OMB Offers Guidance to Agencies about Managing Contractors during COVID-19

Late last week, the Office of Management and Budget issued a memo providing direction to agencies on how to best coordinate with and manage contractors as the nation presses through the disruption caused by COVID-19. Below are some of the salient points.

Before addressing frequently asked questions, the memo (“Managing Federal Contract Performance Issues Associated with the Novel Coronavirus (COVID-19)”) offers three general recommendations. First, acknowledging that some contractors may not be able to access federal work sites given building closures, quarantines, or social distancing practices, OMB urges agencies “to work with their contractors, if they haven’t already to evaluate and maximize telework for contractor employees, wherever possible.” Second, OMB counsels agencies to “be flexible in providing extensions to performance dates if telework or other flexible work solutions, such as virtual work environments, are not possible, or if a contractor is unable to perform in a timely manner due to quarantining, social distancing, or other COVID-19 related interruptions.” Third, OMB encourages agencies to use special emergency procurement authorities under the Stafford Act, such as taking advantage of the increased micro-purchase and simplified acquisition thresholds.

The memo also provides some helpful frequently asked questions and answers. Here are some important takeaways:

  • Previous guidance from the White House about teleworking (in response to COVID-19) applies only to federal workers. That said, OMB wants agencies to allow contractor teleworking where possible. Specifically, it directs that “in the spirit of OMB’s guidance, which seeks to maximize the use of telework, and FAR 7.108, which instructs agencies not to discourage use of telework when consistent with contractual requirements, agencies are strongly encouraged to work with their contractors to evaluate and maximize telework for their contractor employees, wherever possible, as a way to enable continued contract performance consistent with the health and safety of their contractor and government personnel.”
  • OMB encourages agencies to be very flexible in responding to slips in the contract schedule due to quarantining. In that regard, agencies should discuss quarantine-related delays with contractors and find solutions like: teleworking; finding a substitute employee; terminating the contract for convenience (which should not affect the contractor’s performance rating) and re-procuring; or adjusting the contract schedule under excusable delay clauses, such as FAR 52.249-14, 52.212-4(f), and 52.211-13.
  • Requests for equitable adjustment should be considered in accordance with existing agency practices. As part of their assessment, agencies should consider where the requested costs would be allowable and reasonable to protect the health and safety of contract employees as part of contract performance.
  • Agencies should evaluate whether acquisition-related, face-to-face activities (e.g., industry days, inspections, etc.) are absolutely essential and should consider whether these activities could be conducted virtually.
  • Agencies should clearly and timely communicate with industry partners to coordinate COVID-19 response activities.
  • “Current registrants in SAM with active registrations expiring before May 17, 2020 will be afforded a one-time extension of 60 days.”
  • Due to the President’s national emergency declaration: the micro-purchase threshold has been raised from $10,000 to $20,000 for domestic purchases and $30,000 for purchases outside the United states; the simplified acquisition threshold has been raised from $250,000 to $750,000 for domestic purchases and $1.5 million for purchases outside the United States; and agencies may use simplified acquisition procedures up to $13 million for purchases of commercial items. (Note: Under FAR 19.502-2, purchases between the micro-purchase threshold and the simplified acquisition threshold are usually automatically set aside for small businesses. So, hopefully, these increased thresholds will funnel more dollars into small business pockets.)
  • Because the President’s disaster declaration applies nationwide, there is no expectation–at this point–that contracting officials set aside contracts for local businesses under the Stafford Act (see FAR 18.203). That may change, however, as the ongoing response efforts evolve.

Overall, OMB’s memo provides a good summary of what to expect from agencies during the COVID-19 response. Agencies should be understanding and flexible–but so should contractors. Communication is key, however. Contractors and agencies should both work closely and collaboratively to endure the various challenges confronting them.