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US DoD Issues Class Deviation Regarding an Increase in Progress Payment Rates in Response to the Coronavirus National Emergency

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March 22, 2020

On March 20, 2020, the Department of Defense (“DoD”) issued Class Deviation 2020-O0010 (the “Deviation”) providing that, effective immediately, in response to the coronavirus national emergency, the progress payment rates at Defense Federal Acquisition Regulation Supplement (“DFARS”) § 232.501‑1 are increased to 90% for large business concerns and 95% for small business concerns.  Pursuant to the Deviation, DoD contracting officers (“COs”) are required to use the following clauses attached to the Deviation:

  • DFARS § 252.232-7004, DoD Progress Payment Rates (DEVIATION 2020-O0010), in lieu of the clause at DFARS § 252.232-7004;
  • Federal Acquisition Regulation (“FAR”) § 52.232-16, Progress Payments (DEVIATION 2020‑O0010), in lieu of the clause at FAR § 52.232-16; and
  • Alternate II (DEVIATION 2020-O0010), in lieu of Alternate II of FAR § 52.232-16.

The Deviation affects all DoD contracts, that is, it applies to existing and future DoD contracts. 

The Deviation constitutes a modification to the terms of affected contracts that already exist.  Because the DoD CO assigned to the existing contract is the only individual with the actual authority to execute and memorialize the change in progress payment rates pursuant to the Deviation, the Deviation is effective only upon the DoD CO issuing a contract modification. See FAR § 43.102(a) (providing that only COs with authority are empowered to execute contract modifications on behalf of the government); see also Winter v. Cath-dr/Balti Joint Venture, 497 F.3d 1339, 1344 (Fed. Cir. 2007) (stating that an agent of the government must have actual authority to bind the government to modify contracts; apparent authority is not sufficient).  Accordingly, contractors are advised to request a block change modification from their assigned DoD CO to implement the Deviation on all existing DoD contracts.