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News | Feb. 25, 2021

Agency manages critical COVID-19 role

By Matthew Montgomery DCMA Public Affairs

Editor's Note: This article was originally published in DCMA’s 2021 INSIGHT Magazine, which highlights the agency’s warfighter-support story and its global acquisition professionals who use insight and expertise to enhance that story each day. The online version of the magazine can be found here.

As the COVID-19 pandemic engulfed the world mid-2020, governments at all levels, businesses and individuals made provisions and established policies to keep the spread of the virus at bay. For the defense industrial base and Defense Contract Management Agency, this meant having to weigh the safety of their workforce against the need to continue producing valuable items critical for national defense.

To alleviate the confusion about which business needed to shut down based on state directives, and those that were critical for national security, Ellen Lord, undersecretary of defense for acquisition and sustainment, issued a memo designating the DIB as a critical infrastructure workforce. The memo was significant in the reopening of numerous facilities and maintaining a consistent, normal work schedule amid this national emergency. It enabled affected companies to be exempted from state-directed shutdowns.

“If you’re open, we’re open,” was the message to industry from Navy Vice Adm. David Lewis, then-DCMA director, when the pandemic began. The agency’s ongoing engagements with contractors has continued under Army Lt. Gen. David Bassett, who assumed leadership of the agency in June 2020, and DCMA has maintained a physical presence on site to ensure products are delivered and companies receive payments for completed work. DCMA personnel in the field took his directive to the next level and worked closely with local Department of Defense contractors to maintain clear and open communication on COVID-19 issues. The agency shared information and concerns about COVID-19 events and worked on preventative and mitigating measures.

Lewis said at the time, “We are all focused on protecting our respective workforces and continuing product deliveries in support of our nation’s warfighters. The high levels of communication, cooperation and professionalism that we are seeing on the factory floor and in the boardrooms throughout our defense industrial base are noteworthy and essential, as we work our way through this unprecedented crisis.”

To keep DoD apprised of new developments, DMCA’s Portfolio Management and Business Integration Directorate took on the task of tracking and reporting the number of closures, partial closures, average time to reopen and additional statistics related to COVID-19 DIB impact. These metrics were, and continue to be, instrumental in allowing DoD to understand the health of industry partners.

“The tracking of impacts to the DIB supports DCMA’s mission essential function to provide DIB mission assurance,” said Walt Eady, PMBI executive director. “The insights gained from analyzing COVID-19 impacts to programs and trending of data has allowed DoD and the services to take actionable risk management steps. As a result, the DIB has adapted quickly to the new operating environment minimizing the impact to DoD missions.”

Additionally, PMBI was largely represented in DCMA’s Joint Acquisition Task Force as the integrators between the DoD’s product line teams – N95 respirators, personal protective equipment, ventilators, pharmaceuticals, vaccine delivery devices, and screening and diagnostics – and the supply chain analytic support team providing detailed industry analytical support.

“DCMA’s JATF team ensured everyone had the latest COVID-19 material response industrial base analytics and were up to date on JATF priorities to maximize the DoD material response effectiveness supporting our whole-of-government partners while facilitating DoD readiness,” said Eady.

DCMA’s quality assurance and contract administrative capabilities were leveraged to support national COVID-19 material response efforts as DCMA subject matter experts provided direct JATF support by inspecting kind, count and condition of pandemic material being shipped to the Strategic National Stockpile. They also provided contract administrative surveillance support to Defense Logistics Agency, Air Force, and Health and Human Services material response contracts.

“The JATF initiative has developed into Defense Assisted Acquisition under DoD’s Joint Response Acquisition Cell, with DCMA as a major stakeholder,” said Eady. “Along with Defense Health Agency and DLA, we’re working to coordinate the execution of COVID-19 material response, industrial base capacity expansion and assisting in coordinating the restocking of the Strategic National Stockpile.”

In addition to PMBI’s data analytics, DCMA Contract/Pricing Policy Division, Contract Performance Management Division, Cost/Pricing Regional Command and members of General Counsel played a pivotal role in helping to shape DoD’s regulatory response to DIB concerns solely based on COVID-19 effects. These inputs, discussions, planning sessions and follow up data reporting supported the guidance development, execution expectations, and long-term oversight necessary to achieve intended goals.

