Federal Contractor Vaccine Mandate Still in Limbo

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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.

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Flow-Down Clauses: Best Practices

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Merle M. DeLancey Jr. and Amanda C. DeLaPerriere 

Federal government contractors and subcontractors often struggle with flow-down clauses. Fundamentally, prime and subcontractors squabble over flow-down clauses because they involve assumption of risk. A prime contractor has committed to comply with all of the clauses in its prime contract. To the extent a prime contractor does not flow down a clause to its subcontractor, the prime contractor assumes the risk of any subcontractor non-compliance. This is because, if a contracting officer identifies regulatory non-compliance, the government only looks to the party with which it has privity to enforce compliance: the prime contractor. If the prime contractor has not flowed down the applicable clause to its subcontractor, the prime contractor is responsible for its subcontractor’s non-compliance. If the clause has been flowed down, the prime contractor can enforce compliance upon its subcontractor. From a subcontractor perspective, the more flow-down clauses it accepts from its prime contractor, the more compliance risk it assumes.

As a result, prime contractors seek to flow down as many FAR clauses as possible—well beyond the mandatory flow downs discussed below. Subcontractors, meanwhile, seek to keep flow-down clauses to a minimum. Subcontractors must analyze when it is appropriate and productive to resist non-mandatory flow-down clauses, and sometimes the answers to these questions may not be straightforward. Below we address the mandatory flow-down clauses for commercial subcontracts with commercial and non-commercial prime contractors, how subcontractors can handle irrelevant clauses, and best flow-down practices for prime contractors and subcontractors.

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Westlaw Today: The ICTS Supply Chain Rules: Towards a U.S.-China Tech Decoupling?

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Westlaw Today, August 9, 2022

Anthony Rapa ●

A July 2022 report relayed the news that the U.S. Department of Commerce (Commerce) is investigating the installation of Huawei equipment into cell towers situated near U.S. military bases and missile silos, based on concerns the equipment could hoover up sensitive data and transmit it to China.

The report indicates that Commerce is carrying out the investigation pursuant to its rules implementing Executive Order (EO) 13873 on “Securing the Information and Communications Technology and Services Supply Chain” (the ICTS Rules).

What are the ICTS Rules, and how will they be enforced? The ICTS Rules empower Commerce to review — and as warranted, to mitigate, block, or unwind — dealings in information and communications technology and services (ICTS) that have a nexus with a designated “foreign adversary,” including China and Russia.

You can read more on our website.

Complying with the Uyghur Forced Labor Prevention Act’s Strict Supply Chain Rules

Anthony Rapa, Matthew J. Thomas, and Patrick F. Collins 


The Uyghur Forced Labor Prevention Act (“UFLPA” or “Act”), which took effect last month, ushers in a new era of supply chain diligence for importers. The Act creates a rebuttable presumption that any goods produced in whole or in part in the Xinjiang Uyghur Autonomous Region (“XUAR”) of the People’s Republic of China (“PRC”), or by entities identified by the U.S. government on the UFLPA Entity List (“Entity List”), are presumed to be made with forced labor and thus are prohibited from entry into the United States under Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307). Notably, the presumption applies to downstream products that incorporate restricted goods, regardless of where the downstream products are made.

U.S. Customs and Border Protection (“CBP”) is now authorized to detain and exclude and/or seize goods that it suspects were produced in the XUAR or by entities on the Entity List.

Importers whose supply chains have links to the XUAR and China should be aware of the implications of UFLPA enforcement, including with respect to due diligence considerations, supply chain tracing and management, and the evidence required to overcome the UFLPA’s rebuttable presumption. There is no grace period for enforcement.

UFLPA OVERVIEW

President Biden signed the UFLPA into law on December 23, 2021. Effective on June 21, 2022, the UFLPA established a rebuttable presumption that the importation of any “goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part” in the XUAR, or produced by entities designated by the Forced Labor Enforcement Task Force (“FLETF”) as involved in specified XUAR-related activity, is prohibited by Section 307 of the Tariff Act of 1930, which prohibits the importation of items made from forced labor. The presumption applies unless CBP determines that the importer completely and substantively responded to all CBP inquiries, fully complied with FLETF’s guidance, and established by clear and convincing evidence that the goods were not produced using forced labor.

