States Pass Fewer Drug Manufacturer Pricing Disclosure Laws in 2018

Merle M. DeLancey Jr.

While the introduction of state legislation that would require drug manufacturers to disclose pricing and other information did not slow down in 2018, the number of bills that were made law did slow down. During 2018, 22 state legislatures considered bills seeking to require drug manufacturers to disclose pricing information; however, most of the legislation failed.

Two New State Laws

Since my Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update, two states—Vermont and New Hampshire—passed laws that arguably touch on requiring pharmaceutical manufacturers to report drug prices.[1] Continue reading “States Pass Fewer Drug Manufacturer Pricing Disclosure Laws in 2018”

Who Is a Subcontractor under a Federal Government Contract?

Merle M. DeLancey Jr.

Recently, clients have asked if they or a vendor or supplier are a “subcontractor” under a federal government contract. Sometimes the answer is easy—e.g., you are a subcontractor when a prime contractor contracts directly with a vendor or supplier (hereinafter “vendor”) to perform a federal contract. But the lines become less clear when a prime contractor does not inform the vendor that the subcontract is being entered into in furtherance of a federal government contract or where the vendor supplies goods that the prime contractor uses to perform commercial and government contracts.

Why Is Subcontractor Status Important?

Subcontractor status is important to prime and subcontractors. A federal prime contractor is required to flow-down multiple Federal Acquisition Regulation (“FAR”) clauses to its subcontractors. See FAR 52.212-5(e). The required flowdown clauses that receive the most attention implement three antidiscrimination laws: Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, as amended; 29 U.S.C. § 793; and Section 402 of the Vietnam Era Veterans’ Readjustment Assistance Act, 38 U.S.C. § 4212. A prime contractor’s failure to flow down these clauses to its subcontractors could result in the prime contractor being held responsible and/or liable for its subcontractor’s noncompliance. Continue reading “Who Is a Subcontractor under a Federal Government Contract?”

What Is the Christian Doctrine and Why Should You Care?

Merle M. DeLancey Jr.

The Christian Doctrine

The Christian doctrine provides that a mandatory statute or regulation that expresses a significant or deeply ingrained strand of public procurement policy shall be read into a federal contract by operation of law, even if the clause is not in the contract. G. L. Christian & Associates v. United States, 312 F.2d 418 (Ct. Cl. 1963). The doctrine is an exception to the general rule that the government must put vendors on notice of contract requirements, whether expressly or through incorporation by reference. It also is an exception to standard commercial contracting practices and contract interpretation principles. The rationale for the doctrine is that procurement policies set by higher authority cannot be avoided or evaded (deliberately or negligently) by lower government officials. Continue reading “What Is the Christian Doctrine and Why Should You Care?”

In Department of Veterans Affairs Procurements, Veteran-Owned Businesses Trump All Other Contractors

Merle M. DeLancey Jr.

On October 17, 2018, the Federal Circuit ruled that the Department of Veteran Affairs (“VA”) must give priority to veteran-owned small businesses (“VOSB”) when awarding contracts. PDS Consultants Inc. v. U.S., et al., Nos. 17-2379 and 17-2512, 2018 WL 5019735 (Fed. Cir. Oct. 17, 2018). At first blush, no one would argue with the foregoing statement. But, this mandate became less clear when the VA was faced with awarding a contract to a VOSB or following an otherwise mandatory requirement for all federal agencies to buy a specific list of items made by nonprofits employing the blind and significantly disabled.

Here is the source of confusion. More than 40 years ago, Congress enacted the Javits-Wagner-O’Day Act (“JWOD”), which required federal agencies to buy certain items and services from nonprofits that employ the blind or people with other significant disabilities. Today, this mandatory procurement policy is implemented through the AbilityOne program. In 2006, Congress passed the Veterans Benefits, Health Care, and Information Technology Act (“VBA”). As the U.S. Supreme Court stated in Kingdomware, the VBA made it mandatory in almost every procurement for the VA to follow the “Rule of Two.” The “Rule of Two” requires the VA to award a contract to a VOSB whenever at least two VOSBs can perform the work at a reasonable price. Continue reading “In Department of Veterans Affairs Procurements, Veteran-Owned Businesses Trump All Other Contractors”

New Rules Affecting Veteran-Owned Small Businesses (Important to Large Businesses, Too)

Merle M. DeLancey Jr.

Effective October 1, 2018, verification of Veteran-Owned Small Businesses (“VOSBs”) and Service-Disabled Veteran-Owned Small Businesses (“SDVOSBs”) now rests with the Small Business Administration (“SBA”). (See, VA Veteran-Owned Small Business (VOSB) Verification Guidelines.) Previously, the SBA and the Department of Veterans Affairs (“VA”) had concurrent jurisdiction over VOSB/SDVOSB “ownership” and “control” determinations. This led to the confusing and inconsistent results. Now, the VA will no longer vet (pun intended) contractors to determine if they are eligible VOSBs or SDVOSBs. Exclusive authority to verify these businesses is now with the SBA. The new rule clarifies the VA verification process and makes VA and SBA regulations concerning VOSB and SDVOSB joint ventures consistent. The new rule stems from the Fiscal Year 2017 National Defense Authorization Act, Public Law 114-840, which called for the SBA and VA to eliminate inconsistent regulatory interpretations of “ownership” and “control” requirements for VOSBs and SDVOSBs. Continue reading “New Rules Affecting Veteran-Owned Small Businesses (Important to Large Businesses, Too)”

OFCCP Is Staying Busy—So Should Government Contractors

Merle M. DeLancey Jr.

In February, the Office of Federal Contract Compliance Programs (“OFCCP”) sent Corporate Scheduling Announcement Letters (“CSALs”) to 1,000 contractor establishments. Shortly thereafter, in March, OFCCP mailed follow-up compliance review scheduling letters (“Scheduling letters”). On September 7, 2018, OFCCP sent a second round of CSALs to an additional 750 contractor establishments.

Further, on September 19, 2018, OFCCP issued Directive 2018-08: Transparency in OFCCP Compliance Activities. The purpose of the Directive is to “ensure transparency in all stages of OFCCP compliance activities to help contractors comply with their obligations and know what to expect during a compliance evaluation, and to protect workers from discrimination through the consistent enforcement of OFCCP legal authorities.” The Directive identifies the “Roles and Responsibilities” of OFCCP and contractors during a compliance review and the “Policies and Procedures” that will be followed. Continue reading “OFCCP Is Staying Busy—So Should Government Contractors”

Trade Agreements Act Enforcement Loses a Couple More Teeth

Merle M. DeLancey Jr.

Two recent judicial decisions involving the Trade Agreements Act (“TAA”) build on a trend reflecting a more favorable enforcement climate for contractors grappling with domestic preference regimes. Earlier this year, the U.S. District Court for the District of Columbia dismissed a qui tam action that alleged fraud in connection with country of origin requirements imposed by the TAA. United States ex rel. Folliard v. Comstor Corp., 308 F.Supp.3d 56 (D.D.C. 2018) (finding the relator failed to adequately plead that the alleged TAA noncompliance was “material” to the Government’s payment decision). The decision marked a welcome early defeat of a False Claims Act case based on the enhanced materiality and scienter requirements of the Escobar decision (as we wrote about here).

Two recent federal court decisions appear to extend the trend of taking some of the bite out of TAA enforcement, and potential exposure for alleged noncompliance. Despite this welcome news, domestic preference programs remain a key legal obligation for government contractors (and an area likely to remain under scrutiny with the Administration’s professed focus on Buy American and Hire American initiatives). Continue reading “Trade Agreements Act Enforcement Loses a Couple More Teeth”