Potential CARES Act Relief for Federal Contractors

The Coronavirus Aid, Relief, and Economic Security Act (“CARES”) was signed into law by President Trump on March 27, 2020.  Among the litany of relief provisions contained in the massive 880-page law, there appears to be some relief targeted specifically to federal government contractors.

CARES provides potential reimbursement to federal contractors whose employees (1) cannot perform work on a “site that has been approved by the Federal Government ” during the coronavirus (COVID-19) public health emergency due to facility closures or other restrictions, and (2) cannot telework because their job duties cannot be performed remotely.

Section 3610 of CARES authorizes (but does not require) agencies to modify affected contracts (without requiring consideration) to reimburse 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. This new provision will apply to leave up to “but in no event beyond” September 20, 2020. The authorized reimbursements may cover an average of 40 hours per week per affected employee, “at the minimum applicable contract billing rates.”

However, there is a catch.  The new law requires that the maximum reimbursement to a contractor must be reduced by the amount of any credit the contractor is allowed pursuant to the paid sick leave and paid emergency family leave provisions of the Families First Coronavirus Response Act, as well as by any other applicable credits allowed to the contractor under other provisions of the CARES.

The CARES Act allows, but does not require, agencies to provide these reimbursements.  Therefore, contractors should begin now reaching out to their respective contracting officers to discuss their company’s eligibility to receive the above credits.