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”

Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update

Merle M. DeLancey Jr.

Earlier this year, I commented on state drug pricing transparency laws in effect and/or enacted during 2017.[1] I also opined that it was likely more states would pass similar transparency laws requiring drug manufacturers to disclose pricing and/or price increases during 2018. While proposed drug pricing transparency and disclosure legislation has been introduced and is pending in numerous states, during the first half of 2018 only two states (Oregon and Connecticut) passed new laws imposing price disclosure requirements on drug manufacturers. Maine expanded its existing disclosure law. Also of note was the United States Court of Appeals for the Fourth Circuit finding Maryland’s Anti-Gouging law unconstitutional. Continue reading “Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update”

Department of Veterans Affairs Updates Pharmaceutical Federal Schedule Supply

Merle M. DeLancey Jr.

The Department of Veterans Affairs (“VA”) National Acquisition Center (“NAC”), which administers the VA Federal Supply Schedule (“FSS”) Program, has already had a busy year. Among other procurement streamlining activities, the NAC currently is in the process of refreshing all nine (9) of its FSS solicitations to incorporate the most recent regulations and provide updates and clarifications.

Last month, the NAC updated the open and continuous Solicitation for Pharmaceuticals—Schedule 65 I B Pharmaceuticals FSS contract. The NAC issued Mass Modification 0006 and Solicitation Refresh 8. The Modification and Refresh update and incorporate procurement regulations and update or clarify FSS Program policy changes since the last refresh in February 2014, as amended. Refresh 8 applies to all companies submitting FSS proposals (for new contracts and renewals) after June 21, 2018. The Mass Modification is a standard bilateral modification to existing FSS terms and conditions, which the NAC is requesting manufacturers sign and return by July 30, 2018. Continue reading “Department of Veterans Affairs Updates Pharmaceutical Federal Schedule Supply”

Trade Agreements Act Compliance: Some Welcome News for Some Federal Contractors, But Will It Last?

Merle M. DeLancey Jr.

Recently, the United States District Court for the District of Columbia dismissed a qui tam action involving allegations of fraud in connection with country of origin requirements imposed by the Trade Agreements Act (“TAA”). United States ex rel. Folliard v. Comstor Corp., 308 F.Supp.3d 56 (D.D.C. 2018).

Comstor involved a False Claims Act (“FCA”) action filed by a serial whistleblower who alleged two contractors violated the FCA by selling non-TAA compliant products on their General Services Administration (“GSA”) Federal Supply Schedule (“FSS”) contracts to federal government customers. Depending on the dollar value of the acquisition, most procurements are subject to either the Buy American Act (“BAA”) or TAA. Currently (2018), the BAA applies to supply procurements valued at or below $180,000. Accordingly, the TAA currently applies to such procurements valued in excess of $180,000. GSA has determined the TAA applies to FSS contracts. Continue reading “Trade Agreements Act Compliance: Some Welcome News for Some Federal Contractors, But Will It Last?”