Category: Regulatory Compliance and Ethics

What GSA Contractors Need to Know About the New FAR Deviation for Revoked Executive Order 11246, Equal Employment Opportunity

Dominique L. Casimir and Amanda C. DeLaPerriere ●

On February 18, 2025, the General Services Administration (“GSA”) announced that it issued GSA Class Deviation CD-2025-04 (“the GSA Class Deviation”) effective February 15, 2025, to implement Executive Order (“EO”) 14173 titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which, as Blank Rome has previously written about here and here, revoked the landmark 60-year-old EO 11246 titled “Equal Employment Opportunity.”

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Webinar: Navigating the Impact of President Trump’s Executive Orders on DEI Initiatives

Blank Rome-Hosted Live Webinar
February 19, 2025
1:00–2:00 p.m. EST | 10:00–11:00 a.m. PST


Within days of the new administration taking office, there have been tectonic shifts in the employment law and government contracts landscape affecting all employers, large and small, across every industry and every sector of the economy.

The Executive Order “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” has implications for any company that has adopted a formal diversity, equity, and inclusion (“DEI”) policy and puts companies on notice that the new administration considers DEI policies and programs to be “illegal” if they have the effect of reverse discrimination under federal anti-discrimination laws. The Executive Order requires the heads of all federal agencies to submit a plan outlining specific measures to deter illegal discrimination or preferences. Additionally, each agency must identify up to nine major corporations or institutions for compliance investigations on DEI violations and the Attorney General has been tasked with developing strategies to deter “illegal discrimination and preferences, including DEI,” in the broader private sector. This plan will be presented in 120 days.

The Executive Order also has drastic implications for federal contractors. It revokes Executive Order 11246, which for 60 years has required federal contractors adopt affirmative action plans. The Executive Order gives federal contractors until April 21, 2025, to end their compliance with Executive Order 11246. All federal contractors will now be expected to certify that they “do not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” in all contracts with federal agencies.

In addition to this Executive Order, other directives on gender and DEI efforts and civil and criminal enforcement across the private and public sector carry both direct and indirect implications for companies. This landscape is evolving rapidly, influenced by guidance from new agency heads—including the Department of Justice—as well as emerging state-level pressures. Special guest speaker Lisa R. Davis, Senior Managing Director and Co-Lead, DEI Advisory at Teneo, will join Dominique, Anthony, and Brooke to explore the intricate implications of these Executive Orders and offer actionable insights for navigating and communicating changes effectively.

Blank Rome partners Dominique L. Casimir, Anthony B. Haller, and Brooke T. Iley, along with Lisa R. Davis, Senior Managing Director and Co-Lead, DEI Advisory at global CEO consulting and advisory firm Teneo, will serve as speakers for the 60-minute, Blank Rome-hosted live webinar, “Navigating the Impact of President Trump’s Executive Orders on DEI Initiatives,” taking place on Wednesday, February 19, 2025, from 1:00 to 2:00 p.m. EST / 10:00 to 11:00 a.m. PST.

For more information and to register, please visit our website: Navigating the Impact of President Trump’s Executive Orders on DEI Initiatives.

GAO Rejects Notion of a Pre-FPR “Continuous Registration Requirement” for SAM

Luke W. Meier and Amanda C. DeLaPerriere ●

The last week saw GAO sustain two protests that should put the nail in the SAM “continuous registration” coffin.

The Federal Acquisition Regulatory (“FAR”) Council recently revised the standard System for Award Management (“SAM”) registration clause (FAR 52.204-7) to make clear there is no “continuous registration requirement”—contractors need to be registered in SAM only at the time they submit their final, legally-binding proposal.

In two recent decisions, GAO has confirmed that the same was (and is) true under the prior version of FAR 52.204-7 as well. That is, if an agency allows an offeror to submit a revised proposal, and the offeror is properly registered in SAM when that final proposal is submitted, it does not matter if there was some SAM registration failure at an earlier stage of the procurement.  The offeror is eligible, and it would be unreasonable for an agency to eliminate an offeror or terminate an award based on a pre-FPR SAM flaw.

