National Defense Magazine
Albert B. Krachman
The Air Force utilities privatization program has realized significant savings for the government, while also encountering some regulatory growing pains. Recent project accomplishments include saving $19.3 million in natural gas costs per year at a $1.1 million transaction cost, reducing water consumption by 28 percent, and reducing electric system outages by almost 40 percent. The program has saved the Air Force an estimated $520 million over the 50-year life cycle of projects, compared to continued government ownership.
With the current Department of Defense focus on energy security, this is good news. But the program still faces some open issues in the areas of labor standards and terminations that will need to be resolved in the future.
There are 270 Air Force utility systems left to evaluate for privatization. Because of the program’s success, the Air Force is adjusting the intake of new systems for evaluation so that it can match procurement resources with the number of systems in review. Continue reading “Air Force Utility Privatization Saves Real Money”
Merle M. DeLancey Jr. and Lyndsay A. Gorton
On June 16, 2016, the Supreme Court issued a decision in Kingdomware Technologies, Inc. v. United States, available here, holding that the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the “Veterans Act of 2006”) requires the Department of Veterans Affairs (“VA”) to conduct a “Rule of Two” analysis before a contract award. The unanimous decision, authored by Justice Clarence Thomas, holds that the Veterans Act of 2006 “unambiguously requires” the VA to use the Rule of Two before awarding a contract under competitive procedures even when the VA will otherwise meet its annual minimum small business contracting goals.
Kingdomware Technologies, Inc. is a veteran-owned small business (“VOSB”) that filed suit after unsuccessfully bidding for a VA emergency-notification services contract that was eventually awarded to a non-VOSB via the Federal Supply Schedule (“FSS”). In its protest to the Government Accountability Office, and subsequent suits in the Federal Circuit, Kingdomware argued that the VA violated the Veterans Act of 2006 by failing to award the contract to a VOSB because it did not award the contract based on the mandatory Rule of Two provision. The Rule of Two states that the VA “shall award” contracts to VOSBs when there is a “reasonable expectation” that two VOSBs will submit bids “at a fair and reasonable price that offers the best value to the United States.” Continue reading “Supreme Court Affirms Small Business Preference Requirement in Veterans Affairs Contracts in Kingdomware Technologies, Inc. v. United States“
Justin A. Chiarodo and Christian N. Curran
The Department of Justice (DOJ) is setting its sights on individual accountability for corporate wrongdoing. That is the message that DOJ has been promoting following the recent internal memorandum issued by Deputy Attorney General Sally Quillian Yates titled “Individual Accountability for Corporate Wrongdoing” (the Yates Memo), which relates to DOJ’s practices in conducting corporate investigations. Although the idea of holding individuals accountable for corporate wrongdoing is not new, the Yates Memo’s relative focus on individuals as part of corporate investigations suggests more scrutiny of individuals in civil and criminal investigations. This focus complements a well-documented increase in the suspension and debarment of individuals in recent years, and reinforces the heightened risks that business owners, executives, managers, and employees face throughout the government contracting community.
The Yates Memo presents a good opportunity for government contractors to review their compliance programs in the new year—and in particular their practices for conducting internal investigations—to ensure that they are actively managing the risks presented by this professed focus on individuals. This alert summarizes the Yates Memo and offers three tips to government contractors to consider in response. Continue reading “The Justice Department’s Yates Memorandum and Three Tips for Government Contractors to Manage the Risks”
Justin A. Chiarodo and Philip E. Beshara
As the federal government and contracting community near the end of a year filled with headline-grabbing cyber incidents, the Department of Defense (DoD) has recently issued interim cybersecurity and cloud computing regulations that amend the DFARS and impose important new information safeguarding, reporting, and cloud computing requirements. These are major changes that impact all DoD contractors, and if your company holds DoD contracts you should carefully review these new requirements and assess them as part of your broader corporate cybersecurity strategy.
This alert highlights the key requirements in the Interim Rule (available here).
