Facing a cash flow crisis brought on by COVID-19, government contractors have only two basic ways of increasing cash flow: getting new contracts and performing incumbent contracts. A lot of media attention has focused on ways contractors can get cash flow help in performing their incumbent contracts. Berenzweig Leonard has been covering two important federal initiatives: The Paycheck Protection Program (PPP) and CARES Act Section 3610.
But what about help in getting new contracts?
Contractors need to know that a number of provisions in the Federal Acquisition Regulation (FAR) give contracting officers the right to use a number of shortcuts for soliciting new work. One way contractors can improve their chances of getting new contracts is to know these shortcuts and decide if they offer marketing opportunities.
Contractors should focus on FAR Part 18, Emergency Acquisitions.
According to its drafters, FAR Part 18 provides “a single reference to the acquisition flexibilities already available in the FAR to facilitate and expedite acquisitions of supplies and services during all types of emergencies.” Adopted after the 2005 Atlantic hurricane season, Part 18 was designed to help agencies respond to a wide range of undeclared emergencies (Subpart 18.1 Available Acquisition Flexibilities). But Part 18 goes on to address in Subpart 18.2 declared emergencies like the current COVID-19 pandemic.
Two aspects of FAR’s emergency rules are important.
First, Subpart 18.1 Available Acquisition Flexibilities is a wonderfully helpful laundry list identifying for contractors and contracting officers those provisions in other parts of FAR that can be used in an emergency. It’s helpful because, in an emergency, nobody wants to go hunting through the thousands of pages of FAR looking for acquisition flexibilities.
For example, Part 18.1 includes reminders that a contracting officer in an emergency can use specific types of sole-source contracts as well as letter contracts, and oral requests for proposals. It also tells contracting officers that they can ignore or relax some normal contract requirements, like a contractor being in SAM and using bid guarantees.
Especially helpful is the fact that the FAR Part 18 provisions also provide the citation to the other part of FAR in which the shortcut is found. For example, FAR 18.110 Soliciting from a single source reads as follows: “For purchases not exceeding the simplified acquisition threshold, contracting officers may solicit from one source under certain circumstances. (See 13.106–1(b).)”
Second, contractors should keep in mind the impacts that an emergency declaration can have on dollar thresholds. These formal declarations, like the one President Trump has issued, allow the government to dramatically increase a contract’s value by raising the thresholds for micro-purchases, simplified acquisitions, and some commercial items. The $3,000 threshold for micro-purchases expands to $20,000 for contracts performed in the United States and to $30,000 for contracts outside the U.S. The $150,000 simplified acquisition threshold increases to $750,000 for contracts performed in the U.S. and to $1.5 million for contracts performed outside the United States.
Although these increased thresholds might not be enticing enough for some contractors, one increased threshold probably would be. The threshold for simplified procedures for certain commercial items under FAR 13.500(c) during an emergency goes to $13,000,000 from $7,000,000.
As the procurement world continues to help respond to the pandemic, the lawyers at Berenzweig Leonard will continue to update government contractors on critical procurement issues on our blog.
This article was written on May 18, 2020 and represents Berenzweig Leonard’s interpretation of the law and circumstances at the time of publication. As the situation surrounding the COVID-19 pandemic is changing on a daily basis, new or additional developments may impact matters discussed in this article. Please contact Berenzweig Leonard’s attorneys for up-to-date information.