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Unless you’ve been living under a rock or on a self-sustaining deserted island, the chances are high that you have become quite familiar with the term “inflation” (i.e., the rising costs of goods and services) over the past few years. Indeed, everything (from gasoline to gumballs and milk to movie tickets) appears to be more expensive as of late. Unfortunately, government contractors are not immune from this current economic reality. As most of us know all too well, many contracts that were negotiated and priced over the past 18 to 24 months are simply more expensive to perform now than was reasonably anticipated when bids were prepared.

In recognition of these soaring prices, the Department of Defense (DoD) issued a May 25, 2022, Memorandum titled “Guidance on Inflation and Economic Price Adjustments,” the purpose of which is to assist contracting officers (COs) in (i) navigating the impacts of inflation on existing contracts and (ii) managing downstream inflation risks on prospective contracts. Here are the key takeaways and our suggested courses of action to best protect your company’s bottom line:…

Continue Reading DoD Braces for Inflation: Guidance for Contractors Battling Rising Costs

The Cybersecurity Maturity Model Certification version 2.0 (CMMC 2.0) is here! Like a song you’ve heard before, the revised standards are a throwback but no less significant change to the standards that have evolved over the past three and a half years. McCarter & English Government Contracts and Global Trade co-leaders Alex Major and Franklin Turner detail the changes coming to federal contractors in a Feature Comment for Thomson Reuters’ The Government Contractor. Set against the recent Beatles documentary, the comment examines the impact of the Department of Defense’s most recent effort while detailing what contractors need to do before its new standards go into effect.
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Continue Reading Get Back: DOD Retreats While Revealing Plans for CMMC 2.0

As you may recall, Section 818 of the National Defense Authorization Act for Fiscal Year 2018 (FY 2018 NDAA required the US Department of Defense (DoD) to draft regulations to establish comprehensive post-award debriefing rights for disappointed offerors involved in applicable DoD procurements. On March 22, 2018, the DoD responded by issuing a Class Deviation that implemented certain FY 2018 NDAA requirements—i.e., those requirements affording disappointed offerors the opportunity to submit additional written questions to the cognizant DoD agency within two business days of its agency debriefing conducted in accordance with FAR 15.506(d). In such circumstances, the cognizant DoD agency must provide written responses to the questions within five business days after receipt of the questions. Moreover, if a disappointed offeror chooses to submit timely post-debriefing questions, the debriefing does not conclude—and thus the disappointed offeror’s GAO protest “clock” does not begin to run—until the agency provides its written response. On May 20, 2021, the DoD published a Proposed Rule to amend the Defense Federal Acquisition Regulation Supplement to (1) codify the March 2018 Class Deviation and (2) implement the additional post-award debriefing requirements from the FY 2018 NDAA.
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Continue Reading DoD Issues Proposed Rule on Enhanced Post-Award Debriefing Rights

On January 4, 2021, the National Institute of Standards and Technology (NIST) published proposed rules for comment changing regulations promulgated under the Bayh-Dole Act (35 U.S.C. §§ 200-204), which allow businesses and nonprofit institutions, in most circumstances, to take title to inventions made under federally funded projects (subject inventions) and to freely commercialize items, and methods used to produce items, embodying subject inventions.
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Continue Reading NIST on Track to Clarify Bayh-Dole to Ensure High Prices Cannot Be Used as Grounds for Exercising March-in Rights – Or Is It?

Each year, Congress presents us in Title VIII of the National Defense Authorization Act (NDAA) a potpourri of procurement reforms, changes, and additions. Some are effective immediately, while some are bound for rulemaking and regulation and surface years from enactment. Some require analyses, reports, and studies which have no immediate impact but provide a roadmap that can and should be used by government contractors in their business planning. Finally, some provisions of the NDAAs just wither away and have no impact whatsoever. Nineteen days before the Trump Administration ended, the US Senate followed the US House of Representatives in overriding the President’s veto of the William (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (H.R. 6395) (FY2021 NDAA), making it law on January 1, 2021.  Happy New Year! As for its Title VIII, the FY2021 NDAA is no different from its predecessors in its procurement potpourri. Here’s a tour of key provisions you oughta know.
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Continue Reading Here to Remind You of the Key Provisions of the Fiscal Year 2021 National Defense Authorization Act – You Oughta Know!

