The Small Business Administration (SBA) has released the first major guidance regarding the forgiveness of loans made under the Paycheck Protection Program (PPP) by publishing the form of the PPP loan forgiveness application. The forgiveness application, which was posted to the U.S. Treasury’s website on May 15, provides some long-awaited and much needed clarity regarding the calculation of forgivable expenses and the statutory reductions in the amount eligible for forgiveness based on reductions in employee compensation and headcount. The application also contains a number of borrower certifications and outlines the extent of the documentation that borrowers will be required to reference in calculating the forgiveness amount.

Continue reading on BassBerry.com to learn more about:

  • Forgivable Expenses.
  • Reductions to the Forgivable Amount.
  • Application Process and Certifications.

The recently passed Coronavirus Aid, Relief, and Economic Security Act (CARES Act) injected previously unthinkable amounts of stimulus funds into the struggling U.S. economy. To oversee the disbursement of these funds and to curb fraud and misuse, the CARES Act created various oversight and enforcement mechanisms. Notable among these is the Special Inspector General for Pandemic Recovery (SIGPR). As we explained in a recent post, the SIGPR is conferred broad powers to audit and investigate waste, fraud and abuse involving hundreds of billions of dollars in CARES Act funds. Additional primary oversight bodies include the Congressional Oversight Commission and the Pandemic Response Accountability Committee (PRAC).

While arguably the most significant oversight leadership position, the SIGPR remains vacant; however, that may not be the case for much longer. President Trump’s pick for the SIGPR role, Brian D. Miller, has not yet been confirmed by the Senate – although Miller’s confirmation hearings were held on May 5 and his nomination was advanced to the Senate floor on May 12. The actions of similar special inspectors general offices, and in particular that established to oversee the stimulus package Congress passed after the 2008 financial crisis (the Special Investigator General for the Troubled Assets Relief Program, or SIGTARP), suggest the office of the SIGPR will be particularly aggressive in pursuing fraud and misuse related to disbursed CARES Act funds. Yet, even if the Senate confirms Miller soon, considerable time may pass before the Office of the SIGPR can bring to bear its full investigative and audit powers. After all, the Office of the SIGPR is not yet in existence and should Miller, who served as the GSA Inspector General from 2005 through 2014, be confirmed, he will need to lay the agency’s operational groundwork from scratch, including hiring a full staff of employees (Miller expects to hire 75-100 employees), securing office space, and equipping the office, etc.

Continue Reading Update: Investigations Under the CARES Act Ramp Up Even as Oversight Roles Remain Vacant

As developments related to COVID-19 continue to unfold, Bass, Berry & Sims attorneys are monitoring the situation and providing guidance through a series of video chats entitled, “COVID-19 Compliance Conversations.”

In this episode, Thad McBride is joined by Ernie Edgar, General Counsel at Atkins North America, to discuss operational and legal challenges he and his team are currently facing, as well as best practices for promoting compliance during this unprecedented time.

View our other video in this series:

COVID-19 Compliance Conversations – Episode III

COVID-19 Compliance Conversations – Episode II

COVID-19 Compliance Conversations – Episode I

As developments related to COVID-19 continue to unfold, Bass, Berry & Sims attorneys are monitoring the situation and providing guidance through a series of video chats entitled, “COVID-19 Compliance Conversations.”

In this episode, Thad McBride is joined by Ed Bond, the Director of IBM’s Export Regulation Office, to discuss issues that exporters need to address as they navigate the COVID-19 pandemic. Watch the video to hear Thad and Ed’s observations about the novel issues exporters are encountering and recommendations for maintaining compliance.

View our other video in this series:

COVID-19 Compliance Conversations – Episode IV

COVID-19 Compliance Conversations – Episode II

COVID-19 Compliance Conversations – Episode I

I recently discussed various COVID-19-related contracting policies that will impact federal contractors during the pandemic. The article in Law360 examined the following four policies: CARES Act Section 3160, contractual change clauses, accelerated progress payments, and the Paycheck Protection Program (PPP).

In the article I explained that Section 3160 of the CARES Act is “a recognition that we need to keep liquidity flowing into the government contracts space, and we need to have them ready when that work gets switched back on, we need people to be able to resume activity immediately in order to get our economy back on the right track. Many of these contractors are providing mission-critical support to the government.”

However, I added that “Section 3610 is a great safety valve where there isn’t [alternatives] available on a contract. [But] if there’s a possibility for a negotiated arrangement that contracting officer can enter into using his or her existing authorities, and they’ve got the money, why are you relying on 3610? It seems unnecessary and overly complicated.”

Related to the impact of the PPP, I explained, “The PPP program is hugely important. There’s a lot of negative press right now about some larger publicly-traded companies that got money, but I think the important thing to remember is that 1.66 million companies received money under that program. Out of that, 1.6 million companies received less than $1 million, and the average loan was around $250,000.”

The full article, “4 Ways Contractors Can Get Federal Relief During COVID-19,” was published by Law360 on April 24 and is available online.

We recently wrote an article in Bloomberg Law discussing the impact mergers, acquisitions, spin-offs, and restructuring transactions can have on pending bids for government contracts. The article overviews recent bid protest decisions and provides practical guidance on diligence, deal timing and communications with government customers regarding transactions.

