Effective July 21, 2023, DHS is operating under new rules for government contractors on safeguarding Controlled Unclassified Information (CUI) and reporting cyber incidents. In this Feature Comment for The Government Contractor, Alex Major describes how government contractors can best navigate DHS’s wide-reaching cybersecurity and data privacy requirements.

As many GovCon news junkies following recent events had predicted, the Small Business Administration (SBA) just “temporarily suspended” new 8(a) application submissions. For those of you who haven’t been following along the past two weeks, this critically important development might be a little confusing. Let’s get you up to speed.

Continue Reading SBA Cries Time Out! Temporary Suspension of New 8(a) Applications Following <em>Ultima Servs.</em>

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

The Government Accounting Office (GAO) recently issued MiamiTSPi, LLC-Reconsideration, an important decision concerning a procuring agency’s obligation to consider, when evaluating a joint venture, the experience of not only the joint venture itself but also the individual joint venture partners. While many contractors have historically viewed this regulatory requirement as an advantage—allowing small, protégé joint venture partners to rely on and leverage the experience of their “big” joint venture partners—this new opinion turns that thinking on its head. Here, GAO held that an agency’s favorable evaluation of a joint venture’s “Similar Experience” was unreasonable (and the reconsideration of the award therefore required) because the agency did not consider the joint venture’s failure to submit examples of the managing member’s individual past experience.

Continue Reading Blessing or Burden? GAO Decision Casts New Light on Joint Venture Experience

Parties litigating False Claims Act (FCA) cases have long struggled with a thorny question around the essential element of scienter (the defendant’s intent, or state of mind): What/how much does a contractor need to know when submitting an invoice for payment for the related claim to be considered knowingly false when made? When that question arises in FCA litigation, a court’s determination of that essential element of scienter/knowledge often pivots on what the judge believes matters more:

(A) The defendant’s subjective belief at the time a claim is made; or

(B) An objective textual reading of what a person may have known or believed when a claim is made.

Continue Reading The False Claims Act’s Fuzzy Scienter Element Brought into Sharp Focus

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 <em>DoverStaffing</em> Factors

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 Reboot

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” Theory

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 Limitations

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 …