Potential Coronavirus Impact on Procurements, Contracts and Budgets
Published: April 01, 2020
As the coronavirus response continues and shakes the normal course of federal contracting, the potential implications of a prolonged pandemic on procurements, contract performance and future budgets will continue to emerge.
• Contractors can expect delays to RFPs, awards and other procurement actions, but the scope depends on the specific agency.
• Teleworking flexibility will be the key to minimizing impact to contract performance.
• Stimulus funding could force reprioritization in FY 2021 budgets.
There appear to be 3 major uncertainties that remain top of mind among federal contractors as the government’s response to COVID-19 evolves:
Will RFPs be delayed or canceled?
How are existing contracts being affected?
How will the stimulus bill impact funding levels for FY 2021?
The answer to all three is, “It depends.”
Will RFPs be delayed or canceled? It will likely vary by department, and will be influenced by the type of requirement and the location of work. Agencies are still issuing solicitations, but some have been delayed or are currently delayed due to pandemic response. Here’s what GovWin analysts are seeing so far:
- Some solicitation releases are delayed because the agency is still figuring out how they will handle solicitations. For example, one NASA contracting official said that the RFP release for her project (NRESS-II / Opp ID # 148227) was pending NASA's decision of how to handle solicitations during this time. She said this late last week and thought she'd be able to issue it this week. Reviewing the requirements, this procurement seems like it could be done from the contractor's facility, but there may be in-person deliverables they have to figure out.
- Requirements may need to be re-written in order to handle situations where social distancing is not feasible
- Face-to-face visits are a no go. Site visits and conferences if held, will be virtual via webinars or recorded video.
- The arrangements of such can cause delays with solicitation release or postponement of a due date while the agency/office/site figures out how they can accomplish this.
- DOE has delayed several major procurements specifically for this reason. They felt the onsite visit was too integral to the creation of a quality proposal, they chose to delay the solicitations. Depending upon how long this situations continues, they may re-think their strategy and find a way to conduct a virtual visit.
- Proposals will be delivered electronically. This may be through an online portal (Ebuy, FedConnect, other), and/or require submitting multiple emails. There may be limits unique to the office as to email size.
For example, one Bureau of Prisons (DOJ) office can no longer accept proposal deliveries via US Mail or other delivery method. For one specific project with proposals due a couple of weeks ago, contracting officers re-opened the solicitation and set a new deadline, requiring that all proposal material be submitted via email. Offerors were cautioned that there was a 14MB size limit for emails, which may require offerors to break their offer documents into into multiple emails. They were then to confirm with the contracting official that all emails were received.
The specific reasons as to this are speculative. It could be due to social distancing concerns, risk of contaminated items, or inability to staff someone to receive the packages (again for various reasons).
- Staff availability will make all the difference. Some contracting offices have a large staff for their procurements, some might have just a few or even one person for multiple procurements. Should the contracting officials contract the virus, then the procurements may be halted unless others are able to take over or the person recovers enough to resume activity
How are existing contracts being affected? Again, it depends on the contract and agency. Regarding existing contracts, delays will be impacted by contractors’ and subcontractors’ ability to access work sites, which could have newer, more strict access restrictions. This creates multiple scenarios:
- Shifting to telework
- Unable to work if telework is not allowed for particular activity
- Possible health screening for those coming to a govt site. For example, entry to DHS facilities requires temperature checks for those seeking access
Depending on how these new working conditions evolve, it may come to pass that some contracts themselves may halt or be reduced either to lack of ability for contractors to access site or lacking needed materials to perform the work
How does coronavirus impact the FY 2021 budget? You guessed it…it depends.
Some agencies are getting additional IT funds under the CARES Act (stimulus bill), primarily to shore up capability gaps to facilitate telework and telehealth. Addressing some technology needs now could mean that those requirements won’t be necessary in FY 2021 appropriations.
It’s also not clear if this massive outpouring of stimulus funding will result in major cutbacks in regular FY 2021 appropriations. Just as border wall funds came at the expense of several other construction projects across the country, it’s possible that current stimulus spending may force some difficult prioritization decisions in the next fiscal year.
GovWin analysts are closely watching the impact on both procurement activities and budget priorities. Agency leaders are still working to establish new rules amid a continuously evolving situation. At this point, contractors are best served by communicating frequently with contracting officers, planning for a diversity of scenarios and continuing to perform according to agency guidance and contract terms.