On June 2, 2023, the FAR Council issued an Interim Rule to implement the prohibition on having or using TikTok or any successor application or service developed or provided by ByteDance Limited (covered application). Importantly, the prohibition applies not only to Government-issued devices but encompasses contractor and contractor employee-owned devices (e.g., employee devices used as part of a bring-your-own-device program) as well. The Interim Rule took immediate effect and requires new FAR clause FAR 52.204-27, Prohibition on a ByteDance Covered Application, to be included in solicitations issued on or after June 2, 2023. In addition, solicitations issued before the effective date were required to be amended by July 3, 2023, provided that award of the resulting contract(s) occurs on or after the effective date. Existing indefinite-delivery, indefinite-quantity contracts were required to be modified to include the new clause by July 3, 2023, to apply to future orders. Finally, if exercising an option or modifying an existing contract to extend the period of performance, contracting officers must include the clause. In short, this clause will soon be in most if not all Federal government contracts. Contractors should take action now to ensure that they are prepared to comply with these requirements and that employees are familiar with and trained regarding the prohibition.
Continue Reading TikTok Dances Off of Contractor IT Devices—Interim Rule Prohibits ByteDance Limited ApplicationsOstensible Clarity: SBA Rule Addresses Ostensible Subcontractor Rule in General Construction Contracts and DoverStaffing Factors
In a previous post, we mentioned the April 27, 2023 Small Business Administration (SBA) Final Rule, which made a number of revisions to the Small Business Regulations. A few of those revisions relate to the Ostensible Subcontractor Rule, a topic that has confused contractors for years. The Final Rule seeks to clear up that confusion, or at least some of it. Specifically, the Final Rule revises 13 CFR 121.103(h) to (1) clarify how the Ostensible Subcontractor Rule applies to general construction contracts and (2) provide guidance on the utilization of the DoverStaffing factors in determining whether a subcontractor is an “ostensible subcontractor.”
Continue Reading Ostensible Clarity: SBA Rule Addresses Ostensible Subcontractor Rule in General Construction Contracts and DoverStaffing FactorsNIST SP 800-171 Revision 3: Not Another Reboot
Hollywood is full of them. And unless you are trapped on the Planet of the Apes, caught on the 3:10 to Yuma, or running from Godzilla, you’ve probably seen a movie reboot or two over the past two decades. The term generally refers to the new start of a known fictional universe where established continuity is discarded to re-create that series’ characters, plotlines, and backstory from the beginning. Thankfully—and I’m looking at you, CMMC—that is a trend that appears to be confined to the entertainment industry and not one that will be adopted in federal contractor cybersecurity. To be sure, on May 10, 2023, the National Institute of Standards and Technology (NIST) released for review and comment a draft of Revision 3 of its Special Publication (SP) 800-171, Protecting Controlled Unclassified Information (CUI) in Nonfederal Systems and Organizations. Not only is NIST seeking comments via email no later than July 14, 2023, on Rev. 3, it has even provided a comment template to help with that effort. Let’s get into some of those key changes to demonstrate how Rev. 3 is more of a sequel than a reboot.
Continue Reading NIST SP 800-171 Revision 3: Not Another RebootNo Harm, No Fraud: The Supreme Court Narrows the Application of the Wire Fraud Statute and Unanimously Overrules the “Right to Control” Theory
Most experienced contractors have a healthy fear of the various types of fraud claims: False Claims Act, federal and state wire and mail fraud, common law fraud, etc. They know that enforcement authorities are always looking for ways to swing the hammer against a contractor they suspect is fleecing the government. Fraud claims arise when a victim (sometimes the government) contends that the defendant lied about the goods or services offered in order to induce the victim to voluntarily transfer property to the defendant in an exchange. Where the victim parts with much for nothing in return, the fraud analysis is easy—the defendant’s intent to wrongfully steal property or to inflict a pecuniary loss is obvious. But in cases where the victim receives from the defendant goods or services of real value, whether the defendant intended to harm the victim or deprive them of their property becomes a more difficult question.
Continue Reading No Harm, No Fraud: The Supreme Court Narrows the Application of the Wire Fraud Statute and Unanimously Overrules the “Right to Control” TheorySmall Business Contractors Rejoice or Repent: Final SBA Rule Adds Teeth to 13 CFR 125.6 Subcontracting Limitations
On April 27, 2023, the Small Business Administration (SBA) issued a final rule, finalizing a September 9, 2022 proposed rule, and making a myriad of changes to the Small Business Regulations. Those changes are effective at the end of this month, on May 30, 2023. We will be covering a number of those changes in upcoming posts. But for now, we’re focusing on a change that will make some contractors very happy and other contractors very worried: real, negative consequences for small businesses that fail to comply with 13 CFR 125.6, which governs subcontracting limitations for small business set-aside contracts over the simplified acquisition threshold (presently defined in FAR 2.101 as $250,000).
