July 15 OUSD A&S COVID Conference Call Notes

OSD A&S:

• Amy Murray is new acting DASD MIBP—third change in four weeks on this position; working a host of issues.
• Fed Mall webinar next Wednesday July 22nd at 3pm (announcement already pushed out to members).
• SecDef letter to essential workers provided earlier and now SecDef is releasing a new video for the DIB essential workers thanking them for their work—notice will be coming soon for us to pass to members.
• Focus today on Section 889; concern with COVID 19 case counts going up but not yet seeing impact to the Defense Industrial Base (DIB) thus OSD seeking input from industry on any impacts industry is seeing to date.

OSD DPC:

• Final Sec 3610 guidance with respect to streamlined transactions—made good progress but got an OMB curve ball with respect to OMB guidance they just published and now DoD needs to make some further adjustments so release of this policy will not be this week but soon.
• Need OMB paperwork reduction review as well; notionally done internally early part of next week; so end of month this additional guidance should be published; have taken industry input working with DCMA, the Services and looking at a lower dollar value of around a couple of million dollars in claims which would be allowed for streamlined approval; anything higher in value would be worked case by case with the industry.
• Could have a situation with one company whereby they get a multiple contract approval for pandemic adjustments but not a 100% approval for all their DoD contracts.
• Guidance on other COVID costs or Requests for Equitable Adjustments (REAs) associated with the pandemic--that guidance has been published and the need for an appropriation to make all these adjustments has been submitted to the Congress; estimates coming in continue to reinforce the DoD estimate previously prepared of approximately +$10B in pandemic impact costs to the DIB.
• OSD has not officially taken a position on the Section 3610 expiration of 30 September 2020, however, they have taken the financial position of needing additional funds now to implement Section 3610 and other pandemic related REAs.

Section 889

• DoD is very disappointed in how this has played out.
• Rule published as an interim rule effective August 13th 2020 and Part B prohibition will require companies to attest to no prohibited products in use in any system at your company and if there are prohibited products in use there can be no further Federal contracts allowed.
• DoD advocated publishing of rule as early as October 2019 and could not get that done and here we are; worked hard with Congress to try and get some implementable language passed and it remains to be seen if the Hill will do so and OSD not sure that help is coming anytime soon.
• Staff OSD talked to on the Hill do understand the issues and challenges, but the politics are prevailing.
• Guidance to contracting officers coming end of month that anything not awarded by August 13th will require post the 13th modification to all solicitations, amending options and existing contracts will be required as well in many instances, so major workload impact to DoD contracting staff; ODNI waiver proposal not very helpful as drafted.
• Agency level waivers a possibility but the requirements are very stringent so don’t count on any waivers.

DLA:

• Gown solicitation of interest—canceled a solicitation last Friday based on HHS change in requirements and draft solicitation released Monday for disposable surgical gowns and yesterday for disposable and reuseable general purpose medical gowns.
• Working stockpiling solicitations and interest has been growing with deliveries phased from September to January 21st; still building out Fed Mall;

DCMA:

• Not much new; tracking single digit closures with only three closed at this time and 1 projected to be closed later this week; doing some analysis as to why closures are down while positive COVID impacts are on the rise—will report out next week on findings.
• Expedited virtual and remote oversight contract concept with 1,140 contractors signed up for this program to cut out on sight, in person QA inspections; progress payments with the week ending last wee--see continued decline in requests and value with 102 requests totaling $126M last week– decline in part to holiday week but also just a continued overall decline.
• Watching layoffs in the DIB primarily a result of declining commercial business for those companies vice defense purchasing impacts.

Associations and Chamber:

• Webster noted on Sec 889 congresswoman Virginia Foxx (R-NC) proposed amendment 48 hours ago seeking to extend implementation until January 2022, noted Chamber campaign on Sec 889 to get extended to at least August 2021, and our attempt to engage the Hill seeking support for supplemental funds to DoD for REA and Sec 3610 industry claims.
• Mention made of previous engagement by DoD leadership with State Governors and Mayors to keep essential industries open and that engagement most likely will soon be needed again as COVID infections rise.

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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