When last we left the Federal Government, agency buyers were staring down the Interim Rule prohibiting them from contracting with entities that use “covered telecommunications equipment” under Section 889(a)(1)(B) (“Section B”) of the National Defense Authorization Act for Fiscal Year 2019 after August 13, 2020. But then August 13 came and went. Did federal agencies do all they needed to follow the requirement? Did modifications go out to industry yet? Were amendments made? Was FAR 52.204-24 (2019) appropriately corrected to FAR 52.204-24 (2020)? What of 52.204-25 or 52.204-26? Can federal agencies act in time?…

Continue Reading The Perils of Section 889 Part B Execution: The DoD Waiver

Recently, the Defense Pricing and Contracting (“DPC”) unit under the Secretary of Defense issued draft implementation guidance for Department of Defense (“DoD”) contracting officers tasked with assessing contractor requests for reimbursement in accordance with Section 3610 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and applying the recent cost principle implemented by DFARS Class Deviation 2020-O0013—topics covered in depth by this blog. This draft guidance was first alluded to in the May 1, 2020, memorandum from Kim Herrington, the DPC Acting Director, to address “the reimbursement process from requesting the contracting officer’s determination of an ‘affected contractor’ to providing a checklist to guide collection[ ] and evaluation of costs from the [contractor] seeking reimbursement [under Section 3610].” Composed of general reimbursement implementation guidance along with two attachments—a checklist for review of a contractor’s reimbursement request and instructions for using the checklist—the DPC’s draft is, to date, the most comprehensive guidance addressing contractor requests for reimbursement under Section 3610 since the DFARS Class Deviation 2020-O0013 issued on April 8. The final guidance is expected to be released shortly.
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Continue Reading DoD Issues Draft Guidance for Contractor Reimbursement Under Section 3610 of the CARES Act

Contracting with the Department of Defense (DoD) can provide healthy opportunities for businesses of all sizes.  That said, it is no secret that contractors without the cash resources to finance their performance while awaiting payment from the Government may find themselves swallowed whole by their contractual obligations. Many defense contracts are long-term endeavors; consequently, a contractor’s sustainability and profitability can be impacted by the sapping of available manpower while also requiring significant capital investment to manage material, labor, overhead, and other expenses incurred when performing a contract. In many cases, the upfront financial investment required serves as a barrier to entry into the government marketplace for nontraditional defense contractors. However, the DoD has recently unearthed and reanimated one of the more impressive dinosaurs buried in the Federal Acquisition Regulation. Welcome to the world of performance-based payments (PBPs).
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Continue Reading The Evolution of Contract Financing: Resurrecting Performance-Based Payments Under Fixed-Price Contracts

On April 8, 2020, the Department of Defense (“DoD”) issued a Class Deviation authorizing contracting officers to use a new cost principle – DFARS 231.205-79, CARES Act Section 3610 Implementation – to permit the reimbursement of certain leave-related costs incurred by contractors in accordance with Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136).  Additional clarification regarding the application of the new cost principle was issued on April 9, 2020, through the publication of a “living” FAQ document intended to answer critical questions for contractors.  While the FAQ information does not clarify the Government’s position on all potential issues associated with the implementation of Section 3610, it does provide a blueprint that contractors seeking reimbursement should follow.
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Continue Reading DoD CARES After All – New Cost Principle and DFARS Clause Implements CARES Act for Certain COVID-19 Costs

On April 8, 2020, a final rule (the Rule) was issued amending the Defense Federal Acquisition Regulation Supplement (DFARS) and implementing Section 852 of the National Defense Authorization Act (NDAA) for FY 2019 to provide for accelerated payments to DoD’s small business prime contractors and subcontractors supporting DoD contracts. The Rule applies to contracts at or below the simplified acquisition threshold (SAT) – currently $250,000 for DoD contracts – and to contracts for the acquisition of commercial items including commercially available off-the-shelf (COTS) items. With an estimated 96% of DoD contracts valued at or under the SAT, the rule appears to reflect DoD’s recognition that it is in the best interests of the government and small business contractors alike to apply this Rule to contracts at or below the SAT and to accelerate payments to small business prime contractors and subcontractors.
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Continue Reading DFARS Final Rule Establishes Goal of 15-Day Accelerated Payments for Small Business Contractors