GAO-21-475, COVID-19 CONTRACTING: Contractor Paid Leave Reimbursements Could Provide Lessons Learned for Future Emergency Responses
- Issuer
- Government Accountability Office
- Document type
- Report
- Date
- 2020-01-31
Summary
GAO-21-475, a U.S. Government Accountability Office report to congressional addressees dated July 28, 2021, on how agencies used section 3610 of the CARES Act to reimburse contractors for paid leave during the COVID-19 pandemic. It reports that the Departments of Defense, Energy, and Homeland Security and NASA reported use of section 3610 authority totaling at least $882.8 million over 14 months, ranging from $1.4 million at Homeland Security to $760.7 million at Energy. It states that 12 out of the 15 contractors GAO interviewed reported that reimbursement had a great or moderate effect on retaining employees. GAO recommends that OMB collect and share lessons learned from agencies' implementation, and OMB concurred. The report includes background on contract costs, Table 1 on agency use, and appendices on methodology and GAO contacts.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
United States Government Accountability Office
Report to Congressional Addressees
COVID-19
July 2021
CONTRACTING
Contractor Paid Leave
Reimbursements
Could Provide
Lessons Learned for
Future Emergency
Responses
GAO-21-475
July 2021
COVID-19 CONTRACTING
Contractor Paid Leave Reimbursements Could
Provide Lessons Learned for Future Emergency
Highlights of GAO-21-475, a report to Responses
congressional addressees
Why GAO Did This Study What GAO Found
In March 2020, Congress passed the To help government contractors keep their workforce in a ready state during the
CARES Act, which provides over COVID-19 pandemic, section 3610 of the CARES Act generally authorized
$2 trillion in emergency assistance for government agencies to reimburse contractors for paid leave provided to
those affected by COVID-19. contractor personnel and subcontractors during the national emergency. Section
Section 3610 of the CARES Act 3610 did not appropriate specific funding for this purpose. The four agencies
enables agencies, at their discretion, to GAO reviewed—the Departments of Defense, Energy, and Homeland Security,
reimburse contractors for paid leave and NASA—reported use of section 3610 authority totaling at least $882.8 million
provided to their employees and over 14 months. The extent to which the agencies used the authority varied, from
subcontractors who are unable to $1.4 million at Homeland Security to $760.7 million at Energy.
access work sites due to facility
Further, Defense officials estimated that defense contractors have more than
closures or other restrictions, and
whose duties cannot be performed
$4 billion in paid leave costs that are potentially eligible for reimbursement under
remotely during the pandemic. The section 3610. Defense officials also noted, however, that the department does
CARES Act also includes a provision not plan to reimburse this full amount using existing funding. Agencies also
for GAO to review federal contracting based their reimbursement decisions on the nature of the work performed by
pursuant to authorities provided in the contractors, such as whether telework was an option.
Act. Twelve out of the 15 contractors GAO interviewed reported that paid leave
In September 2020, GAO found that reimbursement had a great or moderate effect on their ability to retain employees
agencies had not made much use of (see figure), in particular those with specialized skills or clearances.
section 3610 authority as of July 2020,
and expectations of future use varied. Selected Contractors’ Views on the Effect of Paid Leave Reimbursement on Workforce
Retention
This report (1) examines how selected
federal agencies have used section
3610 authority and (2) presents
selected contractors’ perspectives on
COVID-19 paid leave reimbursement.
GAO reviewed guidance and data and
interviewed cognizant officials from
four agencies with contract obligations
greater than $10 billion in fiscal year
2019. GAO also selected a non-
generalizable sample of 15 contractors
that received or requested section
3610 reimbursements from one or
more of the selected agencies and
conducted semi-structured interviews
of contractor representatives. Given the urgency of the pandemic, agencies prioritized quick implementation of
section 3610 over a more deliberative process, resulting in variations such as
What GAO Recommends how agencies tracked use of the authority. Officials from all four agencies said
OMB should collect and share lessons that they either have captured or intend to capture lessons learned from
learned from federal agencies’ implementing section 3610 and are willing to share these with other federal
implementation of COVID-19 paid agencies. However, the Office of Management and Budget (OMB)—which
leave reimbursement. OMB concurred coordinates government-wide contracting policy—has not collected and shared
with this recommendation. lessons learned. With coordination from OMB’s Office of Federal Procurement
Policy, the government could seize an opportunity to enhance implementation of
View GAO-21-475. For more information,
contact Timothy J. DiNapoli at (202) 512-4841 paid leave reimbursement provisions that may be enacted as part of rapid federal
or dinapolit@gao.gov. responses to future emergencies.
United States Government Accountability Office
Contents
Letter 1
Background 3
Agencies Varied in Their Use of Section 3610 Authority and
Prioritized Implementation Speed over a More Deliberative
Process 6
Contractors Cited Workforce Retention as the Main Benefit of Paid
Leave Reimbursement 15
Conclusions 18
Recommendation for Executive Action 19
Agency Comments 19
Appendix I Objectives, Scope, and Methodology 22
Appendix II GAO Contact and Staff Acknowledgments 25
Table
Table 1: Use of Section 3610 Authority as Reported by Selected
Agencies from January 31, 2020 through March 31, 2021 7
Figure
Figure 1: Effects of Section 3610 Paid Leave Reimbursement
Cited by Contractors GAO Reviewed 16
Page i GAO-21-475 COVID-19 Contracting
Abbreviations
COVID-19 Coronavirus Disease 2019
DHS Department of Homeland Security
DOD Department of Defense
DOE Department of Energy
FAR Federal Acquisition Regulation
FPDS Federal Procurement Data System
NASA National Aeronautics and Space Administration
OFPP Office of Federal Procurement Policy
OMB Office of Management and Budget
This is a work of the U.S. government and is not subject to copyright protection in the
United States. The published product may be reproduced and distributed in its entirety
without further permission from GAO. However, because this work may contain
copyrighted images or other material, permission from the copyright holder may be
necessary if you wish to reproduce this material separately.
Page ii GAO-21-475 COVID-19 Contracting
Letter
441 G St. N.W.
Washington, DC 20548
July 28, 2021
Congressional Addressees
The Coronavirus Disease 2019 (COVID-19) pandemic has resulted in
catastrophic loss of life and substantial damage to the global economy,
stability, and security. On March 11, 2020, the World Health Organization
characterized COVID-19 as a pandemic, and 2 days later the U.S.
