The CARES Act lets agencies reimburse contractors for paid leave provided to their employees who can’t access work sites during the pandemic (and whose duties cannot be performed remotely).
The Departments of Defense, Energy, and Homeland Security, and NASA reported bills totaling $883 million for paid leave costs incurred by contractors. These agencies implemented policies and tracked reimbursements in different ways.
The Government Accountability Office recommended that the Office of Management and Budget (which coordinates government-wide contracting policy) collect and share lessons learned about reimbursing contractors to help inform future federal response to emergencies.
To help government contractors keep their workforce in a ready state during the COVID-19 pandemic, section 3610 of the CARES Act generally authorized government agencies to reimburse contractors for paid leave provided to contractor personnel and subcontractors during the national emergency. Section 3610 did not appropriate specific funding for this purpose. The four agencies GAO reviewed—the Departments of Defense, Energy, and Homeland Security, and NASA—reported use of section 3610 authority totaling at least $882.8 million over 14 months. The extent to which the agencies used the authority varied, from $1.4 million at Homeland Security to $760.7 million at Energy.
Further, Defense officials estimated that defense contractors have more than $4 billion in paid leave costs that are potentially eligible for reimbursement under section 3610. Defense officials also noted, however, that the department does not plan to reimburse this full amount using existing funding. Agencies also based their reimbursement decisions on the nature of the work performed by contractors, such as whether telework was an option.
Twelve out of the 15 contractors GAO interviewed reported that paid leave reimbursement had a great or moderate effect on their ability to retain employees, in particular those with specialized skills or clearances.
Given the urgency of the pandemic, agencies prioritized quick implementation of section 3610 over a more deliberative process, resulting in variations such as how agencies tracked use of the authority. Officials from all four agencies said that they either have captured or intend to capture lessons learned from implementing section 3610 and are willing to share these with other federal agencies. However, the Office of Management and Budget (OMB)—which coordinates government-wide contracting policy—has not collected and shared lessons learned. With coordination from OMB’s Office of Federal Procurement Policy, the government could seize an opportunity to enhance implementation of paid leave reimbursement provisions that may be enacted as part of rapid federal responses to future emergencies.
OMB should collect and share lessons learned from federal agencies’ implementation of COVID-19 paid leave reimbursement. OMB concurred with this recommendation.