McCarter’s Government Contracts team is grateful to its clients for once again honoring it with a Band 1 Nationwide ranking by Chambers USA: America’s Leading Lawyers for Business. It appreciates the recognition that “McCarter & English, LLP is lauded for its ability to provide guidance on a broad array of issues including transactions, regulatory
Supply Chain Checkup: FAR Council Announces New Rulemaking Focused on Prohibiting Certain Semiconductor Acquisitions
If you happen to be a government contractor and are contemplating additions to your Summer reading list, consider adding the FAR Council’s May 3, 2024 advanced notice of proposed rulemaking (“ANPR”) to the mix. The ANPR, which was issued in furtherance of implementing Section 5949 of the FY 2023 National Defense Authorization Act (“NDAA”), contemplates various forthcoming changes to the FAR, all of which focus on banning agencies from purchasing certain products or services that contain or otherwise utilize semiconductors that are produced, designed, or provided by three Chinese entities and their subsidiaries, affiliates, or successors: Semiconductor Manufacturing International Corporation (“SMIC”), ChangXin Memory Technologies (“CXMT”), and Yangtze Memory Technologies Corp. (“YMTC”). In addition, the FAR will likely be amended to prohibit the acquisition of semiconductor products or services from any entity that is owned, controlled by, or otherwise connected to China, North Korea, Iran, Russia and any other “foreign country of concern” – a designation to be determined by the Secretary of Defense or the Secretary of Commerce, in consultation with the Director of National Intelligence or the Director of the Federal Bureau of Investigation.Continue Reading Supply Chain Checkup: FAR Council Announces New Rulemaking Focused on Prohibiting Certain Semiconductor Acquisitions
Sometimes Post-Proposal Communications Are More Than Sweet Nothings …
As most government contractors have experienced firsthand, procuring agencies routinely engage in a wide variety of communications after bids have been submitted. On occasion, these exchanges are quite minor and afford an offeror the limited opportunity to clarify aspects of its proposal and/or to resolve clerical errors. Sometimes, however, the exchanges are more critical in nature and allow the contractor to submit proposal revisions as part of the negotiation process. When this occurs, the agency is said to have engaged in “discussions” with the contractor. In this scenario, the Federal Acquisition Regulation (FAR) imposes a host of obligations on the agency’s conduct.Continue Reading Sometimes Post-Proposal Communications Are More Than Sweet Nothings …
When the Cure Is Worse Than the Disease: Recent CBCA Decision Regarding Improper Default Terminations Provides a Teachable Moment for Every Contractor
As most government contractors will readily admit, there are few pieces of mail more unwelcome than a cure notice from Uncle Sam. This letter, for those of you who may be blissfully unaccustomed, is a government-issued notification that is supposed to put the contractor on notice that the contract may be terminated for default in light of certain alleged performance failures, which the government is supposed to specify for the contractor. In addition, as its name would suggest, the purpose of the communication is to give the contractor an opportunity to explain how it will cure the issue(s) giving rise to the government’s concerns by a date certain—often established as a number of days from the contractor’s receipt of the notice (typically 10 days, but sometimes longer).Continue Reading When the Cure Is Worse Than the Disease: Recent CBCA Decision Regarding Improper Default Terminations Provides a Teachable Moment for Every Contractor
Knowing IS the Battle: Supreme Court to Address the FCA’s Scienter Standard
Scenario 1: A pharmacy chain hires a value consultant to review its Medicare and Medicaid billing practices for ways to optimize the coding of drug reimbursements to maximize profits. Drugs that had historically been charged for government reimbursement at $1/pill as the “usual and customary price” are now getting coded for reimbursement at $3/pill—a 200% markup that represents a pure profit windfall to the pharmacy chain. Is this a violation of the False Claims Act (FCA)?
Scenario 2: A construction company that has years of experience in federal procurement contracting had never charged the government for reimbursement of several cost items, because the company’s previous CFO did not feel such reimbursement would meet the “reasonableness” requirements of FAR Part 31 (e.g., FAR 31.201-2(a)(1) and 31.201-3). But the company’s new CFO, holding a different interpretation of the reasonableness standards and Cost Accounting Standards (CAS), instructs his program leads to start charging those items for reimbursement in all new and existing contracts. Is this a violation of the FCA?Continue Reading Knowing IS the Battle: Supreme Court to Address the FCA’s Scienter Standard
“Respect My Authority!”—An Important Reminder as DoD Issues an Updated Guidebook for Contracting Officer Representatives
Like most businesses, government contractors are in the customer service field and have been conditioned to operate by the old adage that the “The customer is always right.” After all, the customer pays the bills, right? As a general matter, this is true. Uncle Sam is responsible for paying the bills submitted by contractors and—most of the time—payment arrives without issue. That said, there are circumstances in which the government refuses to pay for work performed. One of the more common reasons for such nonpayment is the government’s contention that the work at issue was “not authorized” under the operative contract, notwithstanding the fact that the contracting officer’s representative (COR) was well aware of the work being performed. There are, in fact, many decades of decisional law emanating from courts and boards of contract appeals relating to the nuances of this precise issue. This means that an untold (but stratospherically high) number of frustrated contractors have suffered very expensive battle scars trying to litigate their way to payment by convincing judges that the work performed actually was authorized by the appropriate government personnel. A recent publication by the Department of Defense (DoD) provides contractors with an important reminder as to how to avoid this costly fate.
