May 19, 2022: “Special Focus on FSS Post Award Compliance and Audits” at ACI “BIG FOUR” Pharmaceutical Pricing Boot Camp

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Merle M. DeLancey Jr. will serve as a speaker for the American Conference Institute (“ACI”) “BIG FOUR” Pharmaceutical Pricing Boot Camp, taking place May 18–19, 2022, as an interactive live virtual conference.

Michael Grivnovics, Director, Federal Supply System, Contracts Division, Veterans Affairs Office of Inspector General, will join Merle to present the “Special Focus on FSS Post Award Compliance and Audits” session on May 19 at 9:00 a.m. EDT.

For more details, visit our website.

GSA Relaxes Price Increase Limitations for FSS Contractors

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Merle M. DeLancey Jr. and Sara N. Gerber


The General Services Administration (“GSA”) Office of Governmentwide Policy recently authorized contracting officers to provide relief to GSA contractors experiencing cost increases due to surging inflation. See Acquisition Letter. To assist struggling contractors, GSA issued a temporary moratorium on the enforcement of certain limitations contained in GSA economic price adjustment (“EPA”) clauses.

GSA issued the moratorium in response to an uptick in contractors’ requests for price increases and removal of items from their Federal Supply Schedule (“FSS”) contracts to avoid selling at a loss. In issuing the moratorium, GSA recognized that inflationary pressures and price volatility, caused by supply chain disruptions, strong demand, and labor shortages, are ongoing concerns unlikely to abate in the near term. GSA acknowledged that it must help contractors weather this “unusual time”—especially small businesses and new market entrants—to ensure a resilient and diverse federal industrial base and the government’s continued access to critical “products, services, and solutions.”

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The Medicaid Drug Rebate Program and Value-Based Purchasing

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Merle M. DeLancey Jr.

On March 23, 2022, the Centers for Medicare and Medicaid Services (“CMS”) issued long-awaited guidance regarding how drug manufacturers are to report multiple best prices (“BPs”) to the Medicaid Drug Rebate Program (“MDRP”) under value-based purchasing (“VBP”) arrangements. See Manufacturer Release 116 (medicaid.gov/prescription-drugs/downloads/mfr-rel-116.pdf). CMS delayed issuing the guidance to allow states, payers, and manufacturers to administratively prepare for multiple BP reporting in connection with VBP arrangements. The regulatory amendments are effective July 1, 2022.

VBP Arrangements and Medicaid’s Best Price Rule

VBP arrangements consist of additional rebates or price concessions that states may be able to earn based on a drug’s clinical outcomes in Medicaid beneficiaries. CMS’ challenge was reconciling Medicaid’s long-standing BP reporting rule used to calculate manufacturer rebate payments to states with anticipated low prices available under VBP arrangements. Since 1991, the MDRP agreed to cover every drug a manufacturer sells regardless of price. In exchange for this unprecedented access, manufacturers agreed to pay rebates ensuring that Medicaid programs paid no more than the “best prices” paid by manufacturers’ commercial customers. Many argued that Medicaid’s BP rule prevented states from accessing innovative manufacturer programs involving cutting-edge therapies.

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Expect GSA to More Closely Scrutinize Trade Agreements Act Compliance

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Merle M. DeLancey Jr.

On January 21, 2022, the General Services Administration (“GSA”) Office of Inspector General (“OIG”) informed the Federal Acquisition Service (“FAS”) that ongoing monitoring by the OIG found that the FAS failed to properly monitor the sale of products for compliance with the Trade Agreements Act (“TAA”) during the COVID-19 response. Previously, in April 2020, GSA relaxed compliance with the TAA for a limited number of Federal Supply Classes (“FSCs”) to aid the government’s response to the COVID-19 pandemic. The applicable FSCs included those covering N95 masks, cleaners and disinfectants, disposable gloves, and hand sanitizers. After several extensions, the TAA exception policy expired on April 30, 2021.

The OIG identified two deficiencies in FAS’ implementation of the TAA exception policy. First, the OIG found that FAS failed to properly track the addition of non-compliant products to contracts. As a result, after expiration of the exception policy, there was no effective way for GSA to remove the non-compliant products from contracts. Second, the OIG found that GSA improperly permitted the addition of non-compliant products to GSA contracts. For example, some products that were added were unrelated to the government’s response to the pandemic; some products were added to GSA contracts prior to the effective date of the TAA exception policy; and, remarkably, in one case, a product was added to a contract that identified North Korea as its country of origin.

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Affirmative Action Program Compliance Alert: OFCCP Online Contractor Portal

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Merle M. DeLancey Jr.

Beginning February 1, 2022, contractors and subcontractors required to maintain affirmative action plans (“AAPs”) can register for access to a new secure online contractor portal. The portal was developed and will be monitored by the Office of Federal Contract Compliance Programs (“OFCCP”). OFCCP has been working on an information and verification process for three years. In August 2021, the Office of Management and Budget approved OFCCP’s use of the portal. The portal provides contractors a secure method of (i) annually certifying compliance with AAP requirements and (ii) submitting AAPs to OFCCP during audits or compliance evaluations.

Executive Order 11246 and Section 503 of the Rehabilitation Act of 1973 require contractors and subcontractors that hold a contract valued at $50,000 or more and employ 50 or more employees to comply with equal employment and affirmative action requirements. This includes developing and maintaining written AAPs. Currently, only services and supply contractors, not construction contractors, are required to certify compliance.

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The Government Will Likely Look to the Defense Production Act to Fulfill Its 500 Million COVID-19 Rapid, At-Home Test Kits Requirement

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Merle M. DeLancey Jr. and John M. Clerici*


Last week, in response to the Omicron variant, President Biden announced the Government intends to purchase 500 million at-home, rapid COVID-19 tests for distribution to Americans. According to the announcement, Americans will be able to order test kits to be delivered to their homes starting in January. While this may have been a good sound bite, as discussed below, it does not appear realistic. More likely, while Americans may be able to place orders in January, those orders may not be filled until several months into 2022.

As widely reported, rapid COVID-19 at-home test kits are already in short supply. Moreover, the Government has yet to enter into additional contracts beyond the limited contracts to a small number of suppliers previously announced by the Defense Logistics Agency (“DLA”) and a handful of “prototype” contracts finalized in 2020 under the Trump administration. The Government has not made any recent additional contract awards for rapid COVID-19 at-home test kits.

On December 22, one day after the president’s announcement, the Department of Defense (“DoD”), on behalf of the Department of Health and Human Services (“HHS”), issued a Request for Information (“RFI”) seeking information to assess market availability and sourcing for rapid COVID-19 at-home tests. The RFI, however, is not an actual procurement nor contract award and merely seeks information for 500,000 test kits for agency “personnel use.” Responses were due by 3:00 p.m. on December 24. (See, Rapid COVID-19 Antigen Test Kits.) Proposals to supply test kits are unlikely until after a Request for Proposal (“RFP”) has been issued. As of today, no RFP has been issued.

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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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