Contract Performance & Administration

As we reported last month, the Department of Defense (DoD) has been engaging in an unusual rollout of its new cybersecurity certification program by way of  road tours—led by Katie Arrington, the Special Assistant to the Assistant Secretary of Defense for Acquisition and Sustainment for Cyber—that address the tiered, five-level Cybersecurity Maturity Model Certification (CMMC). At bottom, DoD intends for the CMMC to help streamline the acquisition process by providing acquiring agencies and consenting contractors with more exacting cybersecurity requirements for future acquisitions. What’s unique about the CMMC rollout is the lack of written guidance on the program. DoD representatives have orally provided a majority of publicly available information about CMMC only during various webinars and defense-industry events held over the past couple of months. Indeed, a quick Google search for “CMMC” indicates that, at this time, hard facts about the program appear to be limited to FAQs on a DoD website.
Continue Reading Cybersecurity – The Times (and Standards) They Are A Changin’ – FAST!

Cough…cough…ahem…cough… Any contractor who has had the misfortune of dealing with the Defense Contract Audit Agency (DCAA) likely knows all too well that the agency is the Will Rogers of costs – it never met a cost it didn’t question.  Indeed, DCAA auditors typically question costs with reckless abandon and based often on a patent misreading of applicable regulations.  The net effect, of course, is that contractors have to expend significant time and money trying to explain to boards and courts why DCAA’s auditors are…uh…incorrect as a matter of fact and law.  A recent Memorandum for Regional Directors (MRD) provides some transparency into why this sort of thing happens with unfortunate regularity. Issued on May 14, 2019, the MRD (No. 19-PAC-002(R)), corrects…er…“revises” internal guidance issued in 2014 and 2015 relating to the identification of expressly unallowable costs.  The newly issued memo sets out DCAA’s current stance on identifying expressly unallowable costs under the cost principles codified at Federal Acquisition Regulation (FAR) Part 31 and Defense Federal Acquisition Regulation Supplement (DFARS) Part 231.  This MRD – like all MRDs – is intended to be used as a tool by well-meaning (but often overzealous) auditors when reviewing a contractor’s compliance with federal cost principles.  Contractors should, thus, pay careful attention to this MRD in order to be prepared for questions that may arise during DCAA-led frolics and detours.
Continue Reading Let Me Clear My Throat: DCAA Course Corrects on “Expressly Unallowable” Costs

Cybersecurity. It’s never over, is it? In what can only be described as a “soft” release, the Department of Defense (DoD) has slowly and quietly begun to reveal its intent to provide federal contractors with formal cybersecurity certification as early as next year. The program, known as the Cybersecurity Maturity Model Certification (CMMC), is an effort to streamline the acquisition process by providing acquiring agencies and consenting contractors with more exacting cybersecurity requirements for forthcoming acquisitions.
Continue Reading Never Stop Never Stopping: Defense Department Quietly Unveils Proposed Cybersecurity Maturity Model Certification Standards and Confirms the Allowability of Certain Cybersecurity Costs

Here’s another reminder of limitations that exist when there is a third party claim of infringement against a U.S. Government agency. In such a case, the patent owner must sue in the United States Court of Federal Claims and may recover only “reasonable and entire compensation” for the unauthorized use. See 28 U.S.C. Section 1498(a). No injunctive relief is afforded the plaintiff.  Within the context of that proceeding, the Government agency is free to seek a determination that the patent is invalid, and if the claimed invention does not meet one or more of the patentability requirements, the Government agency will have no liability.
Continue Reading The Supreme Court Limits Government Agencies’ Ability to Deflect Infringement Claims Through the PTO: A Preamble for Government Contractors

On Dec. 4, 2018, the Federal Acquisition Regulatory Council finally released a proposed rule to implement changes to certain small business subcontracting regulations required by the 2013 National Defense Authorization Act (NDAA). 83 Fed. Reg. 62540 (Dec. 4, 2018). This is a welcome, if not long-overdue sign of progress. Over the last half-decade since the…

