Government Contracts DFARS Class Deviation Adds CARES Act Cost Principal
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Monday, May 4, 2020

DFARS Class Deviation Adds CARES Act Cost Principal

By Government Contracts Editorial Staff

The Department of Defense has issued Class Deviation 2020-O0013, CARES Act Section 3610 Implementation. Section 3610 of the Coronavirus Aid, Relief, and Economic Security Act (PL 116-136) allows agencies 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, that a contractor provides to keep its employees or subcontractors in a ready state during the COVID-19 public health emergency. The class deviation to FAR Part 31 and DFARS Part 231 provides a new cost principal, DFARS 231.205-79, to be used in implementing section 3610. DFARS 231.205-79 allows contracting officers to treat as allowable paid leave costs a contractor incurs to keep its employees and subcontractor employees in a ready state during the emergency. It also allows COs to use any “funds made available to the agency” by Congress to reimburse contractors for lost worker time, not otherwise reimbursable, between January 31, 2020, and September 30, 2020, if the contractor provides leave to its employees or subcontractor employees “to maintain a ready state, including to protect the life and safety of [g]overnment and contractor personnel,” as discussed in OMB Memorandum M-20-18. COs are authorized to modify contracts to provide for reimbursement of allowable paid leave costs, not otherwise reimbursable, without securing additional consideration.

Limitations on Reimbursement. However, a contractor may receive reimbursement only if its employees or subcontractor employees cannot perform work on a government-owned, government-leased, contractor-owned, or contractor-leased facility or site approved by the government for contract performance due to closures or other restrictions, and are unable to telework because their job duties cannot be performed remotely during the public health emergency. Also, reimbursement is authorized only at the appropriate rates under the contract for up to an average of 40 hours per week, and for contractor or subcontractor payments made for costs incurred, not otherwise reimbursable, not earlier than January 31, 2020, and not later than September 30, 2020. Further, the government must reduce the maximum reimbursement authorized by the amount of credit allowed under certain other laws. Reimbursement is contingent on the availability of funds.

Support for Costs. Contractors must support any claimed costs, including claimed leave costs, with appropriate documentation, and identify credits that may reduce reimbursement under section 3610. COs are encouraged to work with contractors to understand how they will use the COVID-19 relief provisions and encourage contractors to use existing contract terms or the relief provisions available to them in response to COVID-19. In addition, it is important for COs to secure representations from contractors regarding any other relief claimed or received stemming from COVID-19, including an affirmation that the contractor has not or will not pursue reimbursement for the same costs accounted for under their request, to support their requests for reimbursement under section 3610. The class deviation went into effect on April 8, 2020. For the text of the deviation and the new cost principal, see ¶70,245.117.

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