Hold on to your alphabet . . . GSA extends the MAS CD&F waiver of TAA & BAA for COVID-19 PPE to 8/1/20. If that made sense to you, please proceed to the final paragraph. But for the acronymically challenged, when everything is spelled out, it means that the General Services Administration (GSA) has extended through August 1, 2020, the agency’s Class Determination and Findings (CD&F) providing a temporary waiver of the Trade Agreements Act (TAA) and the Buy American Act (BAA) for certain personal protective equipment (PPE) and supplies sold through GSA Multiple Award Schedules (MAS) contracts used to support the national coronavirus disease 2019 (COVID-19) response (the Extension). Despite the limited waiver implemented under the initial CD&F, it appears that the PPE and supplies covered “are still not available in sufficient supply from Trade Agreement and Buy America statute compliant sources[,]” thus necessitating the Extension.
When entering a casino, professional gamblers understand that “the house doesn’t beat the player. It just gives him the opportunity to beat himself.” This axiom is precisely why in the long run casinos make money, while gamblers see their bank accounts dwindle. The same holds true in the corporate world with respect to the creation, implementation, and maintenance of compliance programs. A company gambling on its compliance obligations does so at its own peril and must understand exactly what the “House” expects. If it doesn’t, then that company may join the unfortunate few that roll the dice or spin the wheel and come up with snake eyes or double zeros. That risk is multiplied if the company betting on sufficient compliance is receiving federal dollars, where failure can lead to catastrophic civil and criminal liability. Fortunately, the United States Department of Justice (“DOJ”) has published its version of “House Rules” that it is supposed to consult when examining whether to investigate, prosecute, or settle criminal charges against a company. In this respect, DOJ prosecutors are tasked with looking at specific factors outlined in the “Principles of Federal Prosecution of Business Organizations” (“Principles”) section of the Justice Manual. Among other factors, these Principles instruct DOJ prosecutors to consider “the adequacy and effectiveness of the corporation’s compliance program at the time of the offense, as well as at the time of a charging decision.” In furtherance of this mandate, the DOJ’s Criminal Division issued revised guidance on June 1, 2020, regarding the specific factors DOJ prosecutors should consider in making that evaluation. This updated version of the DOJ’s “Evaluation of Corporate Compliance Programs” (Guidance) clarifies and modifies certain areas of the version last updated in April 2019. Among other noteworthy revisions, the Guidance underscores the need for companies to ensure their corporate compliance program is:
Although many of us have canceled vacations during this (unusual) year, summer is nevertheless upon us. While we wholeheartedly recommend firing up the grill and enjoying the sunshine in the coming months, companies planning to enter into joint venture (JV) agreements to compete for Government contracts should first make sure that they set aside some time to consider the impacts of proposed changes coming to the Federal Acquisition Regulation (FAR). These changes have the potential to create significant opportunities for both veteran Government contractors and new entrants to the federal marketplace who might consider competing for procurements through JV agreements.
Recently, the Defense Pricing and Contracting (“DPC”) unit under the Secretary of Defense issued draft implementation guidance for Department of Defense (“DoD”) contracting officers tasked with assessing contractor requests for reimbursement in accordance with Section 3610 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and applying the recent cost principle implemented by DFARS Class Deviation 2020-O0013—topics covered in depth by this blog. This draft guidance was first alluded to in the May 1, 2020, memorandum from Kim Herrington, the DPC Acting Director, to address “the reimbursement process from requesting the contracting officer’s determination of an ‘affected contractor’ to providing a checklist to guide collection[ ] and evaluation of costs from the [contractor] seeking reimbursement [under Section 3610].” Composed of general reimbursement implementation guidance along with two attachments—a checklist for review of a contractor’s reimbursement request and instructions for using the checklist—the DPC’s draft is, to date, the most comprehensive guidance addressing contractor requests for reimbursement under Section 3610 since the DFARS Class Deviation 2020-O0013 issued on April 8. The final guidance is expected to be released shortly.
