Author: Blank Rome LLP

Proposed Greenhouse Gas Rule Previews New Compliance Frontier for Government Contractors

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Michael J. Slattery and Justin A. Chiarodo ●

For over 18 months, the Biden Administration has discussed incorporating certain climate-change measures into the federal procurement system. A recent proposed rule forecasts where the Administration may be headed. In a nutshell, the proposed rule would require contractors receiving over $7.5 million in annual contract obligations to disclose greenhouse gas emissions. And it would require those receiving over $50 million in annual contract obligations to also set greenhouse gas reduction targets. Though the rule remains open to comment (through February 13, 2023), the FAR Council has tentatively tied compliance with the rule to responsibility determinations—making this a key new compliance frontier for many government contractors. This post summarizes the proposed rule, including implementation and enforcement mechanisms.

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Background

Climate change has been a procurement priority since early in the Biden Administration. In May 2020, the President issued Executive Order (“E.O.”) 14030, which directed the FAR Council to consider amending the FAR to require contractors to publicly disclose greenhouse gas (“GHG”) emissions and climate-related financial risk, have these entities set science-based GHG-reduction targets, and ensure that federal procurements minimize climate change risk.

Continue reading “Proposed Greenhouse Gas Rule Previews New Compliance Frontier for Government Contractors”

FY 2023 NDAA Muddies the Water on Whether Chinese Semiconductor Ban Will Apply to Contractors

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Robyn N. Burrows ●

Last month, we wrote about a proposed amendment to the FY 2023 National Defense Authorization Act (“NDAA”) that would prohibit contractors from selling certain Chinese semiconductor technologies to federal agencies and from using these same covered products and services. This measure was added through Section 5949 of the NDAA.

On December 6, the House passed a compromise version of the NDAA, which appears to scale back the semiconductor ban by applying it only to federal sales of covered products and services, without also banning contractors from using them. However, the explanatory statement accompanying the NDAA suggests contractors (including their affiliates and subsidiaries) may ultimately be prohibited from using covered semiconductor technologies—which would raise a host of compliance and implementation concerns.

Compromise Version of NDAA Limits Semiconductor Ban to Federal Sales

Section 5949 bans semiconductor products and services from Semiconductor Manufacturing International Corporation, ChangXin Memory Technologies, and Yangtze Memory Technologies Corp., plus their subsidiaries and affiliates. This ban was modeled after the supply chain restrictions from Section 889, which prohibit contractors from selling and using covered telecommunications and video surveillance equipment from five Chinese telecom companies.

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Veteran-Owned Small Business Certification Moves from VA to SBA

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Merle M. DeLancey, Jr. and Patrick F. Collins ●

Effective January 1, 2023, the certification process for veteran-owned small businesses (“VOSBs”) and service-disabled veteran-owned small businesses (“SDVOSBs”) will be transferred from the Department of Veterans Affairs (“VA”) to the Small Business Administration (“SBA”). Except for implementation transitioning discussed below, to be eligible for sole-source and set-aside acquisitions, VOSBs and SDVOSBs will need to be certified by the SBA.

Previously, VOSB and SDVOSB verifications were made by the VA’s Center for Verification and Evaluation (“CVE”). To be eligible for VA contracts, VOSBs/SDVOSBs had to be verified by the CVE; there was no government-wide certification program, and firms seeking SDVOSB sole-source or set-aside contracts outside the VA only needed to self-certify their status pursuant to Section 36 of the Small Business Act, 15 U.S.C. 657f.

On November 29, 2022, the SBA published a final rule implementing Section 862 of the FY 2021 National Defense Authorization Act (“NDAA”) transferring authority for VOSB/SDVOSB certifications from the VA to the SBA. The final rule consolidates the eligibility requirements for the Veteran Small Business Certification Program, and the SBA is assuming control of VOSB/SDVOSB certification for purposes of nearly all small business federal contracting. SBA also published a Frequently Asked Questions (“FAQ”) page regarding the final rule.

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Blank Rome Successfully Represents KPMG LLP in GAO Bid Protest Challenging U.S. Air Force Award Decision

Samarth Barot headshot image

A Blank Rome team represented KPMG LLP in a successful bid protest before the Government Accountability Office (“GAO”), in which KPMG challenged the award decision of the United States Air Force in a procurement for visible accessible understandable linked trusted (“VAULT”) subject matter expert support.  

The team was led by Dominique L. Casimir and included Robyn N. Burrows and Samarth Barot. 

To learn more, please visit our website.

It’s Not Too Late: Notify OFCCP Now to Prevent Disclosure of EEO-1 Data

Merle M. DeLancey, Jr. ●

In case you have not been following this development, the Office of Federal Contract Compliance (“OFCCP”) intends to release certain EEO-1 data in response to a FOIA request. Specifically, OFCCP intends to release EEO-1 Type 2 Reports submitted by federal contractors from 2016 to 2022. All multi-establishment companies (i.e., any corporation that does business out of multiple physical locations) are required to submit Type 2 Reports. These reports must include data for all employees of the company (i.e., all employees at headquarters as well as at all establishments) categorized by race/ethnicity, sex, and job category.

