U.S. Senators Propose Trade-Pact Waivers Amidst Focus on Domestic Preference Laws

The American Rescue Plan, signed into law last month, includes $1.9 trillion in economic stimulus, healthcare, and related funding. And just last week the Biden administration released an infrastructure proposal, the American Jobs Plan, that includes $2.3 trillion in transportation, connectivity, power, and other critical infrastructure investments.

Contractors are right to view these plans as massive opportunities — but should be cognizant of the regulatory strings that often attach to government spending. In general, these can include Federal Acquisition Regulation (FAR) and agency-specific FAR supplements for federal procurements, as well as the nonprocurement uniform requirements (2 C.F.R. Part 200) and related agency-specific regulations that attach to Federal grant funds even when disbursed by state or local entities.

Now, some Congressional members are seeking to add new restrictions that would significantly overhaul the existing domestic preference regime for Federal procurements — mere weeks after the promulgation of new Buy American regulations and the release of a new Executive Order to further tighten the application of these rules.

False Claims Act Update: District Court Rejects DOJ Motion to Intervene for Lack of “Good Cause”

By Michael Wagner, Krysten Rosen Moller and Nicholas Baer on March 29, 2021 Posted in False Claims Act

When the United States government decides to intervene in False Claims Act litigation after initially declining intervention, it is not “déjà vu all over again.” Instead, as one court has recognized, the “government is getting on a moving train,”[1] and it can only be permitted to “intervene at a later date” if it can show “good cause” for doing so. See 31 U.S.C. § 3730(c)(3).

On February 24, 2021, a Tennessee federal district court offered a pointed reminder of this principle when it denied a government motion to intervene in a qui tam suit after DOJ originally had declined to intervene six months earlier. See U.S. ex rel. Odom v. Southeast Eye Specialists, No. 3:17-cv-00689 (M.D. Tenn. Feb. 24, 2021). In so ruling, the court vacated a magistrate judge’s Report & Recommendation (“R&R”), which found that DOJ had established “good cause” for intervention. Although motions to intervene pursuant to Section 3730(c) are often granted, the recent order issued in U.S. ex rel. Odom v. Southeast Eye Specialists illustrates that the “good cause” showing is not a hollow requirement and that it can serve as a meaningful constraint on belated attempts by DOJ to intervene to pursue a case after initially declining to do so.

President Biden Directs Broad Review of America’s Supply Chains

By Susan B. Cassidy, Trisha Anderson, Samantha Clark, Michael Wagner, Ryan Burnette and Darby Rourick on March 8, 2021 Posted in Cybersecurity, Defense Industry, Domestic Preferences, Supply Chain

On February 24, 2021, President Biden signed an Executive Order entitled “Executive Order on America’s Supply Chains” (the “Order”). Among other things, the Order is an initial step toward accomplishing the Biden Administration’s goal of building more resilient American supply chains that avoid shortages of critical products, facilitate investments to maintain America’s competitive edge, and strengthen the country’s national security posture. The Order imposes no new regulatory obligations on industry, but rather outlines a process for federal departments and agencies to assess risks to U.S. supply chains. The first set of reviews focusing on four critical product areas will take place over a 100-day period, while the second set of reviews targeting a broader set of key sectors will be completed over a one-year period. The Order raises a number of key questions that may impact future business plans for companies operating in the industries or sectors to be reviewed.

Additional details on the Order and its impact are available in a client alert that we published on March 2, available here.

Senator Grassley and Senior DOJ Official Discuss Potential False Claims Act Changes and Enforcement Priorities

By Terra White Fulham, Michael Wagner and Peter B. Hutt II on February 23, 2021 Posted in Escobar, False Claims Act

On February 17, 2021, Senator Chuck Grassley (R-IA) and Brian Boynton, Acting Attorney General for the Department of Justice’s Civil Division, provided opening remarks at the Federal Bar Association’s annual Qui Tam Conference. Both emphasized the key role of the FCA in combating fraud against the Government, and noted an anticipated increase in FCA enforcement actions in the coming years, particularly related to the Government’s pandemic response. In addition, Senator Grassley offered a preview of potential legislative changes to the False Claims Act, and Boynton outlined DOJ’s enforcement priorities for the coming year.

