By Daniel Wilson

Law360 (May 1, 2020, 9:52 PM EDT) -- The need for speed in the government's response to the COVID-19 crisis has seen it loosen many federal contracting rules, but contractors will need to keep a close watch on their actions during the pandemic to avoid after-the-fact enforcement.

There are billions of dollars of federal contracting opportunities available to respond to the coronavirus crisis, as well as dozens of temporary policy changes intended to get products and services on contract faster and to keep cash — and if possible work — flowing on existing deals.

The government has moved, for instance, to allow for accelerated payments to contractors and cost reimbursements for keeping workers on payroll when they're unable to work.

"Right now, they can't give the money away fast enough and they can't deregulate the procurement system fast enough to get the money out there into the hands of contractors that can perform," Blank Rome LLP partner Al Krachman said.

But the speed and flexibility built into the federal pandemic response tools has also led to ambiguities in related rules and guidance and differences in implementation between agencies, or even between contracting officers, said Koprince Law LLC senior associate Ian Patterson.

"One of the tricky things is, a lot of these items are discretionary, and even a lot of the guidance says that's going to need to be evaluated on a case-by-case basis," he said.

That uncertainty paves the way for mistakes and therefore for enforcement actions after the crisis is over, even for companies trying to do the right thing.

"One of the things that I know will happen in about a year or two is that if there are mistakes made in the procurement process — which in this circumstance, I guarantee you there will be — you'll have hearings on the Hill where somebody's hauled in to answer for whatever particular mistake was made and how unethical it was," said Abrahams Wolf-Rodda LLC partner Howard Wolf-Rodda.

There is a tendency among auditors, lawmakers and watchdogs to look back at contracts and government assistance programs issued during a crisis or emergency — such as the 2008 global financial crisis, the Iraq and Afghanistan wars, or natural disasters — and pick apart mistakes with the benefit of hindsight, which may lead to some being "raked over the coals unfairly," Wolf-Rodda said.

There are also more eyes on federal COVID-19 spending, the largest-ever federal stimulus program, than any similar program before. The $2 trillion CARES Act calls for three new bodies to oversee coronavirus spending, as well as giving the U.S. Government Accountability Office additional funding to oversee some of the bill's initiatives.

That's on top of the usual panoply of oversight from prosecutors, whistleblowers, inspectors general, agency auditors, suspension and debarment officials, congressional committees and the GAO under its regular watchdog duties.

"Those companies that have invested in compliance are going to be fine," Krachman said. "Those who haven't are going to face whistleblower suits, audits, OIG investigations, suspensions, debarments. There's bound to be a tidal wave of those types of enforcement actions."

Also likely to contribute to hindsight enforcement is that medical equipment suppliers and the potentially thousands of other commercial firms who respond to coronavirus-related contracting opportunities may not have done business with the government before, and will have to deal with the often-arcane rules around federal contracting for the first time, Krachman said.

"Many firms just are not aware that the government has the right and ability to come back and ask for the money back, even if you've performed and you believe you've provided value," he said.

Issues that could trip up a first-time contractor include, for example, failure to comply with record-keeping requirements, or neglecting to specifically document the hours that their employees worked on a federal contract.

Or they may not have an accounting system that can generate separate charge codes needed to deal with COVID-19-related costs, leading to a "complicated scenario" if they have to untangle their billing after the fact, Krachman said.

As such, it's important for those companies to put an appropriate compliance program in place as soon as possible — before obtaining a federal contract, if they can.

"It's a classic 'ounce of prevention' problem," Krachman said.

Even for companies who are already experienced in dealing with the government, if they're scrambling to pull a proposal together to address an emergency procurement, it is likely helpful to have someone outside that team look over the proposal first to help avoid problems down the line, Wolf-Rodda said.

"Just [to] keep an eyeball on it and point out, 'OK, are you really sure you want to do this?,'" he said. "Not necessarily to put the kibosh on something, but to just have a dispassionate eye sitting next to you making sure that you're not forgetting the sensible for the sake of the critical."

--Editing by Aaron Pelc and Emily Kokoll.

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