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OMB Issues Guidance to Agencies on Managing Federal Contract Performance Issues Associated with COVID-19

by | Mar 24, 2020 | Government Contracts

On March 20, 2020, the Office of Management and Budget (OMB) issued a Memorandum to the Heads of Executive Departments and Agencies to identify steps to ensure the health and safety of federal contractors while maintaining continued contract performance. This OMB guidance should provide some standardization across federal agencies in response to the challenges raised by COVID-19. 

The memo urges agencies to work with their contractors to maximize telework whenever possible, and to modify contracts that do not currently allow for telework. The memo also advises agencies to be flexible in providing extensions to contract performance if telework is not possible or where the performance schedule slips due to the quarantine of contractor personnel. The memo encourages contracting officers to discuss the situation with the contractor to determine whether telework or substitution of personnel are feasible, and to be as flexible as possible.

If contractors submit requests for equitable adjustment for costs associated with performance disruptions – such as closure of an office building, unavailability of government personnel, or safety measure taken by contractors – agencies should consider whether such costs are allowable and reasonable. The notice states that what is “reasonable” is “what a prudent person would do under the circumstances prevailing at the time the decision was made to incur the cost (e.g., did the contractor take actions consistent with CDC guidance; did the contractor reach out to the contracting officer or the contracting officer representative to discuss appropriate actions).” 

The memo also encourages agencies to leverage special emergency procurement authorities, which increase the micro-purchase threshold, the simplified acquisition threshold, and the threshold for using simplified procedures for certain commercial items. Agencies are also asked to consider whether certain contracts – such as those with security and logistics requirements – can be retooled for pandemic response within the scope of the contract. 

The full memo, which includes 12 FAQs to provide additional guidance, can be found here.

Stephanie Wilson is a Partner and Co-Director of Government Contracts at Berenzweig Leonard. She can be reached at [email protected].