Type: Law Bulletins
Date: 03/23/2020

OMB Releases Guidance of Federal Contract Performance Issues Amid National Emergency

The Office of Management and Budget (OMB) released guidance to contracting officers and agencies during the response to the novel coronavirus (COVID-19). The guidance is helpful to government contractors because it provides insight into how OMB is advising agencies to mitigate the impact of COVID-19 on contractors. It discusses telework, whether contracts can be extended when there is a slip in the contract schedule, addressing requests for equitable adjustment, enhancing communication with industry partners and special emergency procurement flexibilities available in the Federal Acquisition Regulation (FAR). 

OMB is encouraging agencies to leverage special emergency procurement authority granted under the FAR and agency-specific supplemental regulations, like the DFARS, HHSAR and HSAR, for the Departments of Defense, Health and Human Services and Homeland Security, respectively. The primary takeaway from the memo is that agencies are encouraged to implement these additional tools based on what is reasonable at the time of the decision.

For example, agencies are aware of cost and schedule impacts on contract performance due to COVID-19. The memo encourages agencies to determine any necessary contractor relief on a case-by-case basis in a manner that is both in the best interest of the government and that will not negatively impact a contractor’s performance ratings. Agencies are to review the contracts and FAR clauses at 52.249-14 (Excusable Delays), 52.212-4(f) (Commercials Items – excusable delays) and 52.211-13 (Time Extensions).

Additionally, because President Trump declared a national emergency, agencies may utilize the following increased simplified acquisition procedures thresholds in accordance with FAR 18.202:

  1. The micro-purchase threshold is raised from $10,000 to $20,000 for domestic purchases and to $30,000 for purchases outside the U.S.
  2. The simplified acquisition threshold is raised from $250,000 to $750,000 for domestic purchases and $1.5 million for purchases outside the U.S.
  3. Agencies may use simplified acquisition procedures up to $13 million for purchases of commercial item buys.

It is worth noting that the FAR Council, the entity charged with updating and ensuring continuity of the acquisition regulatory system, has not yet updated the thresholds in the FAR itself. Accordingly, agencies that have been and still are operating under the lower thresholds now have significantly more flexibility to procure needed goods and services in response to the COVID-19 emergency.

Finally, under ordinary circumstances, contractors are required to update their SAM.gov registrations annually if they want to do business with the federal government. Pursuant to the OMB memo, there will be a one-time extension to this requirement. Contractors with registration renewal due before May 17, 2020, will be provided a one-time only 60-day extension.

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