In UNICA-BPA JV, LLC, B-422580.3, the protester (“UNICA”) had an active SAM registration when it submitted its final revised proposal, but the Agency later eliminated UNICA from the competition based on the fact that UNICA was not registered in SAM at the time of its initial proposal. That was unreasonable, GAO found, because UNICA had in fact met the stated requirement to be registered in SAM “when submitting an offer,” as the FAR defines “offer” as a proposal that can form a binding contract, and that definition applied only to UNICA’s final, legally-binding proposal, which was compliant. GAO thus found the Agency acted unreasonably by eliminating UNICA from the competition and sustained UNICA’s protest.

In Metris LLC, B-422996.2, the Agency proposed to take corrective action to terminate the award to Metris for having a break in its SAM registration between the time of the initial proposal submission and its final proposal submission. GAO found that Metris’s initial proposal was extinguished when Metris submitted – and the Agency accepted – Metris’s final proposal revision. Because Metris was registered in SAM at the time of the final proposal revision, Metris had an active SAM registration when it submitted its offer, in accordance with FAR 52.204-7. GAO thus recommended that the agency abandon its plans to terminate Metris’s contract award, and instead “maintain its existing award to Metris.”

These cases follow the legal reasoning of Hanford Tank Disposition Alliance, LLC v. United States, 173 Fed. Cl. 269, 312-319 (2024), and should deter agencies from eliminating any more offerors over pre-FPR SAM issues.

Also published in National Law Review at GAO Confirms No Continuous SAM Registration Requirement, January 17, 2025.

The FAR Council Publishes Long-Awaited CUI Rule

Michael Joseph Montalbano ●

On January 15, 2025, the Federal Acquisition Regulation (“FAR”) Council issued its long-awaited “CUI Rule.” CUI, or Controlled Unclassified Information, is information that the government creates or possesses, or that an entity creates or possesses for or on behalf of the government, that a law, regulation, or governmentwide policy requires or permits an agency to handle using safeguarding or dissemination controls. For nearly 15 years, contractors have struggled to determine what information meets this definition. The CUI rule is an opportunity for the federal government to finally provide contractors with the guidance needed to better identify and safeguard the CUI they receive in connection with their federal contracts.

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Department of Defense Issues Final CMMC Rule

Michael Joseph Montalbano ●

On October 11, 2024, the Department of Defense (“DoD”) issued the first part of its final rule establishing the Cybersecurity Maturity Model Certification (“CMMC”) program. As expected, the final rule requires companies entrusted with national security information to implement cybersecurity standards at progressively advanced levels, (CMMC level 1, CMMC level 2, and CMMC level 3) depending on the type and sensitivity of the information. While the final rule largely tracks the proposed rule issued in December 2023, we outline below several notable updates DoD included in the final rule and their potential impacts on DoD contractors.

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BIS Issues New Export Controls Targeting GAAFET, Quantum, and Additive Manufacturing, and Ushers in New Age of Plurilateral Export Controls: 5 Key Takeaways

Anthony Rapa, Alan G. Kashdan, and Brendan S. Saslow ●

The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) recently issued an interim final rule (“IFR”) under the Export Administration Regulations (“EAR”) imposing licensing requirements for exports to all destinations worldwide of certain gate all-around field effect transistor (“GAAFET”) technology, quantum computing items, advanced semiconductor manufacturing equipment (“SME”), additive manufacturing equipment, and aerospace coating systems technology.

The new measures are notable not only for their restrictive application to all destinations in the world—an unusual type of control under the EAR—but also for their institution of a new license exception, “Implemented Export Controls” (“IEC”), that allows for exports of the newly controlled items to specified “like-minded” countries that have instituted comparable export controls that are harmonized with U.S. controls.

