End of the federal fiscal year brings concerns for agencies, contractors

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The pandemic has proven both scary and monotonous. And now the end of the federal fiscal year is only a month away so agencies and contractors alike can start to worry about the possibility of a partial government shutdown. For these and other concerns, Federal Drive with Tom Temin checked in with the executive vice president and general counsel of the Professional Services Council, Alan Chvotkin.

Interview transcript:

Tom Temin: Alan, good to have you back.

Alan Chvotkin: Always a pleasure Tom.

Tom Temin: Let’s start with something of topical concern — and that is the Section 889 provision where contractors are not allowed to use any equipment by certain banned Chinese telecom providers if they want to get federal contractors. Since the rules went into effect a few weeks ago, we’re already starting to see a little bit of chipping away at it through waivers. What do we know?

Alan Chvotkin: Well that’s absolutely right. The rules were issued in mid July. They became effective on August 13. And just a few days before August 13 effective date, the Director of National Intelligence issued a couple of waivers to federal agencies under the authority that the statute, the National Defense Authorization Act provided to him. One was issued to the Department of Defense. It’s a very broad one. Another was issued to the Agency for International Development. It’s a fairly narrow one. I’m told that the State Department and maybe one or two other agencies also received waivers prior to the effective date to allow them to transition through the effective date. Both of these waivers that I’m aware of are marked for official use only. That’s regrettable. So I don’t have the copies of them. But I understand pretty well what’s in them. And there may be more coming later.

Tom Temin: Now these are waivers for the ability of the contractors to buy this equipment, or is it a waiver that the contractors that already have that equipment can get contracts from those agencies that you mentioned?

Alan Chvotkin: It’s the latter. It’s the ability of the agency to make awards to contractors even though they make a representation that they have prohibited products or services in use. So this is the flexibility for the agency to make an award. It’s not a waiver of a company’s ability to continue to use the prohibited products or services.

Tom Temin: Yeah. So what I’m driving at is that companies that are aware that waivers are starting to come out for some large and small agencies from the ODNI should not take that as a sign that well we can keep buying Huawei and ZTE gear.

Alan Chvotkin: Absolutely right. And they absolutely can’t. First of all, both of the waivers for the Department of Defense and for the Agency for International Development, only go through September 30. And secondly, the company still has to make the waiver and the agency will still have to justify continuing to do business. So if there’s a an underlying message for the companies, it’s clean out your supply chain or find alternatives as rapidly as you can. And for the agencies, at least DoD and USAID it’s be able to take advantage of these only through the end of the current federal fiscal year. There’s no guarantee that they’ll have waivers going into the next federal fiscal year,

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Tom Temin: Got it. And in the meantime, what are you seeing in terms of response of your member companies to the general rule that you can’t buy this stuff anymore and you’ve got to get it out of the systems that employ it for purposes of 889 compliance?

Alan Chvotkin: Sure, two things come into play. First of all, while we have been pushing for months to get the definitions and the rule in place, only got the rule out on July 14, so companies have to apply that and do the analysis. Most of our member companies have done the inventory of the products and services. The good news is that this is use by the company itself unless they know of something in their supply chain. Right now for purposes of the representation back to government, they only need to make a reasonable inquiry about their own activities. Subsequently, after reward if they become aware of some prohibited products or services, they’ll have to notify the government about that within 24 hours and then begin a plan for remediation. But again, the message is still the same. If you know of some use, you’ll have to disclose it based on your own reasonable inquiry. You don’t have that within your own company. And it’s not an essential part of any system, then you can, in good faith certify, make your representation that you do not have such prohibited goods or services.

Tom Temin: Let’s move on to the fiscal year. I think there’s 35 days now, roughly a month until the thing is over, a month of working weeks. What should contractors be doing now to prepare because a lot of people are starting to think, yeah, we could have another lapse in appropriations, or at least for some agencies?

