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U.S. Department of State Eases Military Drone Export Review Policy

Anthony Rapa and Patrick F. Collins ●

The U.S. Department of State (“State”) announced an update to its miliary drone export review policy on September 15, 2025, pursuant to which advanced unmanned aerial systems (“UAS”) will be subject to an export control policy similar to that of crewed aircraft, rather than more restrictive review applicable to missiles. Key takeaways include:

1. Policy Shift: Drones Reviewed Like Fighter Jets, Not Missiles

State announced that pursuant to the policy change, it will consider requests to export UAS similarly to how it reviews requests to export crewed fighter aircraft, rather than as missile systems. This marks a departure from the longstanding application of the Missile Technology Control Regime (“MTCR”) to exports of certain UAS, which imposed a strong presumption against the transfer of large, weaponizable drones due to their range and payload capabilities and provided for rigorous review of other UAS transfers.

Where Grant Litigation Stands After the Supreme Court’s Jurisdictional Ruling in NIH

Dominique L. Casimir●

The Supreme Court issued a fractured, 4-1-4 ruling on its emergency docket in National Institutes of Health v. American Public Health Association, No. 25A103, 606 U.S. ____ (2025) (per curiam) (“NIH”) on August 21, 2025.

The Court’s ruling left behind a complex legal landscape, because four justices wrote that a district court has jurisdiction to hear both a challenge to agency guidance alleged to be arbitrary and capricious, and challenges to grant terminations based on that guidance. Four other justices wrote that the entire case (i.e., both the challenge to the agency guidance and the challenge to grant terminations based on that guidance) belongs in the Court of Federal Claims. In the end, the outcome was controlled by a single justice (Justice Barrett), who decided the jurisdictional issue in a manner inconsistent with the views of eight justices. In her controlling concurrence, Justice Barrett ruled that a district court has jurisdiction to hear a challenge to agency guidance, but lacks jurisdiction to hear challenges to grant terminations based on that guidance because grant termination challenges are subject to the Tucker Act and therefore belong in the Court of Federal Claims.

Two lower opinions handed down since NIH show lower courts falling in line with Justice Barrett’s ruling in NIH:

This Is Not a Drill: Department of Defense Issues Long-Awaited Final CMMC DFARS Rule

Michael Joseph Montalbano ●

After years of drafts and interim measures, the Department of Defense (“DOD”) has issued the final Defense Federal Acquisition Regulation Supplement (“DFARS”) rule implementing the Cybersecurity Maturity Model Certification (“CMMC”) program. This long-awaited development cements CMMC as a contractual requirement and clarifies key aspects of the rule’s certification, compliance, and oversight requirements.

How Will CMMC Work?

Under the final rule, every solicitation where a contractor may store, process, or transmit Federal Contract Information (“FCI”) or controlled unclassified information (“CUI”) will be assigned a CMMC level. Solicitations involving just FCI will have a CMMC Level 1 requirement. Solicitations involving non-Defense CUI will have a CUI Level 2 Self-Attestation requirement. Solicitations involving Defense CUI will have a CUI Level 2 third-party certification (i.e., C3PAO) requirement. Solicitations involving particularly sensitive DOD programs will have a Level 3 requirement. Level 3 requires an assessment by the Defense Industrial Base Cybersecurity Assessment Center (“DIBCAC”).

The Bottom Line: Cost and Pricing Updates | Sum Certain

Stephanie M. Harden and Shane M. Hannon ●

Appeal of Samho Enterprise, ASBCA No. 63587 (Aug. 13, 2025)

The Bottom Line: The Contract Disputes Act (“CDA”) requires that if a contractor submits a claim for payment to the Government, the claim must include a “sum certain”—with the emphasis on “certain.” Here, the contractor submitted a claim for damages after the Government declined to exercise the contract’s first option year. The contractor submitted a claim for “no less than” $326,276. The claim’s qualifying language—“no less than”—meant the claim did not state a sum certain. The Armed Services Board of Contract Appeals (the “Board”) therefore dismissed the contractor’s appeal.

