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ACQUISITION ALERT

 In this unprecedented time, WPI is thinking of our clients, partners and friends.  Keeping with current CDC guidelines and recommendations we encourage businesses to contact us via email or phone. In person events are being postponed for the time being. We do have numerous webinars scheduled and will be updating our webinar programming. We are here to help.  
 
Be Well,  
WPI Staff  
 
 
UPCOMING EVENTS
4/8/20
Acquisition Hour: Understanding and Protecting the DOD Supply Chain
Webinar

 
4/24/20
Acquisition Hour: How the Cybersecurity Maturity Model Certification (CMMC) Will Impact Your Business
Webinar
  Learn More
4/21/20
Acquisition Hour: How to Quickly Analyze Solicitations 
Webinar


4/29/20
Acquisition Hour: Economic Espionage - Awareness of Threats & Resources for Government Contractors
Webinar
Learn More

President Trump Invokes Wartime Law The Defense Production Act-Here's What That Does

Topline:
At Wednesday's White House press briefing, President Trump said he would invoke the Defense Production Act of 1950 in response to the Covid-19 coronavirus pandemic, which gives the federal government broad powers to enlist private companies to help with national crises.
  • The Defense Production Act of 1950, enacted at the outset of the Korean War, allows the federal government to compel companies through loans, loan guarantees, purchases and purchase commitments to prioritize and expedite development of supplies and resources to support national defense.
  • In this case, the Defense Production Act will be used to accelerate the development of medical masks, ventilators and other healthcare supplies as cases of the coronavirus tick up in the country, according to a count by Johns Hopkins University.
  • According to a Reuters report, the Trump Administration mulled using the act last month, around the time the president was attempting to minimize the effects of the coronavirus.
Continue reading at Forbes.com
   

SBA Updates Criteria on States for Requesting Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19)

WASHINGTON - Today, as part of the Trump Administration's aggressive, whole-of-government efforts to combat the Coronavirus outbreak (COVID-19) and minimize economic disruption to the nation's 30 million small businesses, U.S. Small Business Administration Administrator Jovita Carranza issued revised criteria for states or territories seeking an economic injury declaration related to Coronavirus (COVID-19). The relaxed criteria will have two immediate impacts:
  • Faster, Easier Qualification Process for States Seeking SBA Disaster Assistance. Historically, the SBA has required that any state or territory impacted by disaster provide documentation certifying that at least five small businesses have suffered substantial economic injury as a result of a disaster, with at least one business located in each declared county/parish. Under the just-released, revised criteria, states or territories are only required to certify that at least five small businesses within the state/territory have suffered substantial economic injury, regardless of where those businesses are located.
  • Expanded, Statewide Access to SBA Disaster Assistance Loans for Small Businesses. SBA disaster assistance loans are typically only available to small businesses within counties identified as disaster areas by a Governor. Under the revised criteria issued today, disaster assistance loans will be available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to Coronavirus.
"We're very encouraged that banks and financial institutions are responding to the President's efforts to mobilize an unprecedented public-private response to the Coronavirus (COVID-19) outbreak. As a result, most small businesses that need credit during these uncertain times will be able to obtain it. However, our goal is to ensure that credit is available to any and all small businesses that need credit but are unable to access it on reasonable terms through traditional lending channels," said Administrator Carranza. "To that end, the SBA is relaxing the criteria through which states or territories may formally request an economic injury declaration, effective immediately. Furthermore, once an economic injury declaration has been made in a state or territory, the new rules allow the affected small businesses within the state or territory to apply for a disaster assistance loan." SBA's Economic Injury Disaster Loans offer up to $2 million in assistance for each affected small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
 
Process for Accessing SBA's Coronavirus (COVID-19) Disaster Relief Lending
  • The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state's or territory's Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.
  • Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available statewide to small businesses and private, non-profit organizations to help alleviate economic injury caused by the Coronavirus (COVID-19).
  • SBA's Office of Disaster Assistance will coordinate with the state's or territory's Governor to submit the request for Economic Injury Disaster Loan assistance.
  • Once a declaration is made, the information on the application process for Economic Injury Disaster Loan assistance will be made available to affected small businesses within the state.
  • These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can't be paid because of the disaster's impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
  • SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower's ability to repay.
  • SBA's Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government's coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.
For additional information, please visit the SBA disaster assistance website at   SBA.gov/Disaster.


Interruptions to Performance
Provided by our Partners at Leonardo DRS

Coronavirus may create difficulty for contractors to perform.  The disease has created significant interruptions in global supply chains, and may soon decrease the availability of employees in the U.S.  In addition to the risk to financial performance, the inability to perform on contractual obligations may cause reputational harm to government contractors, making it difficult for companies to do business with the government in the future.
 
