Construction Contractors: The Government Contractor Defense is Alive and Well in the Fifth Circuit

Construction contractors take note: the government contractor defense is alive and well in the Fifth Circuit. In Sewell v. Sewerage and Water Board of New Orleans, the Fifth Circuit recently confirmed that construction companies can successfully assert the government contractor defense in response to tort lawsuits that arise from their performance of federal public works and infrastructure projects. This is a welcomed decision in the Fifth Circuit, which had signaled in recent years that a higher level of proof may be required to establish the first element of the defense ─ i.e., that the government meaningfully reviewed and approved reasonably precise specifications for the allegedly defective construction feature.

The Sewell case illustrates that ─ with the right litigation strategy and a skillfully crafted evidentiary record ─ construction contractors may well prove the defense in cases involving even “rudimentary or general construction features.” Continue Reading

Trinity: Divine Fifth Circuit Ruling Gives FCA Defendants Reason for Praise

Last year, the Supreme Court’s watershed Escobar ruling altered the landscape of False Claims Act litigation when it declared that the FCA’s materiality requirement presented a “demanding” barrier to plaintiffs alleging contractual non-compliance. In the 15 months since that time, lower courts have issued a steady stream of rulings interpreting and refining this standard. In the latest—and perhaps most consequential—of these rulings, the Fifth Circuit overturned a $663 million FCA jury award on materiality grounds in the bellwether case of U.S. ex rel. Harman v. Trinity Industries, Inc. While the outcome may not be a surprise given the trend in recent decisions addressing the FCA’s materiality requirement—not to mention an earlier Fifth Circuit ruling involving a strikingly similar issue—Trinity serves as a forceful reminder of the formidable barrier to recovery presented by the materiality requirement. Continue Reading

Introducing Covington’s Escobar Tracker

In Universal Health Services v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), the Supreme Court changed the landscape for False Claims Act litigation. The Court endorsed implied certification liability, but set a high bar for demonstrating the materiality of a violation of law, regulation, or contract to the government’s payment decision.

More than a year after the Escobar decision, lower courts continue to grapple with the case’s key holdings. It is essential that government contractors, practitioners, and other stakeholders keep abreast of how the courts are interpreting Escobar.

Starting today, Inside Government Contracts will be hosting Covington’s Escobar tracker, a listing of district and circuit court cases applying the Court’s implied certification and materiality rulings. Our tracker provides a brief summary of each case and its Escobar-related holding.

The Escobar tracker can be accessed here and will be hosted in the “Resources” section of the blog. We will be periodically updating the list with new cases. We hope you find the tracker useful.

DoD Issues Further Guidance on Implementation of DFARS Cyber Rule

On September 21, 2017, the Director of the Defense Pricing/Defense Procurement and Acquisition Policy (DPAP) issued guidance to Department of Defense (DoD) acquisition personnel in anticipation of the December 31, 2017 date for contractors to implement the security controls of NIST Special Publication (SP) 800-171.  The guidance outlines (i) ways in which a contractor may use a System Security Plan (SSP) to document implementation of NIST SP 800-171; and (ii) provides examples of how DoD organizations could leverage a contractor’s SSP and related Plan of Action and Milestones (POA&M) in the contract formation, administration, and source selection processes.

Continue Reading

Pentagon Reverses Course and Rolls Back The IR&D Technical Interchange Rule

On September 14, 2017, the Department of Defense issued a new class deviation that eliminates the requirement on major contractors to engage with the Government in technical interchange meeting prior to the generation of independent research and development (IR&D) costs.  This class deviation represents a continuing reversal in position for the Pentagon, which had been moving forward with placing more guiderails for IR&D spending.

