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Pentagon requesting ‘lower double digit billions’ to support COVID-hit defense contractors

Hon. Ellen M. Lord, under secretary of defense for Acquisition, Technology and Logistics, speaks during the JEDI Cloud Industry Day in Arlington, Va. March 7, 2018. The unclassified event outlined the Defense Dept.’s acquisition plans for the Joint Enterprise Defense Infrastructure (JEDI) Cloud. (DoD photo by EJ Hersom)
June 23, 2020

The U.S. Department of Defense’s chief purchasing officer said the Pentagon has filed a budget request in the “lower double-digit billions” to support defense contractors disrupted by the coronavirus pandemic.

Ellen Lord, the Under Secretary of Defense for Acquisition and Sustainment, said the Pentagon submitted the multibillion-dollar request to the White House Office of Management and Budget in order to sustain the hiring and workforce levels of key defense contractors.

When asked during a press conference to provide a more precise estimate of the “lower double-digit billions” Lord did not provide further specifics.

The funding request, made under Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, authorizes the federal government to reimburse Federal contractors for paid leave where they have been sickened by the coronavirus, or where conditions have required healthy workers to stay home.

Section 3610 of the CARES Act was implemented to ensure key workforces for key government contractors stay intact and ward off potential lay-offs that could disrupt key contracts through the end of the 2020 fiscal year in September. In this case, the Pentagon request aims to preserve its workforce of civilian contractors.

The Pentagon has already signed for an additional $472 million in contracts to sustain manufacturers of ships, aircraft, body armor, and medical supplies, Lord announced to reporters at the Pentagon on Monday,

One of the most recent Pentagon funding efforts came on June 10 when it gave $20 million to General Electric. The funding allotment mostly went to covering the salaries of 100 engineers involved in defense projects.

On that same day, the Pentagon also paid out around $135 million to five contractors intended to preserve the salaries of their employees, including engineers, composite fabricators, specialized laser operators and others working on defense projects.

Spirit Aerosystems was another company that received $80 million in additional Pentagon funding during the period of coronavirus disruption. The company, which produces aircraft parts for both military and commercial applications has lost much of its revenue during the pandemic. Reuters noted low demand for commercial air travel and aircraft was a key factor in the company’s loss of revenue, as was the grounding of the Boeing’s line of 737 MAX jets.

During her Pentagon remarks, Lord said most defense contractors ordered closed by the coronavirus have since been able to reopen.

“Out of 10,509 companies [the Defense Contract Management Agency] tracks, we are down to two closed, and 267 companies having closed and reopened,” Lord said. “Out of 11,413 companies DLA [Defense Logistics Agency] tracks, 31 are closed with 661 having closed and reopened.”

Lord said those defense contractors that have been forced closed tend to be smaller defense contractors.

Lord did warn that the Defense Department had identified potential three-month delays on some major defense programs but did not offer specifics