Pentagon auditors offer some detail on COVID reimbursements to contractors

Both the continuing resolution keeping government agencies funded and a piece of legislation contractors believe is crucial to maintaining their financial well-being and employees on payroll expire midnight Friday (tonight).

As we are put this story up Friday afternoon, no extension to the stopgap funding bill or Section 3610 of the CARES Act economic relief legislation has been passed by Congress and hence sent to President Trump’s desk for signature.

But some figures are starting to come in on how the Defense Department has used the Section 3610 authority to modify contracts for reimbursement of paid leave costs to contractors covering employees who cannot get to work during the coronavirus pandemic.

In a Defense Department’s inspector general report unveiled Dec. 9, auditors said they identified 135 contracts with $68.3 million in Section 3610 requests as of Sept. 30. Another 157 contracts to the tune of $49.9 million are classified as pending, where contracting officers plan to use the authority.

Those figures are an imperfect tabulation and a final figure will not be known for some time or perhaps ever, given the nature of the pandemic and how classified contracts were not included in this sample the Pentagon’s IG office compiled.

Some contracting officers also mislabeled contracts with Section 3610 authority when they were not implementing such, but those errors were corrected for the most part by Dec. 4.

The primary reason companies see Section 3610 as crucial to the national security ecosystem is to keep technical talent with security clearances in it during and after a period where many agencies are still keeping numbers of people in classified facilities to a minimum.

A second point worth mentioning that is not called out specifically in the DOD IG report is how many companies have worked out alternate arrangements with their customers to the point that Section 3610 reliance was reduced or eliminated.

One issue contracting officers reported to IG staff as a problem in evaluating Section 3610 eligibility was whether applicants were also seeking relief through other related initiatives such as the Paycheck Protection Program.

Companies cannot get duplicate relief for the same employee’s leave expenses for the same timeframe from more than one COVID-19 program such as the PPP and Section 3610. But DOD contracting officers said they could not access other agencies’ databases.

The $68.3 million figure found for DOD contrasts with the Energy Department, where the Government Accountability Office tabulated $550 million in Section 3610 reimbursements and those were without contract modifications.

Pentagon IG staffers used certain key words in searching Beta.Sam.Gov and the Federal Procurement Data System to identify Section 3610 costs, whereas those related actions by the Energy Department were not cataloged in contract data systems because DOE did not use modifications.