Republican: Government should waive penalties on contractors hit by supply chain issues

Rep. James Comer (R-Ky.), ranking member of the House Oversight and Reform Committee, is urging the Biden administration to consider waiving penalties for government contractors that cannot meet their obligations due to supply chain disruptions.

In a Thursday letter to the Office of Federal Procurement Policy, the General Services Administration, NASA and the Pentagon, Comer said that regulations allow federal agencies to excuse delays that are “unforeseeable and beyond the control of the contractor.”

“Penalizing contractors, many of whom bid on and were awarded contracts prior to the collapse of the supply chain, will further disrupt the economy,” Comer wrote. “Small business contractors may be hit particularly hard by late fees and penalties — making it unlikely they will survive.”

Comer asked the agencies to disclose whether government contractors have been penalized this year, whether any have been granted or denied extensions and if contractors have communicated issues related to the supply chain crunch.

The letter comes as supply chain bottlenecks continue to create a shortage of goods in several sectors. Those disruptions are expected to continue into 2023 as container ships struggle to unload goods at clogged ports. The ongoing labor shortage is exacerbating the supply chain crunch.

This week, Republicans on the House Oversight Committee sent a separate letter to agencies asking for more information on President Biden’s COVID-19 vaccine mandate for government contractors, warning that the measure would worsen supply chain issues and prompt some contractors to end their contracts.  

Some companies have mulled ending their government contracts over the vaccine requirement. But guidance released by the Biden administration this week gives contractors broad flexibility to enforce the rule. The Biden administration on Thursday pushed back the deadline to comply with the contractor rule from Dec. 8 to Jan. 4.