Alan Chvotkin: Let’s hope we don’t have a lapse in appropriations for any agencies. Let’s hope that it’s unlikely that we’re going to see the regular appropriations enacted. So think it’s almost inevitable, we’ll see a continuing resolution for most, if not all of the federal government. We’ve seen this movie streaming many, many times before. But I think there are three things that companies can do now, and maybe even a little late, but should be undertaking right now knowing that the end of current federal fiscal year on September 30, and the start of the new one on October 1. First of all, make sure that you’re up to date on your invoices. Invoices that are submitted for work performed in this federal fiscal year can be paid even after October 1 because they’ll be using money available from the current fiscal year. Very, very important to make sure that your invoices are up to date and submitted. Secondly, know how to connect with your contracting chain of command. As we’ve seen in prior furloughs and lapses of appropriations, and even under some continuing resolutions, the contracting officer that you know and love may or may not be available, and so you want to know your chain of command, who is going to fill in for that contracting officer if he or she is not available, and who’s authorized to take action should that be necessary. And the third area that we’re encouraging our members to look at is option periods that may be coming due. Typically, an option period will become due starting October 1 for the new federal fiscal year. But the decision to extend or exercise that option doesn’t have to wait until October 1. So companies should have a pretty good understanding of the options they have under existing contracts and begin working with their contracting officers now to have that option extended and ready to go before the end of the fiscal year. Things will start getting crunched agencies are already increasing their spending to get out the funds committed before the end of the current fiscal year. So resources are going to be constrained, access is going to be a little bit more difficult. Don’t wait until the last week of the federal fiscal year to start addressing these issues.

Tom Temin: Alright, and in the meantime, no one is getting into federal facilities for the most part, and survey after survey shows people are afraid to go back to the office. So what are you learning and what are people experiencing with respect to the lack of access and the compensation for those contractor employees who cannot get in?

Alan Chvotkin: You raised the two related points and they’re both absolutely valid. A number of federal facilities are still not open to contractors and to federal employees. Some are still reluctant to go back to an office facility. But the good news is from most of the contractors in our membership and around the federal space are able to telework, and to the extent that they can, that work should be able to be continued. Again, keeping in touch with the contracting officers making sure that the work you’re doing on a telework basis is being accepted and being paid for. For those that are not, we still have at least one mechanism. It’s referred to as section 3610 of the CARES Act. It provides authority for a federal agency to reimburse companies who keep their employees who are unable to telework in a quote unquote, ready state. Seeing some new guidance issued by the Department of Defense on how they will approach that reimbursement. This has been several rounds of guidance documents. It’s interesting, the statute that provides the authority is 210 words total. We’re now well north of 40 pages worth of implementing guidance. So lots of words are being used to interpret that. DoD has taken the position that they need supplemental appropriations before they’ll reimburse contractors for their employees. Other agencies have gone ahead and made some reimbursements. Now that we’ve just getting close to the end of the period of availability as this provision expires on September 30th also. There’s been not too many reimbursements that we’re aware of. We’re encouraging our member companies to submit a request for reimbursement for partial period of time, from March 24 through whatever date they can pick to get that process underway. But more importantly, PSC is aggressively pushing for an extension of the September 30 sunset date of Section 3610. The pandemic has continued on much longer than anybody had hoped for. And the number of both federal employees as well as contractor employees who are denied access to those facilities and unable to work is continuing as you mentioned, so all the more reason to keep this provision going, and we’ll worry about and support supplemental appropriations when we can get to it.

Tom Temin: In other words, make hay while the sun shines or make sun while the moon shines or something like that.

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Alan Chvotkin: Yeah, don’t drink your moonshine. But drink your sunshine. That’s exactly right. But it’s important that the authority be extended. It’s also important that companies get their invoices and supporting documentation submitted so that agencies can begin the evaluation of the merits of those invoices and and begin to make payment.

Tom Temin: Alan Chvotkin is executive vice president and general counsel at the Professional Services Council. As always, thanks so much.

Alan Chvotkin: My pleasure Tom.

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