President declared COVID-19 a national emergency. In response to this
unprecedented global crisis, in March 2020 Congress passed, and the
President signed into law, the CARES Act, which provided over $2 trillion
in emergency assistance and health care response for individuals,
families, and businesses affected by COVID-19. 1
The CARES Act included a provision for GAO to provide a
comprehensive audit and review of federal contracting pursuant to
authorities provided in the Act. 2 Section 3610 of the CARES Act generally
permits federal agencies to reimburse contractors who provide paid leave
to their employees and subcontractors who are unable to access work
sites due to facility closures and other restrictions and who cannot
telework during the COVID-19 pandemic. This authority currently applies
through September 30, 2021, following a number of extensions. While
authorizing such reimbursements, Congress did not appropriate specific
funding to agencies to cover these expenses. Rather, it allowed agencies
to use funding made available by the CARES Act or any other act. In
September 2020, we reported on section 3610 implementation guidance
1Pub. L. No. 116-136, 134 Stat. 281 (2020). As of March 31, 2021, laws that make
appropriations or provide some other relief in response to the COVID-19 pandemic
include: the American Rescue Plan Act of 2021, Pub. L. No. 117-2, 135 Stat. 4 (2021); the
Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1182 (2020); the
Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139,
134 Stat. 620 (2020); the Families First Coronavirus Response Act, Pub. L. No. 116-127,
134 Stat. 178 (2020); and the Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146 (2020).
2We regularly issue government-wide reports on the federal response to COVID-19. For
the latest report, see GAO, COVID-19: Continued Attention Needed to Enhance Federal
Preparedness, Response, Service Delivery, and Program Integrity, GAO-21-551
(Washington, D.C.: July 19, 2021). Our next government-wide report will be issued in
October 2021 and will be available on GAO’s website at https://www.gao.gov/coronavirus.
Page 1 GAO-21-475 COVID-19 Contracting
issued by selected agencies, as well as the extent to which those
agencies reported use of the authority. 3
This report (1) examines how selected federal agencies have used
section 3610 authority and (2) presents selected contractors’ perspectives
on COVID-19 paid leave reimbursement.
To examine how selected federal agencies have used section 3610
authority, we identified the seven federal agencies with contract
obligations greater than $10 billion in fiscal year 2019. We reviewed these
agencies’ use of section 3610 authority as of July 20, 2020, as reported to
the Federal Procurement Data System (FPDS), and selected the three
agencies with reported use. These three agencies were the Department
of Defense (DOD), Department of Energy (DOE), and the National
Aeronautics and Space Administration (NASA). As a point of comparison,
we also selected one agency—the Department of Homeland Security
(DHS)—that had not reported use of section 3610 authority as of July 20,
2020. For these four agencies, we gathered and analyzed guidance
regarding section 3610 and data on its use either collected by agencies or
reported to FPDS from January 31, 2020, through March 31, 2021; and
interviewed or received written responses from cognizant agency
officials. 4 We also interviewed officials from the Office of Management
and Budget’s (OMB) Office of Federal Procurement Policy (OFPP) due to
this agency’s role in coordinating government-wide contracting policy. To
assess the reliability of data from agencies and FPDS, we reviewed
related documentation, such as data validation rules, and interviewed
knowledgeable agency officials. We determined the data were sufficiently
reliable for the purposes of describing the extent to which selected
agencies reported use of section 3610 authority.
To identify selected contractors’ perspectives on COVID-19 paid leave
reimbursement, we selected a non-generalizable sample of 15 prime
contractors that, according to agency data, have received or requested
section 3610 reimbursements from one or more agencies in this review.
3GAO, COVID-19 Contracting: Observations on Contractor Paid Leave Reimbursement
Guidance and Use, GAO-20-662 (Washington, D.C.: Sept. 3, 2020).
4According to the General Services Administration, FPDS is the federal government’s
authoritative source for contract data. Contracts whose estimated value is $10,000 or
more are reported to FPDS, as well as every modification to those contracts, regardless of
dollar value. On October 17, 2020, the FPDS reports module was retired and the
https://SAM.gov Data Bank is now the only place to create and run both standard and ad
hoc reports on federal contract data.
Page 2 GAO-21-475 COVID-19 Contracting
We selected contractors to reflect a range of company sizes, ownership
structures, and product and service offerings. We conducted semi-
structured interviews of cognizant contractor representatives about their
experiences seeking reimbursement from different agencies and
reviewed available company financial information. We also interviewed
representatives from industry associations about contractors’ experiences
seeking reimbursement from different agencies, and about why some
contractors have not requested reimbursements. Additionally, we
interviewed or received written responses from cognizant representatives
from four contractors identified as having not yet requested section 3610
reimbursements from agencies in our review at the time of selection. See
appendix I for more information on our objectives, scope, and
methodology, including a listing of the contractors and industry
associations that participated in this review.
We conducted this performance audit from October 2020 to July 2021 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Background
Contracting Responses to The CARES Act was enacted on March 27, 2020. Section 3610 generally
COVID-19 authorizes federal agencies to reimburse contractors for paid leave
provided to a contractor’s employees and subcontractors who are unable
to access work sites due to facility closures or other restrictions, and
whose duties cannot be performed remotely during the COVID-19
pandemic. This authority originally applied through September 30, 2020,
but was subsequently extended until December 11, 2020, then March 31,
2021, and then again through September 30, 2021. 5 While authorizing
such reimbursements, section 3610 did not appropriate any additional
funding to agencies to cover these expenses. Use of this authority is at
the government’s discretion and not mandatory, a point emphasized in
implementation guidance subsequently issued by OMB and selected
agencies. Several industry associations had advocated for prior
5Pub. L. No. 116-136, 134 Stat. 281, § 3610; Continuing Appropriations Act, 2021, and
Other Extensions Act, Pub. L. No. 116-159, 134 Stat. 709, § 140 (2020); Pub. L. No. 116-
260, 134 Stat. 1182, § 1002; Pub. L. No. 117-2, 135 Stat. 4, § 4015.
Page 3 GAO-21-475 COVID-19 Contracting
extensions of section 3610 authority as well as for supplemental funding
for section 3610 reimbursements.
While not the focus of this report, the federal government took other steps
to support contractors during the pandemic. For example, to help
companies manage cash flow, DOD increased progress payment rates. 6
Congress also made additional financial relief available through the
Paycheck Protection Program, designed to provide loans for small
businesses to keep their workers on payroll, and included in the CARES
Act an employee retention tax credit for businesses. 7
Contract Costs Federal agency contract spending on products and services in fiscal year
2020 totaled over $660 billion. DOD is responsible for almost two-thirds of
this amount, for services including professional engineering/technical
services and general health care, and for products including fixed wing
aircraft, combat ships, and landing vessels. Civilian agencies contract for
various services, including professional services and maintenance and
security of their buildings, and acquire products such as information
technology hardware and software. Federal agencies typically contract
with private-sector companies to acquire these products and services.
The price of a contract typically consists of various elements such as the
cost of materials, labor costs, and profit or fee. Contractors’ labor costs
include the costs of paid leave such as sick leave, holidays, and
vacations. These costs are generally considered fringe benefits and may
be reimbursed on certain contracts to the extent that they are reasonable
and are required by law, employer-employee agreement, or an
established policy of the contractor. These indirect costs are typically
spread across multiple contracts at a particular contractor business
6Through progress payments, DOD can finance certain contractor expenses as work
progresses, including financing payments made to subcontractors. Contract financing
assists the contractor in managing expenses such as material, labor, and overhead.
