Court of Federal Claims Reaffirms Agency Discretion in TAA Country-of-Origin Determinations for Pharmaceuticals

Merle M. DeLancey, Jr. and Shane M. Hannon ●

On July 28, 2026, the U.S. Court of Federal Claims issued its decision in AvKare, LLC v. United States[1], upholding the Department of Veterans Affairs’ (“VA”) national contract award for Hydroxychloroquine tablets. The opinion is an important reminder of the discretion contracting officers have to evaluate pharmaceuticals for Trade Agreements Act (“TAA”) compliance and reaffirms that the country where a drug’s active pharmaceutical ingredient (“API”) is synthesized can be its country of origin for TAA purposes. The Court also declined to extend the scope of the Federal Circuit’s 2020 Acetris decision which would have conflated “manufacturing” and “substantial transformation.”

Overview of the TAA

The TAA provides that the Government may only acquire “U.S.-made or designated country end products.” See FAR 52.225-5. The TAA states that if a product comprises materials from multiple countries, its country of origin is where it was “substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.” 19 U.S.C. § 2518(4)(B). If a product is “substantially transformed” in a TAA-designated country, the product complies with the TAA.

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DOW Updates Section 1260H List: Expanding Compliance Obligations for Government Contractors

Merle M. DeLancey, Jr. and Samarth Barot ●

Samarth Barot headshot image

The Department of War (“DoW”) updated its 1260H List on June 8, 2026. The update adds approximately 65 new entities and includes an array of Chinese companies across several key areas of China’s economy. For example, the additions include electric vehicle and battery manufacturers, solar equipment manufacturers, display and optical-component manufacturers, drone and robotics companies, and Chinese technology companies including Alibaba.

Among the newly designated entities are several biotechnology-related companies, including WuXi AppTec Co., Ltd., Complete Genomics, Inc., and Novogene Company Limited. WuXi AppTec, a China-headquartered contract research, development, and manufacturing organization with extensive relationships with U.S. pharmaceutical and life sciences companies, has received particular attention given the scope of its partnerships across the biotechnology supply chain. WuXi AppTec has disputed its designation and is pursuing all possible remedies.[1] This post addresses the implications for companies being placed on the 1260H List and how being placed on the 1260H List could also result in consequences under the BIOSECURE Act.

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CUI, FOCI, Quantum, and CMMC: The Federal Government Issues a Wave of Proposed Rules to Safeguard Government Information

Michael J. Montalbano ●

Ernest Hemingway once wrote about bankruptcy that it happens “gradually and then suddenly.” The same can be said about federal information safeguarding rules. The Cybersecurity Maturity Model Certification (“CMMC”) program has been around for seven years. The Controlled Unclassified Information (“CUI”) program for over 15 years. Information safeguarding used to be a slow process with progress measured in years. Not anymore.

Over the past three months, the federal government has issued a wave of proposed rules designed to better safeguard federal information and harden contractor information systems.

FOCI Rule for Non-Cleared Contractors

The Department of Defense (“DoD”) issued a proposed rule in May 2026 that would significantly expand Foreign Ownership, Control, and Influence (“FOCI”) reporting requirements beyond the cleared contractor community, reaching existing and prospective contractors and subcontractors at any tier with DoD contracts or subcontracts exceeding five million dollars, even where no classified information is involved.

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Federal Contractors Face Uncertainty as Multi-State Coalition Challenges Executive Order 14398’s Anti-DEI Contracting Provisions

Dominique L. Casimir and Christina Manfredi McKinley●

Overview

Federal contractors: take notice. A significant lawsuit recently filed in the U.S. District Court for the District of Maryland challenges Executive Order (“EO”) No. 14398, “Addressing DEI Discrimination by Federal Contractors,” which President Trump issued on March 26, 2026. State of Maryland v. Hegseth, Case No. 1:26-cv-02322, was filed on June 10, 2026, by a coalition of 19 state attorneys general and the District of Columbia under the Administrative Procedure Act (“APA”). This case presents administrative law challenges that could reshape the compliance landscape for every entity that does business with the federal government, whether directly or indirectly.

