Proposed Greenhouse Gas Rule Previews New Compliance Frontier for Government Contractors

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

Michael J. Slattery and Justin A. Chiarodo ●

For over 18 months, the Biden Administration has discussed incorporating certain climate-change measures into the federal procurement system. A recent proposed rule forecasts where the Administration may be headed. In a nutshell, the proposed rule would require contractors receiving over $7.5 million in annual contract obligations to disclose greenhouse gas emissions. And it would require those receiving over $50 million in annual contract obligations to also set greenhouse gas reduction targets. Though the rule remains open to comment (through February 13, 2023), the FAR Council has tentatively tied compliance with the rule to responsibility determinations—making this a key new compliance frontier for many government contractors. This post summarizes the proposed rule, including implementation and enforcement mechanisms.

***

Background

Climate change has been a procurement priority since early in the Biden Administration. In May 2020, the President issued Executive Order (“E.O.”) 14030, which directed the FAR Council to consider amending the FAR to require contractors to publicly disclose greenhouse gas (“GHG”) emissions and climate-related financial risk, have these entities set science-based GHG-reduction targets, and ensure that federal procurements minimize climate change risk.

Continue reading “Proposed Greenhouse Gas Rule Previews New Compliance Frontier for Government Contractors”

FY 2023 NDAA Muddies the Water on Whether Chinese Semiconductor Ban Will Apply to Contractors

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

Robyn N. Burrows 

Last month, we wrote about a proposed amendment to the FY 2023 National Defense Authorization Act (“NDAA”) that would prohibit contractors from selling certain Chinese semiconductor technologies to federal agencies and from using these same covered products and services. This measure was added through Section 5949 of the NDAA.

On December 6, the House passed a compromise version of the NDAA, which appears to scale back the semiconductor ban by applying it only to federal sales of covered products and services, without also banning contractors from using them. However, the explanatory statement accompanying the NDAA suggests contractors (including their affiliates and subsidiaries) may ultimately be prohibited from using covered semiconductor technologies—which would raise a host of compliance and implementation concerns.

Compromise Version of NDAA Limits Semiconductor Ban to Federal Sales

Section 5949 bans semiconductor products and services from Semiconductor Manufacturing International Corporation, ChangXin Memory Technologies, and Yangtze Memory Technologies Corp., plus their subsidiaries and affiliates. This ban was modeled after the supply chain restrictions from Section 889, which prohibit contractors from selling and using covered telecommunications and video surveillance equipment from five Chinese telecom companies.

Continue reading “FY 2023 NDAA Muddies the Water on Whether Chinese Semiconductor Ban Will Apply to Contractors”

Senate Majority Leader Schumer Proposes Section 889 Expansion

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

Robyn N. Burrows and Merle M. DeLancey, Jr. 

On October 18, 2022, Senate Majority Leader Chuck Schumer (D-NY) issued a press release signaling a potentially significant expansion of Section 889 through a proposed amendment to the 2023 National Defense Authorization Act (“NDAA”). Schumer’s proposal is aimed at extending the telecommunications supply chain prohibitions in Section 889 to the semiconductor manufacturing industry.

Section 889 currently prohibits contractors from providing the federal government or using any products or services that incorporate “covered telecommunications equipment or services” from five Chinese telecom companies and their affiliates and subsidiaries: (1) Huawei Technologies Company, (2) ZTE Corporation, (3) Hytera Communications Corporation, (4) Hangzhou Hikvision Digital Technology Company, and (5) Dahua Technology Company.

Schumer’s 2023 NDAA amendment would expand Section 889 by banning semiconductor products like microchips from the following three Chinese entities: (1) Semiconductor Manufacturing International Corporation (“SMIC”), (2) ChangXin Memory Technologies (“CXMT”), and (3) Yangtze Memory Technologies Corp. (“YMTC”). Schumer noted that these companies have known links to the Chinese state security and intelligence apparatuses. The amendment is aimed at filling a gap in federal procurement restrictions that currently do not include semiconductor technology and services, creating a vulnerability for cyberattacks and data privacy. The amendment would not take effect until three years after the NDAA’s enactment, or until 2025.

Although we do not yet know whether Schumer’s amendment will be incorporated into the final NDAA bill, contractors should nevertheless begin evaluating their supply chains to identify any semiconductor products from any of the three named Chinese manufacturers. Schumer’s amendment signals a continually expansive interpretation and enforcement of Section 889, which may be reflected in the final rulemaking for Section 889. The current FAR docket anticipates a final rule in December 2022, although these deadlines continue to be moving targets.

