The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), in Section 3610, offers discretionary relief to federal contractors whose employees cannot perform work on a site that has been approved by the federal government during the COVID-19 public health emergency. The following is provided:

Section 3610. Federal Contractor Authority
Notwithstanding any other provision of law, and subject to the availability of appropriations, funds made available to an agency by this Act or any other Act may be used by such agency to modify the terms and conditions of a contract, or other agreement, without consideration, to reimburse at the minimum applicable contract billing rates not to exceed an average of 40 hours per week any paid leave, including sick leave, a contractor provides to keep its employees or subcontractors in a ready state, including to protect the life and safety of Government and contractor personnel, but in no event beyond September 30, 2020. Such authority shall apply only to a contractor whose employees or subcontractors cannot perform work on a site that has been approved by the Federal Government, including a federally-owned or leased facility or site, due to facility closures or other restrictions, and who can not telework because their job duties cannot be performed remotely during the public health emergency declared on January 31, 2020 for COVID–19: Provided, That the maximum reimbursement authorized by this section shall be reduced by the amount of credit a contractor is allowed pursuant to division G of Public Law 116–127 and any applicable credits a contractor is allowed under this Act.

It should be noted that the inability to work must result from “facility closures or other restrictions” and applies to workers who “cannot telework because their job duties cannot be performed remotely.” The Act authorizes agencies to use any available funds to modify affected contracts—without consideration—to reimburse paid leave, including sick leave, which a contractor provides to keep its employees or subcontractors in a ready state. The authorized reimbursements may cover an average of 40 hours per week, “at the minimum applicable contract billing rates.” The maximum reimbursement must be reduced, however, by the amount of any credit the contractor is allowed pursuant to Division G (“Tax Credits for Paid Sick and Paid Family and Medical Leave”) of the recent Families First Coronavirus Response Act, and by any other applicable credits that the contractor is allowed under the CARES Act.

It is expected that this Section of the Act will not be interpreted consistently by federal agencies, and we will have to wait for agency guidance to be issued. It is not yet known whether every federal contract will qualify as work being performed on a “site approved by the federal government”. For example, while it would make sense for any federally funded project to qualify as an “approved site,” if the project is not being performed on a government installation, and simply is either partially or fully funded by the federal government, it is unclear whether Section 3610 of the Act will apply. In addition, there is a question as to whether the Act will apply to U.S. construction projects in foreign countries that are impacted by the coronavirus crisis.

Certainly, construction workers cannot perform telework. Although the Act mentions “facility closures,” it does not mention specific project closures, but that may be covered under the term “other restrictions.” Although the government is currently attempting to allow federal construction projects to continue, effectively treating federal construction as an “essential” activity, that may become impossible as the crisis worsens. There may also be conflicts with state and local restrictions that limit travel. Additionally, there may be situations where federal facilities are not shut down, but a particular project cannot proceed because of illness to employees. However, the stoppage of a project may be covered under the term “other restrictions” in the Act.

Contractors should not expect quick answers to these questions because federal agencies will be making individual interpretations and policy decisions in the days ahead. If you are forced to place your or your subcontractors’ employees on standby to maintain a state of readiness, you should ask the contracting officer whether your company is entitled to reimbursement for the resulting paid leave. Although we previously wrote about the government’s lack of contractual authority to provide monetary compensation to contractors when they are delayed by acts of God, since only a non-compensable time extension is permitted by the regulations (See FAR 52.249-14, Excusable Delays), Section 3610 of the CARES Act provides a welcome legislative exception to that restriction. Hopefully, the government will recognize the need for other exceptions that will allow contractors to be compensated for the costs that result from the extraordinary delays brought about by the COVID-19 crisis.

The attorneys in our Government Contracting Group are available to assist you on these and other government contracting matters.