The effect of transactions on pending government contract bids is largely governed by the Anti-Assignment Act, which generally prohibits the transfer of a government contract to another party without a government waiver or post-closing novation. “However, transfers ‘incident to the sale of an entire business or sale of an entire portion of a business,’ i.e., transfers occurring ‘by operation of law’ are excepted from the statute,” we clarified in the article.

When evaluating whether a transaction will materially affect a bidder’s ability to perform the contract, we recommend that parties to the transaction consider the following:

Continue Reading How Transactions Involving Government Contractors Can Impact Pending Bids

On April 8, the Department of Defense (DoD) issued a Class Deviation 2020-O0013 laying out the framework for implementing Section 3610 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). DoD is to be commended for swift action to implement this useful permissive authority, which is but one of the many tools available to contracting officers to ensure affected contractors with contracts or agreements under Other Transaction Authority are fairly compensated and are prepared, to the maximum extent possible, to continue to support DoD’s mission.

The legislative provision, which we commented on when it first appeared in the Senate version of the bill, raised questions that the class deviation and subsequent implementation guidance and FAQs helpfully address.  Hopefully, DoD’s guidance will be helpful to agencies across the government that are eager to use the authority at Section 3610 but have been delayed due to uncertainty caused by unclear legislative language.

For example, the legislation authorizes agencies to reimburse at the “minimum applicable contract billing rates,” a term that is not defined, but only if the employees cannot perform work at a site that has been “approved by the Federal Government” without guidance on what such approval entails.  Further, Section 3610 provides that the maximum reimbursement authorized shall be reduced “by the amount of credit a contractor is allowed pursuant to division G of Public Law 116-127,” which is a reference to the Families First Coronavirus Response Act (FFCRA) payroll tax credits for paid sick and family/medical leave, and “any applicable credits a contractor is allowed under this Act,” which is not defined.

Continue Reading DoD Issues Framework to Provide Relief to Government Contractors Affected by COVID-19-Related Closures

As developments related to COVID-19 continue to unfold, Bass, Berry & Sims attorneys are monitoring the situation and providing guidance through a series of video chats entitled, “COVID-19 Compliance Conversations.”

In this episode, Thad McBride and Lindsey Fetzer provide a brief overview of compliance considerations related to international donations and charitable contributions. Watch the video to hear their take on challenges related to legal and safety requirements, among others, as well as advice on steps you can take to help mitigate risk during this time of uncertainty.

View our other video in this series:

COVID-19 Compliance Conversations – Episode II

COVID-19 Compliance Conversations – Episode III

COVID-19 Compliance Conversations – Episode IV

As developments related to COVID-19 continue to unfold, it’s imperative to prioritize the rapidly evolving state and federal level regulations and act accordingly to ensure your business is complying, but also accessing available federal and state assistance. In an effort to help navigate the unique challenges government contractors face during this time, our attorneys will discuss recent developments and preview risks associated with what has essentially become war-time contracting.

In this webinar, Bass, Berry & Sims’ Government Contracts and Labor & Employment attorneys will be joined by Isaac Natter, Associate General Counsel (Acquisition & Logistics) at the Department of Defense (DoD) to discuss these timely developments and offer practical guidance on key topics of interest, including:

  • A DoD insider’s view on the new Section 3610 “Ready State” CARES Act Authority
  • Latest on SBA’s Paycheck Protection Program
  • Overview of FFCRA benefits and qualifying reasons
  • Contractual issues such as excusable delays, stop-work order and terminations
  • Government use of the Defense Production Act in response to
    COVID-19

WEBINAR DETAILS

Title: Fighting the Virus: Update on COVID-19 Issues Impacting Government Contractors

Date: Thursday, April 16, 2020 Time: 1:00 p.m. – 2:00 p.m. EDT

Who Should Attend

  • Executives
  • Private equity professionals
  • Management professionals
  • General counsel
  • Other in-house legal and compliance personnel of government contractors, financial institutions and manufacturers

On March 27, President Trump signed into law the $2 trillion coronavirus stimulus bill, named the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  The law, the most expensive single piece of legislation ever passed, includes hundreds of billions in funds to help businesses remain afloat.  To provide oversight into how these funds are used, the CARES Act establishes a Special Inspector General for Pandemic Recovery (SIGPR), along with two other oversight bodies.

This action is not without precedent, as Congress established a similar watchdog to oversee the stimulus funds disbursed in the wake of the 2008 financial crisis, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).  SIGTARP’s broad interpretation of its mandate, as well as its aggressive pursuit of fraud involving stimulus funds, are instructive to forecasting how SIGPR will fulfill its mission and to how recipients of CARES Act funds can protect themselves.

SIGPR Duties & Powers

The CARES Act tasks the SIGPR with monitoring fraud, waste and abuse involving the $500 billion of CARES Act funds allocated to the Treasury Secretary (Economic Stabilization Fund) to support businesses, states and municipalities impacted by the COVID-19 pandemic.

The SIGPR, who will be appointed by the president and requires Senate confirmation, will be empowered to “conduct, supervise, and coordinate audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments” relating to the Economic Stabilization Fund.

Continue Reading The Special Inspector General for Pandemic Recovery – Crisis Funding Comes with Heightened Investigation Risk