Are You Ready for Increasing Buy American Act Content Requirements?

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

Merle M. DeLancey Jr. 

Effective October 25, 2022, the domestic content requirements for government purchases subject to the Buy American Act (“BAA”) will increase. A March 7, 2022, final rule implemented significant domestic content threshold increases over a seven-year timeframe for procurements subject to the BAA requirements of FAR Part 25. These increases were based on President Biden’s January 25, 2021, Executive Order 14005, Ensuring the Future Is Made in All of America by All of America’s Workers. (See, Buy American Act—Final Rule: What Has Changed?) Note that these changes apply to the BAA as implemented in non-Department of Defense (“DoD”) purchases—the rules for implementing the BAA in DoD acquisitions are set forth in the DFARS, and differ from the FAR implementation in several important respects that we will address in a future post.

Unlike the Trade Agreements Act (“TAA”), which bans government purchases of non-compliant products, the BAA applies pricing preferences to encourage government agencies to purchase “domestic end products.” Thus, items that are not BAA compliant may still be purchased by government agencies, but they must be significantly less expensive. Currently, FAR Part 25 provides that large businesses offering domestic end products receive a 20 percent price preference and small businesses offering domestic end products receive a 30 percent price preference. The FAR sets forth a two-part test to determine whether a manufactured end product or construction material qualifies as a domestic end product: (1) the end product or construction material must be manufactured in the United States; and (2) the cost of any components mined, produced, or manufactured in the United States must exceed a certain percentage of the cost of all components.

Continue readingAre You Ready for Increasing Buy American Act Content Requirements?

The Government Contractor: Hejran and Zafer: Reiterating the CDA’s March to Meaningful Review on the Merits

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

The Government Contractor, October 5, 2022

Stephanie M. Harden and David L. Bodner ●

Stephanie Harden's Headshot Photo

The ability for a Government contractor to secure fair resolution of a contract dispute is essential for maintaining a vibrant competitive marketplace for federal contracts. The perceived fairness of the contract dispute resolution process is influential on contractor participation. S. Rep. No. 95-1118, at 4 (1978) (“The way potential contractors view the disputes-resolving system influences how, whether, and at what prices they compete for Government contract business.”). Yet even after passage of the Contract Disputes Act of 1978, it is often difficult for a contractor to secure a review of a claim on the merits due to a barrage of procedural and jurisdictional hurdles. The U.S. Court of Appeals for the Federal Circuit has cleared some of the thicket in recent years by reiterating its commonsense approach to evaluating the sufficiency of claims, finding that if a submission meets the requirements of a claim, it may be heard on the merits, even if it was not originally styled as a claim.

This Feature Comment discusses this recent guidance, including the Federal Circuit’s treatment of the difficult question of which contractor submissions may be treated as valid claims under the CDA, even if not styled as such in the first instance. We then offer practical guidance for contractors navigating these issues.

Learn more on our website.

DoD Section 889 Telecommunications Prohibition Waiver Expires

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

Merle M. DeLancey Jr. 

Effective October 1, 2022, Department of Defense (“DoD”) contractors must comply with Part B of Section 889 of the FY 2019 National Defense Authorization Act (“NDAA”). The approximately two-year long Part B waiver granted to the Director of National Intelligence expired October 1. DoD contractors cannot seek a DoD agency-level waiver as DoD cannot grant waivers under the statute. Thus, as with other agencies, DoD is prohibited from entering into, extending, or renewing contracts with contractors who use covered telecommunications or video surveillance equipment and services from certain Chinese companies in any part of their business.

Compliance with Part A of Section 889 was straightforward. Part A prohibited contractors from selling covered technology to the federal agencies. Comparatively, compliance with Part B is much more complicated. Part B requires a contractor to certify that it does not use “any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.” The prohibition applies to all contracts at any dollar value. “Covered telecommunications equipment or services” is defined as equipment, services and/or video surveillance products from Huawei Technologies Company, Hangzhou Hikvision Digital Technology Company, Hytera Communications Company, Dahua Technology Company, ZTE Corporation, or any entity controlled by the People’s Republic of China.

For more information regarding Part B compliance, see our prior posts For Part B of Section 889, Is Compliance by August 13, 2020, Realistic? and Five Steps to Take to Prepare for Part B of the Section 889 Ban.