One potential source of relief is a force majeure clause.  Common in commercial contracts, a force majeure clause allows a party to suspend or terminate performance of a contractual duty due to extreme circumstances beyond the control of either party.  Coronavirus, as a global pandemic, may trigger force majeure clauses to the extent unforeseen interruptions to a contractor's business prevent it from performing its contractual duties.  Contractors should review their contracts with the government to see whether they contain force majeure clauses and what level of flexibility they provide.
 
Federal regulations for government contractors, particularly the Federal Acquisition Regulation ("FAR"), contain their own provisions for excusable delay.  For example, FAR 52.249-14 requires the following clause in government contracts:
 
(a) Except for defaults of subcontractors at any tier, the Contractor shall not be in default because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of these causes are (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of the Contractor. Default includes failure to make progress in the work so as to endanger performance.
 
48 C.F.R. § 52.249-14.
 
Government contractors might also seek relief through the common law doctrines of impracticability and impossibility.  For example, even if Coronavirus does not constitute a force majeure under the terms of a contract, a government contractor may seek relief by showing that Coronavirus made it impossible for it to perform its contractual obligations. For example, New York courts look to whether impossibility of performance is the result of destruction of the subject matter of the contract or the means of performance.  See Sher v. Allstate Ins. Co., 947 F. Supp. 2d 370 (S.D.N.Y. 2013).  If the subject matter of the contract or the means of performance are not destroyed, the defense of impossibility is inapplicable.  See Warner v. Kaplan, 71 A.D. 3d 1, 5 (1st Dept. 2009).
 
California courts, on the other hand, evaluate the applicability of these defenses by analyzing whether performance "is prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of this state or of the United States, unless the parties have expressly agreed to the contrary."  Cal. Civ. Code § 1511(2); Squillante v. California Lands, Inc., 5 Cal. App. 2d 89 (4th Dist. 1935) (heat conditions prevented production of normal crop of produce and defeated growers' efforts to provide quantities for which they contracted.).  Certain types of contracts may also be governed by the Uniform Commercial Code ("U.C.C."), which provides an excuse where performance has been made "impracticable" by the occurrence of an event "the nonoccurrence of which was a basic assumption on which the contract was made."  Whether these doctrines apply will depend on the terms of a particular contract.
 
Finally, government contractors experiencing loss due to their inability to meet contractual obligations should consider insurance coverage as a form of relief.  Some insurance policies may cover force majeure circumstances, and a contractor's specific policy terms should therefore be carefully evaluated.
 
The Defense Production Act ("DPA")
 
While coronavirus has caused interruptions to the supply side of commercial businesses, it has also created shifts in demand.  Consumers have rushed to purchase medical and home supplies-causing shortages and price increases-and the rush may continue as the virus continues to spread.  The Defense Production Act ("DPA"), codified at 50 U.S.C. § 4501 et seq., and its implementing regulations, the Defense Priorities and Allocation System (DPAS), codified at 15 C.F.R. § 700 et seq., give the U.S. government the authority to "jump the line" and force contractors to prioritize sales of goods to the government before selling to consumers or other private purchasers.

   

The coronavirus - Covid-19 - today's Pandemic - It's here -- What happens if?
 
"What if?" Is the key question that businesses in general, and small businesses especially need to ask as part of their preparations for conducting business with the many unknowns related to the coronavirus. What happens if the extent and depth of the coronavirus increases? How will a spread of the virus impact the company, the employees, suppliers, subcontractors and its ability to perform on contracts?
 
At this time, there are many unknowns. It also can be argued that we are in a lull before the storm at least in Wisconsin due to the relatively small number of cases. This might be a perfect time to ask a variety of questions, make assessments and develop plans to deal with any of the possible impacts. While the impact of the coronavirus may be nothing, it might be significantly worse than expected both here in Wisconsin and in the other states. If the impact of the virus worsens, there is a greater likelihood that the business will be affected in some manner. The impact may be direct - a key employee falling ill or indirect as the virus impacts a supplier or subcontractors. In either case, contract performance may be jeopardized which brings its own issues related to the overall health and sustainability of the business. Therefore, it makes sense to conduct a review, identify concerns and questions related to all aspects of your business and talk with advisors (accountant, attorney, banker), customers, subcontractors and suppliers.
 
One thing seems for certain and that is keeping open lines of communication is and will be increasingly important. Information needs to flow throughout the supply chain in a timely fashion to provide as much time as possible to take action, execute Plan B or to identify a new subcontractor or supplier. If delivery will be impacted, reach out to the customer with the details and provide an update on a reasonable and realistic new delivery date. Given the unexpected emergence of the virus and the inability to plan or totally prevent its spread, there may be greater leniency and understanding if there is a delay. However, there is a difference between providing informed updates as soon as possible and calling after the due date has passed.
 
What also has to be planned for is the worst case - what happens if, as a result of the virus impacting a member or several members of the supply chain, it will be impossible to deliver - at all. What are your options? What does the contract say? Is the cause truly beyond a company's control? Is this in fact an example of force majeure? These can be critical questions to ask, discuss and be ready to respond to. Likely, there will be a need for specific documentation rather than just making a statement. It will be important to know ahead of time what might be required and to be prepared.
 
