Will HHS’s Safe Importation Action Plan Affect How the Federal Government Purchases Drugs?

Merle M. DeLancey Jr.

On July 31, the Department of Health and Human Services (“HHS”) and the Food and Drug Administration (“FDA”) announced their latest plan to reduce the prices Americans pay for prescription drugs. The Safe Importation Action Plan identifies two pathways for the importation of drugs.

Pathway 1 allows states, wholesalers, and pharmacists to submit plans to HHS for demonstration projects, which test and measure the effect of potential program changes, that allow for the importation of certain drugs from Canada. Importing drugs from Canada is not a new concept. In 2003, Congress gave the Secretary of HHS the authority to permit drug importation from Canada. To implement a drug importation plan, however, the Secretary was required to certify to Congress that the importation program poses “no additional risk to public health and safety” and the program will result in a “significant” reduction in costs of products to American consumers. No HHS Secretary has ever made such a certification to Congress. Implementation of importation plans under Pathway 1 will most likely take considerable time. HHS intends to implement Pathway 1 through a formal Rulemaking process with Notice and Comment. Then, importation plans will need HHS approval before going “live.” Continue reading “Will HHS’s Safe Importation Action Plan Affect How the Federal Government Purchases Drugs?”

Agency Protests: An Emerging Tool and Potential Threat for Contractors

Merle M. DeLancey Jr. and Michael Joseph Montalbano

In May 2018, the Government Accountability Office (“GAO”) implemented a $350 filing fee for bid protests. There are differences of opinion regarding why GAO implemented the fee. GAO publicly states that the fee was implemented to cover the costs of its new Electronic Protest Docket System (“EPDS”). Many, however, believe the fee was implemented to deter the filing of frivolous protests. Regardless, there “may” be an unintended consequence of the protest filing fee—an increase in agency-level protests. Recently, several agency contracting officers have stated that they are handling more agency protests, and, in their opinion, it is a direct result of GAO’s protest filing fee. As a result, contractors should understand and be prepared to mitigate the risk of agency protests to protect their contracts and position themselves for new ones.

Pros and Cons of Agency Protests Continue reading “Agency Protests: An Emerging Tool and Potential Threat for Contractors”

The Supreme Court Expands the Meaning of “Confidential” Information under FOIA Exemption 4

Robyn N. Burrows

The Supreme Court in Food Marketing Institute v. Argus Leader Media, No. 18-481 (U.S. June 24, 2019) recently relaxed the standard for withholding confidential information under Exemption 4 of the Freedom of Information Act (“FOIA”)—a major win for contractors that regularly submit sensitive business information to the government.

Exemption 4 protects from disclosure trade secrets and commercial or financial information that is privileged or confidential. For the past 45 years, courts have been guided by the stringent “competitive harm” test first enunciated in National Parks & Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974). This test allowed an agency to withhold information as “confidential” only if disclosure would (1) impair the government’s ability to obtain necessary information in the future, or (2) cause substantial harm to the competitive position of the person from whom the information was obtained. Many businesses objected to this test as overly burdensome and causing confusion about the showing required to establish substantial competitive harm. Continue reading “The Supreme Court Expands the Meaning of “Confidential” Information under FOIA Exemption 4”

Eastern District of California Allows False Claims Act Allegations Based on Noncompliance with DoD Cybersecurity Requirements to Go Forward

Carolyn R. Cody-Jones

A recent decision in the federal district court for the Eastern District of California is one of the first to recognize application of the False Claims Act (“FCA”) to Department of Defense (“DoD”) cybersecurity requirements, and will likely encourage future lawsuits alleging noncompliance with federal cybersecurity procurement regulations. In United States ex rel. Markus v. Aerojet Rocketdyne Holdings, Inc., No. 2:15-cv-2245 WBS AC, 2019 WL 2024595 (E.D. Cal. May 8, 2019), the court denied the defendant contractor’s motion to dismiss qui tam complaint fraud allegations against the company. The complaint—brought by a former employee from the company’s cybersecurity department a month after his termination from the company—alleged the defendant fraudulently entered into DoD and National Aeronautics and Space Administration (“NASA”) contracts despite knowing that it did not meet the minimum standards required to receive the awards. The court permitted the case to move forward despite the government declining to intervene.

