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Lord: Pentagon needs more funding to reimburse contractors for COVID-19 claims

Lord: Pentagon needs more funding to reimburse contractors for COVID-19 claims
Ellen M. Lord, undersecretary of defense for acquisition and sustainment, briefs reporters on the Defense Department’s COVID-19 acquisition policy at the Pentagon Monday. Photo by Jackie Sanders/U.S. Air Force

June 23 (UPI) -- The Department of Defense may have to reach into fiscal 2021 appropriations to reimburse contractors for costs related to the COVID-19 pandemic, Undersecretary for Defense for Acquisition and Sustainment Ellen Lord told reporters this week.

Lord said Monday that the Pentagon needs an amount of money in the "lower double-digit billions" to be included in the fiscal 2021 Defense appropriations bill to meet an expected wave of claims by contractors related to the pandemic.

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Lord said the Pentagon might have to dip into its modernization and readiness funding to address anticipated contractor claims under Section 3610 of the CARES Act.

The section of the law allows DoD and other agencies to modify contract terms to allow contractors to keep their employees who are not working onsite but can't work from home at a "ready state," and reimburse up to 40 hours of paid leave per employee.

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It also allows agencies some discretion in how they reimburse contractors.

So far the agency has not released its criteria for claims, nor received any from contractors, according to Lord.

"We have not yet received any claims because I believe the defense industrial base is waiting to more clearly understand what the process is and we are working with them on the criteria," Lord said.

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Lord said the Pentagon has seen "an enormous amount of recovery" in the defense industrial base, depending on the location and type of work being performed.

The Pentagon also entered into an agreement this week with the U.S. International Development Finance Corp. to create a two-year, $100 million loan program to create, protect, maintain, expand or restore domestic industrial capabilities in support of COVID-19 response.

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