The Department of Defense (DoD) released two-class deviations on August 18, 2020, mandating revised agency-wide guidance and instruction applicable to the evaluation of contractor requests for reimbursement under Section 3610 of the CARES Act.
What do these class deviations mandating revised agency-wide guidance and instruction mean?
These two class deviations provide DoD contracting officers a comprehensive view of the DoD’s required and discretionary elements when reviewing contractor requests for reimbursement.
Overall, contractors will be expected to provide comprehensive documentation and rationale when seeking requests for equitable adjustment (REAs) under Section 3610. Further, the DoD fully expects ‘early engagement’ from contractors when submission of REAs is anticipated.
What does this mean for Government Contractors?
It means communications and discussions between contractors and the government should be well underway, considering, for the moment anyway, that eligibility for reimbursement under Section 3610 expires September 30, 2020.
Our Expert Craig Stetson Put together some Pertinent points to be aware of and noted in these two class deviations include:
- Reiteration that reimbursement is subject to the government’s availability of funds
- Reimbursement is at the contracting officer’s discretion
- Change in the starting date from January 31, 2020, to March 27, 2020, pertaining to reimbursement of paid leave costs
- Costs incurred prior to March 27, 2020, may be reimbursable; however, not under Section 3610 authority
REAs limited to contractor incurred costs – forecasted costs are not to be included
- REAs may be submitted under three approaches – single contract (REA not exceeding $2M), multiple contracts or segment level
- Separate checklists exist for each of the three approaches – abbreviated reimbursement, multipurpose reimbursement or global reimbursement
- Subcontractors must submit REAs to their prime contractors – the government will not accept REAs submitted directly from subcontractors
- REAs require a seven-point contractor executed representation regarding various aspects of the overall request for reimbursement
- Final settlement amount effected with contract modification (DFARS 252.243-7999), including notification to the government of applicable credits received or loan forgiveness
Contractors need to be aware of and understand the vast amount of guidance, instruction, and regulation issued by the DoD over the last several months regarding reimbursement of COVID-19 related costs. Reimbursement of these costs by the government is not a mandate, and, comes with a fair amount of contracting officer discretion.
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