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

By Steven Masiello and Gale Monahan
March 23, 2020
  • Government Contracts
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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.

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Steven Masiello

About Steven Masiello

Steven M. Masiello is the chair of the US Government Contracts practice and a leader of the firm's Global Government Contracts and Procurement group. Masiello serves as lead counsel in complex government contract matters across numerous industry segments concerning state, federal, and foreign military funded transactions in the US courts, agency boards and under domestic and international alternative dispute resolution procedures.

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Gale Monahan

About Gale Monahan

Gale Monahan is a partner in the Firm’s Government Contracts practice where he focuses on government contracts counseling, litigation and internal and government investigations. Gale's counseling practice focuses primarily on cost and pricing, the Cost Accounting Standards (CAS), termination, business systems, domestic preference, and international government contracting issues.

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