DAEC COVID-19 Update April 9: OSD Meeting Notes

Colleagues,

Provided below are notes from April 9th OSD A&S COVID conference call with Associations and the Chamber:

• There was a shout out to associations and Chamber for getting the word out to industry as it often comes up on OSD CEO calls that this is all making a difference.
• Since yesterday +1K new guardsmen deployed--so up to ~30,000 active and deployed; corps is up to 40 sites being constructed.
• At 10:00 am EST today SecDef held a call with troops and their families.
• 506 factories have closed up 441 from two days ago.
• Sec 3610 memo just released last night.
• Industrial base council meeting at OSD tomorrow and they will provide an update to us on Monday.
• Still looking into matter of adversarial capital investment and CFIUS reviews and OSD may do a dedicated webinar on this issue in the near future.
• Small business webinar yesterday was well attended and made for a great discussion; about 1000 on teleconference and another 700 on another app to reach approximately 1700 during the webinar.
• Website is up to date with slides from yesterday’s webinar if you were unable to attend the webinar yesterday.
• Over the webinar, PPP was discussed, loan options for small businesses discussed, and additional PPP guidance was just released today at SBA.gov for latest information.
• Industry is still struggling with safe passage of their employees to work sites under shelter in place mandates—so SBA has released today a best practices package which is a compilation of the information that should help with safe passage efforts.
• JATF is providing input into the industrial base council which convenes tomorrow. They noted positive movement on contracts last night in partnership with FEMA.
• Army established a portal on their website for their small business community to post business concerns at osdp.army.mil and select the contact tab to get to the portal.
• Army also has a COVID site to assist their vendors.
• Navy is also collecting small business data that they are posting on their Navy social media platforms and working to help each of them as they post their concerns.
• Air Force-stood up a webpage yesterday to enable small businesses to interact with the Air Force small business leadership on loans, questions, concerns, etc.

• Section 3610—published last night and DPC received numerous responses in the past 12 hours.
• Implementation memo is being finalized with more detail than what was pushed out last night. They are working the FAQ publication to publish this week; FAQs will be updated routinely as more is learned in executing this precedent setting law. They are also working various payment issues—provided no specific detail as to what the issues are.
• DCMA is tracking the progress payment flows thru DFAS reports and as of last night there has been little to no activity on the progress payments so far as reported—this is info at the prime level and they can’t see the sub supply level but primes are beginning to commit to provide that data, so flow down is a continued watch item and now the Hill is seeking data regarding prime flow down as well.
• DCMA is trying to get ahead of the Hill on his flow down data matter. The lack of posted flow down this early is not surprising but they need to see data soon or there may be Hill intervention in some manner, especially regarding another stimulus package.
• DCMA will be posting on SAM.gov some instructions to request commercial item determination in advance of pre award approval. They continue to get industry impact statements from the supply chain and situation reports are ramping up significantly and reporting up to A&S leadership those impacts.

• DLA’s Small business office is engaged and spoke to the PTAP resource program they manage. More can be found on DLA.mil small business website.
• OSD noted that five other associations have asked to join these calls and all will join in starting Monday.
• Regarding Mexico, there was a ministry of health memo dated 31 March that provided exemption to certain industries including defense industry suppliers. The follow-up memo dated 6 April addresses or attempts to address regional governments within Mexico seeking to open up industry work further and OSD is trying to get a translated copy of the 6 April memo.
• The US Ambassador in Mexico is setting up a roundtable conference with industry to learn more and work the issues real time.
• There is growing concerns from small businesses about the ability to get access to loans and support before they run out of capital on hand—so there is a big need for speed.
• A host of questions on Section 3610—any attempt by OSD to seek expanded legislation on Section 3610 in next stimulus package? OSD DPC said yes, it’s in discussion within OSD but they have not formed a position yet.
• DCAA was waiting for DPC Sec 3610 guidance before publishing their audit guidance, is there merit in having a DCAA rep in on these calls? OSD will set up a group to include DCAA and DCMA representatives to explore the various challenges with Section 3610 and try to get ahead of what will become potential audit challenges with a goal of minimizing audit risk.
• Some Defense agencies were under way with Sec 3610 implementation that are not aligned with the DPC publication late yesterday and so how will these disconnects be handled within DoD? OSD is aware and industry can forward those disconnects to OSD DPC to work and it is known that one disconnect is the effective date—so industry and associations were advised to bring those misalignments to OSD directly.
• Closing out over 1000 responses to small business survey the one association has been working and they are summarizing and OSD asked that they get from the survey summary what are the top two or three concerns that have not been addressed yet that need to be addressed now.
• Continued banking challenges under the CARES Act—some banks have closed processing; some will only consider support to their existing industry clients; etc.
• OSD is working with Treasury to open up some banking options for DIB small businesses who are currently being turned away--Wells Fargo said after April 6th they would not process more loans as one problem example.
• OSD will reach out to the Congressional Banking Committee to discuss the banking challenges.
• It was suggested that a webinar on DPA Title 3 be held at some date—OSD has a one pager on Title 3 to pass out to us and will work on a second paper to be more complete as a start to address the industry ask on this matter.
• OSD has taken action to set up a help desk for small business regarding Cyber security matters and recommendations to tighten up what is emerging as a major vulnerability.
• The discussion on Section 3610 addressed the Chamber concerns I intended to raise.

About the authors

Keith Webster

Keith Webster, president of the U.S. Chamber of Commerce’s Defense and Aerospace Council, guides the focus of the council to strengthen the U.S. defense and aerospace industries by influencing domestic and international policy on behalf of its members.

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