Continue Reading “Respect My Authority!”—An Important Reminder as DoD Issues an Updated Guidebook for Contracting Officer Representatives
The Devil Is in the Details: Recent GAO Decision Underscores the Importance of Checking the Agency’s Math
Virtually every year, the Government Accountability Office’s (GAO’s) Bid Protest Annual Report includes “flawed technical evaluations” as one of the top five most common grounds for successful protests. Simply stated, this means that if a protest is to be sustained at the GAO, there is a good chance the Government watchdog will find that the agency failed to evaluate the protester’s and/or awardee’s technical proposal in accordance with the solicitation’s disclosed evaluation methodology. It follows, of course, that more complex evaluation schemes (i.e., those with a multiplicity of factors, sub-factors, and weighting systems) carry a commensurately higher level of risk that agency evaluators will get it wrong. The GAO’s recent decision in AT&T Mobility, LLC provides one such example and is a useful case study for contractors.
Continue Reading The Devil Is in the Details: Recent GAO Decision Underscores the Importance of Checking the Agency’s Math
DoD Braces for Inflation: Guidance for Contractors Battling Rising Costs
Unless you’ve been living under a rock or on a self-sustaining deserted island, the chances are high that you have become quite familiar with the term “inflation” (i.e., the rising costs of goods and services) over the past few years. Indeed, everything (from gasoline to gumballs and milk to movie tickets) appears to be more expensive as of late. Unfortunately, government contractors are not immune from this current economic reality. As most of us know all too well, many contracts that were negotiated and priced over the past 18 to 24 months are simply more expensive to perform now than was reasonably anticipated when bids were prepared.
In recognition of these soaring prices, the Department of Defense (DoD) issued a May 25, 2022, Memorandum titled “Guidance on Inflation and Economic Price Adjustments,” the purpose of which is to assist contracting officers (COs) in (i) navigating the impacts of inflation on existing contracts and (ii) managing downstream inflation risks on prospective contracts. Here are the key takeaways and our suggested courses of action to best protect your company’s bottom line:Continue Reading DoD Braces for Inflation: Guidance for Contractors Battling Rising Costs
With Just a Little Ado: Significant Buy American Changes Are Coming Before Halloween
Regardless of whether they were eagerly anticipated or begrudgingly unavoidable, the changes promised to the Buy American Act (BAA) early last year have at last arrived, or at least are quickly approaching. On March 4, 2022, the Federal Acquisition Regulation (FAR) Council released its long-anticipated Final Rule implementing important revisions to the BAA provisions of the FAR and incorporating the requirements outlined in President Biden’s January 28, 2021 executive order, “Ensuring the Future Is Made in All of America by All of America’s Workers.” Although the Final Rule, for the most part, conforms with the Proposed Rule issued in July 2021 (which we previously discussed here), the most notable aspect may be that the Final Rule’s effective date was delayed until October 25, 2022. This generous gap provides contractors with roughly 235 days to fortify their compliance efforts and ensure that necessary policies and procedures are in place to meet the necessary supply chain and regulatory changes imposed by the Final Rule — well in advance of Halloween.
Continue Reading With Just a Little Ado: Significant Buy American Changes Are Coming Before Halloween
Get Back: DOD Retreats While Revealing Plans for CMMC 2.0
The Cybersecurity Maturity Model Certification version 2.0 (CMMC 2.0) is here! Like a song you’ve heard before, the revised standards are a throwback but no less significant change to the standards that have evolved over the past three and a half years. McCarter & English Government Contracts and Global Trade co-leaders Alex Major and Franklin Turner detail the changes coming to federal contractors in a Feature Comment for Thomson Reuters’ The Government Contractor. Set against the recent Beatles documentary, the comment examines the impact of the Department of Defense’s most recent effort while detailing what contractors need to do before its new standards go into effect.
Continue Reading Get Back: DOD Retreats While Revealing Plans for CMMC 2.0