Key points of interest:

A sum certain is a mandatory element of a CDA claim. If a contractor’s claim fails to state a sum certain, the contracting officer may deny the claim on that basis, and the Board may dismiss any subsequent appeals for failing to state a claim.
Using qualifying language to describe the requested amount does not constitute a sum certain. If a claim characterizes its requested amount with qualifying language, like “approximately,” “to be determined,” or “in excess of,” the claim does not state a sum certain under the CDA.
Pursuant to the Federal Circuit’s 2023 decision in ECC International Constructors, the “sum certain” requirement is not a jurisdictional requirement. Accordingly, the Board dismissed the appeal without prejudice.
The contractor’s appeal also asked the Board to order the agency to exercise the contract’s option year. The Board reiterated it does not have jurisdiction over requests for specific performance.

Contractors submitting claims for monetary relief must include a “sum certain,” not a “sum approximate.” Failure to state a sum certain is fatal to a claim.

Supreme Court Weighs in for a Second Time on Jurisdiction over Grant Termination Cases

Dominique L. Casimir and Sara N. Gerber ●

The Supreme Court recently ruled for the second time that federal district courts likely lack jurisdiction under the Administrative Procedure Act (“APA”) to hear challenges to terminations of federal grants. The first such ruling came in April of this year, when the Court granted an emergency stay in California v. Department of Education. On August 21, 2025, the Supreme Court issued another emergency stay, in NIH v. American Public Health Association, reaffirming the view that challenges to grant terminations are, in substance, breach of contract actions for money damages that belong in the Court of Federal Claims under the Tucker Act.

Since California, several lower courts have nevertheless asserted jurisdiction over grantee lawsuits seeking reinstatement of terminated grants, often distinguishing California on procedural or factual grounds. We have previously written about some of those cases (including Massachusetts v. Kennedy, which was later consolidated with NIH). Although the Supreme Court’s decision in NIH is an interim order, the jurisdictional question may now be functionally settled, particularly given Justice Gorsuch’s admonishment to lower courts that even if they “sometimes disagree with this Court’s decisions…they are never free to defy them. When this court issues a decision, it constitutes a precedent that commands respect in lower courts.” Following NIH, we expect terminated grantees will largely be forced into the Court of Federal Claims, which generally does not have authority under the Tucker Act to grant the equitable relief—reinstatement of grants—that many of them are seeking.

Federal Circuit Clarifies “Interested Party” Status in Percipient.ai v. United States

Robyn N. Burrows and Michael Joseph Montalbano ●

When a Federal Circuit panel held that subcontractors had standing to challenge procurement violations, Judge Clevenger warned of a flood. Under the panel’s holding, thousands of subcontractors could inundate the Court of Federal Claims with allegations that agencies had violated applicable procurement laws. Progress on major programs could slow as the Government dealt with a wave of new protest litigants.

On August 28, 2025, the full Federal Circuit reversed course. The Court reaffirmed the long-standing definition of “interested party,” holding that only actual or prospective bidders or offerors with a direct economic interest in the outcome of the procurement may protest.

Trump Administration Increases Oversight of Federal Grants

Dominique L. Casimir and Shane M. Hannon ●

President Trump issued an Executive Order (“EO”) on August 7 that overhauls the federal grantmaking process. Titled “Improving Oversight of Federal Grantmaking,” the EO identifies deficiencies in the federal government’s current approach to issuing discretionary grants. The EO criticizes some existing federal grants as an “offensive waste of tax dollars” and promoting “anti-American ideologies,” and contends grants have been issued to “organizations that actively work against American interests abroad.” It also identifies defects in the grant approval process, noting that drafting grant applications is “notoriously complex” and therefore too costly for smaller institutions. The EO seeks to align federal grants with the Administration’s policy preferences and give the Administration greater control to select grant recipients. Here are the relevant highlights and takeaways:

The EO expands the federal government’s ability to terminate grants.

A core feature of the EO is requiring all discretionary grants, current and future, to include termination for convenience clauses. Discretionary grants are those where an agency exercises its own judgment to select both the funding amount and the grantee, such as by basing award on the merits of grant applications via a competitive process. Historically, discretionary grants have not included termination for convenience clauses. For example, the Uniform Guidance, 2 C.F.R. § 200, does not include a provision that permits the federal government to terminate a discretionary grant at its leisure. This is in contrast to typical federal contracts, which invariably include termination for convenience provisions, such as FAR 52.249-2.

