorized by laws enacted in response to this national emergency.” In other words, requests for equitable adjustment will still not be a sure thing. For this reason, we think that contractors should communicate frequently with their contracting officers and extensively document their COVID-19 related costs and delays, as doing so should help make any future claim easier to establish.

Finally, DoD reminded its agencies of their new authority to modify contracts to reimburse contractors for paid leave if contractor employees are not able to access work sites or telework but otherwise needed to retain the employees to keep them in a ready state. Because this authority was only recently granted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, implementing guidance is still being developed.

Overall, DoD’s new guidance is a helpful reminder that we’re all in this together. “Both during and after the COVID-19 emergency,” DoD wrote, “contracting officers must work closely with our industry partners to ensure continuity of operations and mission effectiveness” while also maintaining the industrial base serving national security.

If you have any questions about dealing with the impacts of COVID-19 on your federal contracts, please give me a call. In the meantime, stay healthy!