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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

The U.S. Department of Justice (DOJ) Procurement Collusion Strike Force (PCSF, or Strike Force) celebrates its third anniversary this month. Formed in November 2019 as an interagency partnership consisting of DOJ’s antitrust prosecutors, lawyers in 13 U.S. attorneys’ offices, and investigators from the FBI and federal Offices of Inspector General, the Department of Defense, the General Services Administration, and the U.S. Postal Service, the Strike Force leverages joint resources to investigate public procurement crimes, employ complementary enforcement and prosecution strategies, eliminate anticompetitive collusion and fraud, and promote the integrity of government procurement. Employing education and state-level liaising, the Strike Force has been remarkably omnipresent and successful in that short time, despite numerous pandemic-related interruptions/delays in the courts. The pace of the Strike Force’s enforcement activity has quickened dramatically in 2022—and shows no signs of slowing in 2023.
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Continue Reading DOJ’s Procurement Collusion Strike Force: Widening Its Stride on Its Third Anniversary

The Federal Acquisition Regulation (FAR) Council has returned from an extended vacation to publish a final rule to align the FAR with similar subcontracting regulations implemented by the Small Business Administration more than a half decade ago. McCarter & English Government Contracts and Global Trade co-leaders Franklin Turner and Alex Major and Senior Associates Cara…

On May 12, 2021, the Biden administration unveiled a rather expansive executive order intent on “Improving the Nation’s Cybersecurity.” The lengthy and sweeping order is a comprehensive national cybersecurity overhaul. In addition to requiring significant improvements to the cybersecurity posture of the Federal Civilian Executive Branch (FCEB) agencies, the order also prescribes:

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On January 25, 2021, President Biden issued a sweeping Executive Order titled “Ensuring the Future Is Made in All of America by All of America’s Workers” (Order), which is intended to be the first step toward fulfilling his campaign promise to commit to American businesses by strengthening domestic preference rules in government procurement. The Order states the administration’s policy that the US government should “use terms and conditions of Federal financial assistance awards and Federal procurements to maximize the use of goods, products, and materials produced in, and services offered in, the United States.” While this is not a novel policy objective—indeed, the Trump administration articulated similar goals—the Order introduces certain dramatic steps in furtherance of that objective that may ultimately have significant implications for contractors.
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Continue Reading Big Changes to Buy American—Biden Issues Broad Executive Order on the Future of Domestic Purchasing in Federal Procurement

On the eve of the inauguration of President Biden, a lingering Trump-era policy finally made its way into the Federal Acquisition Regulation (FAR). On January 19, 2021, the FAR Council issued a final rule implementing changes first revealed in Executive Order 13881 (the E.O.), Maximizing Use of American-Made Goods, Products, and Materials (84 FR 34257, July 18, 2019). As we discussed in an earlier post on this topic, the E.O. mandated significant modifications to FAR clauses implementing the Buy American statute by (1) substantially increasing domestic content requirements and (2) increasing the price preferences for domestic products. On September 14, 2020, the FAR Council issued a proposed rule designed to implement the requirements of the E.O. (85 FR 56558, Sept. 14, 2020). Our post on that development noted that, while the proposed rule incorporated the overarching objectives of the E.O., it also significantly expanded on the E.O. by reintroducing the domestic content test for commercially available off-the-shelf (COTS) items made wholly or predominantly of iron or steel, or a combination of both (with the exception of fasteners).
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Continue Reading FAR Council Issues Final Rule to Implement Trump Executive Order on Significant Buy American Changes

As has been widely reported, the United States Federal Bureau of Investigation is warning of mass protests and potential violence accompanying the inauguration of President-Elect Joe Biden on January 20, 2021. However, unlike the tragic events of January 6, 2021, at the U.S. Capitol, this warning is being directed to the capitols of all fifty states in addition to numerous assets located throughout the National Capitol Region. In light of these developments, federal contractors who find their operations close to these seats of power may have concerns as to whether to stay open or close their offices and keep employees away. Accordingly, we provide a timely reminder of key considerations that contractors should take into account when balancing the practical reality of safety concerns against the legal obligations of contractual compliance.
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Continue Reading Office Closures and Limited Access: Federal Contractor Considerations When Weathering Potential Political Unrest

Halloween is coming up and, right on cue, the FAR Council has released a proposed rule that has potentially frightening implications for contractors. Last year, on July 15, 2019, the president signed Executive Order 13881 (the E.O.), Maximizing Use of American-Made Goods, Products, and Materials (84 FR 34257, July 18, 2019). As we noted in our previous post on this topic, the E.O. mandated significant changes to Federal Acquisition Regulation (FAR) clauses implementing the Buy American statute by substantially increasing both domestic content requirements and price preferences for domestic products. As we also pointed out, the E.O. contained several ambiguities as to how the desired changes would be implemented. At long last, we have (proposed) answers. On September 14, 2020, the FAR Council issued a proposed rule designed to implement the requirements of the E.O. (85 FR 56558, Sept. 14, 2020). While this proposed rule incorporates the overarching objectives of the E.O., it also adds a fairly unsettling spin in that it expands on the E.O.’s mandate by reintroducing the domestic content test for commercially available off-the-shelf (COTS) items as it pertains to iron and steel products.
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Continue Reading The FAR Council Issues Proposed Rule to Implement Executive Order on Significant Buy American Changes

When last we left the Federal Government, agency buyers were staring down the Interim Rule prohibiting them from contracting with entities that use “covered telecommunications equipment” under Section 889(a)(1)(B) (“Section B”) of the National Defense Authorization Act for Fiscal Year 2019 after August 13, 2020. But then August 13 came and went. Did federal agencies do all they needed to follow the requirement? Did modifications go out to industry yet? Were amendments made? Was FAR 52.204-24 (2019) appropriately corrected to FAR 52.204-24 (2020)? What of 52.204-25 or 52.204-26? Can federal agencies act in time?…

Continue Reading The Perils of Section 889 Part B Execution: The DoD Waiver

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:
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Continue Reading Gambling on Compliance? DOJ Updates the House Rules on Corporate Compliance Program Expectations