News and Views
Media Coverage

COVID-19 Contractors Must Stay Wary of Enforcement Risks

Law360

The need for speed in the government's response to the COVID-19 crisis has seen it loosen many federal contracting rules, but contractors will need to keep a close watch on their actions during the pandemic to avoid after-the-fact enforcement.

[...]

“Right now, they can't give the money away fast enough and they can't deregulate the procurement system fast enough to get the money out there into the hands of contractors that can perform,” Blank Rome LLP partner Al Krachman said.

[...]

“Those companies that have invested in compliance are going to be fine,” Krachman said. “Those who haven't are going to face whistleblower suits, audits, OIG investigations, suspensions, debarments. There's bound to be a tidal wave of those types of enforcement actions.”

Also likely to contribute to hindsight enforcement is that medical equipment suppliers and the potentially thousands of other commercial firms who respond to coronavirus-related contracting opportunities may not have done business with the government before, and will have to deal with the often-arcane rules around federal contracting for the first time, Krachman said.

“Many firms just are not aware that the government has the right and ability to come back and ask for the money back, even if you've performed and you believe you've provided value,” he said.

Issues that could trip up a first-time contractor include, for example, failure to comply with record-keeping requirements, or neglecting to specifically document the hours that their employees worked on a federal contract.

Or they may not have an accounting system that can generate separate charge codes needed to deal with COVID-19-related costs, leading to a “complicated scenario” if they have to untangle their billing after the fact, Krachman said.

As such, it's important for those companies to put an appropriate compliance program in place as soon as possible—before obtaining a federal contract, if they can.

“It’s a classic ‘ounce of prevention’ problem,” Krachman said.

“COVID-19 Contractors Must Stay Wary of Enforcement Risks,” by Daniel Wilson, was published in Law360 on May 1, 2020.