New FAR Rule Continues Shake-Up of LPTA Procurements

By Kayleigh Scalzo, Jay Carey and Andrew Guy on February 5, 2021 Posted in Bid Protests, Procurement Policy, Procurement Reform

Federal civilian agencies will now face new restrictions on when and how they can use Lowest Price Technically Acceptable source selection procedures. A new rule in the Federal Acquisition Regulation is the latest in a series of measures aimed at regulating the use of LPTA source selection procedures. The new rule implements an October 2019 proposed rule and takes effect on February 16, 2021. Continue Reading

President Biden Orders Tightening of Made in America Laws: What Contractors Need to Know

By Michael Wagner, Evan R. Sherwood, Samantha Clark, Frederic Levy and Jennifer Plitsch on February 1, 2021 Posted in Buy American

On January 25, 2021, President Biden issued a much-anticipated Executive Order announcing plans to strengthen the U.S. Government’s preference for domestically-sourced goods and services, including a proposal to tighten longstanding exceptions to domestic preference requirements.

Executive Order 14005 on Ensuring the Future Is Made in All of America by All of America’s Workers (“EO”) aims to “maximize” the U.S. Government’s purchasing of goods and services produced in the United States. In its key provisions, the EO:

Proposes to increase the domestic content threshold for determining whether a product qualifies as domestic, potentially exceeding the 55% threshold, which was increased to that number only last week by the Trump administration.
Directs the Federal Acquisition Regulatory Council (“FAR Council”) to replace the Buy American Act’s (“BAA”) longstanding domestic cost-of-components test with a domestic value-added test, using as-yet undetermined metrics.
Calls for new procedures that would increase the level of review required to obtain a waiver of domestic preference laws and the scrutiny that would apply to such waivers.
Contemplates leveraging trade remedies used to combat unfair trade as a means of enforcing federal procurement policies.
Establishes a new Made in America Office to oversee and administer domestic preference requirements in federal procurements.

This EO is the latest in a line of recent proclamations from the White House aimed at strengthening domestic preference requirements in federal contracting. Notably, the EO revokes certain earlier Trump administration executive orders, but it leaves in place—at least for now—the Final Rule issued on January 19, 2021 that increased the BAA’s Eisenhower-era domestic content requirements and price preferences in accordance with President Trump’s July 2019 Executive Order. The EO also left untouched the domestic procurement preferences for essential medicines, medical countermeasures, and critical inputs established in a separate order issued by President Trump in August 2020.

Ultimately, the effect of this latest EO will depend on the details of its implementation. While it largely avoids prescriptive details, the EO requires the FAR Council to consider proposing new implementing regulations within 180 days, and the Office of Management and Budget (“OMB”) and General Services Administration (“GSA”) likewise are directed to establish oversight and reporting mechanisms related to BAA compliance. Notably, the EO is unclear about whether and how it applies to the Trade Agreements Act of 1979 (“TAA”), and contractors will need to await guidance from the FAR Council to better understand this issue.

For our full analysis, the full client alert is available here. We will continue to closely track these developments as they unfold. For now, however, the EO offers a clear indication that the Biden administration intends to maintain—if not increase—the U.S. Government’s recent emphasis on promoting and enforcing domestic sourcing requirements.

