Since Russia’s invasion of Ukraine on February 24, the United States and its partners have imposed a web of complex economic sanctions and export controls targeting Russia. These restrictions have broadened and intensified over the course of the conflict, at times at a dizzying pace.
At this point, the United States has not yet imposed a comprehensive embargo on Russia akin to the sanctions on Iran, Cuba, Syria, or North Korea. Rather, the Russia sanctions mainly are aimed at specific individuals, companies, and other entities. In addition, there are U.S. restrictions on certain types of imports (including energy), exports (including a broad range of goods and certain services), and new investment. Accordingly, the Biden Administration has ample opportunity to further expand restrictions to ramp up the impact on Russia’s economy.
This article provides a snapshot of the U.S. measures currently in place. It should be noted that the situation remains fluid, and the applicable restrictions are subject to change.
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.
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.
We are pleased to welcome leading international trade and national security attorney Anthony Rapa as a partner in the firm’s Washington, D.C., office where he will lead the firm’s National Security team. Working closely with the firm’s Aerospace, Defense and Government Services industry group, Anthony will counsel companies, private equity sponsors, and financial institutions on sanctions and export control-related matters in cross-border transactions, mergers and acquisitions, government investigations, and regulatory matters. A dual U.S./UK-qualified practitioner, he joins Blank Rome from Kirkland & Ellis where he was a partner.
“Anthony is a fantastic addition to Blank Rome and our aerospace, defense and government services industry team,” said Grant S. Palmer, Blank Rome’s Managing Partner and CEO. “He will play a key role in expanding our national security and international trade capabilities as well as helping our clients address critical issues in this multidisciplinary and evolving area. His deep knowledge of the sanctions and export control regimes in the United States, UK, and EU will greatly benefit our clients as we help them navigate the increasingly complex, fast-moving sanctions landscape.”
GAO sustained the protester’s allegation that the Department of Health and Human Services had engaged in unequal discussions.
Once an agency chooses to conduct discussions, it must do so with all offerors in the competitive range under FAR 15.306(d)(1).
Here, the Agency did not dispute that it engaged in discussions with only the awardee, but claimed it had established “a de facto competitive range of one.”
GAO found that the record was devoid of any documentation or support for the Agency’s contention that a competitive range had been established before holding discussions with only one offeror, the awardee.
GAO stated, “[w]here, as here, there is no record or evidence that the agency established a competitive range, we will not infer the existence of a de facto competitive range, in order to validate an agency’s omission of an offeror during its conduct of discussions.”
The Interagency Suspension and Debarment Committee (“ISDC”) has released its annual Section 873 Report to Congress for FY2020. The data in this report provides a big picture view of trends in suspension and debarment. Here’s what you need to know:
1. Debarments Increased in FY2020.
Debarments were up slightly, with 1,256 debarments in 2020 compared with 1,199 in 2019, bucking the downward trend of the previous six years. It is reasonable to expect that the increase in debarments will continue, particularly as the Government progresses in investigating CARES Act fraud.
2. Suspensions and Proposed Debarments Decreased.
Suspensions decreased, after a brief uptick in 2019, from 722 in 2019 to 415 in 2020, consistent with the general downward trend of years prior. Similarly, proposed debarments fell from 1,437 in 2019 to 1,317 in 2020. Interestingly, the ISDC attributes these decreases, “in part, to delays in mail service, travel restrictions, and postponements in court proceedings,” which means the FY2020 decrease is likely due to the COVID-19 pandemic rather than an actual Governmentwide downward trend in activity. And the decrease was not uniform: 13 of the 29 agencies reporting their FY2020 metrics actually increased the number of suspensions.
On March 21, 2022, Representative Carolyn B. Maloney (D-NY), Chairwoman of the House Oversight and Reform Committee, introduced the “Federal Contracting for Peace and Security Act” (H.R. 7185). In light of Russia’s military invasion of Ukraine, the proposed bill would prohibit federal agencies from contracting with companies operating in Russia. The Committee approved an amended version on April 6, and the bill will be sent to the House of Representatives for further consideration. If passed, the bill would have a significant impact on government contractors that continue to operate in Russia by terminating existing contracts and barring them from further contracting opportunities.
We provide below an overview of the key elements of the bill. We anticipate further clarifications as the bill proceeds through the legislative process. Contractors should closely monitor these developments as this legislation will likely pose challenges to companies seeking to quickly disentangle themselves from any ongoing Russian business.
The Department of Defense (“DoD”) recently issued its final rule amending the Defense Federal Acquisition Regulation Supplement (“DFARS”) to provide offerors enhanced post-award debriefing rights. DoD has provided these enhanced debriefing procedures since 2018 through a FAR Class Deviation, allowing offerors to submit additional questions after receiving the post-award debriefing. Four years later, DoD’s final rule clarifies when the clock for an automatic stay begins in an enhanced debriefing and provides greater transparency by allowing unsuccessful offerors in certain procurements access to the agency’s redacted source selection decision.
We highlight below several key elements of the final rule:
Access to Redacted Source Selection Decision Document
The final rule requires DoD to provide the source selection decision document in certain circumstances, redacted to remove confidential and proprietary information of other offerors. For awards over $100 million, DoD must automatically provide the source selection decision during the debriefing. Small businesses and nontraditional defense contractors on procurements resulting in awards over $10 million and up to $100 million are also entitled to a copy of the decision but must specifically request it—the agency will not automatically provide it to offerors.
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.”
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.