DAEC COVID-19 Update March 25: OSD A&S MIBP Industry Calls' Minutes

Colleagues,

Provided below are notes from today's industry calls.

March 25th OSD A&S MIBP Notes:

• HON Al Schaffer is working with COVID task force to include our issues. DCMA portal input is worked into all these discussions as well.
• Joint Acquisition Task Force (JATF) formed and led by Stacey Cummings enables DoD, across all offices, to respond to DoD and FEMA immediate demands, to work stimulus packages and to build capacity in fragility areas of the DIB and issues of foreign reliance.
• Hon Fahey still needs details on supply fragility so we will keep sending information as it comes.
• DPA productions task force lead by Scott Baum is reporting to JATF.
• DoD and FEMA are working together on DPA application and implementation. HHS and FEMA set requirements and then look to DoD to determine how DoD can support. The DoD lead is Stacey Cummings and the new task force JATF. USAF has lead for Title 3 DPA equities. Scott Baum is detailed to FEEMA over the past several days and still there.
• Industry info discussed: supply chain fragility; facilities impacted by local and state gov; impact of COVID 19 on small businesses; OSD working various issues like UCA relief, prioritization of testing of aero and defense industry employees is with FEMA, DLA and acceleration of payments to small businesses.
• DCMA is trying to expedite payment process for primes, but not sure about prime payment expediting to subs; REAs to be handled case by case, contract by contract and DCMA is working business withhold under the same process case by case; progress payment change implementation still being worked.
• It will be a prospective change to the contract and higher progress payments will take effect once the modification is signed. Much discussion about actual invoicing and implementation steps and DFAS system ability to handle various rates. It was discussed that DFAS can make this change in progress payments work electronically. OSD will verify again with DFAS. Broader payment issues and resolution remains the same.
• DCMA will execute mass mods hopefully by Friday this week. Mass mod will not cover contracts not covered like DoN contracts and DPC has worked with them on a separate process that is not a mod to the contract but another term and they will do their own notifications to contractors.
• MDA moving out now directly with their own contractors- DoD wide thru various activities, not just DCMA. This means more cash to flow. DPC will continue to assess other changes to help keep cash flowing. Chamber and Associations will be collecting additional information on impacts and needs post this increase in progress payments. REA—FAR clause re pandemics addresses schedule impacts not cost increases but other FAR clauses allow the contracting officer to consider wider impacts.
• DLA has a cell imbedded in FEMA but will now defer to new JATF group.
• DLA set up a COVID code in their system to allow the 9000 small businesses to electronically note impact in the DLA system and to date 179 inputs over the past 48 hours.
• They have held now over 100 calls with suppliers, continue to learn of excess capacity and trying to determine how to take advantage of that excess capacity.
• HHS is working to set up a standing and open solicitation to allow vendors to submit bids.
• OSD is not aware of any specific change to new programs or start of new programs. OSD priority may not be so much on new starts beyond COVID at the moment. Sec 889 relief—there has been a series of meetings to discuss and anticipate very senior level discussions on this matter, high visibility, so stay tuned. Proposed rule is progressing for public comment, it would be helpful if industry used their contacts on the Hill relative to the Rule 889.
• US Navy Acquisition Executive Hondo Gertz memo on changes for cash flow—there are some things that the Services can control that don’t require overarching DoD policy and actions. So Hondo is exercising some of his own authority. Other Services can do so as well. One example, issue of withholds and Hondo is proposing changing the withhold policy.
• I raised the issue of international supply chain and essentiality designation by our partner nations. Was told to expect an update at next meeting.
• Some are questioning if there is thought on changes to performance-based contract pay rates and possible changes like that done for FFP progress rates. There is a DFARS final rule coming that is pre COVID and DPC trying to get that out that will help some. Already providing higher calculation for performance-based contracts but DPC willing to take another look.
• Intel community impacts will have input soon to OSD; overseas contracts and travel hold impacts to contract performance and earlier guidance from DPC.
• Puerto Rico is shut down and they are not working under Hon Lord guidance with regard to essentiality Lord will call the Governor there to fix the situation. Large uniforms and textile material production in Puerto Rico.

March 23rd OSD A&S MIBP Notes:

• Congress is seeking insights and they had a call this morning with all four committees and highlighted our work together.
• Mercy and Comfort deployed and USAF has been flying citizens from overseas to CONUS over the weekend. Press release covered three key messages: get people to work; keep money flowing; prioritizing response.
• New policies on progress payments, telework and essentiality. Had 45 requests for info from the Hill on DPA just this past Friday. About a 100 companies came to OSD A&S over the weekend offering solutions.
• Some companies have excess capacity due to commercial cut back and can do critical work but need help to convert over. Some manufacture a widget and are closed and we need that part and how do we get that back up and running? Chamber is working to provide input.
• Pentagon went to additional telecommuting requirements over the weekend so more details and changes coming.
• It is important to continue to track companies closed involuntarily and working with local commanders to keep DCMA folks reporting to work. Follow Hon. Lord’s essentiality guidance and direction.
• DCMA is talking with company executives to reopen; three companies have refused to allow DCMA in to do their job but those companies are still producing so if DCMA cannot do their job then DCMA will not certify and the government will not pay. DCMA has to get into companies working to do their job to get industry paid—it’s a partnership.
• DLA leadership contracted sixty companies at senior leadership levels to better understand how they are doing and health of their company. They are conducting supply chain health assessments and fragility of that sector- the focus is to develop a better understanding of the market stress and to hear recommendations from those industries.
• Request for equitable adjustments (REA) and FFP contracts—more needed on this issue. You need to go to the contracting officer managing a specific contract in question to discuss how to get equitable adjustment.
• Aware that industry has asked for legislated framework for equitable adjustments but OSD prefers to have the contracting officer to manage this at their level with the tools that they have under the FAR. DCMA jumped in to state that now the Lord guidance is out on essentiality, the contracting officer will now ask at what lengths did you industry go to honor the Lord essentiality direction? So this may complicate REA claims.
• A member now has a single infection that may close the entire facility, so priority testing can help mitigate full shut downs. DCMA responded to the matter of certification of staff and AIA agreed to go back to source and get clarification and report back to OSD and DCMA.
• OMB memo from Friday night suggests contracting officers already have to include mobility status. Some installations sending contractor personnel home and stating intent to not pay further and it appears that some are ignoring the guidance from both OMB and Lord. Senate bill in play now has some helpful provisions and we will have to wait to see what actually gets passed, then discuss the details and ensure the policy guidance is issued quickly.

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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