Coronavirus (COVID-19) Frequently Asked Questions
Frequently Asked Questions (FAQs) guidance on the impact of the COVID-19 (Coronavirus) Outbreak for small businesses performing on federal contracts and financial assistance programs available to small businesses.
PAYCHECK PROTECTION PROGRAM (PPP)
PROGRAM UPDATE AS OF AUGUST 8, 2020: The Paycheck Protection Program loan is no longer available as dictated by law. Please refer to Small Business Administration (SBA) website or your local SBA district office for further assistance.
FINANCIAL ASSISTANCE TO SMALL BUSINESSES DUE TO COVID-19
Who can use an SBA disaster loan?
The U.S. Small Business Administration’s (SBA) Disaster Assistance program offers financial assistance to small business concerns in response to the Coronavirus (COVID-19). Small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due to COVID-19.
What type of disaster loans are available for small businesses?
Business Disaster Loans — up to $2 million
SBA disaster loans are available to businesses, regardless of size, and nonprofits including charitable organizations such as churches and private universities.
Borrow up to $2 million to repair or replace damaged or destroyed real estate, machinery and equipment, inventory and other business assets. Loans may also be used for structural improvements such as adding a retaining wall or sump pump, clearing out overgrown landscaping, building a safe room or elevating the property to lessen the effect of future disasters.
These loans are for small businesses, agricultural cooperatives, aquaculture enterprises and nonprofits affected by disaster to help meet working capital needs or normal business operating expenses through the recovery period. Businesses are eligible for these loans regardless of whether or not they have suffered property damage.
SBA Express Bridge Loans
Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.
Individuals may apply online For additional information related to the SBA Disaster Assistance program, please visit SBA COVID-19 page. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email email@example.com for more information on SBA disaster assistance. Individuals who are deaf or hard of hearing may call (800) 877-8339.
CONTRACT PERFORMANCE GUIDANCE
OMB’s Office of Federal Procurement Policy (OFPP) and the SBA have issued several Frequently Asked Questions (FAQ) to address concerns a small business performing on federal contracts may have related to the impact of COVID-19. Whether or not your firm is currently performing on a federal contract, we suggest that you read these FAQs carefully and take any action as you deem necessary.
1. Should agencies be directing their Federal contractors to follow the lead of the Federal Government in their use of telework for their contract employees as described in OMB Memoranda M-20-13 and M-20-15, which discuss the use of telework in connection with COVID-19?
The Federal Government's telework law and recent announcements cover only Federal managers and employees, not contractors or their employees. Federal contractors are responsible for managing their workforces, including how telework is used by their employees, consistent with their own telework policies and the contract terms they have negotiated with Federal agencies. However, in the spirit of OMB's guidance, which seeks to maximize the use of telework, and FAR § 7 .108, which instructs agencies not to discourage contractor use of telework when consistent with contractual requirements, agencies are strongly encouraged to work with their contractors to evaluate and maximize telework for their contractor employees, wherever possible, as a way to enable continued contract performance consistent with the health and safety of their contractor and government personnel. This includes modifying contracts that do not currently allow for telework. If a contract does not lend itself to telework, for example, because it must be performed at a government facility, agencies should consider being flexible on delivery schedule contract completion dates.
2. If contractor personnel must be quarantined due to exposure to the virus, whether or not related to performance of the contract, and this action results in a slip in the contract schedule, may contracts be extended or otherwise altered?
Yes. Government contracts provide for excusable delays, which may extend to quarantine restrictions due to exposure to COVID-19. For example, see FAR clauses 52.249-14, 52.212-4(f), and 52.211-13. In determining the best course of action, the contracting officer should discuss the situation with the contractor to determine if other options are available (e.g., ability of employee to telework or to find a substitute employee). If other options with the existing contractor aren't feasible, it may be appropriate to re-procure elsewhere if possible. Such actions should be taken for the convenience the government (e.g., through use of the relevant convenience termination clause or a no-cost settlement) and without negatively impacting the contractor's performance rating. Excusable delays that result in adjustments to the contractor's delivery schedule should not negatively impact a contractor's performance ratings. Agencies are encouraged to be as flexible as possible in finding solutions.