Progress payments based on costs are determined as a percentage of the costs incurred
by the contractor. Prior to the pandemic, DOD paid 80 percent of incurred costs of large
businesses and 90 percent of incurred costs of small businesses. However, in response to
COVID-19, in March 2020 DOD increased the customary progress payment rates for
eligible contractors to 90 percent for large businesses and 95 percent for small
businesses. GAO has ongoing work regarding DOD’s use of the increased rate of
progress payments during the COVID-19 national emergency. For additional information
on progress payments, see GAO, Contract Financing: DOD Should Comprehensively
Assess How Its Policies Affect the Defense Industry, GAO-19-406 (Washington, D.C.:
June 27, 2019).
7Pub. L. No. 116-136, §§ 1102, 1106, 2301; 85 Fed. Reg. 20811, 20814 (Apr. 15, 2020).
Page 4 GAO-21-475 COVID-19 Contracting
division, as opposed to direct costs such as the labor and material costs
that can be associated with and allocated to a specific contract. 8
Prior GAO and Agency In September 2020, we reported that, in general, agencies had not made
Offices of Inspector much use of section 3610 authority to reimburse contractor paid leave
costs as of July 2020. Agencies’ expectations of future requests from
General Reports on
contractors varied and depended on factors including availability of
Section 3610 funding. 9 We also found that, in several instances, agencies identified
other contracting authorities that could be used in place of or in addition
to section 3610. For example, DHS guidance identified certain standard
Federal Acquisition Regulation (FAR) clauses through which equitable
adjustments to contract prices in response to COVID-19 disruptions could
be made. 10 Similarly, NASA guidance identified some existing FAR and
NASA FAR Supplement clauses through which the agency could
reimburse paid leave costs. 11 DOD guidance outlined additional ways to
address the effect of COVID-19 on contractors, including the possibility of
relief from contract delivery requirements in the event of delays caused by
COVID-19, and contract modifications, subject to the availability of funds,
to reflect changes to the government’s needs. OMB advised agencies to
report contract modifications using section 3610 authority to FPDS, using
terminology provided by OMB. However, in that same report, we found
that not all agencies’ section 3610 reimbursements were reported to
FPDS as such. For example, DOE officials told us they did not need to
issue a contract modification to obligate additional funding for paid leave
reimbursement.
Offices of Inspector General at several agencies have reported on or are
assessing the implementation of section 3610. For example, in December
2020, the DOD Office of Inspector General found that contracting officers
8Depending on an agency’s guidance, there may be an option to request reimbursement
for section 3610 paid leave directly against a contract, but there may also be opportunities
for reimbursement across multiple contracts as part of a global settlement process. For
instance, we previously reported that DOD’s guidance tailored the reimbursement request
process to the circumstances of the contractor, depending on whether it seeks
reimbursement in relation to a single contract, multiple contracts, or at the level of an
entire business unit. GAO-20-662.
9GAO-20-662.
10FAR § 52.243-1 (Changes-Fixed-Price) and FAR § 52.243-2 (Changes-Cost-
Reimbursement).
11Cited authorities include FAR § 52.242-15 (Stop-Work Order) and NASA FAR
Supplement § 1852.242-72 (Denied Access to NASA Facilities).
Page 5 GAO-21-475 COVID-19 Contracting
had to rely on contractors to self-certify that the section 3610 costs they
claimed were the only reimbursements the contractors received for paid
leave, and that the contractors were not receiving reimbursements for the
same expenses from any other sources. 12 In January 2021, the Office of
Inspector General of the National Reconnaissance Office also completed
an evaluation of that agency’s implementation of section 3610. 13
According to officials, the Offices of Inspector General of NASA and DOE
are also undertaking work related to section 3610.
The four agencies we reviewed made use of section 3610 authority to
Agencies Varied in varying degrees, identifying a total of at least $882.8 million in paid leave
Their Use of Section costs incurred by their contractors over 14 months, which the agencies
either had reimbursed or were assessing for potential reimbursement.
3610 Authority and The agencies tracked this use via different methods. Further, the
Prioritized agencies based their decisions to use this authority on the type of work
performed by contractors and assessments of their own funding priorities.
Implementation Agencies’ implementation of section 3610 was also shaped by the extent
Speed over a More to which they had existing processes for addressing costs claimed by
contractors. In implementing this authority, and given the urgent need to
Deliberative Process respond quickly to the pandemic, agencies prioritized speed over a more
deliberative process.
Extent to Which Selected The four agencies we reviewed—DOD, DOE, DHS, and NASA—identified
Agencies Used Section at least $882.8 million in section 3610 paid leave costs incurred by their
contractors from January 31, 2020, through March 31, 2021, which the
3610 Authority Varied
agencies either had reimbursed or were assessing for potential
reimbursement. The amount of use varied greatly by agency (see table
1).
12Department of Defense, Office of Inspector General, Audit of Department of Defense
Implementation of Section 3610 of the Coronavirus Aid, Relief, and Economic Security
Act, DODIG-2021-030 (Alexandria, VA: Dec. 9, 2020).
13National Reconnaissance Office, Office of Inspector General, Evaluation of the National
Reconnaissance Office’s Implementation of Section 3610 Authorized by the Coronavirus
Aid, Relief, and Economic Security Act, Project Number 2020-004 S (Chantilly, VA: Jan. 4,
2021).
Page 6 GAO-21-475 COVID-19 Contracting
Table 1: Use of Section 3610 Authority as Reported by Selected Agencies from
January 31, 2020 through March 31, 2021
Use of
section 3610 authority
Agency (millions of dollars)
Department of Energya 760.7
Department of Defense 73.2
National Aeronautics and Space Administration (NASA)b At least 47.5
Department of Homeland Security 1.4
Source: GAO analysis of Federal Procurement Data System and agency-reported data. | GAO-21-475
a
The amount reported by the Department of Energy represents potential section 3610 costs incurred
by contractors (e.g., invoiced amounts), unlike amounts reported by the Departments of Defense and
Homeland Security which were based on obligations reported to the Federal Procurement Data
System.
b
As of March 31, 2021, NASA reported $80 million in potential section 3610 reimbursements in its
internal invoice payment tracking system since March 2020. However, a NASA official stated that this
amount includes both section 3610 and non-section 3610 costs related to COVID-19, and based on
initial assessments the amount for section 3610 costs is at least $47.5 million. A NASA official noted
that contracting officers will manually separate these costs when closing contractors’ requests for
equitable adjustment in response to the pandemic and, at that point, will have more visibility into the
agency’s use of section 3610 to reimburse contractors’ paid leave costs.
