The Department of Health and Human Services published a notice on March 30, 2020 — effective March 25, 2020 — designating certain COVID-19-related personal protective equipment (“PPE”) and materials as “scarce” or “threatened” materials subject to the Defense Production Act’s (“DPA”) anti-hoarding provisions. As a result of this notice, the DPA now prohibits the accumulation of these materials in excess of reasonable demands of business, personal, or home consumption. The notice also results in a prohibition of the accumulation of these materials for the purpose of resale at prices in excess of the prevailing market rate.
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Tenth Circuit Provides New Material on FCA’s Materiality Standard
Earlier this month, the United States Court of Appeals for the Tenth Circuit issued a decision that provided further clarity on the False Claims Act’s standard for materiality. The decision, United States ex rel. Janssen v. Lawrence Memorial Hospital, further demonstrated that materiality should be viewed through the eyes of the government customer rather than an hypothetical bystander. The decision also reconfirmed that the FCA is not a “general antifraud statute” and that contractual or regulatory language conditioning payment on compliance will not necessarily prove that noncompliance was material. Lawrence therefore serves as an important reminder to government contractors, practitioners, and other stakeholders about the significance of the materiality element in FCA litigation.
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What Is Lowest Priced Technically Acceptable? GAO Clarifies Reach of New LPTA Restrictions
As previously discussed on this blog, the National Defense Authorization Act for Fiscal Year 2017 and the NDAA for Fiscal Year 2018 imposed new limitations on when the Department of Defense can use Lowest Price Technically Acceptable source selection methods. Just last month, the Department of Defense issued a final rule amending the Defense Federal Acquisition Regulation Supplement to implement those provisions. Now, in Inserso Corp., B-417791, B-417791.3, Nov. 4, 2019, GAO has weighed in on what counts as LPTA for purposes of those restrictions. This decision may indicate a potentially significant limitation on the reach of the NDAA provisions, new DFARS rule, and proposed FAR rule.
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Lowest Priced Technically Acceptable Procurements Are Less and Less Acceptable: Proposed FAR Rule Further Continues Shake-Up of LPTA Procurements
On October 2, 2019, the Department of Defense, General Services Administration, and NASA issued a proposed rule that would amend the Federal Acquisition Regulation to establish new restrictions on when and under what circumstances civilian agencies may employ Lowest Price Technically Acceptable source selection procedures. The proposed rule would implement Section 880 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, and follows hot on the heels of DoD’s final rule making similar — but not identical — amendments to the Defense Federal Acquisition Regulation Supplement. (See our recent blog post on the new DFARS rule.)
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Lowest Priced Technically Acceptable Procurements Not Always Acceptable: New DFARS Rule Continues Shake-Up of LPTA Procurements
On September 26, 2019, the Department of Defense issued a final rule amending the Defense Federal Acquisition Regulation Supplement to establish new restrictions on the use of Lowest Price Technically Acceptable source selection procedures. Effective October 1, 2019, this new rule imposes specific limitations and prohibitions governing when and under what circumstances LPTA procedures are appropriate for a particular procurement. The new rule has the potential to expand — and provide a more definite legal framework for — pre-award bid protests challenging the use of LPTA source selection procedures.
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Supreme Court Extends Statute of Limitations for Relators in FCA Cases, in Limited Circumstances
As previously discussed on this blog, the Supreme Court announced last year that it would resolve a circuit split over when a relator needed to file a qui tam action under the False Claims Act (“FCA”). Earlier this month, the Court decided in Cochise Consultancy Inc. v. United States ex rel. Hunt, that relators can — in limited circumstances — take advantage of the FCA’s 3-year “alternative” statute of limitations, which means they may file their complaints up to four years after the default 6-year period has expired.
Now that the dust has settled, it is worth stepping back to take stock of the ruling’s practical effect. We believe that Cochise will have limited impact on most qui tam actions, although it leaves some important questions open. For FCA aficionados, the ruling by Justice Thomas also foreshadows a plain-reading, textual approach to future questions that may arise.
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More Novation Complexity In Gov’t Contracts M&A?
(This article was originally published in Law360 and has been modified for this blog.)
Government contractors undergoing an asset transaction know all too well the peculiarity and uncertainty associated with the transfer of a U.S. government contract through the required novation process. In two recent decisions, the Government Accountability Office considered the impact of such transactions and the novation process on the pursuit of new task orders from the U.S. government, with disappointing results for the affected contractors.
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Time to Resolve a Question About Time: Supreme Court to Consider FCA’s Statute of Limitations
When does a private party need to file a qui tam action under the False Claims Act (“FCA”)? Such a seemingly simple question has resulted in three different answers from six different courts. This past Friday, November 16, 2018, the Supreme Court announced it would resolve that circuit split — by granting a request to review the Eleventh Circuit’s decision in United States ex rel. Hunt v. Cochise Consultancy, Inc. The case will merit close attention, as the ultimate outcome could help protect government contractors from intentional and prejudicial delay in litigation.
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Any Questions? : Department of Defense Implements FY 2018 NDAA Requirement for Post-Debriefing Q&A Process
This past March marked the beginning of a more fulsome required debriefing process for defense contracts. The Director of Defense Procurement and Acquisition Policy (“DPAP”) issued a class deviation memorandum, effective March 22, 2018, requiring contracting officers to: (1) provide unsuccessful offerors an opportunity to submit additional questions within two days after receiving a debriefing; and (2) hold the debriefing open until the agency delivers written responses. The class deviation implements Section 818 of the National Defense Authorization Act for Fiscal Year 2018 (“NDAA”).
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Government Contracts and Chevron Deference: Justice Gorsuch Weighs In
Under Chevron U.S.A. v. NRDC and its progeny, courts show great deference to administrative agencies’ interpretations of statutes and regulations. However, it does not necessarily follow that courts will provide that same deference to agencies’ interpretations of government contracts. Last week, in a statement respecting the denial of certiorari in Scenic America, Inc. v. Dept. of Transportation, Supreme Court Justice Neil Gorsuch pointed out this distinction and raised an issue that merits further judicial attention.
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