On April 18, 2023, the Department of Defense ("DoD") issued guidance to DoD contracting officers directing the cessation of certain emergency contracting measures utilized during the COVID-19 pandemic. Following the termination of the COVID-19 national emergency declaration through President Biden's April 10, 2023 signing of H.J. Res. 7, DoD released a memorandum titled "Contracting Updates with the Termination of the COVID-19 Emergency," which orders contracting officers to cease utilizing all "emergency acquisition flexibilities that were permitted by the national emergency declaration" and terminated all guidance implementing those flexibilities. The memorandum also identified class deviations issued during the pandemic that "will either be rescinded or addressed through a follow-on effort" including:
- Class Deviation 2020-O0010, which increased the progress payment rates to 90% for large businesses and 95% for small businesses, will be revised to return large businesses to the customary progress payment rate of 80% "in a manner that minimizes disruption" whereas DOD "anticipates" retaining the 95% rate for small businesses;
- Class Deviation 2020-O0012, which relaxed various DFARS requirements for undefinitized contract actions ("UCAs"), will be rescinded in full; and
- Class Deviation 2020-O0021-Rev. 3 and Class Deviation 2020-O0013-Rev. 4, which both relate to reimbursement of covered paid leave costs under CARES Act Section 3610, will be fully maintained until all reimbursement actions are complete.
While this memorandum only addresses to DoD contracts, contractors should watch for other federal agencies to terminate their pandemic-related emergency acquisition flexibility measures as the federal government emerges from the shadow of the COVID-19 pandemic. Government-wide pandemic-related requirements for government contractors—including the contractor vaccine mandate that remains unenforced and partially enjoined—may also terminate.
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