Agencies Used Different The agencies in our review tracked the use of section 3610 in a variety of
Ways to Track Use of ways—including in FPDS per OMB guidance and via tracking
mechanisms established by the agencies themselves—and captured
Section 3610
different types of data. OMB’s April 2020 guidance noted that, to track the
use of section 3610, agencies should report contract modifications
allowing payments authorized by section 3610 to FPDS by entering
“COVID-19 3610” at the beginning of the Description of Requirements
field. We found some differences between the amounts publicly reported
in FPDS and internally tracked by agencies. 14 Specifically:
• At the headquarters level, DHS tracked its use of section 3610
through obligations reported by contracting officers in FPDS. DHS
officials noted that these records sometimes included non-section
3610 obligations, and that they periodically reviewed and corrected
such instances.
• In the case of DOE, the agency’s internal data showed $760.7 million
in potential section 3610 costs incurred by contractors as of March 31,
14Agencies in our review did not centrally track use of other authorities to reimburse
contractors for paid leave costs, such as FAR-based contract clauses, although officials
noted that it was possible that contracting officers were using such authorities.
Page 7 GAO-21-475 COVID-19 Contracting
2021, in comparison to the $357.9 million in section 3610 obligations
reported in FPDS as of the same date. DOE officials said that the
agency was able to use existing contract obligations to cover section
3610 costs incurred by contractors; as such, officials said DOE did not
require issuing new contract modifications to add funding. Such
modifications would have needed to be reported in FPDS pursuant to
OMB’s guidance. For tracking purposes, DOE officials told us the
agency incorporated special coding into its invoicing and payment
systems for expenditures related to COVID-19 since FPDS is not
designed to collect this type of spend information. DOE officials also
noted that the amounts tracked by the agency as costs incurred by
contractors do not necessarily equate to actual or final
reimbursements made to contractors, as reimbursements are
provisional under cost-reimbursement contracts and will be finalized
by DOE after they have been audited.
• In the case of DOD, the amount originally reported in FPDS exceeded
the amount the agency internally tracked. DOD reported in FPDS that
it had obligated $91.3 million in section 3610-related obligations as of
March 31, 2021, whereas DOD officials stated that, upon reviewing
the reported information, the actual amount was $73.2 million. As we
reported in September 2020, these reviews identified instances in
which obligations reported in FPDS as uses of section 3610 authority
actually reflected a combination of section 3610 and non-section 3610
obligations, such as for general services or test operations. Officials
from DOD’s Defense Pricing and Contracting office told us they
continue to review FPDS records for obligations using section 3610
authority to check that they are accurately coded and meet DOD’s
section 3610 policy requirements.
• At NASA, the agency reported $11.1 million in FPDS as section 3610
obligations as of March 31, 2021, but NASA officials said that they do
not use FPDS for the purpose of tracking use of section 3610
authority. Rather, NASA uses an invoice payment tracking system to
monitor its use of the authority, which, as of March 31, 2021, showed
$80 million in potential section 3610 reimbursements since March
2020. However, a NASA official told us that this amount includes both
section 3610 and non-section 3610 costs related to COVID-19; based
on initial assessments, the amount for section 3610 costs is at least
$47.5 million. A NASA official said that contracting officers will
manually separate these costs when closing contractors’ requests for
equitable adjustment in response to the pandemic and, at that point,
will have more visibility into NASA’s use of section 3610.
Page 8 GAO-21-475 COVID-19 Contracting
Agencies’ Decisions to Agency officials told us their decisions to use section 3610 authority to
Use Section 3610 reimburse contractor paid leave depended, in part, on the type of work
contractors performed—specifically, the extent to which (1) contractor
Authority Were Based
employees could not be onsite due to facility closures and (2) teleworking
Largely on Type of Work was not feasible. Such circumstances included when contractor
and Funding Priorities employees needed to work with classified information or were helping test
or produce an item, such as an aircraft or ship, but could not access a
facility due to restrictions associated with COVID-19. In such cases,
reimbursements for paid leave would keep employees—who might have
security clearances or key technical knowledge and skills required to
support the agency’s mission—in a ready state able to return to work
quickly and reduce the chance of these employees leaving the contractor.
A related factor that may have affected facility accessibility—and thus the
potential need to use section 3610—was the identification by DHS in
March 2020 of personnel considered essential critical infrastructure
workers during the COVID-19 response. 15 This step established the
expectation that workers in critical infrastructure sectors—including
contractor and subcontractor personnel—would maintain their normal
work schedules while following federal, state, and local safety guidelines.
The defense industrial base was identified as a critical infrastructure
sector, increasing the likelihood that contractors in this sector would
continue operations and limit their need to place employees on paid
leave.
Agencies in our review also generally based their decisions to use section
3610 authority to reimburse contractors for paid leave on an assessment
of funding priorities. For example:
• NASA officials told us that the agency decided to use existing funding
for paid leave reimbursements to maintain the space industrial base
and retain contractors’ technical skill sets because this approach
would lessen the effect on the agency’s missions. NASA officials
15DHS’s Cybersecurity and Infrastructure Security Agency is responsible for providing
strategic guidance to ensure security and resilience of national critical infrastructure.
Homeland Security Act of 2002, Pub. L. No. 107-296, 116 Stat. 2135 (2002), as amended
by the Cybersecurity and Infrastructure Security Agency Act of 2018, Pub. L. No. 115-278,
132 Stat. 4168 (2018). As a result, this agency developed a list of essential critical
infrastructure workers to inform community decision-making and assist in prioritizing
efforts. However, the list is advisory and not a federal directive. The defense industrial
base is defined as the worldwide industrial complex that enables research, development,
design, production, delivery, and maintenance of military weapons systems/software
systems, subsystems, and components or parts as well as purchased services to meet
U.S. military requirements.
Page 9 GAO-21-475 COVID-19 Contracting
added that doing so allowed the agency to continue to make progress
on missions including the Mars Exploration Program. In addition to
existing funding, NASA received $60 million in supplemental
appropriations in the CARES Act to prevent, prepare for, and respond
to COVID-19. According to NASA officials, $5.2 million of this amount
helped fund contractors’ paid leave reimbursements, while the
remainder supported additional information technology needs due to
increased telework, increased cleaning and personal protective
equipment, and other activities. NASA officials told us that they may
request additional supplemental appropriations from Congress to
support costs that could include, but would not be limited to, funding
paid leave reimbursements.
• DOE officials stated that the agency used existing funding to
reimburse contractors for paid leave costs because it was in the
government’s best interest to retain specialized staff, such as
contractor employees who work in the agency’s National Laboratories
or those who are under contract to help remediate nuclear waste
sites. 16
• Although DOD has used existing funding to reimburse $73.2 million in
paid leave costs, this is a small portion of the total amount it estimates
it needed to reimburse contractors’ paid leave costs. In December
2020, DOD notified Congress that it estimated contractors across the
defense industrial base had incurred $4.25 billion in paid leave costs
potentially eligible for reimbursement under section 3610. This
amount—equivalent to 1.5 percent of DOD’s total contract obligations
across the same period—was based on rough order of magnitude
estimates through December 11, 2020, which were provided by
DOD’s largest contractors and extrapolated across its industrial base.