DOJ Issues July 2025 Guidance on Unlawful Discrimination: Navigating Diversity, Equity, and Inclusion in a New Legal Landscape

Dominique L. Casimir, Brooke T. Iley, and Jennifer A. Short ●

From the outset of his current term in office, President Trump has made it a signature policy objective to target and dismantle diversity, equity, and inclusion (“DEI”) and so-called “gender ideology” in both the public and the private sectors. Blank Rome has covered these policy initiatives extensively, along with the various lawsuits challenging them. In the courts and elsewhere, the government has been questioned about what the phrase “illegal DEI” actually means.

Perhaps in response to those queries, on July 29, 2025, the Department of Justice (“DOJ”) issued a memorandum titled “Guidance for Recipients of Federal Funding.” The memo’s stated objective is to offer “non-binding suggestions to help entities comply with federal antidiscrimination laws and avoid legal pitfalls,” thereby aiming to “minimize the risk of violations.”

This memo provides the most comprehensive insight about DOJ’s perspective on DEI and gender ideology practices to date, and thus serves as a valuable resource for recipients of federal funding as they review their current policies. Private employers, too, may find the memo a useful framework to evaluate potential risks associated with DEI initiatives and to discern what actions the Administration considers to violate civil rights laws. That said, the DOJ memo does not address certain practical questions that entities will face in trying to adhere to its guidance. Below, we summarize the memo and provide our analysis of its most significant aspects for federally funded entities and companies.

Read the full client alert on our website.

This alert was published in The Government Contractor, Volume 67 Issue 30, on August 13, 2025.

Domestic Production of Pharmaceuticals: Are the Administration’s Efforts Enough?

Merle M. DeLancey, Jr. ●

The Administration issued Executive Order (“EO”) 14293: Regulatory Relief to Promote Domestic Production of Critical Medicines on May 5, 2025 (whitehouse.gov/presidential-actions/2025/05/regulatory-relief-to-promote-domestic-production-of-critical-medicines). The EO seeks to ease obstacles for drug manufacturers to establish or expand domestic production facilities. For example, it streamlines Food and Drug Administration (“FDA”), Environmental Protection Agency, and Army Corps of Engineers reviews and inspections associated with building or expanding manufacturing facilities. These accelerated processes are intended to reduce a manufacturer’s cost to build or expand a facility with the intended result being lower prices for domestically produced drugs.

The EO also calls for enhanced FDA inspections of foreign manufacturing facilities. The inspections will be funded through increased fees imposed on foreign drug manufacturers. The likely result will be an increase in foreign drug production costs, which would lead to increased prices of foreign-produced drugs. Further, adding to the price of foreign drugs are the Administration’s proposed tariffs. If imposed, the tariffs could start at 15 percent and ratchet up to 150 percent and 250 percent over time.

The goal of increasing the prices of foreign-produced drugs is to enable domestically produced drugs to compete. Only time will tell whether the EO’s efforts will be enough to level the playing field. However, there are at least two obstacles that could prevent the Administration from reaching its goal.

Beyond the Balance Sheet: The Continued Importance of Cybersecurity in M&A

Merle M. DeLancey Jr., Samarth Barot, and Michael Joseph Montalbano ●

In our August 1 post, we discussed how companies that acquire government contractors can inherit the False Claims Act (“FCA”) exposure based on their targets’ cybersecurity violations. Now, the Department of Justice (“DOJ”) delivered another vivid real-world example: a $1.75 million settlement in which a private equity (“PE”) firm, Gallant Capital Partners LLC, was named jointly and severally liable for its portfolio company’s cybersecurity violations on a U.S. Air Force contract.

The outcome underscores two critical truths. First, DOJ will pursue financial sponsors when a contractor in their portfolio fails to comply with its contractual cybersecurity requirements. Second, investors that fail to ask about, document, and remediate a target’s security shortcomings can find themselves financing both the acquisition and the government’s recovery.

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