The spread of COVID-19 has unveiled unique challenges while presenting us with new realities that will endure long after the virus has been contained to acceptable levels. Around the world, governments and health officials labor tirelessly over treatments, testing, vaccine trials, and safety protocols to curb the outbreak. Beyond those efforts, however, they face the more delicate specter of restoring the economy without further devastating it through another series of widespread shutdowns if the disease spikes again, which could lead to civil unrest, rampant unemployment, and a crippled Gross Domestic Product (GDP). In the interim, the government launched a rapid series of relief measures. We have recently endeavored to explain the facets of these nuanced packages, including the FFCRA’s emergency paid leave laws, the role of the FLSA, and the complexities of navigating Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. For small businesses and federal contractors, the situation has been particularly messy. So let’s look toward the longer term and explore what the new normal for federal contractors could be as we enter a post-coronavirus era.
Living with COVID-19: Legacy Models Must Evolve to a New Normal
As Federal News Network’s Rich Beutel commented, “While many ‘lessons learned’ regarding best practices to confront natural disasters can be gleaned from such situations as Hurricane Katrina and 9/11, the unprecedented scope and impact of this pandemic raise troubling issues for legacy business models.”
Beutel believes that the ramifications of the current crisis will alter the framework of government acquisition—not just in the procurement of supplies, but also in services such as human capital.
Indefinite Telework and Remote Job Arrangements
Since the advent of the Internet and, more recently, the myriad breakthroughs in digital communications platforms, including e-commerce, business analysts have long touted the benefits of remote work. We’ve heard about the rise of virtual offices for years, but traditional brick-and-mortar operations have managed to persist as a mainstay. The pandemic may represent the biggest catalyst for a shift toward true telework on a macro scale.
The Department of Labor’s (DOL) Wage and Hour Division (WHD) has encouraged businesses to be supportive and flexible with workers impacted by quarantines. Where possible, the government has strongly urged federal contractors and small businesses to extend alternative work arrangements, such as teleworking, to employees who can perform their jobs remotely. Telework has already proven itself effective as an infection-control and prevention strategy. It also may be considered a reasonable accommodation.
Workers are increasingly turning to non-traditional employment arrangements to satisfy their work-life goals. They’re setting their own schedules, choosing their employers, and determining their own work arrangements. They rely less on the auspices of corporations and more on their entrepreneurial spirit. In order to continue attracting and retaining this nomadic talent, we need to make our business cultures just as fluid and mobile. However, what began as an incentive in talent acquisition—and an opportunity to substantially decrease overhead costs for business leaders—has transformed into an imperative.
The current crisis has forced employers to accommodate telework to remain operational during quarantines. But it’s also paying off, as explained by Laurel Farrer in Forbes: “Based on a recent report from Gartner, it looks like many workers will continue to have the option to work from home permanently. Even amidst a global crisis, employees are reporting greater productivity and higher job satisfaction, which is translating into enormous profitability for their employers.”
The sudden transition to mass teleworking has unfortunately stressed existing VPN and Internet infrastructures. The CARES Act allocates billions of dollars in assistance to overcome these limitations. If the money is spent properly, Beutel noted, it would “greatly accelerate the transition to a modern, 21st century digital government, as well as accelerate such basic commercial innovation as e-signatures, digital forms and web site developments to improve government customer focus.”
Beyond that, the mere easing of shutdowns and isolations don’t translate to workers feeling secure in returning to normal life. “As state shut-down restrictions ease, employers may confront situations in which some employees resist a return to work because of COVID-19 fears,” the National Law Review pointed out. Telework may become the new norm that employers must embrace to stay solvent, productive, and competitive.
To help in the transition, we’ve prepared a sample telework policy that you can access for free on our COVID-19 resource portal.
It’s Office Life, But Not as We Know It
In the original “Star Trek” series, Doctor McCoy offered a lot of humorous quips. Like, “I’m a doctor, damn it, not a mechanic,” or, frequently, “It’s life, Jim, but not as we know it.” McCoy would’ve been correct in the context of how physical offices will run in the post-pandemic new normal. Following are some points that large venues, such as amusement parks, and health experts are considering in how businesses could appear and function.
- Operating at limited capacities, between 25% and 40%, to ensure social distancing. This would also include airline seating.
- Enhanced sanitization and cleaning protocols, which happen on a recurring and frequent basis. Some stores require employees to clean and wash up every 30 minutes. Dental and medical offices may require cleaning after each patient.
- Access to hand sanitizing stations throughout a facility, especially near surfaces.
- Air purification units throughout the space, with advanced HEPA filters and UV-3 lights to kill the virus on contact.
- Face masks could be requirements for the foreseeable future.
- Protective barriers between workers and the public. Consider hair salons, as illustrated by Julie Appleby from Kaiser Health News: “Plexiglas barriers between stations, cleaning the chairs, sinks and other surfaces often, and having stylists and customers wear masks.”
- Reduced operating hours to suppress mass gatherings, prolonged exposure, and to provide adequate cleaning time for the next day.
- More businesses developing e-commerce options, digital communications, logistics innovations in delivery, and more.
- Temperature regulations may go into effect for most public venues. This could also be an opportunity to capitalize on the potential of wearable health devices, which are already popular and in use.
The New Normal Could Realign Globalization
“From a macro perspective,” Beutel wrote, “we believe that the current unprecedented situation has the potential to fundamentally re-align the basic consensus regarding the much-touted benefits of globalization.”
Because of the pandemic, and the interruption to businesses it has caused, the General Services Administration (GSA) has made certain concessions regarding the Trade Agreement Act (TAA).
SPE-2020-11 provides an exception for Schedule contracts to temporarily allow the procurement of certain TAA non-compliant products (e.g. N95 masks, disinfectants, cleaners, and hand sanitizer). However, many restrictions still apply for TAA non-compliant purchases of other supplies.
There are a few other considerations, and a full list is available on the GSA webpage through the link above.
- Some prohibitions remain against purchases from countries without an international trade agreement in place with the United States, including China.
- The Buy American Act may also apply (refer to FAR 25.1).
- “Only those non-TAA compliant products that fall under the Federal Supply Classes (FSC) identified in Attachment 1 of SPE-2020-11 and are in direct support of the Government’s COVID-19 response may be requested,” GSA noted.
Those exceptions aside, Beutel sees a trend where the wild push toward globalization could stall, reverse, or amend.
- The risks associated with Chinese manufacturing and supply chain dependency will cause U.S. companies and government agencies to reevaluate their reliance on its goods. Beutel also predicts “a profound reassessment of basic supply chain structures to reinforce the defense industrial base.”
- The Trusted Foundry program, launched in the 1990s, is a policy of manufacturing national security supplies through strictly U.S. enterprises. Despite a shaky history of success, Beutel suggested that the government will make this a more robust and pressing priority over the next two years.
- “We are already seeing specific government actions to tighten and ‘reform’ the supply chain, such as the Defense Department’s cybersecurity maturity model certification (CMMC) initiative,” Beutel wrote. “These efforts are likely to accelerate, with concomitant regulatory burdens going forward. In terms of national security services, localizing your research and development, and production efforts primarily in continental United States (CONUS) would be something to keep in mind.”
- The Buy American initiative will also likely gain strength, particularly where IT, cybersecurity, military products and services, health solutions, and human capital are concerned.
- Beutel, however, cautioned that the prominence of cloud-based systems could wane as internal security needs rise. Data localization requirements could become more austere, fueling the momentum to require all government data being stored on CONUS-based platforms.
Preparing to Move Forward
As plans unfurl and situations become clearer, we will continue to provide updates and informative articles to discuss the issues and opportunities for federal contractors. There are no doubt more nuances and wrinkles in this fabric to consider as time progresses. What is essential, however, is that the small businesses who inhabit and help the federal space prosper should emphasize agility, innovative solutions for working proactively within the coming new normal, and maintaining exemplary communication with their customers and workforces. As Beutel concluded:
Recollect that in the event of government-imposed delays or program disruptions, there are specific remedies in the FAR that utilize such procedures as requests for equitable adjustment and the like. On March 30, DOD has issued extensive guidance on requests for equitable adjustment and utilization of existing FAR and DFAR procedures for COVID-19 claims and disputes. The CARES Act also appointed significant oversight resources- a special inspector general for pandemic spending, as well as a Congressional oversight board. These oversight groups will undoubtedly reinforce existing DCAA and DCMA scrutiny over incurred cost audits for COVID-19 work. Coordination with your legal team early on is essential.
We are living through an unprecedented time, perhaps surpassing the trials we overcame after tragedies like 9/11, Hurricane Katrina, and other outbreaks such as Ebola, SARS, swine flu, and Zika. Clarity, communication, and preparation are critical. Adaptability, flexibility, and elasticity in business operations have always spurred innovation, but in these times they represent the aspects of ongoing business performance and growth. As Beutel said, these ideals must now be “baked into your culture.”