Coronavirus and the Cares Act Impact on Government Contracting
The Coronavirus pandemic has had a deep effect on our country. This effect ranges from the higher levels of government and economy, to small businesses, and down to the individual and our day-to-day lives.
Many Small Businesses are facing a very real risk of closure. Founders and owners are making critical decisions right now with a very narrow path to survival. This article is directed specifically to Small Businesses in the Government Market, typically called “Government Contractors.”
I have gathered links and resources to fill you in on the major topics of how the Coronavirus pandemic is effecting the federal market, and what options Government Contractors have to get help and weather this storm.
The 5 most helpful options I came across include:
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– Utilizing “Cooperative Purchasing” within the GSA Schedule program to sell to State and Local governments.
– Focusing on the right Federal Agencies
– The CARE Act
– Federal Agency Assistance
– SLED Financial Assistance
– Contractual Flexibility
– Small Business Assistance
- GSA Schedule program response to the Coronavirus Pandemic
If you are a GSA Contract holder, now is the time to make sure your contract has the most up-to-date offerings and pricing. If you have any past performance in the Emergency, Disaster, or Preparedness spaces then get these goods and services onto your GSA Contract immediately!
The General Services Administration, in response to the pandemic, has opened up the multiple award schedule contracts to state and local governments. This is through the Cooperative Purchasing Program, which up to this point applied only to Information Technology Purchases.
This change to Cooperative Purchasing could lead to a streamlined and quick method for State & Local governments + Education (SLED) to acquire emergency goods and services. It depends on the level of adoption that these agencies and departments decide on, and how well the GSA Customer Service reps get the word out and “sell” the Cooperative Purchasing option to buyers.
If you have a GSA Contract, and know of any SLED buyers that could benefit from your goods or services, then make sure to coordinate with your GSA CO, your Local GSA Customer Service Rep, and the SLED buyer.
So, you should experience a uptick in GSA eBuy opportunities, especially related to contracts responding to the emergency of this outbreak. Likewise, GSA Advantage purchases should be at a record high for this time of year relating to emergency-related products, or even for preparedness.
Now is a more important time than ever to release helpful resources for government buyers, and make it as easy as possible for them to source from you. Your GSA Contract is likely the best tool to make this happen because of the “red tape” cutting that it offers.
- What Agencies Should Government Contractors Focus on?
As of April 1
Of the $8 billion coronavirus relief bill – the Fed has allocated $6.5 billion specifically to HHS and the remaining balance to the State Department ($1.25 billion) and to the Small Business Administration ($20 million). Currently the HHS has released over $225 million, which is being dispersed to federal agencies.
HSH alone constitutes $195 million of the $225 billion seen so far going to areas such as public health, social services, emergency, etc.
The second bill, the $46 billion, is more for assistance to companies (Large and Small) who are facing the major challenges brought on by the coronavirus. Also, some funds are allocated for agencies to continue their operations. Here is the breakdown of the second bill:
– $17.7 billion to VA
– $11.5 billion to HHS
– $8.3 billion to DoD
– $3.2 billion to DHS
– $3 billion to OMB
- What is the Coronavirus Aid, Relief and Economic Security (CARES) Act?
The Coronavirus Aid, Relief and Economic Security (CARES) Act
Federal Agency Assistance
With respect to government contracts, the CARES Act provides $3.8 million for a defense health program, $1 billion for defense purchases pursuant to the Defense Production Act over the next two years, and funds to improve information technology services at numerous federal government departments. These funds will provide a host of opportunities for existing and prospective government contractors.
SLED Financial Assistance
CARES gives various federal agencies and state/local governments significant financial assistance in countering COVID-19. That might be good for contractors providing those directly related COVID-19 goods or services, but it may also benefit other contractors such as those providing supporting or ancillary IT products and services, program management and facility operations-type services.
CARES provides funds to allow agencies to amend contracts, without legal consideration (meaning requiring something of value in return), to require the government to reimburse paid leave paid from Jan. 1 through Sept. 30. The reimbursement cannot exceed an average of 40 hours per week per employee and cannot exceed the contract’s minimum billing rates.
Small Business Assistance
Segments of the U.S. economy have nearly come to a halt in recent weeks as government officials have issued stay-at-home orders to minimize the spread of the coronavirus.
While meant to protect Americans’ health, these directives have crippled many small businesses. Companies have also laid off workers, leading to record unemployment claims. More than 6.6 million Americans sought unemployment benefits in the fourth week of March alone.
- How the CARES Act can help your Small Business
Get a SBA Small Business Disaster Loan
The $350 billion “Payroll Protection Program” Is the majority of the stimulus package. This program aims to give small business owners a cash infusion to cover employee compensation. These loans will be forgiven if the business keeps its workers on the payroll rather than furloughing or firing them. Here are the major details of the “Payroll Protection Program:
– Includes salaries or hourly wages along with benefits
– Lasts for up to two and a half months
– Covers other overhead expenses like mortgage payments and utility bills
– Funds are structured as forgivable loans with an interest rate cap of 4%
– Available to businesses with 500 or fewer employees
– The maximum amount is $10 million
– Small businesses can apply for emergency grants of up to $10,000 after applying for a loan
– The estimated time for completing an application is over two hours
– The program should be operational starting on Friday, April 3
– small business owners will be able to apply for loans and be approved by banks on the same day
– Learn more at the SBA Website ( https://covid19relief.sba.gov/ )
Small businesses contribute most of the country’s economic activity, and lawmakers said this aid could potentially help more than 30 million small businesses stay afloat.
The U.S. Senate Committee on Small Business & Entrepreneurship and the U.S. Chamber of Commerce have resource guides to help small business owners understand their options and the ramifications.
The CARES Act bumped the deadline for filing and paying federal income tax on your 2019 income from April 15 to July 15. If you know you’ll owe the IRS, you get an extra three months to hold onto that money and use it for more pressing needs.
Founders and owners of Small Businesses in the Government Market are making critical decisions right now with a very narrow path to survival. If you fear that your Small Business is coming upon hard times, then exploring your options and assembling a plan to survive is vital. I hope this article helped to set you on the right path to get through the Coronavirus pandemic, and the possibly tough months ahead economically.