Five Things Government Contractors Should Keep in Mind about Political Activities this Election Season

Justin Chiarodo and Stephanie M. Harden 

ChiarodoJ+ZechmannSThe 2016 election season is unlike any other in recent memory. But like elections past and yet to come, political contributions and lobbying remain a mainstay of the political process. This is particularly true in the federal government contracting community, which is heavily influenced by executive and legislative action (and inaction). Though we can expect the unexpected in the three months leading up to the election, we offer below five fundamental “do’s and don’ts” that government contractors should keep in mind to guide their political activities. Continue reading “Five Things Government Contractors Should Keep in Mind about Political Activities this Election Season”

SBA Final Rule Expanding Mentor-Protégé Program to Take Effect This Month

Justin A. Chiarodo and Christian N. Curran

Chiarodo+CurranAfter a long wait and much anticipation, the Small Business Administration (“SBA”) issued its final rule expanding the mentor-protégé program to all small businesses on July 25, 2016. The new rule broadly expands upon the existing 8(a) mentor-protégé program, and is projected to result in $2 billion in federal contracts to program participants. Though the final rule largely tracks the February 2015 proposed rule, which we previously wrote about here, the final rule does make some key changes, including changes regarding size certification and reporting. As the new rule goes into effect on August 24, 2016, contractors both large and small should prepare now to take advantage of what the newly expanded program has to offer. Continue reading “SBA Final Rule Expanding Mentor-Protégé Program to Take Effect This Month”

GSA’s Transactional Data Reporting Rule Ushers in a New Era

Merle M. DeLancey Jr. , Justin Chiarodo, and Philip Beshara

Merle DelanceyJustin A. Chiarodo CC2030E479B404E304DCCE7B55CFAC26

Last month, the General Services Administration (“GSA”) finalized a rule marking what the agency describes as the most significant development to its Schedules program in over two decades. The rule completely changes how GSA will analyze vendor pricing for products and services.

Under the rule, vendors will eventually be required to submit monthly transactional data reports with information related to orders and prices under certain GSA Schedule contracts and other vehicles. Along with the implementation of the new Transactional Data Reporting (“TDR”) requirement, GSA will relieve vendors from two preexisting compliance burdens—eliminating the Commercial Sales Practices (“CSP”) and Price Reductions Clause (“PRC”) reporting requirements when vendors begin submitting transactional data.

While vendors should welcome the relief provided from the elimination of two burdensome regulations, the shift to TDR will not be without cost and risk; and, the eventual efficiencies promised by GSA remain to be seen. Indeed, the impact of the change will likely extend beyond compliance burdens, with potential effects varying from the nature of False Claims Act suits to the potential publication of competitive information.

We summarize these and other key takeaways from the new rule below, and answer questions important to vendors as GSA rolls out this significant development. Continue reading “GSA’s Transactional Data Reporting Rule Ushers in a New Era”

Department of Labor Issues Final Rule Updating Sex Discrimination Guidelines

Merle M. DeLancey Jr. and Lyndsay A. Gorton

DeLancey+GortonOn June 15, 2016, the Department of Labor (“DOL”) Office of Federal Contract Compliance Programs (“OFCCP”) issued a final rule updating its 1970 sex discrimination guidelines. The final rule, available here, enforces Executive Order 11246, which prohibits federal contractors and subcontractors from employment discrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin. The rule applies to companies that have federal government contracts of $10,000 or more and will be effective on August 15, 2016. Continue reading “Department of Labor Issues Final Rule Updating Sex Discrimination Guidelines”

How UHS v. U.S. ex rel. Escobar Will Impact Government Contractors

David Yang and Christian N. Curran

David YangChristian N. CurranOn June 16, 2016, the Supreme Court issued its decision in Universal Health Services, Inc. v. United States ex rel. Escobar, holding that “implied certification” is a valid theory of liability under the False Claims Act (“FCA”), and further concluding that a failure to comply with a contract requirement, regulation, or statute may support a false claims case even if the provision is not an “express condition of payment.” While the unanimous opinion settles the debate over the viability of the implied certification theory, its reliance on a subjective materiality standard will likely make FCA cases more difficult to resolve on the pleadings and also increase the number of FCA cases filed. Continue reading “How UHS v. U.S. ex rel. Escobar Will Impact Government Contractors”

