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Welcome In? The CARES Act Paid Leave Door May Be Open, But the Path to Recovery Remains Narrow and Uncertain for Most Government Contractors

Litigation Alert

At this point, most federal contractors know that it can be challenging to recover increased costs for paid leave stemming from the COVID-19 pandemic under Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Boards of Contract Appeals (BCAs) and the U.S. Court of Federal Claims (COFC) have dismissed or denied recovery in such cases for a variety of reasons, leaving many contractors to wonder if there's really any viable way to be made whole. A recent Armed Services Board of Contract Appeals (ASBCA) decision provides claimants with some reason for hope by confirming that the ASBCA has Contract Disputes Act (CDA) jurisdiction over appeals from a contracting officer's denial of Section 3610 claims.1 As we explain below, however, establishing jurisdiction is only the first step, and the path to recovering paid leave costs remains narrow and highly dependent on the facts of each case. 

The Board's Decision

The January 11, 2024, decision in Appeal of Aviation Training Consulting, LLC (ATC) addressed the ASBCA's jurisdiction to consider denied COVID-19 relief claims under Section 3610 of the CARES Act.2  ATC, an Oklahoma based company that had an Air Force services contract involving B-52 bomber trainers, claimed that it incurred $512,319 in increased costs keeping its workforce in a ready state during the COVID-19 pandemic. After the contracting officer denied ATC's claim, it filed an appeal under the CDA 3 with the ASBCA.

On appeal, the Air Force challenged the ASBCA's authority to grant the requested relief. In analyzing whether it could consider the CARES Act related claim, the ASBCA first reviewed its own jurisdiction. The Board's decision explained that "[it] possesses jurisdiction to entertain an appeal from a contracting officer's final decision upon a 'claim' that has been submitted according to the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109."4 The claim must be one that "relat[es] to a contract with the government."5 "[R]elated to a contract" means that the claim has "some relationship to the terms or performance of the government contract."

The CARES Act, Section 3610

Congress enacted the CARES Act to potentially mitigate some of the impacts that the COVID-19 pandemic had on federal government contractors while performing those contracts. In relevant part, Section 3610 of the CARES Act states that "funds made available to an agency by this Act or any other Act may be used by such agency to modify the terms and conditions of a contract…to reimburse…any paid leave, including sick leave, a contractor provides to keep its employees or subcontractors in a ready state."7 Because Section 3610 explicitly ties the provision of funds under the Act to "modif[ication] [of] the terms and conditions of a contract," the ASBCA in the ATC Appeal held that claims seeking relief under Section 3610 are claims "relating to a contract" under the CDA. As such, the ASBCA found that it has jurisdiction to hear appeals from a decision denying a Section 3610 related claim.8

While Reviewable, Section 3610 Relief is Voluntary and Lacks Specific Funding

Agency authority to grant Section 3610 relief only extends to paid leave taken from March 27, 2020, through September 30, 2021.9 Moreover, any contractual relief granted by contracting officers using Section 3610 authority must come from existing agency funds because Congress did not appropriate specific funds to agencies to cover Section 3610 allowed expenses.10 A July 2021 GAO Report found that agencies "…based their reimbursement decisions on the nature of the work performed by contractors, such as whether telework was an option."11 Finally, Congress did not require contracting officers to grant Section 3610 relief, it merely authorized it. 

DOD's Guidance and Class Deviation

Each federal agency implemented its Section 3610 authority differently. On March 23, 2021, the Department of Defense (DoD) issued revisions to two Class Deviations providing implementing guidance under Section 3610 and a framework for handling Section 3610 reimbursement requests.12 DoD's guidance defined paid leave costs as allowable for leave "taken no earlier than March 27, 2020, and no later than September 30, 2021."13 DoD did not limit this allowance to only cost-type contracts but extended it to all contract types. Additionally, DoD emphasized that "Section 3610 does not prohibit the Department from reimbursing a contractor for paid leave prior to March 27, 2020, using contract authorities otherwise available to the Department; therefore, contracting officers may, at their discretion, consider reimbursing such paid leave costs as other COVID-19 related costs."14 DoD’s guidance makes clear however that contracting officers have no authority to unilaterally extend Section 3610 reimbursements for paid leave taken after September 30, 2021.15   

Recourse for Denied Section 3610 Reimbursement Requests

Federal Government Contractors that incurred costs tied to an authorized government instruction to keep personnel at the ready during the COVID-19 Pandemic but were denied an equitable adjustment for their paid leave costs, should be encouraged that the ASBCA will review the merits of claims involving denials of such equitable adjustments. However, contractors should take a moment to pause before running to the courthouse steps. 

While the Boards and the COFC will review a contractor's entitlement to reimbursement de novo, Congress expressly made this unfunded CARES Act authority discretionary. For that reason, the BCAs and COFC are unlikely to second-guess an agency's compliance with the regulations implementing Section 3610, unless the agency clearly misapplies the law, abuses its discretion, or denies reimbursement in bad faith.16 Is that impossible for contractors to show? No, particularly if you have facts and evidence to support those types of claims. But it is still a high bar for contractors to clear, on top of the other requirements mandated by the CDA,17 so every would-be CARES Act claimant should take the time to carefully evaluate their facts and chances of success before pursuing a CDA appeal for Section 3610 relief. That moment of reflection could make all the difference between choosing a winning strategy over a strategy that may be destined to fail.     

We will continue to monitor and report on the emerging case law related to CARES Act claims before the ASBCA, the CBCA, and the COFC. If you have any questions regarding the CARES Act, please contact one of the Miller & Chevalier attorneys listed below. 

Scott N. Flesch,, 202-626-1584

Ashley Powers,, 202-626-5564

Alex L. Sarria,, 202-626-5822

Alexandra S. Prime,, 202-626-5940

Jason N. Workmaster,, 202-626-5893

Connor W. Farrell,, 202-626-5925


1Appeal of - - Aviation Training Consulting, LLC, ASBCA No. 63634, 2024 WL 306100 (Jan. 11, 2024). The ASBCA’s decision is available at: 
2Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Pub. L. No. 116-136, 134 Stat. 281
3Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109.
4Aviation Training Consulting, LLC, ASBCA No. 63634 at 1, citing ECC Int'l Constructors, LLC v. Sec'y of Army, 79 F.4th 1364, 1377 (Fed. Cir. 2023).
5Id., citing 41 U.S.C. 7102(a), 7103(a)(1).
7See generally, CARES Act, Pub. L. No. 116-136, 134 Stat. 281
8Aviation Training Consulting, LLC, supra
9Pub. L. No. 116-136, 134 Stat. 281, § 3610; Continuing Appropriations Act, 2021, and Other Extensions Act, Pub. L. No. 116-159, 134 Stat. 709, § 140 (2020); Pub. L. No. 116-260, 134 Stat. 1182, § 1002; Pub. L. No. 117-2, 135 Stat. 4, § 4015.
10GAO, COVID-19 CONTRACTING Contractor Paid Leave Reimbursements Could Provide Lessons Learned for Future Emergency Responses, GAO-21-475, (Washington, D.C.: July 2021) 
11Id. at 1.
12See DOD Class Deviation 2020-O0013, Rev. 4 (March 23, 2021) and DOD Class Deviation 2020-O0021, Rev. 3 (March 23, 2021). Both are currently available at: 
13See DOD Class Deviation 2020-O0013, Rev. 4 (March 23, 2021), Attachment at 2. Available at:
14DOD Class Deviation 2020-O0021, Rev. 3 (March 23, 2021) at 2. Available at:…;
15Id. at 3.
16Appeal of - Restoration Specialists, LLC, ASBCA No. 63284, 2023 WL 8522247 (Nov. 14, 2023), citing Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994); Assurance Co. v. United States, 813 F.2d 1202, 1207 (Fed. Cir. 1987); Innovative Techs., Inc., ASBCA Nos. 61686, 62185, 23-1 BCA ¶ 38,413 at 186,658. See also, Appeal of - Cb Portable Toilet Rental & Servs., ASBCA No. 63449, 2023 WL 5827268 (Aug. 16, 2023).
17See 41 U.S.C. § 7103(a)(4)(A) and (b)(3) ("Each claim by a contractor against the Federal Government relating to a contract and each claim by the Federal Government against a contractor relating to a contract shall be submitted within 6 years after the accrual of the claim.").

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