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OMB Issues COVID-19 Guidance for Federal Government Contractors

On Friday, March 20, 2020, the Office of Management and Budget (“OMB”), an Executive Office within the White House, released guidance to federal department and agency heads on dealing with federal contractors as the nation addresses the challenges associated with the COVID-19 pandemic. With its guidance, OMB seeks to strike the appropriate balance between ensuring the safety of contractors and ensuring the delivery of goods and services critical to the federal government during the pandemic. OMB’s guidance instructs contracting officials to provide a variety of relief to contractors under the terms of their contracts, and to adjust contracts to enable contractors to better assist in the nation’s response to the pandemic.

Recognizing the very serious health risks presented by the pandemic, OMB instructs contracting offices across the federal government to engage constructively with contractors through direct communication and other outreach efforts – for instance, through industry liaisons. OMB emphasizes flexibility, particularly in situations where contractors may be unable to access workplaces where contracts are performed.

Specific recommendations include:

  • Maximize telework for contractor employees, including by modifying contracts, if necessary.
  • Provide extensions to performance dates, including under excusable delay provisions, without any negative impact on contractor performance ratings.
  • Use clauses allowing contractual changes to “retool” certain services contracts – for instance, security and logistics – to provide additional services to address the pandemic.
  • Keep key personnel in a “mobile ready state” for activities critical to national security or other top federal priorities.
  • Use acquisition flexibilities authorized under the Stafford Act and FAR § 18.202 for micro-purchases, simplified acquisitions, and purchases of commercial items.
  • Favorably consider requests for equitable adjustments and grant reasonable requests based on protecting the health and safety of contractor employees.

OMB’s recommendations are consistent with the positions that many federal contracting officials have taken in recent weeks; however, a number of contracting officials have been reluctant to acknowledge the implications of the COVID-19 pandemic on contractors’ contractual rights. OMB’s recommendations should assist contractors seeking acknowledgment of COVID-related delays, modifications of performance requirements, and equitable adjustments of contract prices.

Vinson & Elkins has established a cross-disciplinary taskforce that is supporting the health and well-being of our clients and communities. We are prepared to help clients respond to the critical legal implications of COVID-19 – everything from public company disclosures and force majeure to remote workforce considerations and much more.

Please visit our Coronavirus: Preparation & Response series for additional resources we hope will be helpful.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.