OFCCP is notifying contractors who have not objected that it intends to release the requested EEO-1 Data after the start of the new year. In e-mails sent to contractors at the end of November 2022, OFCCP stated:

The objection period is now closed, and we are sending this message to confirm we have not received an objection from your organization regarding release of the requested data. Because we have received no objection, we are providing your organization with notice that its Type 2 EEO-1 data is subject to release under FOIA, and OFCCP intends to release this data after January 2, 2023.

The e-mail notice instructs companies to contact OFCCP “as soon as possible but no later than January 2, 2023” if OFCCP has erred and the company did timely object to release of its data or the company was not a federal contractor during the applicable time period.

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November 18, 2022: “Navigating the Maze of Embargoes and Sanctions”

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Blank Rome partner Anthony Rapa will serve as a panelist at the International Trademark Association’s (“INTA”) 2022 Leadership Meeting, being held November 15 through 18, 2022, in Miami, Florida.

Anthony’s session, “Navigating the Maze of Embargoes and Sanctions,” will take place on Friday, November 18, from 11:30 a.m. to 12:30 p.m.

For more details, visit our website.

Senate Majority Leader Schumer Proposes Section 889 Expansion

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Robyn N. Burrows and Merle M. DeLancey, Jr. ●

On October 18, 2022, Senate Majority Leader Chuck Schumer (D-NY) issued a press release signaling a potentially significant expansion of Section 889 through a proposed amendment to the 2023 National Defense Authorization Act (“NDAA”). Schumer’s proposal is aimed at extending the telecommunications supply chain prohibitions in Section 889 to the semiconductor manufacturing industry.

Section 889 currently prohibits contractors from providing the federal government or using any products or services that incorporate “covered telecommunications equipment or services” from five Chinese telecom companies and their affiliates and subsidiaries: (1) Huawei Technologies Company, (2) ZTE Corporation, (3) Hytera Communications Corporation, (4) Hangzhou Hikvision Digital Technology Company, and (5) Dahua Technology Company.

Schumer’s 2023 NDAA amendment would expand Section 889 by banning semiconductor products like microchips from the following three Chinese entities: (1) Semiconductor Manufacturing International Corporation (“SMIC”), (2) ChangXin Memory Technologies (“CXMT”), and (3) Yangtze Memory Technologies Corp. (“YMTC”). Schumer noted that these companies have known links to the Chinese state security and intelligence apparatuses. The amendment is aimed at filling a gap in federal procurement restrictions that currently do not include semiconductor technology and services, creating a vulnerability for cyberattacks and data privacy. The amendment would not take effect until three years after the NDAA’s enactment, or until 2025.

Although we do not yet know whether Schumer’s amendment will be incorporated into the final NDAA bill, contractors should nevertheless begin evaluating their supply chains to identify any semiconductor products from any of the three named Chinese manufacturers. Schumer’s amendment signals a continually expansive interpretation and enforcement of Section 889, which may be reflected in the final rulemaking for Section 889. The current FAR docket anticipates a final rule in December 2022, although these deadlines continue to be moving targets.

How to Manage a Potential Whistleblower

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Dominique L. Casimir, Jennifer A. Short, and Michael Joseph Montalbano ●

Jennifer A. Short headshot image

The federal False Claims Act (“FCA”) is one of the United States’ most effective tools to detect and prevent fraud against the Government. One reason the FCA is so effective is that it encourages the employees of an organization to come forward as claimants and receive a share of any financial recovery to the Government. Recognizing the central role of these whistleblowers in the FCA’s enforcement scheme, Congress included an anti-retaliation provision in the statute that protects them when they report suspected fraudulent conduct. Under the FCA’s anti-retaliation provision, employees, contractors, or agents can sue for damages on their own behalf if they are “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done” in connection with a reported FCA violation. 31 U.S.C. § 3730(h)(1). Likewise, nearly every state also affords some degree of whistleblower protection, either statutorily or in the common law.

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November 9, 2022: “Legal and DoJ Matters”

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Blank Rome partner Justin A. Chiarodo will serve as a panelist at Federal Publications Seminars and Capital Edge Consulting’s 2022 Government Contract Accounting and Regulatory Update, being held November 9 and 10, 2022, in Arlington, Virginia.

Justin’s session, “Legal and DoJ Matters,” will take place Wednesday, November 9, from 8:30 to 10:00 a.m., and the panel will cover settlement and judgments from recent civil fraud and false claims, penalty assessments, and emerging issues.

For more details, visit our website.

FY 2022 Sees Number of Protests Fall, Solicitation Challenges Join the List of Most Likely Protest Grounds to Be Sustained

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Luke W. Meier and Elizabeth N. Jochum ●

The Government Accountability Office (“GAO”) has released its Annual Report to Congress summarizing bid protest activity for Fiscal Year 2022 (GAO-23-900462). The report mostly shows a continuation of recent trends: the overall number of GAO protests continues to drop, “effectiveness” remains high and stable (51 percent), and there are very few hearings (two for the year). Of note, preaward solicitation challenges were one of the most successful types of protest at GAO, for the first time ever since GAO began reporting the bases for successful protests in 2013. Below we break down what contractors can glean from this latest report.

Overall numbers down

The total number of protests filed at GAO continues to fall. The chart below shows the number of protest actions reported by GAO over the last several years.

Continue reading “FY 2022 Sees Number of Protests Fall, Solicitation Challenges Join the List of Most Likely Protest Grounds to Be Sustained“
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