Agency Spending During the Pandemic

Government contractors are experiencing difficulties as they work through obstacles and uncertainties during the COVID-19 pandemic. However, if you thought spending would slow, think again.

In response to the emergency, spending likely exceeded $100 billion for the month of March, according to a webcast hosted by George Mason University’s Center for Government Contracting (GMU). Because of a standard 90-day reporting lag, that figure is likely to be even higher. (Washington Technology, March 31, 2020)

The department of Health and Human Services is responsible for the bulk of non-defense contracting activity with commitments of approximately $748.5 million under research and development. Eric Lofgren, a GMU research fellow, feels the majority of that is going toward “Other Transaction” contracts, designed for speed of fielding capabilities as they fall outside of traditional acquisition regulations. (ibid)

Orders are also being solicited and placed for Personal Protective Equipment (PPE) as well as services such as testing and cleaning. Orders of this nature could very well rise to over $100 billion in response to the COVID-19 emergency. Non-defense spending, as of 27 March, totaled $15 billion, which is on track for spending during the same timeframe in 2019. However, the recently passed CARES Act stimulus package frees up $2 trillion so agencies have funds available for immediate use. (ibid)

The Department of Defense is looking at how the commercial industry is designing solutions. In March, DoD requested white papers from the academic community and private industry for prototype solutions to prevent, contain, treat, and detect coronavirus as well as other possible bio-threats. Many believe this is just the start as DoD begins to support the federal government’s pandemic response. (ibid)

Jerry McGinn, executive director of the GMU GovCon Center and former head of DoD’s manufacturing and industrial base policy office said, “Initially a lot of industry was in the sources sought phase of solicitations, now you’re starting to see they’re just going straight to solicitations…. They’re publishing notices on one day and requiring responses the next, and this is just going to accelerate.”

Questions about these solicitations and how your company might provide solutions? Give us a call.

Government Contractor Aid

A recent study conducted by the National Defense Industrial Association (NDIA) found that over half of small business government contractors are losing money due to a reduction in billable hours as a direct result of stay-at-home orders. To assist, the DoD is adjusting approximately 1,500 contracts to aid with cash flow for those contractors suffering financial strain. (Federal News Network, March 30, 2020)

The Defense Contract Management Agency is administering a mass modification to increase the amount of money allowed to pay vendors who have not finished their work under their current contracts. These “progress payments” will be increased to 95 percent for small companies and 90 percent for large companies. (ibid)

Additionally, provisions for contractors that cannot telework due to the nature of their work were signed into law on 27 March 27 2020 under the Coronavirus Aid, Relief and Economic Security Act, aimed at supporting individuals and businesses struggling with the economic downturn,  as a result of the pandemic. (Government Executive, March 31, 2020)

For some contractors, agencies may “modify the terms and conditions of a contract or other agreement” to reimburse at the minimum applicable contract billing rates” up to an “average of 40 hours per week for any paid leave a contractor provides to keep its employees or subcontractors in a ready state” as stated under the Act. (ibid)

The National Defense Industrial Association and the Professional Services Council both commend the act. During the pandemic, the Act will assist in ensuring contractors are part of the economic relief efforts and kept in a ready state. The legislation runs through the end of the fiscal year, 30 September 2020.

Questions about your minimum billing rates or how to obtain reimbursement? Give us a call.

More COVID-19 Guidance

Last week the Office of Management and Budget (OMB) updated its agency guidance for federal contractors, as a response to the COVID-19 pandemic. The three main takeaways are:

  • Agencies are encouraged to work with their contractors to allow for the maximization of telework.
  • Agencies must be flexible providing extensions to performance dates if working virtually isn’t possible or if a contractor must quarantine. Agencies should also weigh whether to keep key personnel in a mobile-ready state for national security measures.
  • Agencies are urged to leverage the special emergency procurement authorized in connection with the emergency declaration under the “Stafford Act”. These include increases to: the micro-purchase threshold; the simplified acquisition threshold; and the threshold for using simplified procedures for certain commercial items. These are designed to reduce discord for contractors, especially small businesses, allowing for a more rapid response to the increasing demands agencies face. (Nextgov, March 22, 2020)

The agency guidance comes after trade groups and lawmakers strongly voiced the need for contractor guidance. The updated guidance includes a section of frequently asked questions, including contractor exposure to COVID-19. (ibid)

OMB also issued technology guidance for use during the COVID-19 national emergency. The technology guidance also includes a FAQ section, with steps to ensure IT and cybersecurity measures are met while working remotely. It urges agencies to continue updating their websites to enable public access to government services.

