On January 31, 2022, the Nevada Department of Health and Human Services (“DHHS”) released its annual drug lists in accordance with its Drug Transparency Reporting Program. DHHS published four drug lists: List #1 Essential Diabetes Drug Summary List; List #2 Essential Diabetes Drug List with WAC; List #3 Essential Diabetes Drug List (with Significant Price Increase); and List #4 Over $40 Drug List (with Significant Price Increase). (Nevada Drug Transparency Drug Lists 2023)
Drug manufacturers with drugs identified on Lists #2, #3, and/or #4 are required to submit reports to the Transparency Program on or before April 1, 2023. The reporting templates and instructions can be found here: Manufacturers. Do not wait until late March to prepare the reports because the information requested is detailed and will likely require input from multiple divisions or functions within a company. Examples of the information required to be reported include: total cost of producing the drug; total administrative expenditures related to the drug; profit manufacturer earned from the drug; percentage of manufacturer’s total profit attributed to drug during marketing period for drug; and, for lists #3 and #4, an explanation for the applicable drug’s price increase.
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We are pleased to announce that our Government Contracts group has been named a Practice Group of the Year by Law360, which honors “the attorney teams behind litigation wins and major deals that resonated throughout the legal industry this past year.”
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.
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.
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.
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.
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.
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.
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.
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.