3. How should agencies address requests for equitable adjustment associated with costs related to safety measures taken by contractors to protect their employees from COVID-19, including costs associated with performance disruptions caused by the government (e.g., closure of an office building) when performance doesn't allow for telework (e.g., work requires access to secure location, or involves building maintenance)?
Requests for equitable adjustment should be considered on a case-by-case basis in accordance with existing agency practices, taking into account, among other factors, whether the requested costs would be allowable and reasonable to protect the health and safety of contract employees as part of the performance of the contract. The standard for what is "reasonable," according to FAR § 31.201-3, is what a prudent person would do under the circumstances prevailing at the time the decision was made to incur the cost (e.g., did the contractor take actions consistent with CDC guidance; did the contractor reach out to the contracting officer or the contracting officer representative to discuss appropriate actions).
Agencies may take into consideration whether it is beneficial to keep skilled professionals or key personnel in a mobile ready state for activities the agency deems critical to national security or other high priorities (e.g. , national security professionals, skilled scientists). Agencies should also consider whether contracts that possess capabilities for addressing impending requirements such as security, logistics, or other function may be retooled for pandemic response consistent with the scope of the contract. A number of contract clauses may be helpful in managing COVID-19 issues as they arise. The government may make changes to the contract using the appropriate changes clause that applies to the contract (see FAR clauses 52.243-1 through 52.243-3 or clause 52.212-4(c)). If necessary, generally after considering other alternatives, they may suspend or stop performance through clause 52.242-14, Suspension of Work, and clause 52.242-15, Stop Work Order.
4. If a Federal building, such as a museum, is closed to the general public in order to further the practice of social distancing, should repair work to the building be halted until the building is reopened?
Whether work is continued or stopped should be addressed on a case-by-case basis, taking into consideration the health and safety of government and contractor employees. These discussions should include consideration of guidance from CDC and local public health officials to determine if there is a risk-based reason to stop work and, if work continues, steps that might need to be taken to address the health and safety of workers.
5. Should agencies postpone or virtually conduct acquisition-related activities that are typically performed face-to-face, such as industry days, contractor debriefings, or inspections?
Agencies should evaluate, on a case-by-case basis, whether to proceed with in-person activities, taking into account guidance from the CDC and advice or direction from state and local public health authorities. Consistent with CDC recommendations, agencies should consider steps such as practicing appropriate social distancing and following other guidance if in-person or face-to-face interaction is essential. The CDC has provided additional interim guidance for businesses, and agencies should consider virtual activities, such as online industry conferences, video proposals, and other innovative steps in planning their acquisitions. Sample use cases and examples can be reviewed at https://www.fai.gov/periodic-table/, and brief how-to applications of these proven flexible business practices can be accessed at https://www.fai.gov/media-library/item/procurement-innovation-lab-pil-primer.
6. How can agencies enhance communications with their industry partners?
Clear and timely communication between agencies and their industry partners is critical to supporting the government's response to COVID-19 and to meeting other mission needs during this highly dynamic situation. In addition to promoting this engagement between contracting officers and contractors, agencies can augment their communications efforts by coordinating timely outreach activities with their industry liaisons (for contact information, go to agency industry-liaisons directory offices of small and disadvantaged business utilization, acquisition innovation advocates (for contact information, go to acquisition innovation advocates directory and other agency resources.
7. In light of the pandemic, will any relief be offered regarding re-registration in the System for Award Management?
Yes. Current registrants in SAM with active registrations expiring before May 17, 2020 will be afforded a one-time extension of 60 days.
8. Are the special emergency procurement flexibilities of FAR§ 18.202 available for use in addressing requirements connected to COVID-19?
Yes. The President has declared a national emergency concerning the novel coronavirus disease under the Stafford Act. As a result of this emergency declaration, the flexibilities identified in FAR§ 18.202, "Defense or recovery from certain events," are available for use in supporting response efforts to COVID-19. These flexibilities include increases to the micro-purchase threshold, the simplified acquisition threshold, and the threshold for using simplified procedures for certain commercial items. Specifically-
(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.; and
(3) Agencies may use simplified acquisition procedures up to $13 million for purchases of commercial item buys.
In conducting acquisitions to support response efforts, agencies are expected to use sound fiscal prudence to maximize value for each taxpayer dollar spent. The availability of the flexibility does not mean it must be used, but agencies should feel fully empowered to use the acquisition flexibilities, as needed, consistent with good business judgment in response to the national emergency.
