Author: Blank Rome LLP

Blank Rome Attorneys Appointed to American Bar Association’s Public Contract Law Section Leadership for the 2023–2024 Term

Blank Rome LLP is pleased to announce that nine attorneys from the firm’s nationally recognized Government Contracts group have been appointed to leadership roles in the American Bar Association’s (“ABA”) Public Contract Law Section for the 2023–2024 term, marking the highest number of ABA Public Contract Law Section leadership positions held by our attorneys in the firm’s history.

Visit our website to learn more about their roles and the Section of Public Contract Law.

3 Tips to Reduce False Claims Act Exposure in the Wake of United States ex rel. Schutte v. SuperValu, Inc.

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Justin A. Chiarodo, Jennifer A. Short, Stephanie M. Harden, Samarth Barot, and Oliver E. Jury ●

2023 is shaping up to be a major year in False Claims Act (“FCA”) practice, with the Supreme Court weighing in on both FCA scienter (in SuperValu) and the reach of the government’s dismissal authority (in Polansky), and the government focusing its enforcement efforts around antitrust, cyber, and national security. We focus today on the United States ex rel. Schutte v. SuperValu, Inc. decision, in which the Supreme Court held that a contractor’s subjective belief about its compliance at the time it submitted claims for payment is relevant to whether it had the requisite scienter for FCA liability. Much has been written on this case, with most articles exploring esoteric concepts like “scienter,” “falsity,” and the “objectively reasonable person.” But assuming—as we do—that the decision will reduce the prospect of successful early dispositive motions, what practical steps can contractors take to reduce their False Claims Act exposure and avoid litigation in the first place? We offer three suggestions.

We begin with a basic refresher on the issue presented in SuperValu. A defendant is not liable under the False Claims Act unless it “knowingly” (including acting with “reckless disregard”) submits a false claim to the government. The “knowing” scienter element—particularly around reckless disregard—can be difficult to prove in the world of complex and often ambiguous laws and regulations that govern contractors’ compliance. The federal circuits had split on the issue of whether a defendant’s subjective interpretation at the time it submitted claims for payment to the government was relevant to determining FCA “knowledge” if the defendant could later show that the underlying rule was ambiguous and its conduct (regardless of its contemporaneous understanding or belief) was consistent with an objective, reasonable interpretation of the unsettled requirement. SuperValu resolved the debate by holding that whether a defendant knowingly violated the FCA—and satisfied the scienter element—must consider the defendant’s real-time “knowledge and subjective beliefs.” United States ex rel. Schutte v. SuperValu, Inc., 143 S. Ct. 1391 (2023).

Continue reading “3 Tips to Reduce False Claims Act Exposure in the Wake of United States ex rel. Schutte v. SuperValu, Inc.“

10 Key Takeaways: Biden Administration Sets the Stage for Regulation of U.S. Investments in China

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Anthony Rapa, George T. Boggs, and Alan G. Kashdan ●


President Biden recently issued an executive order (“EO”) establishing a framework to regulate certain U.S. investments with a nexus to China, taking initial steps towards what eventually could be unprecedented regulation of outbound U.S. investment. Specifically, the order directs the U.S. Department of the Treasury (“Treasury”) to issue regulations requiring notification of, and in some cases outright prohibition of, certain U.S. investments in Chinese and Chinese-owned companies relating to semiconductors, quantum technology, and artificial intelligence. The EO also covers investments in Hong Kong and Macau.

Concurrent with the August 9, 2023, executive order, Treasury unveiled an “Outbound Investment Program” website, along with a fact sheet and an Advance Notice of Proposed Rulemaking (“ANPRM”).

In the months ahead, it will be critical for observers to keep apprised of Congress’s reaction to President Biden’s EO and Treasury’s ANPRM, especially among members who have been particularly involved in advancing legislation on outbound investment. Congress may yet legislate on the issue, and such legislation could differ in scope from the Biden Administration’s executive action.

This alert provides background regarding the Biden Administration’s executive action, along with 10 key takeaways.

Background

Geopolitical risk commentators have anticipated an EO relating to U.S. outbound investment for some time, based on policymakers’ stated concerns around the role of U.S. investment capital in developing sensitive technologies in China. Proposals in this context have tended to focus on the establishment of a multi-agency body (akin to the Committee on Foreign Investment in the United States) to review outbound investment in sensitive technologies or “critical capabilities” with a nexus to certain countries of concern, including China.