DOD officials told us that, with the extension of section 3610 authority
through September 30, 2021, DOD contractors will likely incur
additional costs for providing paid leave to their employees. According
to DOD officials, DOD’s current estimate for section 3610 paid leave
costs across the defense industrial base from March 27, 2020, to
September 30, 2021, is $7 billion. DOD officials noted that section
3610 authorized, but did not appropriate, funds for reimbursements.
They added that while DOD might be able to use other appropriated
16DOE officials noted that DOE and the National Nuclear Security Administration—a semi-
autonomous agency within DOE—continue to see a downward trend of costs requested
for reimbursement that are allowed under section 3610, and that they would seek an
extension of the authority beyond September 30, 2021, should conditions warrant.
Page 10 GAO-21-475 COVID-19 Contracting
funds to reimburse contractors, it would not be able to do so without
jeopardizing modernization or readiness efforts. 17 Representatives of
several large contractors told us that they would not go through the
effort of putting together all the information DOD requires in support of
reimbursement requests until they had a clearer indication that DOD
had funding it was prepared to use for this purpose. 18 In addition, two
of the contractors in our review stated in recent financial report filings
that they may not be able to fully recover paid leave costs under fixed-
price-type contracts. DOD officials noted the possibility that, to the
extent that paid leave costs—particularly on fixed-price-type
contracts—are not reimbursed, contractors might increase indirect
cost rates on future contracts. 19
• DHS officials cited the agency’s ability to find ways to keep facilities
open, as well as keep contractors working, as reasons for its relatively
low level of paid leave reimbursement. For example, while increased
telework reduced the need for frequent building cleaning, DHS
modified contracts so that cleaning contractors performed more
thorough cleaning. DHS officials said this enabled the contractors to
keep working, helped meet DHS’s requirement to have facilities
available when needed, and readied facilities for eventual full
reopening. As of March 2021, DHS officials said that they do not plan
to seek supplemental appropriations for paid leave costs.
17DOD also notified Congress that it estimates needing an additional $6.55 billion to
reimburse contractors for other COVID-19-related costs, including the purchase of
personal protective equipment, increased cleaning, and the costs of reconfiguring facilities
and offices to support social distancing. DOD officials stated that the agency has sought a
total of $13.6 billion in supplemental appropriations from Congress to fund all COVID-19-
related costs through fiscal year 2023. This amount takes into account cost reductions due
to COVID-19 such as decreased travel costs.
18A statement from a senior DOD official indicated that global settlements at the business
unit or corporate level—as provided for in guidance issued by DOD in August 2020—
rather than on a contract-by-contract basis, may be the preferred approach for
reimbursing its largest contractors should funding be available.
19Defense Contract Audit Agency officials noted they anticipated seeing COVID-19
effects, including paid leave, reflected in contractors’ incurred cost submissions due the
summer of 2021, as well as in forward pricing rate proposals. Contractor forward pricing
rate proposals are part of the negotiation of forward pricing rate agreements with
contracting officers which establish rates used as bases for contract pricing during the
period covered by the agreement. FAR §15.407-3; FAR subpart 42.17.
Page 11 GAO-21-475 COVID-19 Contracting
Existing Processes The extent to which agencies had existing processes for addressing costs
Informed How Agencies claimed by contractors also informed how they approached
implementation of section 3610.
Implemented Section 3610
• In NASA’s case, prior to the COVID-19 pandemic, the agency
identified in existing contractual clauses contractor responsibilities and
contracting officer authorities in the event that work could not be
safely performed at contractor facilities, or if a NASA facility was
closed and there was no work the contractor could accomplish from a
remote location. 20 Circumstances that might temporarily close a
NASA facility include natural disasters such as hurricanes. For
example, NASA includes a standard FAR clause governing stop-work
orders, which states that the contracting officer shall make an
equitable adjustment to a contract’s price or delivery schedule, or
both, should certain conditions be met. Additionally, a unique NASA
clause states that the contracting officer may consider making an
equitable adjustment or other remedy to compensate for the period
that NASA facilities were not accessible to contractor employees.
NASA’s guidance for section 3610 notes that the CARES Act
complements the agency’s existing authorities. To achieve a standard
agency-wide approach to implement these clauses, NASA established
advance agreements—incorporated into contracts through bilateral
modifications—that identified how to treat costs associated with
employees unable to work remotely. 21 For example, the advance
agreements provide instructions for billing and labeling the invoice to
reflect COVID-19 terminology and require separation on the invoice of
labor and non-labor expenses. NASA officials said that the advance
agreements fostered communication between contracting officers and
contractors and established a clear process for requesting and
receiving paid leave reimbursements under section 3610.
• DOD implemented section 3610, in part, by issuing a class deviation
to the FAR and Defense Federal Acquisition Regulation Supplement
20FAR § 52.242-15 (Stop-Work Order) and NASA FAR Supplement § 1852.242-72
(Denied Access to NASA Facilities).
21FAR § 43.103(a) (Types of contract modifications). A bilateral modification is a contract
modification that is signed by the contractor and the contracting officer, and its uses
include making negotiated equitable adjustments resulting from the issuance of a change
order. A unilateral modification, on the other hand, is a contract modification that is signed
only by the contracting officer.
Page 12 GAO-21-475 COVID-19 Contracting
that established a new cost principle. 22 This class deviation
established the allowability of section 3610 costs. 23 Paid leave
reimbursement remains at the discretion of the contracting officer,
who is expected to consider the immediacy of the contractor’s need
for financial relief. For example, some contractors may still have
incoming revenue and be able to conduct work remotely, whereas
others may be unable to conduct any business and have difficulties
making payroll and retaining employees.
• According to DHS guidance for implementing section 3610, DHS’s
contracting officers can negotiate bilateral contract modifications to
support contractors’ needs in order to maintain a ready state. More
specifically, according to the guidance, DHS’s modifications require
the contractor to agree to segregate and report the actual costs of the
leave payments for each employee. DHS officials said that they
developed this process because contracting officers are familiar with
using bilateral modifications, allowing them to quickly implement
section 3610.
• According to DOE officials, paid leave costs are allowable if they meet
applicable FAR requirements; therefore, no special authorities were
needed to recognize paid leave costs as reimbursable under
contracts. DOE officials said that the agency generally used existing
processes to review and approve paid leave reimbursement requests.
For example, according to DOE officials, under the department’s
existing processes, requests for paid leave reimbursements are
provisional under cost-reimbursement contracts and will be finalized
by DOE after they have been audited. The officials stated that
program officials and contracting officers have significant discretion in
deciding how to implement paid leave reimbursements, including
through means such as contract modifications and advance
agreements. For example, DOE officials noted that one program
established advance agreements to address which costs the
government would consider reasonable for reimbursement. However,
DOE did not require the use of advance agreements because such a
22DOD Class Deviation 2020-O0013, Rev. 4 (March 23, 2021). See also DOD Class
Deviation 2020-O0021, Rev. 3 (March 23, 2021). Class deviations are deviations from the
FAR necessary to meet the specific needs and requirements of an agency, and which
affect more than one contract action. FAR §§ 1.402, 1.404. Class deviations are also
issued in relation to agency acquisition regulations; for example, they allow DOD
organizations to deviate from the Defense Federal Acquisition Regulation Supplement.
