COVID-19 Challenges for Government Contractors

The coronavirus pandemic, or COVID-19, has created a major disruption to our lives. All corners of society, both business and personal, are experiencing unprecedented changes. Though government contractors may have a little less volatility due to generally providing “essential services” and being funded by the government, it stands to reason that contractors will still endure some turbulence to their business, due to COVID-19. In this time of change, it is important to have the knowledge required to move forward and the flexibility to pivot business plans, as needed. Read on to learn more about the top COVID-19 challenges for government contractors.

Lack of Access to the Website and Personnel

With each passing day, federal, state, and local governments are placing increasingly tight restrictions on workplaces and on the public-at-large. Policies that limit the size of a gathering and that define ‘essential’ versus ‘non-essential’ business operations are among the many COVID-19 challenges for government contractors.

Measures such as building closures, quarantines, or social distancing practices imposed to limit the spread of COVID-19 may limit a contractor’s access to a worksite, and impact the ability to manage personnel. If the performance of a contract cannot be performed via telecommuting, the problem only becomes more intimidating.

For hourly employees, these changes will likely lead to diminished work hours and participation, and have a direct effect on their access to or ability to maintain employee benefit. For more detail on an hourly-employee’s access to employee benefits, check out our previous blog post on hour banking as a benefit solution for government contractors.

Delays and Applicable Clauses

Considering the broad impact of COVID-19 on business operations, public health, the supply chain, and worksite measures in place, project delays will likely occur. Thankfully, the language of many contracts subject to either the Services Contract Act (SCA) or the Davis Bacon Act (DBA) usually include an excusable delay clause, generally referred to as a “force majeure” clause. Force Majeure refers to extreme and unforeseeable circumstances that prevent a contractor from fulfilling performance of a contract. Force majeure clauses typically include “acts of God,” sovereign acts of the Government, epidemics, and quarantine restrictions.

Government contractors should check their existing and new contracts for a “force majeure” clause and promptly notify the contracting officer of any delays or COVID-19-related performance issues. Just as it is important to keep current with regular COVID-19 updates, government contractors should also stay in frequent communication with the contracting officer to advise them of their situation, albeit ever-evolving. The Federal Acquisition Regulations (FAR) provide additional detail as to contractor issues related to suspension of work or delay of work. See below for references.

Resources:

FAR 52.242-12, Suspension of Work

FAR 52.242-17, Government Delay of Work

Employee Health Concerns

Questions of healthcare are at the top of everyone’s minds. One of the most high-stakes COVID-19 challenges for government contractors is addressing employee health concerns. Whether the contractor is trying to find the best healthcare fit for right now or SCA/DBA employees have questions about their hours worked and how that impacts their eligibility to group health plans, healthcare seems to be at the forefront!

Government guidelines and policies to address COVID-19 related sick leave are updated on a daily basis. Most recently, the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security Act (CARES Act) have provided additional relief for individuals and businesses. The regulations to the FFCRA and CARES Act are forthcoming. Read more.

Solutions for government contractors may include implementing new minimum essential coverage (MEC)-only plans, establishing hour banking to potentially extend group health coverage, and adding telemedicine options. Contractors should know that there are flexible group health plan options available, even now.

Addressing Constant Change

As mentioned at the outset, the novel coronavirus has created an environment that is constantly changing. Government contractors, as businessmen and employers, are in the difficult position of having to make “on-the-fly” decisions regarding their business operations and employee health. To stay informed on the latest COVID-19 updates, the following resources provide current information:

Government COVID-19 Response: https://www.coronavirus.gov/

Health updates from the Centers for Disease Control: https://www.cdc.gov/coronavirus/2019-ncov/index.html?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fcoronavirus%2Findex.html

At Boon, we also provide up to date information and guidance specific to the needs of government contractors. Click here to see our most recent updates.