Author: Blank Rome LLP

DOJ Issues July 2025 Guidance on Unlawful Discrimination: Navigating Diversity, Equity, and Inclusion in a New Legal Landscape

Dominique L. Casimir, Brooke T. Iley, and Jennifer A. Short ●

From the outset of his current term in office, President Trump has made it a signature policy objective to target and dismantle diversity, equity, and inclusion (“DEI”) and so-called “gender ideology” in both the public and the private sectors. Blank Rome has covered these policy initiatives extensively, along with the various lawsuits challenging them. In the courts and elsewhere, the government has been questioned about what the phrase “illegal DEI” actually means.

Perhaps in response to those queries, on July 29, 2025, the Department of Justice (“DOJ”) issued a memorandum titled “Guidance for Recipients of Federal Funding.” The memo’s stated objective is to offer “non-binding suggestions to help entities comply with federal antidiscrimination laws and avoid legal pitfalls,” thereby aiming to “minimize the risk of violations.” 

This memo provides the most comprehensive insight about DOJ’s perspective on DEI and gender ideology practices to date, and thus serves as a valuable resource for recipients of federal funding as they review their current policies. Private employers, too, may find the memo a useful framework to evaluate potential risks associated with DEI initiatives and to discern what actions the Administration considers to violate civil rights laws. That said, the DOJ memo does not address certain practical questions that entities will face in trying to adhere to its guidance. Below, we summarize the memo and provide our analysis of its most significant aspects for federally funded entities and companies. 

Read the full client alert on our website.

This alert was published in The Government Contractor, Volume 67 Issue 30, on August 13, 2025.

Domestic Production of Pharmaceuticals: Are the Administration’s Efforts Enough?

Merle M. DeLancey, Jr. ●

The Administration issued Executive Order (“EO”) 14293: Regulatory Relief to Promote Domestic Production of Critical Medicines on May 5, 2025 (whitehouse.gov/presidential-actions/2025/05/regulatory-relief-to-promote-domestic-production-of-critical-medicines). The EO seeks to ease obstacles for drug manufacturers to establish or expand domestic production facilities. For example, it streamlines Food and Drug Administration (“FDA”), Environmental Protection Agency, and Army Corps of Engineers reviews and inspections associated with building or expanding manufacturing facilities. These accelerated processes are intended to reduce a manufacturer’s cost to build or expand a facility with the intended result being lower prices for domestically produced drugs.

The EO also calls for enhanced FDA inspections of foreign manufacturing facilities. The inspections will be funded through increased fees imposed on foreign drug manufacturers. The likely result will be an increase in foreign drug production costs, which would lead to increased prices of foreign-produced drugs. Further, adding to the price of foreign drugs are the Administration’s proposed tariffs. If imposed, the tariffs could start at 15 percent and ratchet up to 150 percent and 250 percent over time.

The goal of increasing the prices of foreign-produced drugs is to enable domestically produced drugs to compete. Only time will tell whether the EO’s efforts will be enough to level the playing field. However, there are at least two obstacles that could prevent the Administration from reaching its goal.

Continue reading “Domestic Production of Pharmaceuticals: Are the Administration’s Efforts Enough?”

Beyond the Balance Sheet: The Continued Importance of Cybersecurity in M&A

Merle M. DeLancey Jr., Samarth Barot, and Michael Joseph Montalbano ●

In our August 1 post, we discussed how companies that acquire government contractors can inherit the False Claims Act (“FCA”) exposure based on their targets’ cybersecurity violations. Now, the Department of Justice (“DOJ”) delivered another vivid real-world example: a $1.75 million settlement in which a private equity (“PE”) firm, Gallant Capital Partners LLC, was named jointly and severally liable for its portfolio company’s cybersecurity violations on a U.S. Air Force contract.

The outcome underscores two critical truths. First, DOJ will pursue financial sponsors when a contractor in their portfolio fails to comply with its contractual cybersecurity requirements. Second, investors that fail to ask about, document, and remediate a target’s security shortcomings can find themselves financing both the acquisition and the government’s recovery.

Continue reading “Beyond the Balance Sheet: The Continued Importance of Cybersecurity in M&A”

GAO Sharpens Its Pleading Standard Description: But Did GAO Raise the Bar?