The new controls are effective immediately as of September 6, 2024, with the exception of controls over certain quantum items, which take effect November 5, 2024, the cutoff date for public comment on the IFR.

Read the full client alert on our website.

FAR Council Issues Final Rule on Sustainable Products & Services

Sara N. Gerber ●

As part of the Biden administration’s effort to use federal purchasing power to tackle climate change, the FAR Council issued a final rule, effective May 22, 2024, requiring agencies to procure “sustainable products and services,” to the “maximum extent practicable.” The “sustainable products and services” rule is just one of several proposed rules and directives intended to compel the government and government contractors to do business in a more environmentally sustainable way.

Under the final rule, the procurement of sustainable products and services is considered “practicable” if the products or services meet “reasonable performance requirements” and can be acquired “competitively within a reasonable performance schedule” and at “a reasonable price.” Federal Acquisition Regulation (“FAR”) 23.103(a)(1). To determine whether the price is reasonable, the regulation directs agencies to “consider whether the product is cost-effective over the life of the product.” FAR 23.103(a)(2). If an agency determines that it is not practicable to procure sustainable products or services, the contracting officer must document the reason in writing in the contract file. FAR 23.103(a)(2).

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DOJ Looks to Incentivize Whistleblowers with New Pilot Program


Robyn N. Burrows ●

On March 7, 2024, Deputy Attorney General Lisa Monaco announced that the Department of Justice (“DOJ”) is designing and launching a pilot program to pay monetary rewards to whistleblowers who report significant corporate or financial misconduct. The pilot program, which will roll out later this year, is intended to encourage individuals to report misconduct and for companies to further invest in their internal compliance and reporting systems.

Several agencies have already established similar programs that reward whistleblowers financially, including the U.S. Securities & Exchange Commission (“SEC”) and the Commodities Futures Trading Commission (“CFTC”). Those programs, however, are limited in scope to each agency, resulting in what Monaco referred to as a “patchwork quilt” that does not address the full range of corporate and financial misconduct. The new pilot program is intended to fill these gaps.

Key Aspects of Pilot Program

Over the next 90 days, DOJ will be engaging in a “policy sprint” to gather information, consult with stakeholders, and design the pilot program. DOJ’s Money Laundering and Asset Recovery Section (“MLARS”) will lead the development and administration of the program.

The program’s core concepts will include the following:

  • Award Thresholds: DOJ expects to establish a monetary threshold to focus its resources on the most significant cases. Both the SEC and CFTC whistleblower programs limit rewards to cases in which the agency orders sanctions of one million dollars or more. DOJ may end up adopting a similar threshold.
  • Victim Compensation: Whistleblowers will only receive payment after all victims have been compensated.
  • “First in the Door”: Eligibility is limited to whistleblowers who provide truthful information not already known to the government. The information cannot be in response to any government inquiry, pre-existing reporting obligation, or imminent threat of disclosure. As Monaco emphasized, “you have to tell us something we didn’t already know.”
  • No Criminal Involvement: Whistleblowers cannot be involved in the criminal activity itself.
  • No Existing Incentive Programs: The program applies only in cases where there is no existing disclosure incentive, including qui tam provisions of the False Claims Act or another federal whistleblower program.

Enforcement Priorities

Although DOJ seeks information about any violation of federal law, Monaco clarified that the government is primarily interested in:

  • Criminal abuses of the U.S. financial system;
  • Foreign corruption cases outside the SEC’s jurisdiction; and
  • Domestic corruption cases, especially involving illegal corporate payments to government officials.

What to Expect from the Pilot Program?

Increase in voluntary disclosures

  • The new whistleblower program builds on DOJ’s prior efforts to strengthen corporate enforcement by encouraging voluntary disclosures. With the new pilot program offering monetary rewards to those “first in the door,” companies assessing whether to self-report potential misconduct must consider whether a whistleblower might get to DOJ first (thereby preventing the company from reaping the benefits of a voluntary disclosure). This may encourage companies to self-report misconduct earlier and more often. As Monaco stated, “[O]ur message to whistleblowers is clear: the Department of Justice wants to hear from you. And to those considering a voluntary self-disclosure, our message is equally clear: knock on our door before we knock on yours.”

