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Defense execs press lead lawmakers for COVID reimbursements
By Joe Gould
July 15, 2020
WASHINGTON ― Eighty defense industry executives have written to top congressional leaders to ask for emergency appropriations to reimburse defense contractors’ coronavirus-related costs.
Led by the Aerospace Industries Association, which represents 300 large and small suppliers to the Department of Defense, the letter called for “an appropriate level of funding for these reimbursements and respectfully request your support of the Department of Defense’s request for emergency funding.”
The letter was one of two this week to House Speaker Nancy Pelosi, D-Calif. Senate Majority Leader Mitch McConnell, R-Ky., their minority party counterparts and the leaders of the defense committees. The other letter came Wednesday from the Professional Services Council, which represents more than 400 government contracting firms.
Section 3610 of the Coronavirus Aid, Relief, and Economic Security Act allows firms serving the federal government to seek reimbursement for pandemic-related expenses, but Congress hasn’t passed corresponding appropriations. Defense officials have said they need roughly $10 billion, and that without added funding from Congress, the Pentagon would have to dip into modernization and readiness funds.
Both the PSC and the defense executives called for an extension of the 3610 authorities beyond their Sept. 30 expiration date, to Dec. 31.
While federal civilian workers and uniformed personnel will be paid whether they can come to work or not, that’s not often the case for contractors, said the PSC’s president and CEO, David Berteau. Contractors need the 3610 reimbursements to hold onto highly skilled workers, many with high-level security clearances.
“Failure to sustain the employees in that workforce will lead to negative impacts on the agencies which they support as well as on the workers themselves, their families, and their employer companies,” Berteau said in the PSC’s letter. “Such a failure could also lead to furloughs and layoffs that would further damage an already faltering economy. Extending Section 3610 authorities will help prevent these negative consequences.”
The defense execs said in their letter that their firms face coronavirus-related costs associated with “travel restrictions, facility closures, social distancing within facilities, enhanced cleaning measures, the purchase of personal protective and sterilization equipment, and costs associated with supply chain disruptions.”
The pandemic has created weapons program slowdowns, temporary factory closures and cash flow problems, particularly for smaller firms. The Pentagon was been working in close communication to respond to the problems, largely by making billions of dollars in advance payment to contractors.
The AIA-led letter asked for consideration for the Defense Department’s request for emergency funding as congressional leaders draft their next tranche of coronavirus aid.
“Absorbing the magnitude of the Department’s estimated costs without appropriations would threaten recent improvements to readiness, jeopardize critical defense sector jobs which have helped stabilize communities across the country during the pandemic, and further erode the domestic supply base,” the letter read.
“During a period of massive unemployment, the defense industrial base has risen to the challenge and gone above and beyond to keep essential manufacturing sites safe and open, and to ensure critical national security programs are not delayed indefinitely. The defense industrial base continues to be an economic driver during a period when many elements of commercial industry have been shaken by the pandemic.”
The advocates appear to face an uphill battle in Congress, where Republicans in particular are skeptical of new deficit spending after already approving aid packages worth trillions of dollars. McConnell outlined a proposal last week that made no mention of defense spending or Section 3610.
The House Appropriations Committee passed a fiscal 2021 defense spending bill Tuesday that included $758 billion, which is far less than the figure the Pentagon is seeking. House Armed Services Committee Chairman Adam Smith, D-Wash., has repeatedly said the Defense Department should draw from its existing budget.
A smaller group of top defense firms sent similar letters last week to Pentagon acquisition chief Ellen Lord and acting White House budget chief Russell Vought, warning that a disruption in the defense budget would lead to “significant job losses in pivotal states.”