After a series of preliminary, narrowly decided, and conflicting court decisions concerning requests for preliminary injunctions (see August 20, 2024 Alert), a federal district court in Texas has now entirely set aside the Federal Trade Commission (FTC) rule that would have invalidated tens of millions of non-compete agreements in the United States (see judge’s order). The court ordered that “[t]he Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024, or thereafter.” This is hardly the final chapter in this saga, however, and both employers and employees should be aware not only of the inevitable appeals and the possibility of the non-compete rule’s revival but also of other state and federal laws that will continue to impact non-compete agreements.

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On August 7, 2024 the Federal Communications Commission (FCC) adopted a new Notice of Proposed Rule Making (NPRM) proposing regulations that prohibit the use of AI in automated dialing or artificial or pre-recorded voice calls absent the prior written consent of the call recipient, unless otherwise exempted by the FCC. The action was taken under the authority of Section 227(b)(2)(B) of the Telephone Consumer Protection Act (TCPA) (47 U.S.C. § 227) which prohibits pre-recorded or artificial voice calls to any residential telephone line unless exempted by the FCC. The proposed rulemaking was prompted over continuing concern over robocalling and robotexting and the impacts that AI generated voice calling may have in fostering more fraud and abuse.

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The third revision of NIST Special Publication 800-171 brings substantial changes across several key areas: the structure of control families has been expanded to better address new threats, individual security controls have been updated to enhance overall system security, and the criteria for tailoring these controls to specific organizational needs have been clarified, all in an effort to adapt to the dynamic landscape of information security. Read more about these changes and what federal contractors need to know in Alex Major’s Feature Comment for The Government Contractor.

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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

DOD released a final rule which updates the DFARS to address requirements outlined in Executive Order 14005, “Ensuring the Future is Made in All of America by All of America’s Workers.” Cara Wulf and Marcos Gonzalez explain the changes and what contractors should be aware of while making adjustments to their supply chains in order to continue supplying “domestic end products” to the government.

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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 and compliance and litigation matters under the False Claims Act,” and that “The firm is called upon by clients from a range of sectors, such as technology and manufacturing.” The team is honored to successfully work with and be trusted by outstanding companies, their leadership, and their counsel.

“The team is fantastic and very knowledgeable,” and continues to grow across the firm’s offices. “The McCarter attorneys provide outstanding advice on many different matters,” and “The partners understand our needs and keep us informed at every step of the way.” Chambers USA is widely considered the nation’s premier survey of law firms. Rankings are based on in-depth interviews with clients and lawyers, focusing on firms’ legal skills, professional conduct, client service, and commercial awareness.

On May 16, 2024, the Securities and Exchange Commission (SEC) adopted amendments to Regulation S-P to “modernize and enhance the rules that govern the treatment of consumers’ nonpublic personal information by certain financial institutions.”  Affected financial institutions have 18-24 months (depending on their size) to comply, and should begin preparing now.

Continue Reading SEC Adopts Rule Amendments to Regulation S-P to Safeguard Customer Information and Enhance Cybersecurity Procedures at Financial Institutions

China dominates the rare earth industry, accounting for approximately 60 percent of rare earth metal mining and approximately 90 percent of rare earth metal processing in 2023. In order to combat this near-monopoly and to limit supply chain vulnerabilities and risk to the US defense industry, a final Defense Federal Acquisition Regulation Supplement (DFARS) rule, published May 30, 2024, applies broader sourcing prohibitions to the language of DFARS 225.7018 and operative clause DFARS 252.225-7052 to prohibit the use and acquisition of magnets mined in China as of January 1, 2027.

Continue Reading DOD Releases Final Rule Prohibiting the Acquisition of Certain Magnets from Nonaligned Foreign Nations

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

“Arm me with harmony.” – Treach, Naughty By Nature[1]

On May 14, 2024, the National Institute of Standards and Technology (NIST) dropped the third remix…er, revision…of its Special Publication (SP) 800-171, “Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations.” It even came with a critical sidekick in the form of the companion assessment guide, “NIST SP 800-171A, Revision 3,” which gives organizations the necessary lowdown on “assessment procedures and methodologies” to check if they’re playing by NIST SP 800-171’s rules. Over a year in the making after previous releases in May and November of 2023, NIST’s finalized revision takes inspiration from industry by laying down the cybersecurity rules that contractors should expect to follow when handling Controlled Unclassified Information (CUI) for the US Department of Defense (DoD). While DoD isn’t requiring contractors who handle CUI to roll with Rev. 3 just yet, contractors can expect that DoD will eventually bring Rev. 3 into the mix for DFARS 252.204-7012, “Safeguarding Covered Defense Information and Cyber Incident Reporting” (DFARS 7012), and will be harmonizing it with the upcoming Cyber Maturity Model Certification (CMMC) program at some point soon.

Continue Reading NIST SP 800-171 Revision 3 Goes Final: Who’s Down with ODP?