E-Verify, the online system used by enrolled employers to verify the identity and employment eligibility of newly hired employees against records available to the Social Security Administration (SSA) and the Department of Homeland Security (DHS), is temporarily suspended. It’s a barely noticed consequence of the government shutdown, unless, of course, you happen to be one of the more than 800,000 employers enrolled in the program and are in a position to hire new employees.
Continue Reading Government Shutdown Irony: Battle Over Immigration Impacts E-Verify Employment Eligibility Checks

By now, we have all read the horror stories of federal employees who are either furloughed or forced to work without pay during this historic shutdown. Less well-known, however, is the impact this shutdown has had on small business contractors who rely on federal government contracts for much – if not all ‒ of their revenue. Whereas large government contractors may have ample cash reserves for a situation like this, small businesses are likely less fortunate. In fact, many small businesses hire highly skilled, in-demand personnel specifically in support of their government contracts. Unfortunately, with much of the government shuttered and its coffers empty, these highly skilled personnel, and the companies for which they work, find themselves emptyhanded and operating in the red. Absent a stream of revenue, small businesses cannot pay the employees they specifically hired for the contracts that are now unfunded. While many small business contractors have been able to weather the first few weeks of this shutdown by either diverting these employees to other projects or using vacation or sick leave, many thousands of contractors are now facing grim choices as the shutdown enters its fourth week. Simply stated, these companies are in real danger not only of losing those employees hired to support existing contracts, but of losing the opportunity to leverage those employees to compete for future contracts. To make matters worse, unlike federal employees who will likely receive back pay, most if not all contractors will not be reimbursed for the revenue lost during this time of political chicken.
Continue Reading Small Business, Big Problems: Navigating the Government Shutdown as a Small Business Contractor

Here we are again. Large swaths of the federal government have been closed since December 22 because Congress and the president cannot agree on legislation to fund the government. Nearly a million federal employees are not receiving their paychecks. Even larger numbers of government contractors are – as is often the case – left squarely at the bottom of the hill, dodging the boulders of political mismanagement that are raining down in a landslide of “stop-work” orders. For example, as has been reported, the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) took affirmative steps to publicize and issue a “blanket” stop-work order on December 26 – the day after Christmas – giving many affected contractors a post-holiday cocktail of uncertainty and dread. Other agencies have followed suit, with the Departments of Justice, Agriculture, Commerce, Housing and Urban Development, Interior, State, Transportation, and Treasury issuing such orders over the past few weeks.
Continue Reading Contractors in the Crosshairs – Weathering the 2019 Government Shutdown

In the August 2018 publication of Thomson Reuters’ Briefing Papers, McCarter & English Government Contracts and Export Controls Partner Dan Kelly provides a comprehensive review of patent rights under “Other Transaction Agreements” (OTAs) with DoD and NASA. Heavily promoted by Congress, and only partially understood by industry, OTAs are quickly becoming DoD’s and NASA’s contractual vehicle of choice to lure commercial companies to sell the Government their latest and greatest technologies. However, OTAs are not governed by standard government contracts laws and regulations, meaning there are significant changes to the common provisions of ownership and license rights incident to government contracts and grants. The Briefing Paper should be required reading before entities enter into an OTA as a vehicle for developing new technologies for NASA and DoD to ensure their company’s intellectual property efforts are properly protected.
Continue Reading IP Rights Under NASA and DoD “Other Transaction” Agreements—Inventions and Patents

The Demon: What an excellent day for an exorcism.
Father Karras: You would like that?
The Demon: Intensely.

Honestly, it was challenging finding an all-audiences quote from William Peter Blatty’s “The Exorcist,” but we believe that this quote is exactly what federal contractors need to know. Today is indeed an excellent day for an information system exorcism and, unlike Father Karras, federal contractors know the name of that which they must purge: Kaspersky Lab.Continue Reading The Russian Exorcism of US Gov’t Contracts