Lifecycle of a Claim, Part III: Submitting a Claim

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

Stephanie M. Harden and David L. Bodner ●

Stephanie Harden's Headshot Photo

Welcome back to our “Lifecycle of a Claim” series. This series explores the Contract Disputes Act (“CDA”) claims process, with practical guidance stemming from recent case law every step of the way. Click the subscribe button on the right to get timely updates right in your inbox!

This series walks through this infographic (click here or the image below to expand), which illustrates the lifecycle of a typical claim:

Click here to read our first post and here to read our second post. This post focuses on Step 5 of this process: submitting a claim.

Seven Elements for Submitting a Claim

Once a contractor has made the decision to pursue a CDA claim, the contractor must ensure that it follows the Contract Disputes Act or risk jeopardizing its ability to obtain meaningful judicial review. While the Federal Circuit has made clear that a claim need not take “any particular form or use any particular wording,” below are seven fundamental elements that should be included:

Continue reading “Lifecycle of a Claim, Part III: Submitting a Claim

Federal Contractor Vaccine Mandate Still in Limbo

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

Merle M. DeLancey Jr. and Samarth Barot 

Merle M. DeLancey Jr. headshot image
Samarth Barot headshot image

Since December 2021, after a Federal District Court for the Southern District of Georgia issued a nationwide injunction against the federal contractor vaccine mandate, compliance with the federal contractor vaccine mandate has been in limbo. Many hoped that, on appeal, the Eleventh Circuit would bring some clarity to vaccine requirements. Unfortunately, that is not the case. On August 26, 2022, the Eleventh Circuit agreed that a preliminary injunction was warranted, however the Court narrowed the applicability of the injunction. The court held that the injunction should only apply to the specific plaintiff-states and trade associations in the case, and should not “extend[] nationwide and without distinction to plaintiffs and non-parties alike.” Georgia v. President of the United States, No. 21-14269 (11th Cir. Aug. 26, 2022).

The Eleventh Circuit agreed with the lower court that a preliminary injunction was warranted, stating that while “Congress crafted the Procurement Act to promote economy and efficiency in federal contracting, the purpose statement does not authorize the President to supplement the statute with any administrative move that may advance that purpose.” Therefore, the Court held that “the President likely exceeded his authority under the Procurement Act when directing executive agencies to enforce” the vaccine mandate.

Continue readingFederal Contractor Vaccine Mandate Still in Limbo

Lifecycle of a Claim, Part II: Submitting a Request for Equitable Adjustment and Negotiation

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right to get our timely posts delivered directly to your inbox.

Stephanie M. Harden and David L. Bodner ●

Stephanie Harden's Headshot Photo

Welcome back to our “Lifecycle of a Claim” series. This series explores the Contract Disputes Act claims process, with practical guidance stemming from recent case law every step of the way. Click the subscribe button on the right to get timely updates right in your inbox!

This series walks through this infographic (click here or the image below to expand), which illustrates the lifecycle of a typical claim:

Click here to read our first post (covering Steps 1 and 2 of the infographic). This post focuses on Steps 3 and 4 of this process: submitting a request for equitable adjustment (“REA”) and negotiating the REA with the contracting officer.

Terminology Defined: What Is the Difference between an REA and a Claim?

There are two primary methods for pursuing a contract adjustment following a change: submitting an REA or filing a claim.

      • REA: A request (rather than a demand) to negotiate with the contracting officer to adjust the contract for price, time, or other terms. There is no FAR definition of an REA but generally an REA does not expressly or implicitly request a contracting officer’s final decision (“COFD”) or contain the FAR 33.207(a) certification.
      • Claim: A “written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.” FAR 2.101; FAR 52.233-1(c).
Continue readingLifecycle of a Claim, Part II: Submitting a Request for Equitable Adjustment and Negotiation

New SBA Rule on Small Business Past Performance Also Has Implications for Large Businesses

Merle M. DeLancey Jr. 

The U.S. Small Business Administration (“SBA”) recently issued a final rule that creates new opportunities for small businesses to submit relevant past performance, and new requirements for large/other than small prime contractors to provide past performance reviews to first-tier small business subcontractors.

The final rule is intended to help small businesses overcome the hurdle of having minimal past performance to use in competitive procurements. The rule creates new mechanisms to permit small businesses to use the past performance of a joint venture in which it was a member, or to use its performance as a first-tier subcontractor. The new rule takes effect on August 22, 2022.

Continue reading “New SBA Rule on Small Business Past Performance Also Has Implications for Large Businesses”
%d bloggers like this: