Statement of the Hon. Kweisi Mfume on The Interaction Between the Paycheck Protection Program and Federal Acquisition Rules: What it Means for Government Contractors
Washington, March 23, 2021
Thank you all for being here today for the first hearing of the Subcommittee on Contracting and Infrastructure for the 117th Congress. For our opening hearing, I thought it was important to examine an issue that is a priority for government contractors: the interplay between the Federal Acquisition Regulations (the FAR) and the Paycheck Protection Program (PPP).
The FAR serves as the primary set of rules governing all executive agencies in their acquisition of goods and services.Today we will focus on Part 31 of the FAR, which helps contractors determine which costs are reimbursable. Specifically, we will be taking a closer look at the FAR “credits clause”, which can impact federal contractors who have taken advantage of the Paycheck Protection Program. Congress created the PPP to help small businesses meet payroll costs and other expenses. These loans were designed to be fully forgivable if small businesses spent loan proceeds on these purposes.
With that said, some small contractors argue that this is antithetical to the PPP program’s intent, which is to help struggling firms during a time of crisis. Contractors contend that if the government forces them to repay portions of the loan through credits, then the PPP loan wasn’t truly forgivable. Today, we will have an opportunity to examine the varying positions on this critical issue. And during the hearing, it will be important to note that Defense Contract Audit Agency, has issued additional guidance on the treatment of credits.
It’s clear that this is a complex issue with significant ramifications for small government contractors. I hope that today’s hearing will allow us to dive into this subject and better understand all sides of this issue, as well as available guidance. This hearing is an essential first step in coming to a resolution that doesn’t inflict further harm on the small businesses already suffering from the pandemic.