To read the full client alert, please visit our website. 

Proposed Bill Would Amend the Arms Export Control Act and Establish AUKUS Advisor and Task Force: 3 Highlights

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Anthony Rapa and Patrick F. Collins ●

On July 19, 2023, Rep. Michael McCaul (R-TX), chair of the House of Representatives Foreign Affairs Committee, introduced a bill to ease trade restrictions among parties to the AUKUS agreement—a trilateral security partnership between Australia, the United Kingdom, and the United States. House Republicans separately have proposed granting the UK and Australia blanket exemptions from requirements under the International Traffic in Arms Regulations (“ITAR”), while a proposed amendment to the National Defense Authorization Action for Fiscal Year 2024 from Senate Democrats stops short of blanket exemptions. The McCaul bill offers a compromise—it amends the Arms Export Control Act (“AECA”) to allow the President to exempt select exports of defense items from licensing requirements for countries that meet certain conditions, and requires the U.S. State Department to appoint a senior AUKUS advisor and establish an AUKUS task force.

Background

The AUKUS agreement, initially announced in September 2021, aims to provide Australia with nuclear-powered submarines and deepen cooperation in the Indo-Pacific region with the United States and UK. A White House fact sheet highlights the agreement’s other goals, including cooperation on cyber capabilities, quantum technologies, artificial intelligence, hypersonic and counter-hypersonic capabilities, electronic warfare, and undersea capabilities.

Continue reading “Proposed Bill Would Amend the Arms Export Control Act and Establish AUKUS Advisor and Task Force: 3 Highlights”

6 Key Takeaways from the CFIUS 2022 Annual Report

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Anthony Rapa, George T. Boggs, and Alan G. Kashdan ●


The Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) recently released the unclassified version of its statutorily mandated annual report to Congress, covering calendar year 2022. Viewed in the context of prior CFIUS reports to Congress, the report, released July 31, 2023, highlights key trends in the U.S. government’s review of inbound foreign investment, including a record number of filings, increased investigations, and the emergence of Singapore as a top investor domicile. Overall, the report makes clear that CFIUS continues to play an active and robust role in reviewing proposed investments in U.S. businesses, and dealmakers should account for this from the outset of deal planning.

Here are six key takeaways from the CFIUS annual report:

  1. CFIUS Reviewed a Record Number of Filings, Even as M&A Activity Slowed

CFIUS reviewed 440 filings (154 short-form declarations and 286 full joint voluntary notices) in 2022, a slight increase over the prior record of 436 filings that CFIUS reviewed in 2021. This is particularly notable given the slowdown in M&A deals in the second half of 2022.

The record number of filings is reflective of robust engagement with the CFIUS process by foreign investors, as investors become more familiar with the process and as CFIUS makes clear that it will vigorously safeguard U.S. national security in reviewing investments. Notably, the record-high filings came in the midst of intensified public engagement regarding CFIUS review in 2022, including a presidential executive order, issuance of the first-ever CFIUS enforcement guidelines, and the inaugural Treasury Department CFIUS conference.

To read the full client alert, please visit our website. 

Government Offerors—There Are No Foolish Questions

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Merle M. DeLancey, Jr. ●

The Government Accountability Office (“GAO”) regularly denies protests because an offeror made assumptions in its proposal. To the offeror, such assumptions seem perfectly reasonable but to an agency the assumptions are incorrect or contrary to the agency’s intended procurement approach. As a result, the offeror’s proposal is rejected as non-compliant.

If the offeror files a GAO protest, GAO will likely dismiss the protest as being untimely, stating that the offeror was required to challenge a solicitation’s terms and conditions prior to the deadline for the submission of proposals. This scenario is frustrating because it likely could have been avoided had the offeror simply asked the agency questions.

Frequently, clients ask us to opine on what information an agency is seeking in a solicitation or how to interpret a term in a solicitation. These questions are often asked shortly before an offer is due. While we do our best, our guidance is not a substitute for agency guidance. We appreciate offerors are busy. Most prepare proposals based on due dates. As a result, by the time an offeror begins to prepare its proposal, the solicitation’s Q&A period is over.