The same is true when working with other members of a business' core team such as the- banker and/or accountant. There are always options but in most cases, the planning for and execution of an option cannot occur overnight. So identify the issues early on and develop plans The issues are those items which if allowed to proceed unchecked could very well cause irreparable damage to the business. Of course the conversation with the accountant and banker will focus on cash flow, liquidity and sources of cash - lines of credit and/or loans if needed. Conversations with other members of the team will focus on related but often different questions.
 
The immediate end goal is to walk through a variety of options with the members of the team. Identify those options that are most critical, prioritize and initiate appropriate actions for the near term.
 
There are two other issues that businesses should consider.
 
For a variety of reasons, there may be new and unexpected opportunities. It is a given for businesses that they will always need a constant flow of work that provides the necessary revenues to sustain the business and allow it to grow. However, with all of the unknowns about the virus and what its impact might be, does it make sense to stress the company's capacity by taking on new and more business? It might, but as the work load grows, the margin for error is reduced. Successfully performing on all contracts will require all aspects of the supply chain to be intact and to perform. Companies that develop diverse and redundant supply chains may be better positioned to take on new and more work. However, there are no guarantees and therefore, companies need to plan for the unknown and what happens if the supply is impacted by the virus.
 
Secondly, businesses should look beyond the immediate business horizon and take time to think about what will the business landscape look like six months or a year in the future. What will change? Will there be new opportunities? Who will be the competition? What will drive those opportunities? What will be required to participate in or compete for a variety of new contracts?
 
Business is about taking risks and managing risks. Some of the risks are well defined and others like the coronavirus create greater uncertainty and have many more unknowns. As always, it is important for businesses to identify risks, evaluate each and plan accordingly to reduce the uncertainty and reduce to the greatest extent the number of variables that must be managed.
 

Upcoming certification changes to the WOSB and EDWOSB certifications

In summer 2020, the certification process for Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged WOSBs (EDWOSBs) will change as put forth by Congress in the 2015 National Defense Authorization Act (NDAA).
The SBA expects that the regulations enacting the statutory requirement will be published on June 30, 2020, and will be effective 30 days later.
Once the changes go into effect:
Review the SBA's latest FAQ and certification options table for more information.
 
Stay up to date on changes at sba.gov. Contact Kim Garber for questions or assistance with the WOSB certification.  
 
 

OSHA reminds employers COVID-19 is a recordable illness
 
The Occupational Safety and Health Administration released on Monday guidance to help employers prepare their workplaces for an outbreak of COVID-19 - along with a reminder that any incidents of employees contracting the novel coronavirus at work are recordable illnesses, subject to the same rules and failure-to-record fines as other workplace injuries and illnesses.

While OSHA specifically exempts employers from recording incidents of employees contracting common colds and the flu in the workplace, COVID-19 is not exempt, the agency noted on a newly added website providing OSHA guidance for preventing occupational exposure to the rapidly spreading virus.
The guidance, while not a standard or regulation, outlines safety standards that employers whose workers are at high risk of contracting COVID-19 should implement to remain in compliance with the Occupational Safety and Health Act's general duty clause.

The report also advises employers to develop an infectious disease preparedness and response plan, implement basic infection prevention measures and develop policies for the identification and isolation of ill individuals.

 

Reverse Auctions and You

WPI has noticed the Defense Logistics Agency using a clause from the FAR with increasing regularity. The solicitation will contain provision 52.215-9023, Reverse Auction, which allows for the use of a reverse auction as a pricing technique. After the solicitation closes, the contracting officer will determine if a reverse auction will be held. If a reverse auction is held, contractors must be registered in the reverse auction system in order to participate in the auction. Additionally, the contractor representative participating in the auction must have taken the on-line reverse auction training prior to the auction.

Registration, on-line training, and other information regarding the reverse auction can be found at https://dla.procurexinc.com. Any questions related to the reverse auction system or process can be directed to the Contract Specialist.

**This extends the solicitation until March 23, 2020**

This notice is released under - NAICS Code: 336350 - Motor Vehicle Transmission and Power Train Parts Manufacturing


From KBJR6 - Bill would award state contracts to Wisconsin businesses

WISCONSIN (WQOW) -- A pair of Democratic state lawmakers, Rep. Tip McGuire (D-Somers) and Sen. Jennifer Shilling (D-La Crosse) are proposing a bill aimed at ensuring state tax dollars are supporting Wisconsin businesses.
Right now, state offices are required to award contracts to the lowest bidder for things like stationery purchases.

The 'Buy American Act' would amend the state constitution to require those contracts go to state businesses that offer the lowest bid unless no Wisconsin-based companies enter the running.

The bill's authors say it will promote job creation here in the state. The legislation already has support from Wisconsin business groups.
The bill has yet to be scheduled for a committee vote.