As we stated last month, further restrictions are afoot on the use of Chinese technology in federal acquisitions. An Interim Rule issued by the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) (collectively, the “FAR Council”) implements the first phase of Section 889 of the FY2019 National Defense Authorization Act (NDAA). The Interim Rule, effective August 13, 2019, broadly prohibits federal agencies, federal contractors, and grant or loan recipients from procuring “covered telecommunications equipment or services” produced by Huawei Technologies Company and ZTE Corporation and, with respect to certain public safety or surveillance applications, Hytera Communications Corporation, Dahua Technology Company, and Hangzhou Hikvision Digital Technology Company. In particular, federal suppliers are prohibited from sourcing “substantial or essential component of any system, or as critical technology as part of any system” from the foregoing companies.

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Changes to the Federal Acquisition Regulation’s (FAR) small business subcontracting rules have been slow in coming, but the FAR Council is finally catching up with the Small Business Administration (SBA) in making regulatory modifications to implement a few changes intended to help prime contractors reach their small business subcontracting goals as required by Section 1614 of the National Defense Authorization Act of 2014 (2014 NDAA). Specifically, the changes focus on aiding prime contractors possessing an individual subcontracting plan for a contract with a single executive agency. Now, in such instances, the prime contractor will receive credit toward its subcontracting goals for awards made to small business concerns employed at any tier by subcontractors through their respective subcontracting plans. This should be helpful news to prime contractors.

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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

The House version of the 2018 National Defense Authorization Act (“NDAA”) (passed July 14, 2017) includes key provisions that would radically change the way the Government purchases certain commercial items, and it may result in the extinction of large parts of the Federal Supply Schedules as we know them. Section 801 of the NDAA promotes Government wide use of online commercial marketplaces (“online marketplaces”) such as Amazon, Staples, and Grainger for the acquisition of certain commercial off-the shelf (“COTS”) items, defined as “commercial products” in the proposed legislation. If enacted, the NDAA would be a revolutionary development in the way the Government buys many of its products, allowing agencies to leapfrog over competitive bidding requirements and numerous mandatory clauses now included in Government contracts for commercial items.

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Contractor past performance evaluations are important factors in source selection decisions under Parts 8 and 15 of the Federal Acquisition Regulation (“FAR”), and they can easily make or break a contractor’s federal customer base. Especially vulnerable are contractors competing in Lowest Price Technically Acceptable (“LPTA”) procurements, where a bad past performance rating can make contractors ineligible due to an “unacceptable” technical rating even though they may offer the lowest price. The submission by Government contracting officials of a contractor’s performance evaluation to the Contractor Performance Assessment Reporting System (“CPARS”) is required in most instances; however, the contractor’s remedies for correcting poor performance evaluations due to mistakes and material omissions by the evaluator are limited in both time and scope. And as the DoD’s Inspector General (“IG”) has repeatedly pointed out, most recently in its May 9, 2017 report, Summary of Audits on Assessing Contractor Performance (noting a large percentage of DoD performance assessment reports are late and not prepared correctly and accurately), mistakes often happen. Contractors looking to sustain their business in the federal marketplace need to be properly armed with the weapons available to challenge poor performance evaluations when the agency gets it wrong.

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One common complaint we hear from our subcontractor clients is “HOW CAN WE GET PAID????” Our experience has shown that whether through inadvertence, lack of subcontract management resources – or even as a predatory business strategy – some prime contractors will dance, dither and delay upon receipt of requests for payment by their subs for work performed, services rendered and/or products delivered. This can be particularly onerous for small business subcontractors whose payroll and other obligations depend upon prompt payment by their customers. Subs are put in an untenable position. Should they stop work and risk breach of contract? Should they threaten to sue and risk breaching the relationship? New changes to the FAR now impose mandatory reporting obligations on primes should they fail to make timely and full payments to their small business subs. Chronic and unjustified payments now must go into an agency’s evaluation of the prime’s past performance in bidding contests. Primes are well advised to make sure their supply chain management is in order to minimize the additional obligations and risks confronting them should they fail to meet their obligations to their small business subs.
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If you are aware of German Christmas folklore (and really, who isn’t?), you know that Belsnickel is a legendary companion of St. Nick who carries a switch with which to punish naughty children and a pocketful of sweets to reward good ones. This holiday season, many are feeling the sting of a switch of another kind, this one involving the December 20, 2016, issuing by the National Institute of Standards and Technology (NIST) of a preholiday revision of Special Publication 800-171 (SP 800-171), Protecting Controlled Unclassified Information (CUI) in Nonfederal Information Systems and Organizations. If SP 800-171 sounds familiar, it is because the publication is the source of the cybersecurity controls that defense contractors must follow and flow down to subcontractors pursuant to DFARS Subpart 204.73 and its operative clauses (e.g., DFARS 252.204-7008 and DFARS 252.204-7012). Essentially accompanying St. Nick (perhaps Santa Clause may be more appropriate) this season, the NIST’s revised publication may resemble Belsnickel’s switch (pun intended) to contractors who already have existing SP 800-171 controls in place (as the controls have been required, in various forms, since November 2013) or who have started down the road toward SP 800-171 adherence in advance of the DFARS-directed December 2017 deadline. With that in mind, let’s take a quick look at the implications that switch (pun still intended) brings to the security requirements for protecting the confidentiality of CUI in nonfederal systems and organizations:

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The comment period for DoD’s proposed rule amending DFARS 212 has been extended to November 10. Click here.

The passage of the Federal Acquisition Streamlining Act of 1994 and the Clinger-Cohen Act of 1996 saw the dawning of a new era in procurement policy, pursuant to which sweeping changes to the procurement laws and regulations governing the acquisition of goods and services offered and sold in the commercial marketplace took hold. These goods and services are referred to, and defined, in the Federal Acquisition Regulation (“FAR”) as “commercial items.” Two major effects of these legislative landmarks were: (1) the streamlining and modification of certifications and clauses required in solicitations and contracts for commercial items; and (2) the exemption of commercial item suppliers from the requirement to submit certified cost or pricing data under the Truth in Negotiations Act (“TINA”).


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New FAR Rules and U.S. Department of Labor Guidance Implement the Long-Anticipated (and Much-Dreaded) Fair Pay and Safe Workplaces Executive Order

Burdensome disclosure obligations, pay transparency, and other affirmative requirements as a condition of doing business with the federal government continue. Sound familiar? The trend continues with new Federal Acquisition Regulation (“FAR”) rules and accompanying U.S. Department of Labor (“DOL”) guidance issued on August 25, 2016, implementing the Fair Pay and Safe Workplaces Executive Order. In a nutshell – boiling down over 800 pages of rulemaking materials – the rules will soon require:


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Forrest Gump’s mama was a brilliant woman. As anyone who watched the 1994 Academy Award-winning classic can confirm, Mrs. Gump’s advice to her son provided an indispensable well of wisdom from which Forrest often drew to navigate life’s many adversities. Perhaps the most famous of Mrs. Gump’s quotes equated the unpredictability of life with the somewhat surprising discoveries one can make after removing the lid from a box of chocolates. As it turns out, contractors can learn a lot from Mrs. Gump.

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