This content has been edited as of April 15, 2020.
The Coronavirus Aid, Relief, and Economic Security Act (CARES) was signed into law on March 27, 2020 to provide economic assistance to individuals, businesses, and state and local governments struggling with the fallout of the COVID-19. To keep government contractors "in a ready state," Section 3610 of the CARES Act gives Federal agencies the authority to reimburse contractors "at minimum applicable contract billings rates" for paid leave, including sick leave, through September 30, 2020. The reimbursements must not exceed rates under the contract for up to an average of 40-hours per week.
The Act mandates that Contracting Officers exercise this authority only when contractor employees or subcontractors cannot perform work at a "site that has been approved by the 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 cannon be performed remotely." Both criteria must be met in order to qualify. Additionally, any reimbursement authorized by the Government under the CARES Act must be reduced by (1) tax credits for paid leave authorized by the Families First Coronavirus Response Act, as well as, (2) any other relief allowed to the Contractor through the CARES Act.
To implement Section 3610 of the CARES Act, the Department of Defense issued a Class Deviation to the Defense Federal Acquisition Regulation (DFARS). The Class Deviation provides implementation guidance to Contracting Officers and established a new DFARS cost principle, 231.205-79, to address the allowability of reimbursed leave under CARES Act Section 3610.
Under 231.205-79, reimbursed leave is allowable if:
- The leave costs were incurred as a consequence of the COVID-19 national emergency and would not be incurred in the normal course of the contractor's business
- The leave costs were used for keeping contractor employees and subcontractor employees in a ready state, including to protect the life and safety of Government and contractor personnel, notwithstanding the risks of the public health emergency declared on January 31,2020, for COVID-19;
- The leave costs were used for protecting the life and safety of Government and contractor personnel against risks arising from the COVID-19 public health emergency.
- The employee cannot perform work at their normal work site because the facilities have been closed or made practically inaccessible or inoperable, or other restrictions prevent performance of work at the facility or site as a result of the COVID-19 national emergency. Inaccessibility can be due to applicable Federal, State, or local law, including temporary orders having the effect of law.
- The employee is unable to telework because their job duties cannot be performed remotely.
The Class Deviation suggests that Contracting Officers will be securing representations from contractors regarding amounts claimed under other relief efforts and affirming that the contractor will not "double dip" by requesting reimbursement for leave costs already provided for by another COVID-19 relief effort. Additionally, to aid in supporting cost allowability it will be important for contractors to properly segregate and identify COVID-19 related leave costs to provide a sufficient audit trail.
Any contractor with site accessibility issues related to COVID-19 should discuss this reimbursement option with their Contracting Officers immediately, as we have already seen evidence that contractors are receiving related contract modifications. As always, WEC is continuing to monitor for updates related to COVID-19, the CARES Act, and the impact on of these issues on Government Contractors. Please contact WEC's Government Contracting Advisory Team if you have any questions and continue to check our COVID-19 Resource page for further updates.