The EO and Its Requirements

As we have previously covered, EO No. 14398 declares that diversity, equity, and inclusion (“DEI”) activities are “unethical and often illegal” and directs all federal agencies to include new contract terms in their contracts, subcontracts, and “contract-like instruments” barring contractors from engaging in “racially discriminatory DEI activities.” The order defines that term as “disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources.”

Section 3 of the order directs federal agencies to insert a comprehensive clause into federal contracts that requires contractors to: (1) refrain from engaging in racially discriminatory DEI activities; (2) furnish all information and reports, including access to books, records, and accounts, as requested by the Contracting Officer to enable compliance reviews; (3) flow the clause down to subcontractors at every tier including to commercial item subcontracts; (4) report any subcontractor’s known or “reasonably knowable” conduct that “may violate” the clause; (5) inform the contracting agency if a subcontractor sues the contractor regarding the validity of the clause; and (6) recognize that compliance with the clause is “material to the Government’s payment decisions” for purposes of the False Claims Act (“FCA”).

The order threatens severe consequences for violations, including contract termination, suspension or debarment, and lawsuits under the FCA.

To read the full alert, please visit our website.

SBA Proposes to Eliminate the Rebuttable Presumption of Social Disadvantage for Individually Owned 8(a) Firms: What Contractors Need to Know

Elizabeth N. Jochum, Dominique L. Casimir, and Samarth Barot●

Samarth Barot headshot image


Summary

The U.S. Small Business Administration (“SBA”) published a proposed rule on June 11, 2026, that would reshape how individually owned small businesses establish social disadvantage for purposes of the 8(a) Business Development program. The proposed rule would eliminate the longstanding rebuttable presumption that members of certain designated racial and ethnic groups are socially disadvantaged. In its place, SBA proposes a single, race-neutral test requiring all applicants to show that a governmental or private entity discriminated against their clearly definable group and that the discrimination caused them “material harm.”

Critically, the proposed rule applies only to individually owned firms. Entity-owned 8(a) participants, including firms owned by Indian tribes, Alaska Native Corporations (“ANCs”), Native Hawaiian Organizations (“NHOs”), and Community Development Corporations (“CDCs”), are unaffected.

Comments on the proposed rule are due by July 13, 2026. Stakeholders may submit comments through regulations.gov under Docket No. SBA-2026-0133.

Key Takeaways

  • The rebuttable presumption of social disadvantage for designated racial and ethnic groups would be eliminated for individually owned applicants.
  • A new, uniform test would require all individual applicants to show that a governmental or private entity discriminated against or was biased against their clearly definable group and that this caused them “material harm” (defined as loss of access to or diminished opportunities for economic advancement).

To read the full alert, please visit our website.

Debarment or Suspension Based on a DEI Program? Let’s Think It Through

Dominique L. Casimir ●

Suspension and debarment are powerful administrative tools that the Government uses to exclude from federal contracting entities that are not “presently responsible.” These exclusions can be lengthy, effectively shutting debarred or suspended contractors out of the lucrative federal marketplace for years. Even after the period of exclusion ends, disclosure requirements in connection with proposal submissions and teaming arrangements make it difficult for a previously debarred or suspended contractor to shed the stain of a prior exclusion. Because of these severe consequences, contractors shape their compliance programs, organizational cultures, and conduct to minimize the risk of creating cause for debarment or suspension.

To read the full article, please click here.

“Debarment or Suspension Based on a DEI Program? Let’s Think It Through,” by Dominique Casimir, was published in The Government Contractor, Volume 68 Issue 21, on June 3, 2026.

New Proposed Rulemaking Targets Federal Grants

Dominique L. Casimir and Shane A. Pennington ●

On May 29, 2026, the Office of Management and Budget (“OMB”) published a lengthy proposed rule in the Federal Register that would fundamentally transform the government-wide framework for federal financial assistance. Joined by virtually every grantmaking agency in the Executive Branch, the proposal seeks to revise Title 2 of the Code of Federal Regulations (the “Uniform Guidance”) in pursuit of three stated objectives: (1) improving transparency, accountability, and oversight for use of federal funds; (2) clarifying the regulatory status of the OMB requirements; and (3) reducing recipient burden.

Comments are due July 13, 2026, and may be submitted electronically via regulations.gov under docket OMB–2026–0034. OMB chose a 45-day comment period, and a final rule could be effective by October 1, 2026. Late comments will be considered “only to the extent practicable.”

