Trump’s New Executive Order Requires Additional Buy American Preferences For Infrastructure Projects

Last week, President Trump issued a new executive order, entitled “Strengthening Buy-American Preferences for Infrastructure Projects.” This order serves as an extension of the President’s earlier April 2017 “Buy American and Hire American” executive order, which we have previously analyzed in this space. The April 2017 order stated that “it shall be the policy of the executive branch to buy American and hire American,” and, among other things, directed agencies to “scrupulously, monitor, enforce, and comply with” domestic preference laws (referred to by the executive order as “Buy American Laws”) and to minimize use of waivers that would permit the purchase of foreign end products.

The President’s new order continues to emphasize the importance of “the use of goods, products, and materials produced in the United States,” but is specifically directed towards infrastructure projects that are recipients of federal financial assistance awards. As we have reported previously, federally-financed infrastructure has also been a stated area of focus for the Trump administration, although the Administration’s “Legislative Outline for Rebuilding Infrastructure in America” released last year curiously lacked any domestic preference requirements.

The new executive order makes up for this previous omission and then some: it has the potential to affect a vast number of programs and projects, and may in fact impose domestic sourcing requirements in areas—such as internet infrastructure—that are not typically targets for domestic preferences.

Debate Over Qui Tam Constitutionality Resumes After 20-Year Hiatus

By Peter B. Hutt II, Herbert Fenster and Carl Wiersum on February 7, 2019 Posted in False Claims Act

The motivating force behind the False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”) is its provision for qui tam enforcement, which authorizes private parties (aka relators) to initiate FCA cases on behalf of the United States. Id. § 3730(b)(1). Immediately after re-invigoration of the FCA in 1986, scholars and litigants questioned the constitutional validity of statutory authorization for relators to sue on behalf of the U.S. government. After 15 years of litigation, this debate withered, but has been recently re-invigorated.

This post summarizes four principal challenges to the constitutionality of qui tam enforcement, and then discusses two recent events in which these challenges have reappeared: the confirmation hearings for Attorney General nominee William Barr and a cert petition that asks the Supreme Court to rule on qui tam constitutionality. Continue Reading

A Tale of Two Protests: Recent GAO Decisions Highlight Impaired Objectivity OCIs

By Peter B. Hutt II, Hunter Bennett and Brooke Stanley on February 6, 2019 Posted in Bid Protests, Procurement Policy, Subcontracting

Organizational conflicts of interest (OCIs) are perpetually thorny issues in federal procurement that contracting officers are required to identify and evaluate “as early in the acquisition process as possible.”[1] Although the Government Accountability Office (GAO) has identified several OCI categories,[2] two recent decisions highlight so-called impaired objectivity OCIs, which arise when a contractor’s ability to provide objective advice or recommendations to the government will be undermined by competing interests. The two decisions serve as an important reminder of what does — and does not — qualify as meaningful consideration by the contracting officer in such situations, and how prospective contractors can assist in identifying and mitigating such OCIs.

DoD Continues to Up the Ante on Cybersecurity Compliance for Contractors

By Susan B. Cassidy and Ian Brekke on January 29, 2019 Posted in Cybersecurity, Defense Industry, Government Contracts Regulatory Compliance, Information Technology Contracting

Compliance with the security controls in National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171 is only the beginning for contractors that receive controlled defense information (CDI) in performance of Department of Defense (DoD) contracts and subcontracts. Faced with an evolving cyber threat, DoD contractors have experienced an increased emphasis on protecting DoD’s information and on confirming contractor compliance with DoD cybersecurity requirements. This includes audits by the DoD Inspector General (IG) “to determine whether DoD contractors have security controls in place” to protect CDI and enhanced security controls for certain high risk contractor networks. And on September 28, 2018, the Navy issued a policy memorandum calling for enhanced cybersecurity requirements, including some that have generated opposition within the defense community such as the installation of network sensors by the Naval Criminal Investigative Service on contractor systems. Other requiring activities are reportedly requiring similar enhanced protections and NIST is expected to issue a public draft of Revision 2 to NIST SP 800-171 by the end of February, with an appendix of additional enhanced controls.

As discussed in our blog post here, on November 6, 2018, DoD issued final guidance to requiring activities for assessing contractors’ System Security Plans (SSPs) and their implementation of the security controls in NIST SP 800-171. Since then, DoD has issued two additional guidance memoranda; one that includes contractual language for implementing the November 6^th guidance and one that explains how DoD plans to confirm contractor oversight of subcontractor compliance with the DFARS 252.204-7012 cybersecurity requirements.

Surviving the Shutdown: Seven Things Contractors Should Consider If a Cost Overrun Is on the Horizon

By Susan B. Cassidy, Frederic Levy and Evan R. Sherwood on January 23, 2019 Posted in Claims and Contract Disputes, Costs, Government Contracts Regulatory Compliance

The U.S. Government shutdown is now the longest in U.S. history and is starting to have serious implications for Government contractors. One of many key concerns arises when contractors approach their contract funding ceiling — can they continue to work, and what happens if there is a cost overrun?[1]

The answers are often complicated for both contractors and agency officials, and depend on the terms of the contract and the statutory basis for the program. Contractors facing this situation should keep seven points in mind.