More referrals to DOJ—and potentially fewer internal whistleblower reports

  • With the prospect of potentially significant financial rewards, we can expect more employees to report wrongdoing directly to DOJ, rather than going through corporate whistleblower channels. Companies should therefore ensure employees are aware of and have easy access to whistleblower hotlines to encourage internal reporting.

Focus on non-public companies

  • One of the “gaps” DOJ seeks to fill with the whistleblower program is to target foreign corruption cases outside the jurisdiction of the SEC, which already has its own whistleblower program. Thus, DOJ is likely to focus on suspected violations by non-public corporations.

We expect more information on program details and implementation over the coming months and will follow up with further updates.

DOD Finalizes Rule Concerning Domestic Content Preference

Samarth Barot and Shane M. Hannon ●

On February 15, the Department of Defense (“DOD”) finalized a rule amending the Defense Federal Acquisition Regulation Supplement (“DFARS”) to supplement the Federal Acquisition Regulation (“FAR”) implementation of Executive Order 14005, addressing domestic preferences in DOD procurement. Defense contractors should be aware of the specific changes and ensure their sourcing and supply chain systems incorporate the updated requirements.

Background

As we discussed in prior posts, in January 2021 President Biden issued an executive order strengthening the Buy American Act’s (“BAA”) preference for domestic products and services in federal procurements. The executive order directed the FAR Council to consider proposing a rule to increase the BAA’s domestic content threshold for domestic end products.

The FAR Council then issued a final rule that increased the domestic content threshold for domestic end products (covered here). Previously, a product was considered a domestic end product if the cost of its components mined, produced, or manufactured in the United States exceeded 55 percent of the cost of all components. The FAR Council’s final rule increased that domestic content threshold to 60 percent and implemented a phased increase to 65 percent in 2024 and 75 percent in 2029. However, the rule also included a fallback threshold of 55 percent if (1) no end products exist that meet the new domestic content threshold or (2) such end products do exist but are unreasonably expensive. This fallback threshold will persist until 2030.

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Starting December 4th, Contractors Must Rid Supply Chains of Covered Articles and Sources Subject to FASC Orders

Robyn N. Burrows ●

Effective December 4, 2023, a new interim rule will prohibit contractors from delivering or using covered articles and sources subject to exclusion or removal orders issued under the Federal Acquisition Supply Chain Security Act of 2018 (“FASCSA”). The rule is intended to eliminate certain technology from the federal supply chain that foreign adversaries might exploit to commit malicious cyber acts. The interim rule allows the executive branch through the Federal Acquisition Security Council (“FASC”) to exclude certain technologies and manufacturers from federal procurements and even to require removal of covered articles from federal or contractor information systems during performance.

The rule imposes a host of new obligations, including certification, monitoring, and reporting requirements. This post provides practical guidance on the rule and several compliance tips to help contractors prepare for the December deadline.

Background

Congress passed Section 202 of the FASCSA to protect the information and communications technology (“ICT”) supply chain against threats and vulnerabilities that may lead to data and intellectual property theft, damage to critical infrastructure, or national security harm. The Act established the FASC as an interagency council authorized to make recommendations for orders that would require the removal of covered articles from agency information systems (removal orders) or the exclusion of sources or covered articles from agency procurement actions (exclusion orders) (collectively referred to as “FASCSA orders”).

In August 2021, the FASC issued a final rule establishing procedures for recommending removal and exclusion orders. The FASC evaluates supply chain risk based on several non-exclusive factors and sends its recommendations to the Secretaries of Homeland Security and Defense and the Director of National Intelligence to consider when deciding whether to issue a FASCSA order. If a FASCSA order is issued, agencies are required to implement the exclusion or removal order.

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