OMB Asks Agencies to Consider Paying ‘Ready State’ Contractors

The Office of Management and Budget (OMB) is asking Federal agencies to consider reimbursing paid leave to Federal contractors to keep them in position to mobilize in a timely manner, as needed to complete government missions.

According to the April 17 memo, the Coronavirus Aid, Relief, and Economic Security (CARES) Act explains that paid leave can help keep contractors in “ready state.” The new OMB memo aims to clarify how agencies determine the role of paid leave in supporting contractor needs.

OMB asks agencies to “carefully consider if reimbursement for paid leave to keep the contractor in a ready state is in the best interest of the government.” The memo allows agencies to use any funds made available by Congress to reimburse contractors for lost time, modify contracts to reimburse allowable paid leave costs, provide reimbursement without invoking the need for terms and conditions, and reimburse at billing rates not including profit or fees.

Agencies should also be mindful of the challenges faced by small businesses, the memo states. OMB writes that small businesses “may face the most difficult economic hardships” and recommends that agencies work with the Offices of Small and Disadvantaged Business Utilization to keep small business contractors aware of the support available.

OMB asks agencies to closely follow section 3610 of the CARES Act, the section that dictates contractor paid leave stipulations, as they make pay decisions. Section 3610 should be considered within the broader context of other contractor resiliency strategies, and agencies should closely follow all restrictions and documentation recommended in the CARES Act, the memo states. OMB also asks agency to track paid leave data in the Federal Procurement Data System.

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