COVID-19 has had significant impacts on federal contractors and subcontractors who, in addition to dealing with the health and safety of their workforce, have faced supply shortages, closures, remote work requirements, government-mandated restrictions and stop-work orders, and a host of other challenges. Responding to these issues has caused contractors to incur significant additional costs which were often not priced in or anticipated in their bids for federal contracts. Contractors faced with these uncertain requirements, potential losses, and steep increases in costs as a result of recent events and government response likely have little in the way of past experiences to guide requesting compensation and equitable adjustments for COVID-19 setbacks. 

Despite the unprecedented nature of the COVID-19 pandemic, there are many key policy and regulatory developments can help guide federal contractors’ response. For example, earlier in the pandemic the federal Office of Management and Budget published a memorandum that urged federal agencies to be cooperative when working with contractors and set out the office’s policy on costs and delays. Additionally, an appeals board that hears claims related to federal contracts recently published a ruling on issues related to the past Ebola outbreak. Lessons from emerging cases like this demonstrate that federal contractors should focus on government requirements and orders and understand that unilateral responses, however warranted, could undermine their recovery of costs.

While the optimal strategies for recovery remain uncertain and subject to change as the doctrine around COVID-19 related costs continues to develop, several clear recommendations can be made. Contractors should ensure careful documentation of all related costs and coordinate with subcontractors, record government communications, and ensure timely notice is provided under any applicable provisions in the underlying contracts. Contractors should review each individual contract for risk shifting provisions, changes and delays clauses, and other language that will guide any claims for equitable adjustment.

For more information on how federal contractors can respond to the COVID-19 pandemic and potentially recover their costs, contractors should consider attending the Berg Hill Greenleaf Ruscitti Construction Team’s webinar: Recovering the Costs of COVID-19 Impacts and Delays: A Guide for Federal Contractors. (New Date: January 21, 2020 10 a.m. MST)