Defense Federal Acquisition Regulation Supplement subpart 201.4.
23The class deviation stated that the costs could be charged directly to affected contracts,
although DOD also issued guidance noting that in some situations it may be more
appropriate to charge these costs indirectly across multiple contracts.
Page 13 GAO-21-475 COVID-19 Contracting
step might not be necessary in some cases when implementing
section 3610, according to officials. Further, DOE officials expressed
cost accounting standards-related concerns about contractors
charging COVID-19 paid leave to affected contracts as a direct cost
instead of an indirect cost. DOE officials also observed that large-
scale changes to agreed-upon cost accounting practices can take
considerable time to coordinate with contracting officers and can have
significant effects on costs across different contract types at multiple
federal agencies.
Agencies Prioritized Quick Given the urgency associated with responding to the pandemic and
Implementation; mitigating its effect on contractors’ ability to support their government
customers, agency officials told us they prioritized implementation speed
Opportunities Exist to
over a more deliberative process. Overall, each of the agencies in our
Collect and Share review—as well as OMB—issued initial guidance outlining how they
Lessons Learned planned to implement section 3610 and the extent to which they would
use or adapt existing mechanisms. While some coordination across and
within agencies occurred following enactment of section 3610, our
September 2020 report found a number of inconsistencies between
different agencies’ initial guidance documents, such as the start date for
reimbursement of section 3610 paid leave costs.
Furthermore, several of the contractors in our review work with multiple
agencies, and they observed variations in how agencies implemented
section 3610. For example, several contractor representatives noted that
NASA’s process to reimburse contractors affected by COVID-19 was a
clearer pathway to reimbursement than DOD’s approach. Finally, as
noted above, the ways that agencies tracked use of section 3610 relied
on different data sources and required manual adjustments for accuracy,
adding to the challenges of obtaining information on use of section 3610.
In prior work, we found that the collecting and sharing of lessons learned
from previous programs or projects provides organizations with a
powerful method for sharing ideas for improving work processes. 24 In
24GAO, Grants Management: OMB Should Collect and Share Lessons Learned from Use
of COVID-19-Related Grant Flexibilities, GAO-21-318 (Washington, D.C.: Mar. 31, 2021);
DOD Utilities Privatization: Improved Data Collection and Lessons Learned Archive Could
Help Reduce Time to Award Contracts, GAO-20-104 (Washington, D.C.: Apr. 2, 2020);
Project Management: DOE and NNSA Should Improve Their Lessons-Learned Process
for Capital Asset Projects, GAO-19-25 (Washington, D.C.: Dec. 21, 2018); and Federal
Real Property Security: Interagency Security Committee Should Implement a Lessons-
Learned Process, GAO-12-901 (Washington, D.C.: Sept. 10, 2012).
Page 14 GAO-21-475 COVID-19 Contracting
particular, we found that collecting and sharing lessons learned from an
interagency effort is valuable since one agency can share its experiences
with other agencies that may benefit from the information. 25 Furthermore,
organizations that identify and apply lessons learned can ensure they
factor beneficial information into planning for future efforts and limit the
recurrence of challenges that can be anticipated in advance. We have
previously reported on actions Congress and OMB have taken to
strengthen agencies’ use of evidence about whether federal programs
and activities achieve intended results in planning future efforts. For
example, the Foundations for Evidence-Based Policymaking Act of 2018
requires major federal agencies to develop learning agendas. 26
Officials from all four agencies in our review said that they either have
captured or intend to capture lessons learned from the implementation of
section 3610 and would be willing to share these with other federal
agencies. However, OMB—which coordinates government-wide
contracting policy among other responsibilities—has not collected and
shared agencies’ lessons learned. With coordination from OFPP within
OMB, such information could help OMB and agencies to enhance the
implementation of any new paid leave reimbursement provisions that may
be enacted as part of rapid federal responses to future emergencies.
The primary benefit of section 3610 paid leave reimbursement cited by
Contractors Cited contractors in our review was its effect on workforce retention, in
Workforce Retention particular for workers with specialized skills or clearances. Contractor
representatives noted that they took other steps to mitigate the effect of
as the Main Benefit of COVID-19 prior to seeking paid leave reimbursement, leading to fewer
Paid Leave individuals being placed on paid leave.
Reimbursement
Contractors Cited Contractor representatives noted that the availability of paid leave
Workforce Retention as reimbursement under section 3610 reinforced workforce retention by
boosting employee morale, allowing employees to maintain health
Primary Benefit of Section
benefits and paychecks during a time of uncertainty, and increasing
3610 safety by encouraging possibly sick employees to stay at home.
Contractor representatives stated they were generally supportive of
section 3610 to reimburse paid leave costs, noting that its use allowed
25GAO-12-901.
26For more information on developing learning agendas, see GAO, Evidence-Based
Policymaking: Selected Agencies Coordinate Activities, but Could Enhance Collaboration,
GAO-20-119 (Washington, D.C.: Dec. 4, 2019).
Page 15 GAO-21-475 COVID-19 Contracting
them to avoid some furloughs or layoffs, retain key skill sets in high
demand, and keep employees in a ready state able to quickly remobilize
to support the government (see fig. 1).
Figure 1: Effects of Section 3610 Paid Leave Reimbursement Cited by Contractors
GAO Reviewed
Contractors we spoke with cited the ability to retain employees with
specialized skills or clearances in their decisions to seek paid leave
reimbursement on particular contracts. For example, representatives of
one contractor stated that receiving section 3610 reimbursement eased
the fear of permanently losing employees with years of training and
experience, and representatives of another contractor noted the ability to
keep employees with security clearances due to paid leave
reimbursement. 27
27We have previously noted extensive challenges with the timely processing of personnel
security clearances across the federal government and, in 2018, GAO added the
government-wide personnel security clearance process to the High-Risk List due to its
various challenges. See GAO, High-Risk Series: Dedicated Leadership Needed to
Address Limited Progress in Most High-Risk Areas, GAO-21-119SP (Washington, D.C.:
Mar. 2, 2021).
Page 16 GAO-21-475 COVID-19 Contracting
In addition to employee retention, contractors noted other benefits
associated with receiving section 3610 reimbursements:
• Contractors noted the effect of section 3610 reimbursement on the
ability of subcontractors—sometimes also small businesses—to
remain viable and able to perform. As representatives of one
contractor noted, small businesses do not always have access to the
same financial resources as larger businesses, so a missed payment
could have a significant effect on their viability. However, by being
able to submit invoices and receive payment under normal timelines,
these subcontractors could retain their personnel and remain
financially healthy.
• Representatives for some DOD contractors noted a contract cost
accounting benefit of section 3610. Paid leave is usually a fringe
benefit allocated as an indirect cost across multiple contracts.
