March 23, 2020

Office of Management and Budget Issues COVID-19 Guidance for Contractors

Holland & Knight Government Contracts Blog
Eric S. Crusius
Government Contracts Blog

On March 20, the U.S. Office of Management and Budget (OMB) issued guidance regarding contractor expectations and performance in the wake of the burgeoning coronavirus (COVID-19) outbreak (OMB Guidance). The OMB Guidance attempts to balance difficulties contractors may have performing agency requirements. Below is a summary of the guidance and potential impacts for contractors.

  • Emergency Procurement Flexibilities. Because the president has declared a national emergency, simplified procurement thresholds under Federal Acquisition Regulation (FAR) Part 13 have increased government-wide.
    • The micro-purchase threshold is now $20,000
    • The simplified acquisition threshold is now $750,000
    • The threshold for simplified acquisition procedures for commercial item buys is now $13 million

    These higher thresholds will allow for more streamlined acquisition processes across the government.Allowance for Delays Related to COVID-19. The OMB Guidance states that "[a]gencies are encouraged to be as flexible as possible in finding solutions." That includes finding telework solutions or alternate employees if the current employees are unable to telework for some reason. Even if the delay requires termination because of agency needs, any COVID-19 delay would be excusable and should not impact a contractor's performance rating.

  • Equitable Adjustments May Be Permitted. The OMB Guidance states that equitable adjustments "associated with costs related to safety measures taken by contractors to protect their employees from COVID-19, including costs associated with performance disruptions caused by the government" should be reviewed on a case-by-case basis. According to the OMB Guidance, factors include whether costs connected with the requested adjustment "would be allowable and reasonable to protect the health and safety of contract employees as part of the performance of the contract." Agencies may also consider the importance of the work the contractor employees are performing and whether having skilled labor in a ready state for high-priority missions is beneficial.
  • Extension of Re-Registration in the System for Award Management (SAM). Current SAM registrants will receive a one-time, 60-day extension if their registration expires prior to May 17, 2020.
  • OMB Encourages Telework. Contracting agencies should encourage telework among contractor employees. If a contract currently does not allow for telework, agencies should seek to modify contracts, wherever possible.

The OMB Guidance demonstrates OMB's commitment to flexibility in the wake of the COVID-19 pandemic. Contractors should review the OMB Guidance and other guidance issued by the federal government to be aware of more flexible contracting procedures and remedies if a contract is impacted by COVID-19.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact the author or your responsible Holland & Knight lawyer for timely advice.

Related Insights