Department of Veterans Affairs Releases Contractor Vaccination Guidelines

Merle M. DeLancey Jr.

At the end of July 2021, the Biden administration announced that, in addition to federal government employees, onsite federal contractor employees will be required to attest to their COVID-19 vaccination status. Visitors to federal buildings or federally controlled indoor workspaces and other individuals interacting with the federal workforce also will be required to submit a signed Certification of Vaccination form.

Any onsite contractor employee or visitor who declines to respond or responds that they are not fully vaccinated must (i) wear a mask regardless of the level of community transmission; (ii) physically distance; and (iii) provide proof of having received a negative COVID-19 test from within the previous three days if not enrolled in the applicable agency’s testing program. Federal agencies are required to establish a weekly or twice-weekly testing program for individuals not fully vaccinated. In addition, all onsite contractor employees and visitors, even those fully vaccinated, will be required to wear a mask in areas of high or substantial transmission.

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Government Contractor Best Practices in Light of Afghanistan Withdrawal (Part 2)

Merle M. DeLancey Jr. and Craig Stetson*

Our Part 1 post addressed contract administration related to changes to or a termination of a contract arising from the government’s withdrawal from Afghanistan. This post focuses on the cost management, documentation, and government audit aspects that contractors should be focused on to prepare for and mitigate downstream and currently unknown risks.

Requesting Payment/Compensation

Responding to a change or termination will likely involve submitting a request for payment or compensation. The label placed on a contractor’s request for payment depends on whether its contract has been terminated or has experienced a “change.” The type of request for payment also can vary depending on the type of contract involved (i.e., cost reimbursement, fixed price, or labor hour).

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Government Contractor Best Practices in Light of Afghanistan Withdrawal (Part 1)

Merle M. DeLancey Jr. and Craig Stetson*

It is hard to describe the manner in which the United States is withdrawing from Afghanistan. At this point, the safety and security of Americans and those who provided critical assistance to U.S. operations in Afghanistan are at the forefront of everyone’s thoughts. However, contractors in Afghanistan must confront the repercussions of shutting down operations in Afghanistan or dealing with significant changes in contract performance requirements. Translated—this means ensuring fair compensation for terminated or changed contracts.

This blog post focuses on the contract administration aspects that contractors should be thinking of now to prepare for and mitigate downstream and currently unknown risks. Below is a list of issues for contractors supporting operations in Afghanistan to consider.

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“Rule of Two” Cheat Sheet

Merle M. DeLancey Jr.

June 2021 marked the five-year anniversary of the Supreme Court’s Kingdomware decision[1], which is best known for broadly interpreting the so-called “Rule of Two” requirement flowing from the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the “VBA”). The Rule has been criticized for delaying Department of Veterans Affairs (“VA”) procurements and increasing the prices the government pays for goods and services. However, the importance of the Rule’s purpose—to prioritize and increase the government’s use of small businesses owned by veterans—cannot be credibly challenged.

Over the past five years, the Federal Circuit, Court of Federal Claims, and Government Accountability Office (“GAO”) protest decisions have created some bright-line rules interpreting the VBA’s Rule of Two. After a brief summary of the Rule of Two, this post lays out these bright-line rules, and concludes with predictions regarding future VBA Rule of Two protests.

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Biden Administration Initiatives to Rein in Drug Prices—Déjà vu All Over Again

Merle M. DeLancey Jr.

On July 9, President Biden signed Executive Order 14063, designed to promote competition in the American economy with the goal of lowering prices for families, increasing wages for workers, and promoting innovation and even faster economic growth. The Order is expansive—requiring more than 12 federal agencies to pursue 72 initiatives. One of the Order’s prominent targets is drug pricing. At the signing ceremony, President Biden reiterated that “Americans pay two-and-a-half times more for prescription drugs than in any other leading country,” and “nearly one in four Americans struggles to afford their medication.” We have heard similar words multiple times before over many years, however, to date, there has been little progress.

The Order’s initiatives focusing on drug prices do not appear very different from similar efforts in recent years. First, the Order calls on the Department of Health and Human Services (“HHS”) to create a plan within 45 days to combat “excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such drugs, and to address the recurrent problem of price gouging.” While perhaps a good sound bite, this initiative is not new. In fact, it sounds similar to the Trump administration’s “Most Favored Nation” drug pricing initiative under which Medicare reimbursement for certain drugs would be based on lower prices in other countries. The call for a plan to be delivered in 45 days is curious since it is reported that HHS delivered a new, Biden administration, most favored nation drug pricing rule to the Office of Management Budget for review earlier last week. Perhaps the plan will address how the Biden administration can implement this policy and avoid being bogged down in litigation.

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How to Know the Government Is Investigating You or Your Company in Connection with COVID Relief Funds

By Merle M. DeLancey Jr.Craig Stetson*, and Jennifer A. Short

In our previous blogs, we discussed the multiple government enforcers and regulators charged with authority to oversee the application, eligibility, and use of COVID relief funds. Here, we address how to know whether you or your company is under investigation or review or being considered for same. Sometimes it is obvious—for example, when the Federal Bureau of Investigation (“FBI”) along with other agencies raid your offices. Other times, the signs are subtle. 

The federal government has an arsenal of tools it uses to gather information for investigations and audits. These tools are not new and are not specific to COVID relief funds. However, some of the “new” entities created by COVID relief legislation (e.g., the Special Inspector General for Pandemic Recovery (“SIGPR”)), as well as the coordination of agency inspectors general on the Pandemic Response Accountability Committee (“PRAC”)), can use those same old tools to hone in on recipients of COVID-related funding.

Below are some practical tips to understand whether you are being investigated based upon investigative tools used by the government. 

