By Daniel Wilson

Law360 (May 12, 2020, 6:00 PM EDT) -- Payments for federal contractors responding to the coronavirus pandemic will be accelerated and contractors would not be penalized for COVID-19-related disruptions under the House Democrats' $3 trillion relief bill proposed Tuesday.

H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act, includes a host of funding proposals that could provide billions of dollars for contractors, including more than $900 billion in funding for state, local, tribal and territorial governments.

"We must act boldly to support state and local entities to address coronavirus-related outlays and lost revenue due to the coronavirus," House Speaker Nancy Pelosi, D-Calif., said in a speech unveiling the bill. "We must put more money in the pockets of the American people."

Title IV of the bill's Accountability and Government Operations section also seeks to clarify Section 3610 of the earlier CARES Act stimulus bill, which allows agencies to reimburse contractors for the cost of keeping employees and subcontractors in a "ready state" if they're currently unable to work due to COVID-19.

Implementation of that section — which attorneys recently told Law360 was the most important contracting-related clause in the CARES Act, at least in the near term — has varied from agency to agency. 

The U.S. Department of Defense, for example, has allowed reimbursement for sick leave payments going back to Jan. 31, when a national emergency was first declared, while other agencies have allowed payments only from the date the CARES Act was enacted, March 27.

The HEROES Act would require the Office of Management and Budget to issue governmentwide guidance for how Section 3610 should be implemented, making it consistent across agencies.

The new bill would also protect contractors from being penalized with adverse past performance ratings on future deals if disruptions in their work were caused by the pandemic, and would require contracting officers to pay invoices submitted by prime contractors within 15 days, expanding a requirement that currently only applies to small businesses.

Additionally, the bill makes it mandatory for federal agencies to allow contractor employees to telework during the course of the pandemic, as long as their work is possible to carry out remotely.

Outside of clauses specifically targeted at assisting federal contractors, there are also a number of funding measures that are likely to flow through at least in part to government vendors, such as $1 billion in funding for the General Services Administration to spend on technology modernization in response to the coronavirus.

The HEROES Act would also direct the U.S. Department of Health and Human Services to partner with industry to improve the domestic production of personal protective equipment and replenish existing stocks of medical supplies.

And it would cap rates for phone calls from prisons or jails — systems generally operated by private contractors — to 4 cents per minute for debit calls and 5 cents per minute for collect calls, while giving the Federal Communications Commission the authority to set rates both for inter- and intra-state calls from prison or jail, in recognition of what Democrats said is "the need to connect families and incarcerated family members, particularly during the COVID-19 pandemic."

The U.S. Government Accountability Office would also get an additional $30 million specifically for oversight of government spending on coronavirus response, on top of $20 million it received in the CARES Act.

The House is expected to vote on the bill Friday, but will likely need heavy tweaking to be considered in the Senate, where it needs a 60-vote majority to avoid a filibuster. 

State and local government assistance proposed in the bill is one aspect that is likely to be contentious, with Senate Majority Leader Mitch McConnell, R-Ky., saying in an April 22 radio interview that "there's not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations."

In comments on the Senate floor Tuesday, McConnell also said that Senate Republicans are putting together their own new COVID-19 response bill, which would prioritize issues such as liability protections for businesses that reopen amid the pandemic, and that he would not consider a "big laundry list of pet priorities" from congressional Democrats.

--Additional reporting by Vince Sullivan. Editing by Abbie Sarfo.

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