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CARES Act Authorizes Reimbursement for Department of Defense Contractors’ Paid Leave Expenses

Updated: May 8, 2020

Section 3610 (“Federal Contractor Authority”) of the CARES Act, signed into law on March 27, 2020, provides U.S. contracting agencies with discretion to modify the terms and conditions of government contracts to allow for contractor cost reimbursement for paid leave to keep their employees and subcontractors in a “ready state.” On April 8, 2020, the Department of Defense (“DoD”) approved a deviation from the DoD’s traditional contract cost principles (“DoD Contract Cost Principles”) under Defense Federal Acquisition Supplement (“DFARS”) 231 to authorize DoD contracting officers to use the newly issued DFARS 231.205-79 as a means to implement the Federal Contractor Authority for defense contractors.

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