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Paycheck Protection Program Audits Are Upon Us—Borrowers Prepare!

Merle M. DeLancey Jr., Craig Stetson*, and Jennifer A. Short

In our last post on this topic, we touched on how the acceptance, use, and forgiveness of Paycheck Protection Program (“PPP”) loans can be viewed in the context of a Defense Contract Audit Agency (“DCAA”) audit. This post focuses on audits and investigations involving PPP loans. Close scrutiny of PPP loans is not a prediction; it is reality. The Small Business Administration (“SBA”) has announced it will audit all PPP loans in excess of two million dollars following a lender’s submission of a borrower’s loan forgiveness application, and it reserves the right to “spot check” any PPP loan of a lesser amount at its discretion. The Department of Justice has already charged multiple individuals with PPP fraud. And this is just the beginning of what many think will be a tidal wave of enforcement activity involving PPP loans.

Overview of the PPP

The PPP is the largest relief measure for small businesses under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The government has made available nearly one trillion dollars in PPP relief funds through four separate funding measures ($349 billion via the CARES Act; $310 billion via the PPP and Health Care Enhancement Act; $284 billion via the Consolidated Appropriations Act of 2021; and $7.25 billion via American Rescue Plan Act of 2021).

The PPP makes available guaranteed SBA loans to small business that meet certain eligibility requirements. In addition, PPP loans can be forgiven fully if used properly to cover specified business expenses such as payroll, rent, utilities, mortgage interest, and other limited uses. As of April 11, 2021, the SBA had approved more than 9.5 million loans totaling more than $755 billion using more than 5,400 lenders.

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COVID-Related Audits and the DCAA’s New Audit Direction

Merle M. DeLancey Jr. and Craig Stetson*

This is the third in a series of posts regarding what we believe will be an onslaught of government investigations and audits of COVID relief funds and contracting. Previously, we identified likely categories of programs, contracts, and companies the government might investigate or audit. Below, we discuss the Defense Contract Audit Agency’s (“DCAA”) current direction, interests, and initiatives related to contractors’ receipt of COVID relief funds and the impact an uncertain business environment may have on government contract pricing and costing forecasts.

COVID Relief Funds

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) funding opportunities come with unique government contract compliance requirements and financial reporting obligations. The funding is not “free” and may result in financial consequences to unwary contractors. DCAA knows this and will be conducting audits to test contractors’ compliance with unique relief fund requirements. Contractors unaware of these accounting and reporting requirements risk DCAA questioning or denying costs.

In January 2021, DCAA issued an audit alert to its regional offices pertaining to COVID relief legislation and regulation.[1] The audit alert includes frequently asked questions and answers (“FAQs”) concerning contractors’ request or receipt of COVID relief funding. Originally released last summer, the FAQs have been revised and expanded several times. The FAQs telegraph DCAA’s position on various instances where COVID relief funding intersects with or impacts government contract cost accounting and compliance.

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The Likely Targets of COVID-Related Audits and Investigations

Merle M. DeLancey Jr. and Craig Stetson*

This is the second in a series of posts regarding what we believe will be an onslaught of government investigations and audits of COVID relief funds and contracting. Previously, we identified the government offices that will be conducting the investigations and performing the audits. Below, we identify three categories of programs, contracts, and companies we believe are more likely to be investigated or audited.

Programs/Contracts

The first group of companies ripe for audits are those accepting COVID relief funding and contractors performing large COVID-specific contracts, as well as contractors performing traditional government contracts that entail certain COVID-related twists impacting performance.

Companies accepting COVID relief funds are likely at the top of auditors’ lists for several reasons. First, because of the magnitude of funds at issue. Second, due to the complex and ambiguous eligibility, use, and reporting requirements. For example, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and supplemental legislation appropriated funds to reimburse eligible healthcare providers for healthcare-related expenses or lost revenues attributable to COVID. Receipt of funds was easy. Most recipients’ funds were automatically deposited into their bank accounts. But healthcare provider recipients have not yet been required to file reports attesting to the proper utilization of the relief funds. Relief funds recipients in other non-healthcare industries may also be affected. Certain monies received under the CARES Act also involve ongoing and downstream reporting requirements by companies regarding statutory limitations on compensation paid to certain employees and the receipt of a variety of potential tax credits. Thus, recipients’ use of funds has not been tested, and it is unlikely that all usage has been in compliance with the ambiguous requirements and multiple rounds of agency guidance and interpretations.

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Under Biden Administration, Will Federal Drug Pricing Transparency Efforts Continue to Outpace State Laws?

Merle M. DeLancey Jr.

During 2019 and 2020, states enacted fewer laws requiring drug manufacturers to disclose pricing and related information. Initially, the slowdown may have been due to federal actions to rein in drug prices through the Trump administration’s multiple executive orders. Thereafter, states were focused on responding to the pandemic and drug pricing was understandably placed on the back burner.

Circumstances have since changed. We now have a new president and administration, and the country is hopefully turning the corner on the COVID-19 pandemic. Inevitably, the federal government and states will again turn their focus to drug prices. While the Trump administration’s executive orders made for good public sound bites, they had little to no actual impact on drug prices. At the end of the day, most of the Trump administration’s initiatives never made it to the regulatory rulemaking phase and those that did were met with legal challenges.

Only a month in, the Biden administration has issued multiple executive orders and memoranda reversing prior executive orders and freezing pending regulations and enforcement policies with respect to existing regulations. After a brief discussion of what we have seen in the early days of the Biden administration in terms of drug pricing, this article reviews new and existing state laws requiring drug manufacturers to report pricing and other information. Thereafter, we again question the efficacy of the state price transparency efforts and what manufacturers should be doing in terms of compliance.

To read or download the full client alert, please click here.