DoD Underscores Requirement of Segregating Covid-19-related Costs with 3610 Guidance

GovCons that secured relief from the CARES Act may have questions about compliance, reporting, auditing & accounting. Read additional guidance here.

For government contractors that managed to secure relief under the CARES Act or PPP, big questions still remain about compliance, reporting, auditing, and accounting. As usual, the details matter, and in the case of these emergency pieces of legislation, the details weren’t always addressed upfront. So, it’s good news that the Department of Defense (DoD) recently provided guidance for contracting officers (COs). Click here for a copy of the Class Deviation – CARES Act Section 3610 Implementation. But what’s most compelling is that these guidelines make it clear that it’s more critical than ever that GovCons prioritize their relationship with their CO during this unusual time, and have strong control measures in place.

First, here are a few basic highlights from this recent guidance:

  • COs must put in writing that a GovCon cannot perform its contracted work at a government facility due to facility closures, nor can they do the job via telework.
  • Paid leave for employees idled by the facility closure, including sick leave, may be direct charged to the affected contract, and not as regular leave that would have been recorded as fringe expense in the normal course of business, so long as it can be attributed to the Covid-19 outbreak from Jan. 31 – Sept. 30, 2020.
  • The leave charged to the contract must be necessary to maintain the workforce in a ready state to permit a return to work upon facility re-opening and to ensure the safety of the workers.

Finally, and most important of all, the 3610 guidance is very clear that in order to be eligible for reimbursement of the cost of paid leave, GovCons must segregate these specific costs and actions so that compliance with these terms can be reasonably identified. The guidelines say, “segregation and identification of costs can be performed by any reasonable method, as long as the results provide a sufficient audit trail.”

How can GovCons do this simply and effectively? This article in Compliance Week: Preparing for the compliance caveats that accompany CARES Act, PPP, gives good counsel on the value of ERP to resolve this segregation issue. Your Unanet platform will enable your business to accurately track, manage, and segregate costs associated with the Covid-19 outbreak so you can specifically demonstrate to your CO precisely where your business incurred costs that are eligible for reimbursement.

Want to understand more about how Unanet can be a solution to helping your business segregate costs for reimbursement and manage your projects? Check out our white paper, The Business of Projects.