Pentagon can pay contractors to keep workforce home, but ready - memo

By Mike Stone

WASHINGTON, April 9 (Reuters) - The Pentagon will pay defense contractors for sick time or if healthy workers can't get to job sites due to the coronavirus outbreak, according to a memo seen by Reuters.

The memo, signed late Wednesday by the Pentagon's acquisition office, aims to keep the defense industrial workforce intact and ward off layoffs if plants have to close or workers stay at home by reimbursing the sick leave through the end of the government's fiscal year in September.

Boeing Co and others have been hit by plant closures due to the virus, and this kind of directive could pay the salaries of those workers affected.

Costs covered include those "incurred as a consequence of granting paid leave as a result of the COVID-19 national emergency." COVID-19 is the potentially lethal respiratory illness caused by the novel coronavirus.

"It permits contractors to be reimbursed for sick leave. It's a huge opportunity for contractors to maintain their workforce through this crisis." said Franklin Turner, a government contracts lawyer at McCarter & English. The directive "specifically allows the expense to be billed to the contract," Turner said.

The Pentagon has recently increased the amount of interim payments it makes to defense contractors in an effort to give them a financial boost.

The Air Force and Navy have reduced or forgiven some financial penalties levied against contractors for substandard work. And the Pentagon has issued guidance that workers in the defense industry were deemed critical infrastructure workers amid the COVID-19 pandemic, allowing those companies to keep up production and therefore revenue.

These moves will benefit defense contractors, including Northrop Grumman, General Dynamics and Lockheed Martin Co, as well as their suppliers and sub-suppliers. (Reporting by Mike Stone; editing by Jonathan Oatis)