Contracting with the Department of Defense (DoD) can provide healthy opportunities for businesses of all sizes. That said, it is no secret that contractors without the cash resources to finance their performance while awaiting payment from the Government may find themselves swallowed whole by their contractual obligations. Many defense contracts are long-term endeavors; consequently, a contractor’s sustainability and profitability can be impacted by the sapping of available manpower while also requiring significant capital investment to manage material, labor, overhead, and other expenses incurred when performing a contract. In many cases, the upfront financial investment required serves as a barrier to entry into the government marketplace for nontraditional defense contractors. However, the DoD has recently unearthed and reanimated one of the more impressive dinosaurs buried in the Federal Acquisition Regulation. Welcome to the world of performance-based payments (PBPs).
In order to provide guidance on agency implementation of Section 3610 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the General Services Administration (GSA) issued its April 21, 2020 Class Deviation CD-2020-12 (Class Deviation) covering contractor paid leave reimbursement authority in response to the COVID-19 pandemic. Effective immediately, the Class Deviation (1) sets forth Section 3610 guidance for GSA Contracting Officers, and (2) creates a new GSA Acquisition Regulation (GSAR) contract clause prescribing controls for contractor reimbursement under Section 3610 (GSAR 552.222-70). Although the Class Deviation does not account for all implementation issues associated with Section 3610, it does establish guidelines for agency implementation of contractor reimbursement under Section 3610. Given the wide variety of contracts GSA administers for the use of other agencies, this is welcome and practical guidance for contractors.
The Prospect of False Claims Act’s Treble Damages Requires Meticulous Recordkeeping Under the CARES Act
On April 10, 2020, the Government Accountability Office (GAO) announced its effort to root out fraud associated with the billions of dollars in payments promised under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Congressional watchdog is encouraging individuals – private citizens, government workers, contractors, etc. – to anonymously and confidentially report any allegations of fraud, waste, abuse, and mismanagement through FraudNet (the GAO’s fraud-reporting website), via e-mail or by calling 1-800-424-5454 (the GAO’s automated phone answering system). The GAO, of course, is seeking as much detail as possible about any allegations so the reports can be handed off to its own investigative unit, appropriate inspector general offices, or to the ultimate enforcer – the Department of Justice.
On April 8, 2020, the Department of Defense (“DoD”) issued a Class Deviation authorizing contracting officers to use a new cost principle – DFARS 231.205-79, CARES Act Section 3610 Implementation – to permit the reimbursement of certain leave-related costs incurred by contractors in accordance with Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136). Additional clarification regarding the application of the new cost principle was issued on April 9, 2020, through the publication of a “living” FAQ document intended to answer critical questions for contractors. While the FAQ information does not clarify the Government’s position on all potential issues associated with the implementation of Section 3610, it does provide a blueprint that contractors seeking reimbursement should follow.
On April 8, 2020, a final rule (the Rule) was issued amending the Defense Federal Acquisition Regulation Supplement (DFARS) and implementing Section 852 of the National Defense Authorization Act (NDAA) for FY 2019 to provide for accelerated payments to DoD’s small business prime contractors and subcontractors supporting DoD contracts. The Rule applies to contracts at or below the simplified acquisition threshold (SAT) – currently $250,000 for DoD contracts – and to contracts for the acquisition of commercial items including commercially available off-the-shelf (COTS) items. With an estimated 96% of DoD contracts valued at or under the SAT, the rule appears to reflect DoD’s recognition that it is in the best interests of the government and small business contractors alike to apply this Rule to contracts at or below the SAT and to accelerate payments to small business prime contractors and subcontractors.
FEMA Seeks All Comers to Supply Government with COVID-19 Supplies
Through its website, the Federal Emergency Management Association (“FEMA”) is encouraging the private sector to step up and support the agency in its response to COVID-19 in a variety of ways. In pertinent part, the website solicits donations of medical supplies and equipment, refers businesses with nonmedical good and/or services that can help the response to the Department of Homeland Security (“DHS”) Procurement Action Response team, and provides guidance to hospitals and healthcare providers in need of medical supplies.