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Audit of Department of Defense Implementation of Section 3610 of the Coronavirus Aid, Relief, and Economic Security Act (DODIG-2021-030)

Audit

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Publicly Released: December 11, 2020

 

Objective

The objective of this audit was to assess the DoD’s implementation of section 3610 as authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including whether contracting officers properly authorized and reimbursed contractor costs. The CARES Act did not provide specific appropriations for section 3610, but instead authorized agencies to use any legally available funds.

 

Background

The President declared a U.S. national emergency on March 13, 2020, and signed the CARES Act into law on March 27, 2020. Section 3610, “Federal Contractor Authority,” of the CARES Act authorized agencies to reimburse contractors for any paid leave, including sick leave, they provide to keep their employees or subcontractor employees in a “ready state,” including to protect the life and safety of Government and contractor personnel. A ready state is defined as a contractor’s ability to mobilize and resume performance in a timely manner.

In order to qualify, contractors must not have been able to work due to closures or other restrictions, and must have job duties that cannot be performed remotely. Contractors can only request the minimum applicable contract billing rates up to an average of 40 hours per week until December 11, 2020.

 

Results

In general, DoD contracting officers complied with the Office of Management and Budget and DoD guidance to support rational decisions that were in the best interest of the Government when implementing section 3610 of the CARES Act. For the 37 contracts reviewed, we found that the majority of contracting officers ensured that contractors provided necessary supporting documentation, claimed only 40 hours per week for each employee, charged billing rates in line with the contract rates, and excluded profit from their request for reimbursement. In addition, the majority of contracting officers justified that contractors needed to be kept in a ready state and obtained information from the contractors on other relief claimed or received.

However, we identified some challenges that the DoD faced while implementing section 3610 that extended beyond our sample. Specifically:

• Contracting officers had to rely on contractors to self-certify that the section 3610 costs
   claimed were the only reimbursement that contractors were receiving for the paid leave and
   that contractors were not being reimbursed from any other source of other coronavirus
   disease–19 relief for the same leave expenses.

• The DoD’s use of section 3610 authority was limited; as of September 30, 2020, only 96 of the
   781 DoD affected contractors received assistance through section 3610.

• Tracking and identifying DoD contracts using section 3610 was not easy. Not all contracts using
   section 3610 authority were clearly identified in DoD information systems and some contracts
   were mislabeled as using section 3610 authority when they did not use it.

 

This report is the result of Proj. No. D2020-D000AH-0137.000