The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, which was signed into law on March 28, contains a provision aimed at contractors and provides the potential for compensation due to facility closures or other restrictions due to the ongoing coronavirus (COVID-19) pandemic. The provision isn't long; here is the text with key items highlighted:
SECTION 3610. FEDERAL CONTRACTOR AUTHORITY.
Notwithstanding any other provision of law, and subject to the availability of appropriations, funds made available to an agency by this Act or any other Act may be used by such agency to modify the terms and conditions of a contract, or other agreement, without consideration, to reimburse at the minimum applicable contract billing rates not to exceed an average of 40 hours per week any paid leave, including sick leave, a contractor provides to keep its employees or subcontractors in a ready state, including to protect the life and safety of Government and contractor personnel, but in no event beyond September 30, 2020. Such authority shall apply only to a contractor whose employees or subcontractors cannot perform work on a site that has been approved by the Federal Government, including a federally-owned or leased facility or site, due to facility closures or other restrictions, and who cannot telework because their job duties cannot be performed remotely during the public health emergency declared on January 31, 2020 for COVID–19:
Provided, That the maximum reimbursement authorized by this section shall be reduced by the amount of credit a contractor is allowed pursuant to division G of Public Law 116–127 and any applicable credits a contractor is allowed under this Act.
Many contractors are grappling with the issue this section addresses: an inability to perform contracts due to facility closures, or other government (federal, state and local) restrictions. As discussed below, this new provision of law gives contractors a potentially useful tool, along with other clauses in the Federal Acquisition Regulation (FAR) and contract terms and conditions, to seek continued payment during periods of work disruption. Here's our initial break down of the text:
Section 3610 presents an important potential remedy for contractors and should be considered in concert with other FAR-based and contractual remedies, such as suspension of work/stop work orders, contract changes clauses and excusable delay clauses. Please see our previous blogs, alerts and webinars on these issues.
DISCLAIMER: Information contained in this alert is for the general education and knowledge of our readers and is not intended to constitute legal, tax, accounting or investment advice. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.
Please note that email communications to the firm through this website do not create an attorney-client relationship between you and the firm. Do not send any privileged or confidential information to the firm through this website. Click "accept" below to confirm that you have read and understand this notice.