CORONAVIRUS NEWS: Army Looking to Modify Contracts as Industry Copes with COVID-19

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The Army may modify contracts if the novel coronavirus pandemic makes it difficult for contractors to fulfill their obligations, the service announced March 31.

On March 20, as states and cities throughout the country were forcing non-essential businesses to close, Undersecretary of Defense for Acquisition and Sustainment Ellen Lord issued a memo to the defense industrial base saying the Department of Homeland Security had identified it as a critical infrastructure sector.

“Companies aligned with the essential critical infrastructure workforce definition are expected to maintain their normal work schedules,” Lord said. “If your contract or subcontract supports the development, production, testing, fielding or sustainment of our weapon systems/software systems, or the infrastructure to support those activities, [your efforts] are considered critical infrastructure. If your efforts support manning, training, equipping, deploying, or supporting our military forces, your work is considered critical infrastructure.”

However, industry has faced challenges as it tries to simultaneously maintain the safety of its workforce and continue its defense work.

As the crisis escalates and the number of COVID-19 cases ramps up, state and local officials have put in place restrictions on movement, limited the size of gatherings and encouraged social distancing. Pentagon officials are expecting programs to be affected, and the Army is looking to see which companies might need some relief through contract modifications.

“Contracting officials are working to maintain robust and clear communications with contractors to determine impacts of the COVID-19 pandemic on performance of Army contracts,” the service said in a March 31 press release.

“Officials are also assessing the impacts of specific contract terms and conditions in cases where contractors request assistance. Assessments are being made on how contractors are impacted by state and local laws, regulations and orders governing access to offices and facilities, and contracting officials will be proactive and transparent in efforts to attempt to resolve or mitigate such impacts, as appropriate,” it added.

Officials are working with contractors to determine the impacts and feasibility of telework arrangements for meeting contract requirements. Contract terms might be modified as a result, according to the service.

"Each situation should be evaluated on a case-by-case basis in an effort to best promote the welfare and safety of the workforce while ensuring mission continuity," Assistant Secretary of the Army for Acquisition, Logistics and Technology Bruce Jette said. "The resiliency and strength of our team is a national asset and is critical to our Army's ability to meet mission requirements around the world. We must do what we can to support it."

As of March 31, there are 72 COVID-19 cases among Defense Department contractors, including one death and four hospitalizations, according to the Pentagon. There have been a total of 1,259 cases across the military including servicemembers, civilians, dependents and contractors. That number is expected to rise as the pandemic continues and the amount of cases across the United States and the world increases.

Topics: Army News