David L. Bodner, Elizabeth N. Jochum, Stephanie M. Harden, and Luke W. Meier ●

In a recent decision, GAO announced that it was clarifying its pleading standard for bid protests. For many years, GAO had described a minimally acceptable protest pleading as one with “either allegations or evidence sufficient” to establish a likelihood of improper agency action. Going forward, as articulated in Warfighter Focused Logistics, Inc., B-423546, B-423546.2, Aug. 5, 2025, 2025 WL 2237333, the standard now calls for “credible allegations that are supported by evidence and are sufficient” to make that showing. GAO linked this revised formulation to a request from Congress in Section 885 of the 2025 National Defense Authorization Act to clarify and enhance its pleading standard. 

It is not immediately clear whether this means a change in protest practice at GAO. GAO seemed to suggest that the updated language was not a change to the pleading standard itself, but a clarification to better align the stated legal standard with its longstanding stance that “‘bare allegations’ or allegations based upon ‘information and belief’ are not sufficient to meet our pleading standards.” We will be closely watching how GAO applies the standard in its decisions to fully understand the level of evidence required to clear GAO’s pleading standard, and it is likely to remain a heavily fact-specific analysis. Regardless, protesters, as ever, should make sure they substantiate allegations with evidence and awardees should retain counsel to safeguard their interests through effective dismissal requests.

Continue reading “GAO Sharpens Its Pleading Standard Description: But Did GAO Raise the Bar?”

Blank Rome Attorneys Appointed to American Bar Association’s Public Contract Law Section Leadership for the 2025–2026 Term

We are pleased to announce that a record nine attorneys from Blank Rome’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 2025–2026 term.

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

Buyer Beware: Cybersecurity Compliance in M&A

Merle M. DeLancey Jr. and Samarth Barot ●

A recent Department of Justice (“DOJ”) settlement highlights the importance of assessing cybersecurity compliance for government contractors during mergers and acquisitions (“M&A”). In April 2025, DOJ announced an $8.4 million settlement with a defense contractor resolving alleged cybersecurity noncompliance by a company it acquired. Notably, under the settlement, the acquiring company was liable for cybersecurity noncompliance that occurred prior to the acquisition.

In the M&A context, successor liability arises when an acquiring company becomes responsible for liabilities, obligations, or wrongful acts committed by the company to be acquired prior to the acquisition. Fundamentally, successor liability ensures that a corporate acquisition does not allow the acquired entity to escape accountability. In the settlement, DOJ explicitly named the acquiring company as the “successor in liability” for the acquired company’s alleged violations, even though the conduct at issue occurred years before the acquisition. This underscores the importance for acquirers to add cybersecurity compliance to the issues vetted during due diligence.

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CMS Proposes New Rules for Calculating Average Sales Price for Medicare Part B Drug Reimbursement


Merle M. DeLancey, Jr. ●

The Centers for Medicare & Medicaid Services (“CMS”) released the Calendar Year 2026 Medicare Physician Fee Schedule (“PFS”) proposed rule on July 16, 2025. (See cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-pfs-proposed-rule-cms-1832-p). The proposed rule includes potentially significant changes to what is considered a bona fide service fee (“BFSF”) when calculating average sales price (“ASP”) under Medicare Part B.[*]

Under Medicare Part B, most drugs are reimbursed based on ASP plus six percent. Manufacturers report ASPs to CMS quarterly. With certain exceptions, ASP is defined as a weighted average price to commercial customers in the United States. Drug manufacturer price concessions are deducted when calculating ASP but BFSFs are not. To support a higher ASP, which increases a drug’s reimbursement, manufacturers seek to avoid price concessions and instead classify programs as BFSFs. Improperly classifying a price concession as a BFSF increases a manufacturer’s ASP, which results in Medicare overpayments and higher coinsurance amounts for Medicare beneficiaries.

Continue reading “CMS Proposes New Rules for Calculating Average Sales Price for Medicare Part B Drug Reimbursement”

Webinar: Impacts on Government Contractors: 180 Days of the Trump Administration—Quick Hits on Executive Orders, Actions, and Policies

Blank Rome-Hosted Live Webinar
July 29, 2025
12:00–1:00 p.m. EDT | 9:00–10:00 a.m. PDT


Please join Blank Rome Government Contracts attorneys Justin A. Chiarodo, Dominique L. Casimir, Robyn N. Burrows, and Sara N. Gerber for this timely webinar with key updates for government contractors navigating the first 180 days of the Trump Administration, and the days ahead.

Topics include:

  • Civil rights enforcement / diversity, equity, and inclusion
  • Federal Acquisition Regulation update
  • Contract and grant terminations 

This session is part of Blank Rome’s summer live webinar series 180 Days of the Trump Administration—Quick Hits on Executive Orders, Actions, and Policies (ending on Wednesday, August, 13, 2025), where our interdisciplinary Trump Administration Resource Team is unpacking the most pressing legal, regulatory, and policy developments from the Trump administration’s first 180 days.