The technical interchange meeting requirement was promulgated on November 4, 2016 and required that for IR&D costs to be allowable, major contractors must engage in technical interchange meetings with operational Department of Defense personnel so that “contractor plans and goals for IR&D projects benefit from the awareness of and feedback by a DoD Government employee who is informed of related ongoing and future potential interest opportunities.”  This rule generated significant industry concern that the Government would unduly interfere in independent research and development by becoming a de facto approval process.  After publication of the final rule, on December 1, 2016, DoD issued a class deviation  eliminating the requirement that the technical interchange occur “before IR&D costs are generated.”  Further addressing industry concerns, the Undersecretary for Defense for Acquisition, Technology, and Logistics issued a memorandum clarifying that although the DFARS rule required contractors to share their IR&D plans with DoD, the technical interchange meetings did not represent a government approval process for IR&D projects. Continue Reading

Senate Democrats Look to Strengthen “Buy American” Policies and Requirements

Last week a group of four Senate Democrats – led by Minority Leader Chuck Schumer (D-NY) – jointly published an article about “strengthen[ing]” the U.S. Government’s “Buy American policies.” While the senators acknowledged President Trump’s recent efforts to “re-examine the use of . . . Buy American waivers” (see our blog post regarding the “Buy American” Executive Order), they also expressed concern that these efforts would “not fundamentally change . . . Buy American policies.” In other words, both sides of the aisle are targeting “Buy American” reforms. Continue Reading

The FCA’s First-to-File Bar and The Enduring Importance of Textualism

Two years ago, in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, the Supreme Court interpreted the “first-to-file” bar of the False Claims Act (“FCA”) in a manner that seemingly authorizes relators to pursue qui tam suits based upon the same allegations made in previously dismissed FCA actions.  On remand from the Supreme Court, the Fourth Circuit recently issued an opinion in Carter in which it took a similarly text-based approach, but reached a different conclusion, holding that the FCA’s first-to-file bar should be interpreted in a manner that promotes finality and prevents copycat lawsuits.  These opinions demonstrate the importance of carefully assessing the FCA’s statutory text in litigation.

Continue Reading

Border Wall Protest Dismissed After Protester Fails to Timely Submit Comments

The Department of Homeland Security’s procurement for border wall prototypes is a complex, controversial procurement by any measure.  But one protest of that procurement has recently been dismissed for a simple reason: the protester failed to timely submit comments on the agency report.

Bid protests at the Government Accountability Office are notorious for their fast and rigid deadlines.  One such deadline requires that protester comments on the agency report be filed within ten calendar days of receiving the agency report — barring an extension from GAO, which must be granted before the deadline passes.  A protester cannot opt to skip comments and rest on its initial protest.  If it fails to timely submit comments, GAO will dismiss its protest.

PennaGroup, LLC protested its exclusion from the second of two phases of the border wall–prototype procurement.  The solicitations required “offerors to acknowledge any issued amendment by signing the accompanying Standard Form 30 (SF-30), and to submit the SF-30 with each offeror’s proposal.”  PennaGroup’s proposals were eliminated from the competition for both the solid concrete prototype and the other-than-solid-concrete prototype because it failed to include SF-30s acknowledging the first six of seven RFP amendments.

Continue Reading

CIA Torture Case Is A Cautionary Tale for Contractors on The Battlefield

By Alex L. Sarria and Marianne F. Kies

The recent settlement of a noteworthy “contractor-on-the-battlefield” case should serve as a cautionary tale to government contractors that perform high-risk work in support of military operations. In Suleiman Abdullah Salim v. James E. Mitchell and John Jessen, No. CV-15-0286, three foreign plaintiffs filed Alien Tort Statute (“ATS”) claims against American contractors who allegedly “designed, implemented, and personally administered” the CIA’s post-9/11 “enhanced interrogation” program.

The district court recently issued an opinion denying the defendants’ motion for summary judgment on the basis of the Political Question Doctrine and Derivative Sovereign Immunity. Less than two weeks later, the contractors agreed to settle the case for an undisclosed amount. The Salim case illustrates why government contractors must proactively assess and mitigate potential tort liabilities before entering into high-risk federal contracts, such as contracts for military logistics support, private security, and intelligence-support services.

Continue Reading

NIST Releases Fifth Revision of Special Publication 800-53

The National Institute of Standards and Technology (“NIST”) released on August 15, 2017 its proposed update to Special Publication (“SP”) 800-53. NIST SP 800-53, which was last revised in 2014, provides information security standards and guidelines, including baseline control requirements, for implementation on federal information systems under the Federal Information Systems Management Act of 2002 (“FISMA”). The revised version will still apply only to federal systems when finalized, but one of the stated objectives of the revised version is to make the cybersecurity and privacy standards and guidelines accessible to non-federal and private sector organizations for voluntary use on their systems.  Continue Reading

LexBlog