Construction services included in the CARES Act
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act is a $2 trillion package to battle the harmful effects of the COVID-19 pandemic and to provide economic relief, including stimulus payments to individuals, expanded unemployment coverage, student loan changes and different retirement account rules.
The CARES Act also provides for the appropriation of funds to certain segments of the federal government for construction projects related to fighting COVID-19 and treating victims of COVID-19. The construction-related funds were appropriated to the Department of Labor and the Department of Veterans Affairs.
Under the CARES Act, the federal government appropriated $706 million to the Department of Labor for the National Institute of Allergy and Infectious Disease. Of this amount, $156 million has been appropriated for the construction, demolition, renovation and acquisition of equipment for vaccine and infectious disease research facilities of or used by the NIH, including the acquisition of real property. At this point, it is not clear when or where these funds will be spent. However, under the CARES Act, these funds will be available until September 30, 2024.
The CARES Act appropriated over $27 billion to the Department of Labor for the Public Health and Social Services Emergency Fund. These funds have been appropriated for several purposes that could potentially involve construction-related services, which include the following:
- Next generation manufacturing facilities. No less than $3.5 billion of the funds appropriated to the Public Health and Social Services Emergency Fund are for the Biomedical Advancement Research and Development Authority for the necessary expenses of manufacturing, producing and purchasing vaccines, therapeutics, diagnostics and small molecule active pharmaceutical ingredients, including the development, translation and demonstration at scale of innovations in manufacturing platforms. However, the CARES Act also allows for the funds to be used for construction related to these services. Specifically, these funds can be used for the construction or renovation of U.S.-based next generation manufacturing facilities, other than facilities owned by the U.S. government. These funds will be available until September 30, 2024.
- Improve preparedness and response capability at state and local levels. The funds appropriated to the Public Health and Social Services Emergency Fund may be used for grants for the construction, alteration or renovation of non-federally owned facilities to improve preparedness and response capability at the state and local levels. Under this section of the CARES Act, the State of Ohio and political subdivisions within Ohio may be able to receive funds for approved projects. However, the CARES Act does not provide any additional detail on the types of projects that may be eligible for funding under this provision.
- Non-federally owned production facilities. The funds appropriated to the Public Health and Social Services Emergency Fund may be used for the construction, alteration or renovation of non-federally owned facilities for the production of vaccines, therapeutics and diagnostics when the secretary determines that such a contract is necessary to secure sufficient amounts of such supplies.
- Health care provider reimbursement for coronavirus. The federal government appropriated $100 billion for the Public Health and Social Services Fund to reimburse, through grants or other mechanisms, eligible health care providers that are attributable to coronavirus. The term “eligible health care providers” means public entities, Medicare or Medicaid enrolled suppliers and providers and such for-profit entities and non-profit entities not otherwise described that the secretary may specify to provide diagnoses, testing or care for individuals with possible cases of COVID-19. The funds appropriated to the Public Health and Social Services Emergency Fund may be available for the building or construction of temporary structures, leasing of properties, medical supplies and equipment, including personal protective equipment and testing supplies, increased workforce and trainings, emergency operation centers, retrofitting facilities and surge capacity. To be eligible for a payment under this paragraph, an eligible health care provider is required to submit to the secretary of Health and Human Services an application that includes a statement justifying the need of the provider for the payment. These funds are to remain available until expended.
Finally, the CARES Act appropriates certain funds to the Department of Veterans Affairs related to the coronavirus. First, $606 million will be made available until September 30, 2021, for medical facilities to prevent, prepare for and respond to coronavirus, domestically or internationally, including related impacts on health care delivery. Second, $150 million will remain available until September 30, 2021, for grants for construction of State Home Extended Care Facilities to prevent, prepare for and respond to coronavirus. Under the CARES Act, “State Home” has the same meaning given to that term in Section 101(19) of Title 38, United States Code, which is defined as a home established by a state for veterans disabled by age, disease or otherwise who by reason of such disability are incapable of earning a living. The term “State Home” also includes a home that furnishes nursing home care for veterans.
Although some of these appropriations, such as the appropriations for eligible health care providers, may be available for immediate financial relief, most of the appropriations for construction services will likely not be immediately available due to the time required to identify the needed projects.
This is for informational purposes only. It is not intended to be legal advice and does not create or imply an attorney-client relationship.Download PDF