New COVID-19 bill extends contractor reimbursement, but no new funding

By: Joe Gould

WASHINGTON ― A bipartisan group of lawmakers has unveiled a $748 billion coronavirus relief proposal that includes an extension of a prized reimbursement program for federal contractors, but without the billions of dollars previously sought by defense firms.

Defense officials have warned they will need to tap modernization and readiness funds if Congress does not appropriate at least $10 billion for defense contractors' coronavirus-related expenses, as authorized by Section 3610 of the Coronavirus Aid, Relief, and Economic Security Act. However, the new proposal doesn't appropriate funding for the Section 3610 reimbursements.

Negotiations on a final relief deal are ongoing, but the package includes a Section 3610 extension through April 30, 2021. The provision applies to all federal agencies, but it has been of particular interest to the Pentagon and defense industry.

Added funding could come in the $1.4 trillion omnibus spending package for fiscal 2021, which is expected this week, or it could come with the next Congress and the incoming Biden administration in 2021. The defense industry has of late pushed for the extension of Section 3610 first, over added appropriations.

“You have people who can't feed their families, you have people who are going to get evicted, you have people whose unemployment insurance is going to run out. They need Congress to pass this legislation,” Arnold Punaro, National Defense Industrial Association chairman, said of the new bipartisan relief package.

“We prefer the defense industry have 3610, and we believe we'll have an opportunity with the new administration to make the case to them that it's still an important provision,” Punaro said, adding that the extension gives the incoming administration time to work on a “much more comprehensive approach.”

Fifteen defense companies implored Congress on Friday to extend the program. In a letter to congressional leaders, they argued the extension is needed to maintain national security, but also “thousands of critical employees who would be difficult to replace within the industrial base.”

“As COVID-19 rates hit record levels that were unanticipated not only when the CARES Act was enacted but just weeks ago, agencies are shifting work plans, reducing hours and taking other steps to ensure the health and safety of the workforce,” the letter stated.

The reimbursement window was extended until Dec. 18 under the continuing resolution Congress passed on Friday. Originally the support was to stop at the end of fiscal 2020 in September.

NDIA was among eight trade organizations that signed a Nov. 20 letter to Congress urging an extension of Section 3610. There have been a spate of similar letters from lawmakers to congressional leaders in recent weeks.

“The current authority has saved thousands of NASA and defense contractors from being furloughed,” Florida Republican Rep. Bill Posey said in a letter with nine other lawmakers. “If the authority is not extended, many contractors — through no fault of their own — will face dire economic and financial consequences if they are restricted again from conducting their regular work on a NASA center or defense program and may be limited or unable due to the nature of their work to do so through a telework alternative.”

Senate Intelligence Committee acting Chairman, Marco Rubio, R-Fla., and Vice Chairman Mark Warner, D-Va., pressed congressional leaders earlier this month to extend Section 3610.

“Section 3610 has proven to be an important means of providing necessary relief during the pandemic to critical Intelligence Community industry partners ― and particularly to small businesses that provide highly specialized capabilities ― to retain key national security capabilities,” they said in a joint letter.

https://www.defensenews.com/congress/2020/12/15/contractor-reimbursement-extension-in-new-covid-19-bill-but-no-new-funding/