However, DOD’s section 3610 guidance allows for COVID-19 paid
leave costs to be charged directly to affected contracts. 28 For
example, one contractor’s representative noted that if the contractor
had to treat these as indirect costs, it would have had a potentially
significant effect on rate structures and increased future contract
prices.
Contractors Used Other Our review of contractor financial statements and discussions with
Approaches to Mitigate the contractor representatives indicated that contractors took a variety of
steps to keep employees and subcontractors working to the extent
Effect of COVID-19 and
possible and, from their perspectives, minimized the need to seek
the Need to Place reimbursement for paid leave costs. For example, in addition to following
Employees on Paid Leave Centers for Disease Control and Prevention guidelines on social
distancing, contractors reported purchasing personal protective
equipment, increasing cleaning at facilities, and buying additional
equipment to support teleworking. Contractors also reported that they
adjusted their internal policies, such as increasing telework availability,
allowing flexible employee schedules, implementing shift work, and
enhancing leave share programs. To keep employees working, 11 out of
28DOD recommended that contractors charge section 3610 costs to a newly created cost
category, “Other Direct Costs COVID-19”, while recognizing that in some situations, it may
be more appropriate to charge these costs through indirect cost pools. DOD noted that, by
creating a new category of costs, contractors may avoid any potential issues with
disclosed accounting policies and procedures, cost accounting standards, or their cost
accounting standards disclosure statements.
Page 17 GAO-21-475 COVID-19 Contracting
the 15 contractors in our review reported moving employees to different
contracts or projects.
Some large prime contractors in our review also took steps to lessen the
effect of COVID-19 disruptions on their supply chain. In their financial
statements, they reported using increased progress payment rates from
the government to accelerate payments to subcontractors so the
industrial base could maintain its financial health and liquidity. Further,
some of these contractors’ representatives told us that accelerating
payments to critical suppliers and subcontractors was helpful in
minimizing the effect of COVID-19.
Contractor representatives told us that after taking steps to keep
employees working, there was still a need to provide paid leave to some
employees. 29 However, the proportion of employees and contracts for
which each contractor requested paid leave reimbursement was usually
low compared to the contractor’s overall workforce and contracting base.
For example, as of February 2021, 14 of the 15 contractors in our review
reported seeking reimbursement on a subset, rather than all, of their
federal contracts. Representatives of one contractor told us that they
sought section 3610 reimbursement on only 1 percent of their contracts.
Representatives of another contractor stated that as of January 2021,
they had three employees for whom they were currently requesting
reimbursement under section 3610, representing less than 1 percent of
their workforce.
In the face of the pandemic, provisions to keep the government and its
Conclusions contractor support in a ready state—such as section 3610—could help
accelerate recovery. Agencies understandably prioritized quick
implementation of section 3610 over a more deliberative process given
the urgency of responding to the pandemic. For a number of reasons,
agencies’ use and implementation of section 3610 authority, and
contractors’ experiences, varied. Once the COVID-19 pandemic is over,
there will be an opportunity for the federal government—with the
coordination of OMB’s OFPP—to collect and share lessons learned from
agencies’ implementation of section 3610. Doing so could enhance how
agencies implement paid leave reimbursement provisions should they be
enacted in response to future emergencies.
29Some contractors we spoke with told us they also incurred paid leave costs or used
section 3610 in their work with the Intelligence Community.
Page 18 GAO-21-475 COVID-19 Contracting
The Director of OMB should, upon conclusion of the COVID-19 national
Recommendation for emergency, ensure that OFPP collects and shares lessons learned from
Executive Action federal agencies’ implementation of COVID-19 paid leave reimbursement,
including those related to data tracking and reporting. (Recommendation
1)
We provided a draft of this report to DHS, DOD, DOE, NASA and OMB
Agency Comments for review and comment. DHS and NASA had no comments on the draft
report. DOD and DOE provided technical comments, which we
incorporated as appropriate. OMB concurred with the recommendation. In
an email response, OMB noted that OFPP seeks to promote interagency
collaboration and sharing of information and lessons learned. OMB
further noted that after the enactment of section 3610, OFPP convened
senior procurement executives and FAR Council members on several
occasions to discuss OFPP’s guiding principles and to provide a forum for
agencies to explain their approaches and share perspectives on
implementation. In addition, OFPP posted agencies’ public guidance
documents on a government-wide coronavirus acquisition-related website
and posted internal information in an OMB system used to facilitate
collaboration. OFPP agreed to collect and share individual agencies’
lessons learned more broadly with the community to promote knowledge
management.
We are sending copies of this report to the appropriate congressional
addressees; the Secretaries of Defense, Energy, and Homeland Security;
the Administrator of NASA; and the Acting Director of OMB. In addition,
the report will be made available at no charge on the GAO website at
https://www.gao.gov.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4841. Contact points for our offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. Staff members making key contributions to this report are
listed in appendix II.
Timothy J. DiNapoli
Director, Contracting and National Security Acquisitions
Page 19 GAO-21-475 COVID-19 Contracting
List of Addressees
The Honorable Patrick Leahy
Chairman
The Honorable Richard Shelby
Vice Chairman
Committee on Appropriations
United States Senate
The Honorable Ron Wyden
Chairman
The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate
The Honorable Patty Murray
Chair
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Gary C. Peters
Chair
The Honorable Rob Portman
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Rosa L. DeLauro
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Robert C. “Bobby” Scott
Chairman
The Honorable Virginia Foxx
Ranking Member
Committee on Education and Labor
House of Representatives
Page 20 GAO-21-475 COVID-19 Contracting
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Cathy McMorris Rodgers
Republican Leader
Committee on Energy and Commerce
House of Representatives
The Honorable Bennie G. Thompson
Chairman
The Honorable John Katko
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives
The Honorable Eddie Bernice Johnson
Chairwoman
Committee on Science, Space, and Technology
House of Representatives
The Honorable Richard E. Neal
Chairman
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives
The Honorable Donald S. Beyer, Jr.
Chairman
Subcommittee on Space and Aeronautics
Committee on Science, Space, and Technology
House of Representatives
Page 21 GAO-21-475 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
This report (1) examines how selected federal agencies have used
section 3610 authority and (2) presents selected contractors’ perspectives
on Coronavirus Disease 2019 (COVID-19) paid leave reimbursement.