To read the full client alert, please visit our website

June 23, 2022: “Significant Regulatory and Litigation Developments—from Bid Protests to Vaccine Mandates—and Beyond”

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Justin A. Chiarodo will serve as a panelist at American Conference Institute’s 13th Advanced Forum on DCAA & DCMA Cost, Pricing, Compliance & Audits, being held June 22 and 23, 2022, in Arlington, VA.

Justin’s session, “Significant Regulatory and Litigation Developments—from Bid Protests to Vaccine Mandates—and Beyond,” will take place on Thursday, June 23, from 11:50 a.m. to 12:45 p.m.

For more details, visit our website.

NISPOM Creates New Requirements for Senior Management Officials

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Michael Joseph Montalbano

In February 2021, the Department of Defense (“DoD”) promulgated 32 C.F.R. Part 117. This move converted the National Industrial Security Program Operating Manual (“NISPOM”)—the rules that govern personnel and facility security clearances—from DoD policy into federal law. The move originally garnered little attention because the new regulations include virtually all requirements that were in the prior NISPOM. DoD, however, embedded new requirements with potentially significant implications for cleared contractors and their senior management officials (“SMO”). And the Defense Counterintelligence and Security Agency (“DCSA”) is now signaling that it will hold SMOs accountable if they fail to meet these requirements.

A cleared contractor’s SMO is the person “with ultimate authority over the facility’s operations and the authority to direct actions necessary for the safeguarding of classified information in the facility.” § 117.3(b). Typically, the SMO is the individual who holds the top position at a company, such as a chief executive officer or majority owner. Prior to the promulgation of Part 117, the SMO had discretion to delegate responsibility over the contractor’s industrial security program to another employee. Section 117.7(b)(2) of the new NISPOM regulations has put an end to that practice.

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Law360: How Russia Sanctions Are Affecting Compliance

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Law360, May 25, 2022

Anthony Rapa and Matthew J. Thomas

The wide-ranging sanctions and export controls that the U.S. and its partners have imposed on Russia in recent months pose complex compliance challenges for parties operating across borders, even when there is not a direct or obvious nexus with Russia.

Notably, the U.S. rules include restrictions relating to dealings with sanctioned persons, exports to Russia of a broad range of items, certain services, banknotes, certain imports, and new investment. Furthermore, the annexed Crimea region of Ukraine is subject to a comprehensive U.S. embargo, as are the so-called Donetsk People’s Republic, or DNR, and the Luhansk People’s Republic, or LNR.

This article provides practical guidance for compliance with such restrictions, which can affect commercial operations, investments, and processing of financial transactions.

You can read the full article on our website.

Expect GSA to More Closely Scrutinize Trade Agreements Act Compliance

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Merle M. DeLancey Jr.

On January 21, 2022, the General Services Administration (“GSA”) Office of Inspector General (“OIG”) informed the Federal Acquisition Service (“FAS”) that ongoing monitoring by the OIG found that the FAS failed to properly monitor the sale of products for compliance with the Trade Agreements Act (“TAA”) during the COVID-19 response. Previously, in April 2020, GSA relaxed compliance with the TAA for a limited number of Federal Supply Classes (“FSCs”) to aid the government’s response to the COVID-19 pandemic. The applicable FSCs included those covering N95 masks, cleaners and disinfectants, disposable gloves, and hand sanitizers. After several extensions, the TAA exception policy expired on April 30, 2021.

The OIG identified two deficiencies in FAS’ implementation of the TAA exception policy. First, the OIG found that FAS failed to properly track the addition of non-compliant products to contracts. As a result, after expiration of the exception policy, there was no effective way for GSA to remove the non-compliant products from contracts. Second, the OIG found that GSA improperly permitted the addition of non-compliant products to GSA contracts. For example, some products that were added were unrelated to the government’s response to the pandemic; some products were added to GSA contracts prior to the effective date of the TAA exception policy; and, remarkably, in one case, a product was added to a contract that identified North Korea as its country of origin.