What the Administration Is Seeking to Achieve

At its core, the proposed rule seeks to codify the policy directives from various executive orders into a durable regulatory framework that applies government-wide. OMB frames this as eliminating “wasteful spending” that became prevalent during the prior administration, ending what it characterizes as “unlawful DEI mandates,” “gender ideology,” and other “divisive doctrines.” The administration states that federal programs must be designed to achieve “essential public purposes authorized by law” while aligning with “administration policies and priorities.” The preamble reaffirms the view of OMB Director Russell Vought that the government’s ledger contains too much spending that is “wasteful,” “divisive,” or “woke.”

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Blank Rome and Our Attorneys Highly Ranked in Chambers USA 2026

We are proud to announce that Blank Rome’s attorneys and practices were highly ranked across several categories in the 2026 Chambers USA rankings, which reflect our high level of integrated services for government contractors and companies in the Aerospace, Defense and Government Services sector.

Our Government Contracts practice was ranked in Band 2 in Government Contracts: The Elite, USA, again placing our team among the top 10 law firms in the nationwide rankings.

  • Chambers quoted a government contracts reference as saying, “They provide creative and pragmatic solutions to complex legal issues.”

Our False Claims Act practice and partner Jennifer A. Short were ranked in False Claims Act, USA – Nationwide. An FCA reference told Chambers, “The attorneys really understand the factual issues and really bat for us.”

Partners Anthony Rapa and Kenneth Nunnenkamp, who serve clients impacted by tectonic changes in the international business environment, were both ranked in International Trade: Export Controls & Economic Sanctions.

To view all of Blank Rome’s Chambers USA 2026 rankings, please visit Chambers USA 2026 Recognizes Blank Rome Attorneys and Practices.

DoD Seeks “Unprecedented Level of Visibility” into the Supply Chain Under Newly Proposed Regulations

Michael Joseph Montalbano ●

The Department of Defense (“DoD”) released a proposed rule on May 7, 2026, that would significantly expand Foreign Ownership, Control, and Influence (“FOCI”) and beneficial ownership disclosure requirements beyond cleared contractors to a much broader segment of the Defense Industrial Base. Soon, any contractor or subcontractor with a DoD contract exceeding five million dollars will need to report its FOCI status in the National Industrial Security System (“NISS”).

Who Is Covered Under the Proposed Rule

The proposed rule would apply to any existing or prospective contractor or subcontractor, at any tier, holding a DoD contract valued in excess of five million dollars—regardless of whether classified information is involved. The reporting and review framework will be established under a new DFARS Part 240, “Information Security and Supply Chain Security.” The DoD does not mince words. The rule is designed to provide an “unprecedented level of visibility” into the ownership structures of its partners and to prevent foreign adversaries from accessing sensitive unclassified information and critical technologies.

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Is This the End of Cost-Type Contracting? What Federal Contractors Should Know About a New Executive Order Making Fixed-Price Contracts the “Default”

Stephanie M. Harden, Dominique L. Casimir, Elizabeth N. Jochum, and Sara N. Gerber ●

On April 30, 2026, President Trump signed another executive order (“EO”) that may significantly impact how the government buys goods and services. The target: cost-reimbursement contracts, which let contractors bill the government for their “allowable, allocable, and reasonable” costs incurred, plus some pre-established or earnable profit. According to the EO, in Fiscal Year (“FY”) 2024, the government spent roughly $120 billion on cost-reimbursement consulting contracts. The EO seeks to significantly reduce that figure by making fixed-price contracts the default for federal procurement—meaning prices are locked in up front and contractors, not taxpayers, bear the risk of overruns.

What does the executive order require agencies to do?

Agencies that want to use structures other than fixed-price will begin to face real hurdles as agencies implement the EO’s directives. Nearly every exception from the “default” fixed-price model will require the contracting officer to provide written justification not just to someone senior within the contracting authority, but to the head of the relevant agency, and bigger-ticket exceptions—at thresholds of $100 million (Department of Defense (“DoD”)), $35 million (National Aeronautics and Space Administration), $25 million (Department of Homeland Security), and $10 million (everyone else)—need the agency head’s sign-off, not just notification.

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