DOD eyes large COVID payments for contractors

The Pentagon is looking to issue contractors large payments rather than per contract for COVID-19 related costs, a top Defense Department official said Aug. 13.

Ellen Lord, the Defense Department's undersecretary for acquisition and sustainment, said the organization is working on final guidance for the implementation of section 3610 the CARES Act, which authorizes the government to pay contracting companies when personnel can't work due to COVID-19 restrictions.

Contractor guidance for submitting Section 3610 claims is underway, she said, and the final version, which has been sent to the Office of Management and Budget, includes a path for large payment amounts under $2 million.

"We have developed a streamlined path forward for low dollar value reimbursements under $2 million, and a path to settle globally at a company or division level that will eliminate the need to have proposals and negotiations on the contract-by-contract basis," Lord said during the Professional Services Council's virtual defense conference Aug. 13.

"[Section] 3610 authorizes payments to companies to defense industrial base employees when they cannot work on government contracts. No appropriations accompanied the authorization to reimburse these costs," Lord said, building on previous comments that those costs would be north of $10 billion.

The Pentagon, and large defense companies, has been heavily advocating for Congress to cover industry's COVID-related costs, such as personnel leave, protective gear, and added cleaning measures to cope with the pandemic, to keep DOD contracts moving.

The trillion-dollar pandemic rescue bill proposed by Senate Republicans, would give DOD more than $29.4 billion, $10.8 of which would be to help reimburse contractors for COVID costs. Congressional Democrats, however, have been less keen on giving the DOD, which commands a nearly $750 billion annual budget, any more money.

Senate Majority Leader Charles Schumer and House Speaker Nancy Pelosi said the proposal was "handing a $30 billion to defense contractors" in a joint statement July 28. The Democrat-led House passed a $3 trillion rescue bill, in May. Negotiations on a new package between the White House and legislative leaders are largely stalled.