Congress Extends Contractor COVID-19 Relief For 6 Months

By Daniel Wilson
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Law360 (March 10, 2021, 4:01 PM EST) -- The U.S. House of Representatives on Wednesday agreed to extend a program allowing federal contractors to claim reimbursement for COVID-19-related disruptions by six months, after repeated urging from contracting industry groups.

Lawmakers passed an extension of Section 3610 of the Coronavirus Aid, Relief and Economic Security, or CARES, Act, until the end of September as part of the American Rescue Plan Act, a $1.9 trillion coronavirus-related stimulus package that passed in a 220-211 vote, sending the legislation to President Joe Biden to be signed into law. The extension had been included as a Senate amendment after the bill previously passed the House.

The Section 3610 extension did not come up during floor debate Wednesday, but its authors Sens. Mark Warner, D-Va., and Marco Rubio, R-Fla., described it in a joint statement Saturday as a "critical lifeline for federal agencies to maintain contractors," including "personnel who serve a key role in protecting our national security missions and other vital programs."

Section 3610 allows federal agencies to reimburse contractors for the costs of keeping employees and subcontractors in a "ready state" if they're unable to perform their work as usual, such as if they're sick with the coronavirus or locked out of their usual worksite and unable to telework, for example because their work is classified.

Originally included in the CARES Act in March 2020, the provision was one of several tweaks to contracting law and regulations adopted as the effects of COVID-19 began to bite, intended to help keep cash flowing through federal supply chains.

It was originally due to expire at the end of fiscal year 2020 in September, but its expiry had been pushed back several times through stimulus legislation and a continuing resolution, after contracting industry groups said their pandemic-related workforce readiness problems would persist past the end of fiscal 2020.

The scope of reimbursement requests made so far under Section 3610 was not immediately clear Wednesday, although the U.S. Department of Defense, which is expected to receive the bulk of claims under the program, said last year that it expects to receive billions of dollars in related requests, citing a rough poll it had conducted with major defense contractors.

The most recent previous extension pushed the program's expiry out to the end of March, and senators agreed to include the September extension as one of only four amendments to the original House version of the bill — and the only one to secure widespread bipartisan support, with a 93-6 vote — that they adopted when the Senate voted on the bill on Saturday.

In a March 6 statement following the Senate vote, CEO of contractor group the Professional Services Council David Berteau said Section 3610 was a "critical retention authority for key federal contractor personnel."

"With so much uncertainty around safe access to workplaces, now is not the time to let up on COVID-19 protections," he said. "This extension will help the federal government continue to access the highly skilled, cleared and trusted contractor workforce needed to meet mission needs."

Without Section 3610, many federal contractors would be forced to terminate employees, or would have employees leave to search for more stable employment in the commercial sector, according to a March 4 letter to senators signed by several small business CEOs and ML Mackey, chair of the small business division at industry group the National Defense Industrial Association.

"Because it is difficult and time-consuming to replace employees with specialized skills or security clearances, our companies' future ability to support critical government missions would be hindered without 3610 authorities," the CEOs said in the letter.

--Editing by Stephen Berg.

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