GAO Report Shows That Agencies Buy Only A Small Percentage of Non-American Goods, But Buy American Act Implementation Remains A Challenge

By Michael Wagner and Peter Terenzio on January 23, 2019 Posted in Buy American, Domestic Preferences, Trade Agreements Act

Last month, GAO released a report analyzing federal agency implementation of the Buy American Act (“BAA”), 41 U.S.C. §§ 8301-8305. As we have previously reported, BAA enforcement is an area of focus for the Trump Administration, which has repeatedly emphasized the need to “Buy American and Hire American,” including in an April 2017 executive order. And for government contractors, compliance with the BAA and other domestic sourcing regimes also has been an increasingly common subject of litigation, particularly under the civil False Claims Act, as we have detailed in this space.

In keeping with this Buy American focus, GAO was commissioned to report on (A) the extent to which federal agencies procure non-domestic end products through the use of BAA exceptions and waivers, and (B) the ways in which the government’s largest buyers provide training and guidance to implement BAA requirements. Although GAO found that only a relatively small percentage of goods purchased were foreign end products, GAO also found that this number could have been misstated due to reporting errors and system limitations. Moreover, GAO found that the level of BAA training varied significantly among the agencies it canvassed. GAO’s findings, which are discussed in greater detail below, offer a window into the government’s view of its own compliance with the BAA’s complex and often confusing regulatory scheme.

Jumping to Exclusions: New Law Provides Government-Wide Exclusion Authorities to Address Supply Chain Risks

By Susan B. Cassidy and Ian Brekke on January 22, 2019 Posted in Cybersecurity, Defense Industry, Information Technology Contracting, Supply Chain

On the eve of the recent government shutdown over border security, Congress and the President were in agreement on a different issue of national security: mitigating supply chain risk. On December 21, 2018, the President signed into law the Strengthening and Enhancing Cyber-capabilities by Utilizing Risk Exposure Technology Act (the “SECURE Technology Act”) (P.L. 115-390). The Act includes a trio of bills that were designed to strengthen the cyber defenses of the Department of Homeland Security (“DHS”) and mitigate supply chain risks in the procurement of information technology. The last of these three bills, the Federal Acquisition Supply Chain Security Act, should be of particular interest to contractors that procure information technology-related items related to the performance of a U.S. government contract. Among other things, the bill establishes a Federal Acquisition Security Council, which is charged with several functions, including assessing supply chain risk. The bill also gives the Secretary of DHS, the Secretary of the Department of Defense (“DoD”) and the Director of National Intelligence authority to issue exclusion and removal orders as to sources and/or covered articles based on the Council’s recommendation. Finally, the bill allows federal agencies to exclude sources and/or covered articles deemed to pose a supply chain risk from certain procurements.

Domestic Sourcing Requirement Doesn’t Fit DOD’s Gloves

By Scott A. Freling and Pierre Hines on January 16, 2019 Posted in Bid Protests, Buy American, Country of Origin, Defense Industry, Domestic Preferences, Government Contracts Regulatory Compliance

(This article was originally published in Law360 and has been modified for this blog.)

The Government Accountability Office (GAO) recently issued a bid protest decision regarding the application of the Berry Amendment’s domestic sourcing requirement to a U.S. Department of Defense (DOD) solicitation for leather combat gloves with touchscreen capability. In that decision, the GAO found that the nonavailability exception to the Berry Amendment applied to the glove’s kidskin leather even though the agency determined, through market research, that this type of leather was available domestically. Importantly, this decision provides an opportunity for stakeholders to consider the nuances associated with the Berry Amendment’s nonavailability exception and to reflect upon the complex regulatory landscape of domestic sourcing requirements.

Lowest Price Technically Acceptable Solicitations No Longer Acceptable? Reviewing the Department of Defense’s Proposed Changes to the DFARS

By Hunter Bennett and Ryan Burnette on December 27, 2018 Posted in Bid Protests, Government Contracts Regulatory Compliance, Procurement Policy

In a proposed rule issued earlier this month, the Department of Defense (“DoD”) seeks to incorporate into the Defense Federal Acquisition Regulations Supplement (“DFARS”) restrictions on the use of the lowest price technically acceptable (“LPTA”) source selection method from the National Defense Authorization Act (“NDAA”) for Fiscal Years 2017 and 2018. This proposed rule makes clear that these NDAA-imposed restrictions are not going away any time soon, and that DoD contracting officers need to engage in a thorough and reasoned analysis before conducting an LPTA procurement. Continue Reading

Signs of Progress with the Limitations on Subcontracting, but Outstanding Questions Remain

By Scott A. Freling, Tyler Evans and Brooke Stanley on December 20, 2018 Posted in Government Contracts Regulatory Compliance, Procurement Policy, Small Business, Subcontracting

A recently proposed rule would update the Federal Acquisition Regulation (“FAR”) to incorporate statutory changes to limitations on subcontracting that have been in effect since 2013. The U.S. Small Business Administration (“SBA”) has long since revised its own regulations to implement these changes, but some contracting officers have been reluctant to follow these changes in the SBA regulations because the FAR contains contradictory provisions.

The proposed rule is a sign of progress. In particular, it should add significant clarity to the current disconnect between the FAR and SBA regulations. However, the proposed rule is not perfect, and a number of recent developments highlight that outstanding questions remain.