Continue reading “Expect GSA to More Closely Scrutinize Trade Agreements Act Compliance”

Where Are We Going with Section 889 Part B?

Justin A. Chiarodo, Merle M. DeLancey, Jr., and Robyn N. Burrows

About two months have passed since the August 13, 2020, effective date of Part B of Section 889 of the FY 2019 National Defense Authorization Act. Part B, sometimes referred to as the Chinese telecommunications equipment ban, broadly prohibits the federal government from contracting with entities that use certain Chinese telecommunications (including video surveillance) equipment and services.

After the FAR Council published its July 10, 2020, Interim Rule, contractors, large and small, spent countless hours working to be able to certify compliance by August 13. This deadline was critical because the Interim Rule said that absent such a certification, a contractor was ineligible for future contract awards. That is, government agencies were prohibited from renewing or extending existing contracts with contractors unable to certify Part B compliance. Indeed, agencies were prohibited from issuing an order under an existing contract to a contractor that failed to certify compliance.

Yet, despite the Rule’s laudable policy goals, the government’s piecemeal and inconsistent implementation has placed government contractors in an untenable position. Continue reading “Where Are We Going with Section 889 Part B?”

Newly Released Interim Rule Implementing Part B of Section 889

Justin A. Chiarodo, Merle M. DeLancey Jr., and Robyn N. Burrows

On July 10, the government issued the    long-awaited Interim Rule implementing Part B of Section 889 (here is a link to the pre-publication version, with the official version soon to follow). Part B prohibits the federal government from contracting with entities that use certain Chinese telecommunications equipment (previously discussed in our blog posts here and here). The Interim Rule is 86 pages and addresses issues related to compliance with Part B, as well as clarifying aspects of Part A.

These are the key points federal contractors need to know:

  • Effective Date: The effective date remains August 13, 2020. The ban applies to solicitations, options, and modifications on or after August 13. However, as we previously discussed, the Department of Defense may allow its contractors more time to comply, despite the statutory deadline.
  • Required Representation: An offeror must represent that, after conducting a reasonable inquiry, it does/does not use covered telecommunications equipment/services.
    • “Reasonable inquiry” means an inquiry designed to uncover any information in the entity’s possession about the identity of the producer or provider of covered telecommunications equipment or services used by the entity. An internal or third-party audit is not required.
  • Scope of “Use”: Applies to the contractor’s use of covered technology, regardless of whether it is used to perform a federal contract. Thus, a contractor’s commercial operations are included.
  • Affiliates/Subsidiaries: The required representation is not applicable to affiliates or subsidiaries at this time. The FAR Council is considering whether to expand the scope of the representation/prohibition to cover an offeror’s domestic affiliates, parents, and subsidiaries. If expanded, it would be effective August 13, 2021.
  • Subcontractors: The ban and required representation are not applicable to subcontractors at this time. The ban only applies at the prime contractor level and does not include a flow down obligation.
  • Detailed Waiver Process: The Interim Rule includes a detailed and complex process for seeking a waiver (really a two-year delayed application).
  • Suggested Compliance Steps: The Interim Rule suggests contractors adopt a “robust, risk-based compliance approach” to include educating personnel on the ban and implementing corporate enterprise tracking to identify covered equipment/services.

Regulators are still seeking feedback from industry, which suggests the government’s willingness to incorporate changes in a final rule. But prime contractors need to act now. In the next 30 days, prime contractors need to determine through a “reasonable inquiry” whether they use covered equipment, regardless of whether that use relates to performance of a federal contract. To demonstrate a reasonable inquiry, contractors should memorialize all steps taken and decisions made in performing the inquiry.

A more detailed analysis is forthcoming. In the meantime, if you have any questions regarding compliance, please contact one of Blank Rome’s Government Contracts practice group attorneys for guidance.

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