Need some help figuring out OMBs agency guidance for contractors? Give us a call.

Easier Contract Awards Paper a Silver Lining

The General Services Administration (GSA), The Department of Veterans Affairs (VA), and IRS raised the micro-purchase threshold (MPT) and the simplified acquisition threshold (SAT) last week, in response to the coronavirus relief effort This allows these agencies to expedite contract award timeframes. (Federal News Network, March 20, 2020)

As required under the 2020 Defense Authorization bill, the Defense Department raised the threshold for sole-source 8(a) contracts up to $100 million as well. The non-emergency threshold for 8(a) contracts is $22 million. (ibid)

GSA and VA have raised their MPT and SAT threshold for purchases both in and outside of the US while the IRS raised theirs for purchases within the US only, to speed up the time it takes to make contract awards.

The MPT is increased to:

  • $20,000 for contracts awarded and performed or purchases made within the U.S.
  • $30,000 for contracts awarded and performed or purchases made outside the U.S.

The SAT is increased to:

  • $750,000 for contracts performed or awarded and purchases made within the U.S.
  • $1.5 million for contracts awarded, performed or purchases made outside the U.S.

The SAT supporting contingency operations or major disaster recovery is increased to $13 million.

All thresholds, in place through at least 30 June, give agencies the ability to be nimble and make purchases quickly. They are “specific to only to support the designated National Emergency COVID-19. FAR Part 6 also provides the opportunity to expedite purchases after justifying exceptions to competition. There may also be opportunities to use existing contracts by negotiating a bilateral modification to allow for additional quantities of goods or a surge for services included in concurrent awards,” according to Angela Billups, VA’s executive director in the Office of Acquisition and Logistics and senior procurement executive. (ibid)

To track acquisition costs for the coronavirus response, the Federal Acquisition Regulations Council set up a new code in the Federal Procurement Data System, P20C. (ibid)

Jeff Koses, GSA’s senior procurement executive stated in a recent memo that local set-aside rules are not applicable because this is a national emergency and not a strictly local one. According to Koses, some exceptions that allow agencies to restrict or limit competition are:

  • phoning a reasonable number of vendors
  • obtaining “on the spot” quotes
  • keeping the period of performance brief (ibid)

The changes to the MPT and SAT were made prior to the Defense Production Act being invoked. The Defense Production Act, authorizes certain agencies providing specific products or services with relation to the coronavirus relief efforts, to move to the front of the line. However, GSA strongly advises contracting officers to verify pricing and contractor details on GSA Advantage and GSA eLibrary. (ibid)

Interested in contracting for relief efforts? Give us a call.

Emergency Relief for GSA Schedule Holders

GSA is instituting a 60-day extension to SAM.gov registrations with an expiration date between March 19 and May 17, 2020, to provide relief for those required to re-register during this time frame. (GSA Interact, March 24, 2020)

For example, if your entity registration is set to expire on April 1, 2020, you are granted an automatic extension to May 31, 2020. No action is required, other than to get re-registered by your new extension due date. (ibid)

GSA plans to process the extensions gradually to lessen the impact on their interfacing systems. Therefore, the entity administrators who are affected by the extension will receive an email with the subject line: “60-day SAM.gov Extension Granted for [Entity Name/DUNS/CAGE]. (ibid)

Once the records are extended, the revised expiration dates will be included in the SAM entity management extracts. (ibid)

Unclear if you are one of the 61,298 entities impacted by the extension? Give us a call.