The Department continues to aggressively partner with the defense industry to mitigate impacts from COVID-19.
Under Secretary of Defense Ellen Lord’s Acquisition and Sustainment leaders in Industrial Policy, Defense Pricing and Contracting, Defense Logistics Agency (DLA), and the Defense Contracting Management Agency (DCMA) have made significant progress this week in addressing specific concerns outlined by defense industry leaders.
During the 4 daily COVID-19 update calls with defense industry associations leaders this week, led by Deputy Assistant Secretary of Defense for Industrial Policy Ms. Jennifer Santos, several key concerns identified by industry included 1) critical defense contractor workforce ability to continue working; 2) ensuring cash flow to the defense industrial base; and 3) getting standardized guidance out to industry.
On Friday the Department issued two memos that address all three concerns. After working closely with the Hill and the Department of Homeland Security, Under Secretary Lord issued a Defense Industrial Base Essential Critical Infrastructure Workforce memo that defined essentiality in the Defense Industrial Base (DIB) workforce, ensuring the defense industrial base’s critical employees can continue working. The memo also reiterated her commitment to the safety of the workforce and support of the national security mission.
In addition, on Friday Mr. Kim Herrington, Director of Defense Pricing and Contracting, issued a Deviation on Progress Payments memo, which stated that once in contracts, the progress payment rate that contracts can get paid for will increase from 80% of cost to 90% for large businesses and from 90% to 95% for small businesses. This is an important avenue where industry cash flow can be improved. DCMA will work on mass modifications to contracts where applicable (vs one by one) using DCMA authorities. In addition, the Department is accelerating payments through several means to prime contracts and directing prime contracts to expedite payments to subcontractors.
Vice Admiral David Lewis, DCMA Director, has worked closely with the contracting workforce and the Defense Finance and Accounting Services (DFAS) to ensure that invoices are continuing to be paid in a timely manner.
On Friday, the Acquisition and Sustainment Small Business Office reached out to defense industry small businesses, and is working with the Small Business Administration and their small business emergency loan program to help protect these companies.
The Department is fully engaged with the interagency to leverage the Defense Production Act to help reinforce critical elements of the DIB. It is especially important to understand that during this crisis the DIB is vulnerable to adversarial capital, we need to ensure companies stay in business without losing their technology. The Department will be discussing this in more detail next week.
Under Secretary Lord remains grateful for the productive discussions with the defense industry associations, U.S. Chamber of Commerce, Hill and State leaders. She’s especially proud of the incredible efforts of Department leaders and contracting officers across the nation who are helping ensure a secure, reliable and resilient Defense Industrial Base.