Air Force Utility Privatization Saves Real Money

National Defense Magazine

Albert B. Krachman

Krachman, Albert. B.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”

Supreme Court Affirms Small Business Preference Requirement in Veterans Affairs Contracts in Kingdomware Technologies, Inc. v. United States

Merle M. DeLancey Jr. and Lyndsay A. Gorton

Merle DelanceyLyndsay A. GortonOn 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“

Senate Seeks to Disincentivize Certain Protesters in 2017 National Defense Authorization Act

Albert B. Krachman and Lyndsay A. Gorton

Krachman, Albert. B. Lyndsay A. GortonOn June 14, 2016, the Senate passed the National Defense Authorization Act (“NDAA”) for Fiscal Year 2017, S. 2943, by a vote of 85-13.  The final bill grants to the military a $602 billion budget, and includes what Senator Harry Reid has called “several needed reforms,” which include bid protest reforms.  The bill, drafted by the Senate Armed Services Committee (“SASC”), includes language that would amend statutes related to bid protests at the Government Accountability Office (“GAO”) to require a “loser pays” scheme and the withholding of profits on bridge contracts.  President Obama has threatened to veto the NDAA when it crosses his desk due to provisions unrelated to the proposed bid protest reforms.

The House of Representatives passed its version of the NDAA on May 18, 2016, by a vote of 277-147.  The House bill, H.R. 4909, does not include similar bid protest-related provisions to those in the Senate bill, and only requires that the Secretary of Defense enter into a contract with an “independent entity with appropriate expertise to conduct a review of the bid protest process related to major defense authorization programs.”  The “independent entity” would be required to submit interim findings on bid protest trends by March 1, 2017, and a final report of findings by July 1, 2017. Continue reading “Senate Seeks to Disincentivize Certain Protesters in 2017 National Defense Authorization Act”

NISPOM Conforming Change 2: What You Need to Know

Justin A. Chiarodo and Philip Beshara

Justin A. Chiarodo CC2030E479B404E304DCCE7B55CFAC26The government recently issued long-awaited amendments to the National Industrial Security Program Operating Manual (“NISPOM”).  The amendments, known as Conforming Change 2, are targeted at combating insider threats and impose several new requirements warranting immediate action by contractors holding facility clearances.

There are four key elements to Change 2: (1) a mandated Insider Threat Program (“ITP”); (2) new cyber incident reporting requirements; (3) newly defined NISPOM components; and, (4) an updated standard for foreign-owned or controlled companies seeking access to proscribed information.  We summarized these changes and provide implementation suggestions below.

I. Insider Threat – Mandated Insider Threat Program

Change 2 requires cleared contractors to have a written Insider Threat Program plan no later than November 30, 2016.  The ITP must detect, deter, and mitigate insider threats consistent with the ITP requirements currently imposed on executive branch agencies (as set forth in Executive Order 13587 and the National Insider Threat Policy and Minimum Standards for Executive Branch Insider Threat Programs). Continue reading “NISPOM Conforming Change 2: What You Need to Know”

Coming to a Government Contract Near You: Mandatory Information Safeguarding Requirements

Justin A. Chiarodo,  Philip E. Beshara, and Heather L. Petrovich

The government recently finalized a sweeping amendment to the Federal Acquisition Regulation (“FAR”) that will impose basic information system safeguarding requirements on many federal acquisitions, marking the latest in the continuing government effort to regulate and enhance cybersecurity protections in the industry. The Final Rule, effective June 15, 2016, imposes fifteen basic safeguarding requirements for contractors with information systems containing information provided by, or generated for, the government under a federal contract.

Though many contractors likely maintain information security standards that meet or exceed the new rule, they should confirm their compliance status by assessing these requirements against their current cybersecurity compliance program (to help mitigate the risk of a breach of contract claim or more serious enforcement action). This should include confirming that the requirement is flowed down to subcontractors where appropriate. Continue reading “Coming to a Government Contract Near You: Mandatory Information Safeguarding Requirements”