By understanding the data and contract administration oversight requirements provided by DCMA and various types of inputs from other agencies, Defense Contracting and Pricing was able to provide extensive COVID-19 policy and guidance to include:
• Implementation guidance for section 3610 of the Coronavirus Aid Relief and Economic Security (CARES) Act
• Detailing efforts to strengthen the defense industrial base
• Instruction for use of regulatory tools to minimize adverse impacts
• Considerations guidance for DIB
• Emergency acquisition flexibilities
• Assessing COVID-19 related impacts and costs
• Class deviations for defense contracts

These policy changes and the associated supplemental guidance directly supported the DIB in several ways. First, these responses offered new forms of regulatory relief and provided for limited, controlled contractual and cost-based allowances during a specified time frame and for situations directly resulting from federal or state responses to the COVID-19 pandemic. Second, the remainder of existing statutes extended the range of support to the DIB.

“One example is Section 852 of the National Defense Authorization Act for Fiscal Year 2019,” said Sonya Ebright, Contracts Directorate executive director. “In this case, DoD was mandated to assist small business concerns by paying them as quickly as possible, with a goal of 15 days after receipt of proper invoices. Since DCMA performs contract administration services at the prime contractor level, DCMA administrative contracting officers encouraged prime contractors to make accelerated payments for small business contracts. However, for the approximate 140,000 small business contracts that DCMA currently administers, DCMA ACOs took immediate action to ensure accelerated payments directly to small businesses.”

When progress payment rates increased to 90% for large business concerns and 95% for small business concerns, the result was an estimated additional $3.3 billion being pushed into the DIB, which started with large companies and then flowed to second and third tier sub-contractors.

“This was made possible by the DCMA Financial Information and Resource Management Center issuing mass modifications incorporating the progress payment class deviation into 1,798 contracts and DCMA ACOs reviewing and approving progress payments faster than the previous fiscal year, despite an influx of complex payment requests,” said Ebright.

Additionally, DCMA has been actively engaged with the services and the DIB to facilitate expedited payments to contractors. DCMA acquisition personnel have participated in numerous teleconferences and question and answer sessions to help the contractor community understand what the government is doing to help during this unprecedented pandemic.

“We’ve also taken other actions to help mitigate the effects of COVID,” said Ebright. “Management of DoD funds is critical in all environments; however, it is even more pressing to de-obligate excess funds in this time when appropriated dollars may be made available to fund government purchases to combat the spread and remediation of COVID-19. DCMA ACOs have aggressively identified excess funds so the buying activities are able to reapply these funds for COVID-19 related expenses.”

DCMA has also been an integral player in Operation Warp Speed, which will accelerate the testing, supply, development and distribution of safe and effective vaccines, therapeutics, and diagnostics to counter COVID-19. DCMA supports six Army-involved technology investment agreements, which are non-Federal Acquisition Regulation procurement instruments.

“DCMA’s Commercial Item Group was targeted as the only capable organization available to evaluate over $1 billion associated with OWS proposals, which ultimately saved the American taxpayers more than $100 million during negotiations,” said Jorge Bennett, DCMA Cost and Pricing director.

Finally, DCMA is in the process of implementing cost principle changes provided by Class Deviation 2020-O0013. This relief is part of the CARES Act, Section 3610. When the permissive authority under Section 3610 is used, reimbursement requests should compensate only for the costs of providing paid leave, which is for maintaining the workforce, and shall not increase profit.

“To the extent that the impacted contractor workforce is applied across multiple contracts, contracting officers will need to coordinate on a reasonable allocation of costs, ideally through the ACO,” said Ebright. “In order to ensure understanding of Section 3610 and support consistent treatment of released guidance, we have released an info memo with summary guidance and held virtual training sessions for the 1102 workforce. These organizations are also supported by the indirect cost control capability in the creation of a tracking tool to maintain oversight of accumulated Section 3610 reimbursement requests.”