Information Safeguarding and Cybersecurity Reporting
The Interim Rule expands DoD’s cybersecurity safeguarding and reporting requirements, including the types of information covered by the requirements, governing standards, and triggering events. Up until now, many of DoD’s cybersecurity requirements applied to select groups of defense contractors—those deemed “operationally critical” under the 2015 NDAA or “cleared defense contractors” under the 2013 NDAA, and contractors handling “unclassified controlled technical information,” or “UCTI,” under the DFARS. Continue reading “What DoD Contractors Need to Know: New Changes to Cybersecurity and Cloud Computing Regulations”
Justin A. Chiarodo and Heather L. Petrovich
With Congress quickly approaching a September 30 funding deadline with no adequate spending measures in place, and the Office of Management and Budget now directing agencies to prepare contingency plans, the possibility of a government shutdown is becoming increasingly likely. Unfortunately, government contractors faced these challenges just two short years ago during a 16-day shutdown. Among other challenges, contractors may face a lack of incremental funding; the inability to enter into new contracts or contract modifications; closed government facilities; furloughed government employees; delayed payments; increased indirect costs; and unexercised and deferred contract options. This alert highlights steps government contractors can take to protect their business interests in the event of a shutdown.
Review Your Contracts
Reviewing your contracts is good advice in all times, but particularly so when facing a shutdown. Several key areas are worth reviewing before a shutdown. First, contractors should consider the amount and type of contract funding for each contract. A shutdown will affect incrementally funded contracts more than fully funded contracts. Though exceptions may apply, the funding for incrementally funded contracts may lapse in the event of a shutdown, which could cause the contract work to come to a halt. Fully funded contracts may be impacted by furloughed employees, facility closures, or other unexpected costs. Second, the place of contract performance may affect the ongoing work on a contract if the contractor is performing at a government facility. Many government facilities will close during a shutdown and furloughed employees or limited hours may affect those government facilities that do remain open. Third, the period of contract performance may affect a contract in that the government cannot exercise options and contract extensions during a shutdown. Fourth, the statement of work could also affect how the shutdown applies to a contract. For instance, national security and emergency preparedness contracts are much more likely to be funded during a shutdown than facility maintenance work. Nonetheless, even those exempt contracts may still be affected if the statement of work requires contractors or projects to interact with furloughed employees. Continue reading “Déjà Vu All Over Again: Six Tips to Prepare for a Government Shutdown”
Deborah P. Kelly
Buckle up: In his last term, President Obama has unleashed a flurry of Executive Orders and Presidential Memoranda that promise sweeping changes for government contractors and their employees. Below, we outline some of the major recent workplace initiatives that create new restrictions and requirements for government contractors, describe their effects, and suggest what to do about them.
- The “Blacklisting” Order
On July 31, 2014, President Obama signed Executive Order (E.O. 13673) “Fair Pay and Safe Workplaces,” known as the “Blacklisting” Order, which instructs contracting officers to make responsibility determinations for procurements over $500,000 based on a subjective review of federal contractors’ compliance with 14 federal and equivalent state labor, employment, and safety laws. The Department of Labor’s proposed guidance and the FAR Council’s proposed regulations would create an online database for agencies to track contractors’ violations, which could provide a basis for suspension and debarment procedures. Continue reading “New Legal Landmines for Government Contractors”
Merle M. DeLancey Jr., Steven J. Roman, James R. Murray, and Christian N. Curran
If you are a multi-million dollar company and receive a subpoena for your documents and records, you simply send it to the legal department. But what if you are a smaller healthcare provider? Responding to a government subpoena can be daunting, especially if it is your first one, and you may not have the personnel or resources to respond without a significant disruption to your business. Does the subpoena mean you or your company is about to be charged with a crime? Do you have to submit original records? Will the government insist on the production of all documents within the often broadly worded scope of a subpoena? How do you deal with electronic information on your computer system? How do you protect patient confidentiality? Will your insurance help with the costs of complying with the subpoena? What can you do to ensure the company is prepared ahead of time?
Step One: Issue a Document Hold Notice and Consult Counsel
The first thing you should do when you receive a government subpoena is issue a written notice to your employees to protect and maintain any documents and records that may be encompassed by the subpoena. As part of that process, you will also need to suspend any records destruction practices that you currently have in place. The failure to produce or preserve potentially relevant documents and information can result in significant exposure. Courts have regularly penalized companies and individuals who fail to produce or preserve potentially relevant materials. It is important to send the notice out as soon as possible and to thoroughly document its distribution. You should also simultaneously consult with counsel to review the subpoena and ensure that you are taking all necessary steps to preserve information. Continue reading “We Just Received a Government Subpoena. Now What?”