To examine how selected federal agencies have used section 3610
authority, we identified the seven federal agencies with contract
obligations greater than $10 billion in fiscal year 2019—the most recent
full year for which data were available at the time of our analysis. We
reviewed these agencies’ use of section 3610 authority as of July 20,
2020, as reported to the Federal Procurement Data System (FPDS), and
selected the three agencies with reported use. These three agencies
were the Department of Defense (DOD), Department of Energy (DOE),
and the National Aeronautics and Space Administration (NASA). As a
point of comparison, we also selected one agency—the Department of
Homeland Security (DHS)—that had not reported use of section 3610
authority as of July 20, 2020. 1 For these four agencies, we gathered and
analyzed guidance regarding section 3610 and data on its use either
collected by agencies or reported to FPDS from January 31, 2020,
through March 31, 2021; and interviewed or received written responses
from cognizant agency officials. 2 We also interviewed officials from the
Office of Management and Budget’s (OMB) Office of Federal
Procurement Policy (OFPP) regarding the extent of this agency’s plans to
collect and share lessons learned from federal agencies’ implementation
of section 3610, due to this agency’s role in coordinating government-
wide contracting policy. To assess the reliability of data from agencies
and FPDS, we reviewed related documentation such as data validation
rules and interviewed knowledgeable agency officials. We determined the
data were sufficiently reliable for the purposes of describing the extent to
which selected agencies reported use of section 3610 authority.
1In addition, the scope of this engagement does not include use of section 3610 within the
Intelligence Community. We coordinated with the Office of Inspector General of the
National Reconnaissance Office, which completed an evaluation of that agency’s
implementation of section 3610 in January 2021. National Reconnaissance Office, Office
of Inspector General, Evaluation of the National Reconnaissance Office’s Implementation
of Section 3610 Authorized by the Coronavirus Aid, Relief, and Economic Security Act,
Project Number 2020-004 S (Chantilly, VA: Jan. 4, 2021).
2According to the General Services Administration, FPDS is the federal government’s
authoritative source for contract data. Contracts whose estimated value is $10,000 or
more are reported to FPDS, as well as every modification to those contracts, regardless of
dollar value. On October 17, 2020, the FPDS reports module was retired and the
https://SAM.gov Data Bank is now the only place to create and run both standard and ad
hoc reports on federal contract data.
Page 22 GAO-21-475 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
To identify selected contractors’ perspectives on COVID-19 paid leave
reimbursement, we selected a non-generalizable sample of 15 prime
contractors that, according to agency data, have received or requested
section 3610 reimbursements from one or more agencies in this review.
These contractors reflected a range of company sizes, ownership
structures, and product and service offerings. We selected the following
15 contractors:
• Afognak Native Corporation
• ASRC Federal Holding Company
• The Boeing Company
• Booz Allen Hamilton Holding Corporation
• Constellis
• Fluor Corporation
• General Dynamics Corporation
• Jacobs Engineering Group Inc.
• Leidos Holdings, Inc.
• Lockheed Martin Corporation
• Melwood Horticultural Training Center, Inc.
• Northrop Grumman Corporation
• Raytheon Technologies Corporation
• S&K Technologies, Inc.
• Science and Technology Corporation
We conducted semi-structured interviews of cognizant contractor
representatives about their experiences seeking reimbursement from
different agencies and reviewed available company financial information.
We also interviewed representatives from the following industry
associations about contractors’ experiences seeking reimbursement from
different agencies, and about why some contractors have not requested
reimbursements:
• Aerospace Industries Association
• Coalition for Government Procurement
• National Defense Industrial Association
Page 23 GAO-21-475 COVID-19 Contracting
Appendix I: Objectives, Scope, and
Methodology
• Professional Services Council
• Shipbuilders Council of America
Additionally, we selected four contractors that we identified as having not
yet requested section 3610 reimbursements from agencies in our review
at the time of selection. For each of the four agencies in our review, we
identified the three contractors with the most contract obligations in fiscal
year 2020, as reported to FPDS, that did not appear in agencies’ lists of
contractors that had received or requested section 3610 reimbursements,
and that FPDS showed as having not received contract obligations
indicating use of section 3610 authority. We then selected one of the
three contractors from each agency to reflect a range of company sizes,
ownership structures, and product and service offerings. Based on this
analysis, we interviewed or received written responses from cognizant
representatives from the following four contractors:
• Association of Universities for Research in Astronomy
• Huntington Ingalls Industries, Inc.
• The GEO Group, Inc.
• Project Enhancement Corporation
We conducted this performance audit from October 2020 to July 2021 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Page 24 GAO-21-475 COVID-19 Contracting
Appendix II: GAO Contact and Staff
Appendix II: GAO Contact and Staff
Acknowledgments
Acknowledgments
Timothy J. DiNapoli at (202) 512-4841 or dinapolit@gao.gov
GAO Contact
In addition to the contact named above, Tatiana Winger (Assistant
Staff Director), Sarah Amer, Hilary Benedict, Robert Bullock (Analyst-in-
Acknowledgments Charge), Laura Greifner, Julia Kennon, Natalie Logan, Miranda Riemer,
Zamir Ruli, Rachel Stoiko, Roxanna Sun, and Carmen Yeung made key
contributions to this report.
(104562)
Page 25 GAO-21-475 COVID-19 Contracting
The Government Accountability Office, the audit, evaluation, and investigative
GAO’s Mission arm of Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability of the
federal government for the American people. GAO examines the use of public
funds; evaluates federal programs and policies; and provides analyses,
recommendations, and other assistance to help Congress make informed
oversight, policy, and funding decisions. GAO’s commitment to good government
is reflected in its core values of accountability, integrity, and reliability.
The fastest and easiest way to obtain copies of GAO documents at no cost is
Obtaining Copies of through our website. Each weekday afternoon, GAO posts on its website newly
GAO Reports and released reports, testimony, and correspondence. You can also subscribe to
GAO’s email updates to receive notification of newly posted products.
Testimony
Order by Phone The price of each GAO publication reflects GAO’s actual cost of production and
distribution and depends on the number of pages in the publication and whether
the publication is printed in color or black and white. Pricing and ordering
information is posted on GAO’s website, https://www.gao.gov/ordering.htm.
Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537.
Orders may be paid for using American Express, Discover Card, MasterCard,
Visa, check, or money order. Call for additional information.
Connect with GAO on Facebook, Flickr, Twitter, and YouTube.
Connect with GAO Subscribe to our RSS Feeds or Email Updates. Listen to our Podcasts.
Visit GAO on the web at https://www.gao.gov.
Contact FraudNet:
To Report Fraud,
Website: https://www.gao.gov/about/what-gao-does/fraudnet
Waste, and Abuse in
Automated answering system: (800) 424-5454 or (202) 512-7700
Federal Programs
Orice Williams Brown, Managing Director, WilliamsO@gao.gov, (202) 512-4400,
Congressional U.S. Government Accountability Office, 441 G Street NW, Room 7125,
Relations Washington, DC 20548
Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800
Public Affairs U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, DC 20548
Stephen J. Sanford, Managing Director, spel@gao.gov, (202) 512-4707
Strategic Planning and U.S. Government Accountability Office, 441 G Street NW, Room 7814,
External Liaison Washington, DC 20548
Please Print on Recycled Paper.
File and source
- File
- 21-475-covid-19-contracting-contractor-paid-leave-reimbursements.pdf
- Size
- 486,557 bytes
- SHA-256
- 1ce3309a80a3a18ab39ba55b54a16c341f4796466495d4ac2b273d1f0ad86e95
- Original
- www.gao.gov