Continue reading “Government Offerors—There Are No Foolish Questions”

The SBA’s 8(a) Program—Possible Changes after SFFA and Ultima

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Scott Arnold ●

When the U.S. Supreme Court struck down affirmative action programs in the college admissions context in late June, it noted that racially conscious government programs must have a “logical end point.” Students for Fair Admissions, Inc. v. Harvard and Students for Fair Admissions v. University of North Carolina (“SFFA”). It has been apparent for some time that the “logical end point” concept could have implications for racially conscious programs in the government contracts context, and indeed it took only three weeks after SFFA for this to manifest in a decision issued by U.S. District Court for the Eastern District of Tennessee, Ultima Servs. Corp. v. U.S. Department of Agriculture. In Ultima, the court relied on reasoning in SFFA to conclude that regulations in the Small Business Administration’s (“SBA”) 8(a) program that establish a rebuttable presumption of social disadvantage to individuals in certain minority groups violate the Fifth Amendment’s Equal Protection rights of individuals who are not members of those minority groups.

SBA’s 8(a) Program

The Small Business Act has been in place for 70 years. Section 8(a) of the Act authorizes the SBA to facilitate increased government contracting opportunities for socially and economically disadvantaged small businesses by working with procurement agencies to set aside certain procurements for 8(a) contractors—contractors who have been accepted into the 8(a) program by virtue of being socially and economically disadvantaged. Contractors who are not in the 8(a) program are ineligible to compete for 8(a) set-aside contracts (although they can participate in such procurements as subcontractors).

Continue reading “The SBA’s 8(a) Program—Possible Changes after SFFA and Ultima“

Conflicting State and Federal Requirements for Government Contractors . . . Again

Merle M. DeLancey, Jr. ●

In 2021, federal government prime contractors and subcontractors found themselves in a difficult situation with respect to COVID vaccination requirements. More than a dozen states enacted laws prohibiting companies from requiring their employees to be COVID-19 vaccinated or even show proof of COVID-19 vaccination as a condition of employment. At the same time, federal government contracts were subject to mandatory employee vaccination requirements in the FAR and DFARS. (i.e., FAR 52.223-99 Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (OCT 2021) (DEVIATION) and DFARS 252.223-7999 Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (Deviation 2021-O0009) (OCT 2021). Luckily, the potential conflict was resolved, on May 9, 2023, when President Biden signed Executive Order (“EO”) 14099, Moving Beyond COVID–19 Vaccination Requirements for Federal Workers, which revoked EO 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors. EO 14099 directed agencies to rescind any policies that were adopted to implement EO 14042. Thus, the potential conflict between inconsistent federal and state laws concerning COVID-19 vaccinations was mooted.

A new conflict between state and federal procurement requirements may be brewing for federal prime contractors and subcontractors concerning race-based employment preferences and diversity policies after the Supreme Court decision in Students for Fair Admissions v. Harvard and Students for Fair Admissions v. UNC.

Continue reading “Conflicting State and Federal Requirements for Government Contractors . . . Again”

Relief Requested: What the Federal Circuit’s CACI-Federal Decision Means for Your Bid Protest beyond Standing

Stephanie M. Harden ●

The primary holding of the Federal Circuit’s May 2023 decision in CACI, Inc.-Federal v. United States (Case No. 2022-1488), is that “statutory standing” is no longer a jurisdictional issue. This means that when considering whether a protester is an “interested party” under the Tucker Act, the Court of Federal Claims (“COFC”) is not required to address statutory standing before the merits.

Although much has been written about this holding, our view is that there will be little or no impact on most bid protests stemming from this particular aspect of the decision, other than perhaps an uptick in denying protests on the merits without first addressing statutory standing.

We think the more interesting part of the decision is its reaffirmance of the Chenery doctrine, and specifically, the Federal Circuit’s direction about which issues must be remanded back to the agency, rather than decided by the COFC in the first instance. Although the Chenery doctrine is not new, the Federal Circuit has now made it clear that the doctrine greatly limits the COFC’s ability to order specific relief where an issue was not previously considered by the agency. On this issue, our takeaway is that CACI-Federal will actually lead to a reduction in the COFC weighing in on certain merits-based issues.

Confused about how Chenery relates to statutory standing? Read on for our analysis.

Continue reading “Relief Requested: What the Federal Circuit’s CACI-Federal Decision Means for Your Bid Protest beyond Standing”
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