9. How should agencies address preferences and set-asides for local firms set forth under the Stafford Act?
When an emergency declaration is made under the Stafford Act, contracting officers are typically expected, to the extent feasible and practicable, to give preference to local firms in the area designated in the declaration. However, in this case, the declaration makes clear that the emergency created by the pandemic exists nationwide. As a result, there is no specific locally affected area, and therefore no current action required from the acquisition workforce to create preferences for local firms. This issue will continue to be reviewed in light of ongoing response efforts, and agencies are encouraged to confer with 0MB regarding potential circumstances where application of local set asides may make sense, especially for small business contractors.
10. What if I am unable to fulfill the Federal government contract awarded to me because of the Coronavirus?
Your first obligation as a prime contractor on a Federal government contract is to complete performance on that contract. If you do not perform at a satisfactory level on a Federal government contract, the contracting officer may have to terminate your firm for non-performance. Should your firm be terminated – for convenience or default – on a Federal government contract, it is possible you may not receive another Federal contract due to documented poor past performance.
For any potential performance interruptions, contractors should review their contracts to see what, if any, latitude or remedy for performance delays are available. While most commercial contracts have a force majeure clause that excuses performance under extreme circumstances, including pandemics, government contracts do not typically utilize this kind of commercial language. Instead, contracts usually contain Federal Acquisition Regulation (FAR) and other agency-specific regulations. Here, some cost-reimbursement, time-and-material, and labor-hour government contracts contain FAR Clause 52.249-14 – Excusable Delays. This FAR clause, if inserted into the contract, provides that the Contractor shall not be in default because of any failure to perform if the failure arises from causes beyond the contractor’s control. Such circumstances include:
If the failure arises from causes beyond the control and without the fault or negligence of the contractor.
Examples of these causes are (1) acts of God or the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes and (9) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of the contractor.
Notably, the government still reserves the right to terminate the contract for convenience if there is a delay in contractual deliverables to the government subject to the clause above. Further, all Federal government commercial contracts should contain FAR Clause 52.212-4(f), which provides that the contractor shall be liable for default unless non-performance is caused by an occurrence beyond the reasonable control of the contractor and without its fault or negligence such as acts of God or the public enemy, acts of the government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, unusually severe weather and delays of common carriers.
The contractor shall notify the contracting officer, or in the case of a subcontractor – the Prime’s contracting officer, in writing as soon as it is reasonably possible after the commencement of any excusable delay. Providing official notification will set forth the full particulars in connection therewith, shall remedy such occurrence with all reasonable dispatch, and shall promptly give written notice to the contracting officer of the cessation of such occurrence.
Contractors should take note that this clause requires contractors to notify the contracting officer in writing “as soon as it is reasonably possible” and mitigate any potential impact. With or without this clause, contractors would be wise to be in frequent communication with their government counterparts to set expectations and develop a plan. For small business concerns, find more information on planning for and responding to the Coronavirus disease: Current CDC Business Guidance.
11. What if I’m a subcontractor on a Federal contract, how are subcontracts impacted?
Contracts between a Prime contractor and its subcontractor(s) are considered commercial contracts. Subcontractors are encouraged to review agreements with their Prime Contractor representative to fully understand their obligations and recourse options in the event of impact to performance due to the coronavirus. As noted above, many commercial contracts contain a force majeure clause that provides for excusable delay for things like epidemics, quarantine restrictions, etc. However, it is important to know that these agreements often allow prime contractors to seek goods and services from other sources if a subcontractor cannot fulfill its obligations for an excused reason.
12. Who, in SBA, can I contact if I have questions regarding the impact of the Coronavirus on my Federal contract?
An SBA Procurement Center Representative (PCR) is an excellent resource to address questions regarding the impact to a contract. In addition to contract questions, the PCR may be able to address – or will refer you to someone who can answer – issues regarding small business size standards, certificates of competency, and subcontracting. The main mission of the PCR is to assist small businesses win federal contracts through advocacy and access. PCRs review many federal acquisition and procurement strategies before they’re announced. This enables them to influence opportunities that should be set aside for small businesses. PCRs also conduct market research, assist small businesses with payment issues, provide counseling on the contracting process, and more.
8(a) firms should contact their Business Opportunity Specialist (BOS) or contact their closest SBA District Office.