Click here to register for the July 29 government contractor session and for any future sessions: Summer 2025- Trump 180 Day Webinar Series | RSVP Blank.

You may also view any past sessions on demand here: On-Demand Webinar Series: 180 Days of the Trump Administration.

60-Second Sustains: BrightPoint, LLC

Elizabeth N. Jochum and David L. Bodner ●

Protest of: BrightPoint, LLC
B-423392, B-423392.2, B-423392.3

  • BrightPoint raised numerous challenges to the Department of Agriculture’s evaluation and award of a task order for information technology services.
  • The Government Accountability Office (“GAO”) sustained one protest ground: that the discriminators identified by the Agency to justify its award decision were based on the awardee’s experience with work unrelated to the anticipated work scope and also possessed and demonstrated by Brightpoint.
  • In response to this protest ground, the Agency argued “in general terms” that its evaluation was reasonable and equal.
  • But GAO noted that the Agency did not demonstrate a connection between the Solicitation’s requirements and the positive findings it gave to the awardee’s experience.
  • The Agency also did not “meaningfully respond” to Brightpoint’s allegations of unequal treatment, stating only that it treated offerors equally.
  • GAO determined that, but for the discriminators identified in favor of the awardee, Brightpoint might have been selected for award, even at a small price premium.
  • GAO recommended the Agency reevaluate the prior experience volumes and make a new source selection decision.

Department of Defense to Increase Scrutiny Over IT Consulting and Advisory Contracts

Michael Joseph Montalbano  and Amanda C. DeLaPerriere ●

The Department of Defense’s (“DoD”) Under Secretary for Acquisition and Sustainment issued a memorandum on June 23, 2025, that tightens oversight on DoD contracts for information technology consulting & management services (“ITC&MS”) and advisory & assistance services (“A&AS”).

What contracts are impacted?

The memorandum applies to unclassified, FAR-based contracts or task orders for ITC&MS or A&AS. ITC&MS are services provided by integrators or consultants that involve system information technology (“IT”) integration, implementation, or advice and that are valued at over $10 million. A&AS are services for consulting, advising, assisting, or any professional services for similar functions, and that are valued over $1 million. The memorandum expressly notes that requirements may not be split into multiple efforts to stay under the $10 million and $1 million thresholds. Additionally, the memorandum does not apply to already existing consulting and advisory contracts. 

What is the timeline for review?

Effective immediately, DoD agencies must secure advance approval from the Department of Government Efficiency (“DOGE”) for all qualifying ITC&MS or A&AS contracts. DoD agencies must include in their approval request a description of the contract’s purpose, a cost/benefit analysis, and a justification as to why the efforts cannot be insourced or acquired from a direct service provider. DOGE then has three business days to respond. If DOGE does not respond or approves the contract, then the contract may proceed. If DOGE raises issues with the contract, then DOGE and the DoD agencies are required to work collaboratively to resolve those issues. The memorandum does not specify whether DOGE can block a DoD agency from moving forward with the contract, whether there is any time limit on DOGE and DoD’s attempts to work collaboratively, or whether the agency has a specific appeal process if it disagrees with DOGE’s assessment.

Scope and Exemptions

Not all ITC&MS or A&AS contracts are subject to review. The memo expressly excludes:

  • ITC&MS contracts involving “direct service providers” performing services rather than resellers, integrators, or intermediaries.
  • ITC&MS contracts in direct support of defense weapon system programs or sustainment activities.
  • A&AS contracts for systems engineering and technical assistance in support of major defense acquisition programs.

These exemptions align with the Administration’s decision to prioritize war fighting efforts as well as procure more supplies and services from Original Equipment Manufacturers.

Strategic Implications for Contractors and Agencies

This memorandum reflects a strategic push—rooted in broader federal efficiency initiatives—to trim consulting spend, eliminate unnecessary intermediation, and ensure rigorous scrutiny of high-value service awards.

While the exact impact this memorandum will have on contractors is still unclear, contractors working in the ITC&MS or A&AS space can take several steps to reduce their risk:

  • Preempt DOGE scrutiny with clear justifications: Articulate in your proposal how your services provide unique value and cost-effective support.
  • Clarify your role: Emphasize direct mission-critical support—especially for exempt programs. Avoid generic management consulting language that could trigger heightened scrutiny.
  • Collaborate with agency customers: Work early with DoD contracting and program officials to help them develop the rationale for approving your contract or identifying an applicable exception.
  • Streamline pricing and deliverables: Clearly define work products, performance metrics, and accountability mechanisms.
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