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
Federal government contract domestic preference requirements are set for significant changes. McCarter & English Government Contracts and Global Trade co-leaders Franklin Turner and Alex Major and Senior Associate Cara Wulf provide guidance for federal contractors in a Feature Comment for Thomson Reuters’ The Government Contractor. In the comprehensive article, the authors review the current regulatory…
On December 21, 2020, the Department of Defense (DoD) Office of the Undersecretary of Defense for Intelligence & Security published a Final Rule codifying the National Industrial Security Program Operating Manual (NISPOM)—currently published as part of DoD Manual 5220.22-M—in Title 34, Part 117 of the Code of Federal Regulations. The Final Rule became effective on February 24, 2021.
Continue Reading DOD Issues Final Rule Codifying The NISPOM
On January 14, 2021, the Department of Justice released its updated statistics for False Claims Act (FCA) recoveries in FY 2020. The Civil Division reported that it recovered $2.2 billion in settlements and judgments in the previous fiscal year—down nearly $900 million from FY 2019, and off nearly two-thirds from the government’s high-watermark collections of $6.1 billion in FY 2014. Although $2.2 billion in net FCA recoveries represents DOJ’s lowest FCA haul in a decade, it is still a remarkable figure considering court closures and pandemic-slowed dockets across the country over the past eleven months.
Continue Reading 2020 False Claims Act Recoveries Were Down by One-Third in 2020. . . and That’s Bad News for Federal Contractors
When Abraham Lincoln signed the False Claims Act (FCA) into law in 1863, it was a legislative reaction to a series of sensational congressional investigations into war profiteers’ sale of phony provisions and useless equipment to the U.S. government during the Civil War. Contractors who agreed to provide 100-pound bags of flour filled many of the bags with sand. Munitions suppliers demanded full payment (at exorbitant, wartime prices) for rusted, nonfunctioning weapons gleaned from scrap heaps. It was not a leap to find claims that sand was flour, or that a rusted flintlock was an Army rifle, were objectively false; these were not just breaches of contract, but out-and-out frauds. Congress stepped in to stop this “plundering of the public treasury,” and the FCA imposed penalties on those who sought to defraud the U.S. government and its taxpayers.
Continue Reading Honest Abe Would Demand “Objective Falsity” for FCA Liability. Will the Supreme Court?
Like the hits produced by DJ Khaled, the FAR Council offers “another one.” As covered extensively in this blog, federal contractors have been—or should have been (you have been working toward compliance, haven’t you?)—spending the closing days of summer ensuring compliance with the July 14, 2020 Interim Rule implementing Section 889(a)(1)(B) (“Section B”) of the National Defense Authorization Act for fiscal year 2019. Section B prohibits the government from entering into a contract with an entity that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, and requires, among other affirmative obligations, for contractors to represent—after conducting a “reasonable inquiry”—that they do/do not use covered telecommunications equipment or services in their respective business operations. In light of the Interim Rule’s broad scope and mandatory accounting of a contractor’s operations, Section B’s compliance mandate presents another significant regulatory burden for contractors to shoulder. But contractors should fear not, because the FAR Council has heard their plaintive wails and responded on August 27, 2020, with a Second Interim Rule implementing new requirements for Section B compliance.
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?
As covered recently in this blog, the Department of Defense (DoD), the General Services Administration (GSA), and the National Aeronautics and Space Administration released on July 14, 2020, an Interim Rule covering prohibitions on 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 (“NDAA for FY19”). Effective August 13, 2020, Section B prohibits federal contractors from “entering into, or extending or renewing, a contract with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.” In addition, “covered telecommunications equipment or services” includes telecommunications or video surveillance equipment and services produced by (1) Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company, or any subsidiary or affiliate thereof, or (2) an entity “owned or controlled by, or otherwise connected to, the government of [The People’s Republic of China].”
Continue Reading DoD and GSA Release Guidance on Implementation of Section 889 Part B
Like the sailors of old, the government contracting community ventures forth knowing full well that danger lies ahead – although fortunately not in the form of a kraken, leviathan, or other mythical sea monster. Rather, these perils and risks are embedded in sweeping new regulations that, like an unseen reef, will be arriving and taking effect all too quickly. On July 14, 2020, the FAR Council published a long-awaited (or perhaps long-dreaded) Interim Rule implementing Section 889(a)(1)(B) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Section B). Effective August 13, 2020, Section B prohibits executive agencies from “entering into, or extending or renewing, a contract with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.” Unlike its counterpart, Section 889(a)(1)(A) of the NDAA for FY 2019 (Section A), which prohibits agencies from “procuring or obtaining equipment or services that use covered telecommunications equipment or services as a substantial or essential component or critical technology,” the restrictions of Section B go far beyond the immediate contract between the contractor and the government. Instead, Section B directs contractors to discontinue any and all use of covered telecommunications equipment or services. Even accounting for the choppy seas caused by the ongoing pandemic, the exceedingly broad scope of Section B promises sharp, jagged, and uncharted hazards to contractors attempting to implement compliant policies and procedures.
Continue Reading Risks, Reefs, and Wrecks: Charting a Course Through the Perils of Covered Telecommunications Equipment and Services
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.