Continue Reading Small Business Contractors Rejoice or Repent: Final SBA Rule Adds Teeth to 13 CFR 125.6 Subcontracting LimitationsWhat Every Federal Contractor Should Know About the FTC’s Proposed Rule to Void Noncompete Agreements Nationwide—and What to Do About It
One of the most dynamic areas of the law that is of keen concern to federal contractors is the issue of employee noncompetition agreements (NCAs). Historically, NCAs were a common and valuable tool employers used to protect their businesses from unfair competition or misuse of confidential company information; NCAs prevented former employees from leveraging their on-the-job training and introductions to key customers in order to poach those same customers if the employees moved to a competitor or launched a rival business. But in recent years, a number of states have increasingly limited the enforceability of NCAs in employment and separation agreements. Last year, the District of Columbia joined California, North Dakota, and Oklahoma in essentially banning outright the use of NCAs in most circumstances. There has also been a gradual trend in many other states (e.g., Virginia, Maryland, Nevada) to limit or void noncompetes for low-wage or hourly workers. Hawaii passed a law in 2015 that specifically prohibits including a noncompete clause in the employment contract of an employee of a “technology business,” defined as any business that derives most of its gross income from the sale or license of products or services resulting from its software and/or information technology development. Everywhere you look, NCAs are increasingly under threat in most jurisdictions across the country.
Continue Reading What Every Federal Contractor Should Know About the FTC’s Proposed Rule to Void Noncompete Agreements Nationwide—and What to Do About It(No Longer) Building a Mystery—Biden Administration Issues Long-Awaited Guidance Implementing BABA Requirements for Infrastructure Projects
Approximately 15 months ago, on November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), commonly known as the Bipartisan Infrastructure Law. The IIJA is one of the Biden administration’s signature legislative achievements to date and provides $1.2 trillion in funding for a broad range of infrastructure projects. A key part of the IIJA is the Build America, Buy America (BABA) Act, which requires that the head of each covered federal agency ensure that “none of the federal funds made available for a Federal financial assistance program for infrastructure may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.” BABA Act at § 70914. The BABA Act required agencies to implement these requirements by May 14, 2022; however, as that deadline came and went, contractors eagerly awaiting opportunities to build the nation’s infrastructure were left wondering how (and when) these requirements would be applied to affected projects.
Continue Reading (No Longer) Building a Mystery—Biden Administration Issues Long-Awaited Guidance Implementing BABA Requirements for Infrastructure ProjectsKnowing 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 StandardComing Soon? The American Data Privacy and Protection Act (SPOILERS)
Sure, America has the Grand Canyon, baseball, and apple pie, but you know what it doesn’t have? A nationwide data protection law. Instead, data protection has been left up to a pastiche of state laws, regulations, and enforcement actions that demand many companies choose one state law to rule them all. California led the pack, being the first to pass a data protection law, the California Consumer Privacy Act of 2018, going into effect January 1, 2020. Following California, only four other states have successfully enacted a data protection law, with Colorado and Virginia passing such laws in 2021 and Utah and Connecticut in 2022.
Continue Reading Coming Soon? The American Data Privacy and Protection Act (SPOILERS)An Inconvenient Requirement: New Proposed Rule Would Require Federal Contractors to Disclose Greenhouse Gas Emissions
In 2006, the documentary An Inconvenient Truth chronicled former Vice President Al Gore’s efforts to educate the public on the consequences of climate change. In the sixteen years since the Academy Award-winning film was released, public interest in the impact that greenhouse gas (GHG) emissions have had, are having, and will have on our planet has increased exponentially. Most recently, at the 27th U.N. Climate Conference (COP27), countries from around the globe came together to discuss the implementation of battle plans to combat climate change. One such plan, which was discussed at COP 27 by President Biden, is a new Proposed Rule that would require “significant” and “major” federal contractors to disclose their GHG emissions and climate-related financial risk as well as set science-based targets to reduce their GHG emissions. If and when the Proposed Rule is finalized, it will have seismic implications for contractors, in that it ties contractor responsibility (i.e., a contractor’s ability to receive federal awards) to compliance with these requirements.
Continue Reading An Inconvenient Requirement: New Proposed Rule Would Require Federal Contractors to Disclose Greenhouse Gas Emissions