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Just how broad is the scope of the False Claims Act (FCA)? That is the basic question posed in Wisconsin Bell, Inc. v. U.S. ex rel. Heath, No. 23-1127. Put more directly, the case addresses whether reimbursement requests under the Schools and Libraries Universal Service Support program—better known as the E-Rate program—are actionable “claims” exposed to liability under the FCA. But when the US Supreme Court hears oral argument next month, the justices will grapple with broader questions with implications far beyond this case: (1) when does the government “provide” money in any transaction or program so that FCA liability attaches; (2) when is an independent government-sponsored enterprise (e.g., Fannie Mae/Freddie Mac) acting as an “agent” of the United States for FCA purposes; and (3) to what extent do those who deal with private entities established or chartered pursuant to federal law need to watch this case to determine their potential exposure under the FCA and its panoply of enforcement mechanisms?Continue Reading Wisconsin Bell: Testing the Elasticity of False Claims Act’s Scope

On April 29, 2024, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) released guidance to federal contractors regarding the use of artificial intelligence (AI) in their employment practices. See https://www.dol.gov/agencies/ofccp/ai/ai-eeo-guide. The guidance reminds federal contractors of their existing legal obligations, the potentially harmful effects of AI on employment decisions if used improperly, and best practices. Arriving early, the guidance puts contractors on notice of their responsibilities when using AI in their employment decisions.Continue Reading Department of Labor Issues New Guidance on the Use of Artificial Intelligence and Employment Decision-Making

In Percipient.ai v. United States, the US Court of Appeals for the Federal Circuit may have triggered a legal “Big Bang” moment in government procurement law. The case centered on whether the Federal Acquisition Streamlining Act’s (FASA) “task order bar” could suppress claims alleging violations of 10 U.S.C. § 3453, which mandates a preference for commercial products. The Panel’s interpretation of the Tucker Act’s definition of “interested party” expanded the universe of standing, allowing prospective subcontractors to exert gravitational influence in legal challenges regardless of their role as indirect offerors. At the risk of offending real physicists, from a legal perspective, the Percipient.ai v. United States decision looks to expand a universe of legal scrutiny. Like the cosmic forces that shape galaxies, the Percipient.ai decision may shape the parameters of government contracting jurisdiction and procedural fairness in the procurement process.Continue Reading Big Bang?: The Federal Circuit, Percipient.ai, and Expanding Jurisdiction

McCarter’s Government Contracts team is grateful to its clients for once again honoring it with a Band 1 Nationwide ranking by Chambers USA: America’s Leading Lawyers for Business. It appreciates the recognition that “McCarter & English, LLP is lauded for its ability to provide guidance on a broad array of issues including transactions, regulatory …

Cyber incidents involving critical infrastructure pose a serious risk to the US. In March 2024, the Environmental Protection Agency and the National Security Advisor warned state governors about potential attacks on drinking water and wastewater facilities by specific Iran- and China-aligned hackers. The following month (on April 4, 2024), in an attempt to prepare for such attacks and otherwise improve the federal government’s ability to collect and analyze data related to cyber incidents on critical infrastructure, the Cybersecurity and Infrastructure Security Agency (CISA) issued a proposed rule to implement cyber incident reporting requirements under the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA). Enacted in an omnibus appropriation, CIRCIA directed CISA to issue rulemaking requiring the reporting of cyber incidents or the payment of ransoms in response to cyberattacks affecting critical infrastructure.  Continue Reading CISA’s CIRCIA Proposed Rule: Another Player Enters the Reporting Regime

In March 2024, the Department of Health and Human Services—through the Office of the National Coordinator for Health IT (ONC)—released a draft 2024-2030 Federal Health IT Strategic Plan for public comment. A collaborative effort between ONC and more than two dozen federal agencies, the plan outlines federal health information technology (health IT) goals and objectives…

On December 26, 2023, the Department of Defense (“DoD”) belatedly gifted defense contractors and subcontractors a Proposed Rule on the Cybersecurity Maturity Model Certification (“CMMC”) Program. DoD also released eight CMMC guidance documents, providing interested parties a one-two combo of what to expect under the Program. The Proposed Rule has already received over 100 comments. With commenting open until February 26, 2024, will DoD proceed with a final rule, or is the Proposed Rule a Groundhog Day scenario with DoD further delaying final implementation of the CMMC Program?Continue Reading DoD’s Proposed CMMC Rule: Groundhog Day… or a Final Rule in the Works?

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 Applications

As most government contractors have experienced firsthand, procuring agencies routinely engage in a wide variety of communications after bids have been submitted. On occasion, these exchanges are quite minor and afford an offeror the limited opportunity to clarify aspects of its proposal and/or to resolve clerical errors. Sometimes, however, the exchanges are more critical in nature and allow the contractor to submit proposal revisions as part of the negotiation process. When this occurs, the agency is said to have engaged in “discussions” with the contractor. In this scenario, the Federal Acquisition Regulation (FAR) imposes a host of obligations on the agency’s conduct.Continue Reading Sometimes Post-Proposal Communications Are More Than Sweet Nothings …

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