Paycheck Protection Program Expands and Offers Opportunity for Second Draw Loans

By Tyler Evans and Sarah Shepson on January 14, 2021 Posted in CARES Act, Coronavirus, COVID-19, Small Business, Uncategorized

On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act opened up the Paycheck Protection Program (“PPP”) to additional organizations and authorized a second draw of PPP loans. The U.S. Small Business Administration (“SBA”) has issued guidance on changes to the original Program and new second draw loans, and the Program has been partially reopened for both first and second draw loans as of January 13, 2021. Loans will initially only be available through community financial institutions, but SBA has indicated that additional lenders will once again be able to participate in the Program on January 15, 2021, with a full reopening scheduled for January 19, 2021.

Similar to the Program’s original rollout, a number of questions remain with respect to SBA’s implementation of the Act. SBA is also delaying guidance on changes to loan forgiveness, which may once again place borrowers in the position of taking out loans without knowing whether they will be fully forgiven. However, SBA has now been managing the Program for almost ten months, and borrowers will hopefully not be subject to the same level of policy shifts and reversals that was experienced during the Program’s original rollout.

The Act makes first and second draw loans available until March 31, 2021, but there is a good chance that all available funds will be allocated before that date.

Cybersecurity and Government Contracting: False Claims Act Considerations

By Michael Wagner, Peter B. Hutt II, Susan B. Cassidy and Andrew Guy on January 11, 2021 Posted in Cybersecurity, False Claims Act

As the recent SolarWinds Orion attack makes clear, cybersecurity will be a focus in the coming years for both governmental and non-governmental entities alike. In the federal contracting community, it has long been predicted that the government’s increased cybersecurity requirements will eventually lead to a corresponding increase in False Claims Act (FCA) litigation involving cybersecurity compliance. This prediction may soon be proven true, as a December 2020 speech from Deputy Assistant Attorney General Michael Granston specifically identified “cybersecurity related fraud” as an “area where we could see enhanced False Claims Act activity.” This post discusses recent efforts to use the FCA to enforce cybersecurity compliance — and, based on those efforts, what government contractors may expect to see in the future. Continue Reading

Technically Still Yours: Court Holds that Contractors May Mark Unlimited Rights Data with a Proprietary Legend

By Evan R. Sherwood and Jay Carey on December 22, 2020 Posted in Claims and Contract Disputes, Data Rights, Defense Industry, Government Contracts Regulatory Compliance, Intellectual Property, Intellectual Property Rights and Internal Investigations, Procurement Policy

If your company delivers technical data to the Department of Defense, you should take a close look at the Federal Circuit’s decision issued yesterday in The Boeing Co. v. Secretary of the Air Force.

The Court acknowledged that contractors may retain ownership and other interests in unlimited rights data, and it held that they may take steps to put third parties on notice of those rights. In particular, the Court held that, in addition to the standard legends required by the Defense Federal Acquisition Regulation Supplement (“DFARS”), contractors may also include a legend notifying third parties of the contractor’s retained rights.

Expansion of the Procurement Collusion Strike Force

By Ross Demain, Michael Pierce, Bobby Chen and Michael Wagner on December 15, 2020 Posted in Procurement Fraud and Internal Investigations, Procurement Policy

Just over a year after launching the Procurement Collusion Strike Force (“PCSF”), the U.S. Department of Justice’s Antitrust Division (“DOJ”) announced new measures to further its pursuit of antitrust and related crimes in government procurement, grant, and program funding. These changes expand the PCSF’s enforcement capacity and signal DOJ’s enduring—and intensifying—commitment to the PCSF’s mission.

The PCSF has added 11 new national partners: the Department of Homeland Security Office of the Inspector General, the Air Force Office of Special Investigations, and nine new U.S. Attorneys. As a result, the growing PCSF coalition now includes 29 agencies and offices, including U.S. Attorneys in 22 federal judicial districts; the Federal Bureau of Investigation; and Offices of Inspectors General at six federal agencies. The PCSF also named the Antitrust Division’s Daniel Glad as the Strike Force’s first permanent director, solidifying the PCSF’s institutional role at DOJ. Glad previously served as an Assistant Chief at the Antitrust Division’s Chicago Office. Continue Reading