Department of Defense Class Deviation: DARS 2020-O0013 Implementing CARES Act Section 3610 – Federal Contractor Authority

As predicted, on April 8, 2020, the DOD issued a class deviation with implementing instructions to contracting officers regarding section 3610 of the CARES Act.  Section 3610 allows appropriated funds to be used to modify the terms and conditions of existing contracts to reimburse contractors for allowable costs incurred keeping its work force in a “ready state” despite COVID-19 restrictions due to work site closures, personnel quarantines, and state and/or local movement restrictions.  Specifically, Sec. 3610 allows a contractor to request reimbursement “at the minimum applicable contract billing rates not to exceed an average of 40 hours per week” for costs incurred from January 31, 2020, through September 30, 2020, for paid annual and sick leave provided to its employees or its subcontractors to keep them mission-ready and protect the life and safety of government and contract employees due to the COVID-19 public health emergency.

The deviation from certain subparts of FAR Part 31 and DFARS Part 231 mandates use of the prescription at “DFARS 231.205-79 CARES Act Section 3610 – Implementation,” which sets forth a cost principle allowing reimbursement of special leave expenses incurred only as a result of COVID-19. These allowable cost can be treated as indirect costs to multiple costs objectives or, as appropriate, direct costs chargeable to the contract as the only cost objective.  Costs incurred for paid leave not related to COVID-19 remain subject to the applicable cost principles of FAR Part 31 and DFARS Part 231.  Contractors seeking this relief must ensure records property segregate and identify these costs to provide a “sufficient audit trail” and adequate support for the request.  Further, a contractor must be careful to disclose any other relief obtained under any other part of the CARES Act, the Families First Coronavirus Response Act, or any other law “specifically identifiable with the public health emergency declared on January 31, 2020 for COVID-19.”  As such, the contract payment will be reduced by any amount the contractor “is eligible to receive” under any other remedy available under laws related to the COVID-19 public health emergency. 

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For other DOD Deviations related to COVID-19, see

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