The primary regulations at issue in the case are DFARS 252.204-7012, which recently required, as of December 31, 2017, that contractors have a cybersecurity plan in place complying with 110 recommended security control standards set forth in NIST SP 800-171. However, the court’s decision in Aerojet Rocketdyne focused on the previous 2013 final rule and the two interim rules in 2015 implementing DFARS 252.204-7012, and also a NASA cybersecurity regulation at 48 C.F.R. § 1852.204-76 involving contractor security controls for sensitive but unclassified government information. Continue reading “Eastern District of California Allows False Claims Act Allegations Based on Noncompliance with DoD Cybersecurity Requirements to Go Forward”

What Contractors Should Know about DOJ’s Revised Guidance on Evaluations of Corporate Compliance

Brian S. Gocial and Stephanie M. Harden

As government contractors know well, a robust compliance program can be critical—both in preventing, detecting, and resolving compliance problems and in working with agencies and/or the Department of Justice (“DOJ”) to resolve compliance issues when they arise. Though DOJ has previously issued guidance on how it evaluates corporate compliance programs, on April 30, 2019, it greatly expanded upon its earlier guidance with a lengthy new guidance document. The document is notable for its emphasis not just on the design of compliance programs, but also on their effectiveness in practice. The document is a useful benchmark for contractors to evaluate their compliance programs, as well as to demonstrate their affirmative responsibility to agencies when facing agency-level investigations.

The guidance document focuses on three central questions:

  1. Is the corporation’s compliance program well designed?
  2. Is the corporation’s compliance program implemented effectively?
  3. Does the compliance program actually work in practice?

The following outline provides a summary of the various factors DOJ discusses in connection with each of these questions—and more information on each topic can be found here.

Contractors should assess how their own compliance programs measure up against these factors: Continue reading “What Contractors Should Know about DOJ’s Revised Guidance on Evaluations of Corporate Compliance”

GSA Announces Pilot Plan for Commercial E-Commerce Portals

Luke W. Meier

The effort to create an “Amazon-like” market for Government purchasing has taken another step forward. After completing its market consultation phase, the General Services Administration (“GSA”) has now put forth a proposal for an e-commerce test portal, through which federal agencies will be able to purchase commercial products from a select group of vendors that will set up new online marketplaces specifically for federal purchasing. (See Phase II Report here.)

To simplify regulatory requirements, all purchases on the test portal must be within the micro-purchase threshold—currently $10,000 for most types of purchases. To expand the breadth of its trial run, GSA has asked Congress to temporarily raise the micro-purchase threshold to $25,000 “for a limited period of five years,” only with respect to purchases “through GSA-approved commercial e-commerce portals.”

The scope of the trial program also will depend on which (and how many) vendors receive the “initial proof of concept contracts” to sell products through portals during the trial run. To avoid being locked in to a single supplier, GSA has said it needs “at least two [vendors] or we won’t award.” Will Amazon itself be a vendor? Right now, GSA says it is unclear “if Amazon will compete” for a spot in the pilot program.

Contractors with an interest in the direction of this effort should continue to express their views. Feedback from the pilot program will guide GSA’s next steps as it decides how to move forward with the commercial e-commerce purchasing concept.

Spring Cleaning for Government Contractors? Think Compliance.

Merle M. DeLancey Jr.

If you’re like me, it’s the time of year when you clean out your garage and closets and do all those outside projects you delayed until the weather warmed up. If you are a government contractor, you should consider this to be the season to do some spring cleaning in terms of your government contract compliance programs and procedures. Not to be an alarmist, but there are numerous areas you can review now and, if you should find some compliance deficiencies, you still have ample time to get your house in order before an agency audit or the deadline for submission of certain government reports.

Set forth below is a list of areas you may want to clean up: Continue reading “Spring Cleaning for Government Contractors? Think Compliance.”