Contractors must prepare for and mitigate the impacts of performance delays and business disruptions due to workforce illness, facility closures, travel restrictions, and domestic and international supply chain issues, among other threats. Prudent steps include assessments of continuity plans, workforce telecommuting policies, current insurance coverage, alternative suppliers, and the threats to performance and how to mitigate them.
Some business disruption mitigation considerations are unique to federal government contractors. For example, government contractors should (i) review the contingency plans and directives of their customer agencies, (ii) update any applicable Mission Essential Contractor Services Plans required by Defense Federal Acquisition Regulation Supplement (DFARS) 252.237-7023 as necessary, (iii) identify any other contract clauses requiring close coordination with government customers in connection with any business disruptions (e.g., whether Contracting Officer approval is required to substitute a supplier or material) and implement plans for compliance, (iv) identify any rated order requirements (and reaffirm those to suppliers), and (v) document all disruptions and mitigation efforts, and segregate related costs.
We have summarized below some unique contract clauses, supply chain risks, and employment issues government contractors should consider and address in light of potential commercial and government business disruptions the COVID-19 outbreak and response will precipitate. In all events, contractors should consider these topics and other guidance in light of specific contract terms and evolving circumstances.