GSA recently announced it is supporting an Inspector General investigation into alleged, third-party fraudulent activity in the System for Award Management (“SAM”). The GSA announcement suggests that fraudulent SAM accounts may have been used to divert certain federal payments to unauthorized bank accounts. The announcement does not elaborate on the scope of potentially impacted entities or the amount of misdirected payments at issue. GSA has advised impacted entities to validate their SAM registration and confirm their financial information. Although GSA has indicated it has or will reach out to impacted entities, contractors would be well advised to confirm independently the accuracy of their current SAM registration.
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The Long-Standing TAA “Substantial Transformation” Standard for Drug Products is Challenged at the Court of International Trade
A generic pharmaceutical distributor, Acetris Health, LLC, has challenged the Final Determination of U.S. Customs and Border Protection (“Customs”) that Acetris’ generic prescription drug, Rosuvastatin Calcium Tablets (“Rosuvastatin”), is a product of India, the place where the active pharmaceutical ingredient (“API”) is produced. If successful, the challenge in the U.S. Court of International Trade (“CIT”) could have a meaningful impact on decisions about where to manufacture API for the very broad range of drug products sold to the U.S. Government.
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California Law Aims to Scrutinize Drug Pricing
Over the last few weeks, much attention has been paid to California’s recently enacted SB 17, legislation that requires pharmaceutical manufacturers to report certain price increases of prescription drugs and, in some cases, provide a justification for such increases. The legislation also requires health insurers and health plans to report additional rate information to state agencies. California’s push to impose disclosure of prescription drug pricing information is part of a growing trend of proposed and enacted legislation across the country purportedly aimed at increased price transparency and control.
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Protecting Intellectual Property as Government R&D Funding Rises
The U.S. Government’s research and development (“R&D”) spending is on the rise. For instance, the U.S. Government spent $139 billion in on R&D in FY 2015 and approximately $148 billion in FY 2016. It is slated to spend as much as $154 billion on R&D in FY 2017. With this funding comes great opportunities
Senate Committee Directs DoD to Reduce Drug Prices
In its Report on the National Defense Authorization Act for Fiscal Year 2018, the Senate Armed Services Committee (the “Committee”) included an “Item of Special Interest” directing the DoD to exercise its rights under the Bayh-Dole Act “to authorize third parties to use inventions that benefited from DOD funding whenever the price of a drug, vaccine, or other medical technology is higher in the United States” as compared to prices in foreign countries. This directive does not have the force of law, and was included as an item of special interest after an amendment to incorporate the clause into the NDAA failed. However, it represents an example of efforts to use the Bayh-Dole Act to influence drug product pricing.
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Department of State Releases 2017 TIP Report
The Department of State has released its 2017 Trafficking in Persons (“TIP”) Report. As with prior versions of the annual report, the State Department reviewed efforts made by more than 180 countries to address the minimum Prosecutorial, Protective, and Preventative standards necessary for effective anti-trafficking measures, as these standards are outlined in the United States’ Trafficking Victims Protection Act (“TVPA”).
The release of the report is notable because it can directly impact contractors’ diligence obligations for supply chain review under the Federal Acquisition Regulation (“FAR”) Human Trafficking Rule (located at FAR § 52.222-50). As we have highlighted in previous articles, for those contractors required to submit compliance plans to the government, such plans should be appropriately shaped to the “nature and scope of activities to be performed for the Government . . . and the risk that the contract or subcontract will involve services or supplies susceptible to trafficking in persons.” See FAR § 52.222-50(h)(2)(ii). Additionally, as set forth in a recent proposed memorandum, which remains the clearest articulation of the government’s views on supply chain diligence obligations to date (covered in a prior post), contractors are expected to take steps to “identify high-risk portions of [their] supply chain[s].”
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Section 809 Panel Urges Congress to Bring DoD Spending into the 21st Century
The Section 809 Panel recently released an interim report and supplement (the “Interim Report”) advocating in broad strokes for a host of improvements to the Department of Defense’s (“DoD”) acquisition system to better streamline the process and increase industry offerings to the government. The NDAA for FY 2016 established the Section 809 Panel to address “fundamental problem[s]” in the means by which the DoD acquires goods and services to support its warfighters. Indeed, in meeting with over 200 government and industry representatives, the Interim Report found that the DoD’s acquisition system creates obstacles that make it unattractive for small and large businesses alike to offer their goods and services to the government. The Interim Report explains that “the United States’ ability to maintain technological, military, and economic superiority is being challenged,” as our adversaries are recognizing vulnerabilities in our forces and modernizing their militaries in response. Thus, according to the Interim Report, DoD’s acquisition procedures must be improved to achieve “a degree of agility that DoD is not currently able to deliver.”
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Trump’s Commitment Against Human Trafficking Brings Greater Uncertainty for Contractors
Last Thursday, President Trump and his senior advisors met with representatives of organizations committed to fighting human trafficking. As reported by several news outlets (e.g., AP, NYT, and Reuters), the President stated during the meeting that he would commit the “full force and weight” of the U.S. government against what he views as an “epidemic” of human trafficking around the world. He explained that he would “direct the Department of Justice, Department of Homeland Security, and other federal agencies that have a role in preventing human trafficking to take a hard look at the resources and personnel that they are currently devoting to this fight.” He noted that these agencies “are devoting a lot, but we are going to be devoting more.” The next day, President Trump appeared to reiterate his commitment on Twitter.
Continue Reading Trump’s Commitment Against Human Trafficking Brings Greater Uncertainty for Contractors
New Guidance on Contractor Risk Management Under the Human Trafficking Rule Released
On December 7, the Office of Management and Budget, the Department of Labor, and the Office to Monitor and Combat Trafficking in Persons in the Department of State, issued a proposed memorandum titled “Anti-Trafficking Risk Management Best Practices & Mitigation Considerations.” The document is intended, at least in part, to “promote clarity and consistency in the implementation of anti-trafficking requirements” imposed by Executive Order 13627, Title XVII of the FY 2013 National Defense Authorization Act, and the implementing regulatory provisions applicable to all federal contractors at FAR 22.17 and FAR 52.222-50. Although the guidance document is in draft form, it is important for contractors to consider closely because it (1) outlines the government’s contemplated expectations on anti-trafficking risk mitigation, and (2) informs agencies that they may immediately take the contents of the memorandum “into consideration in applying the anti-trafficking requirements in the Federal Acquisition Regulation.”
In addition to reiterating the basic requirements of the anti-trafficking FAR rule (which we have covered in other posts), the memorandum outlines a series of “best practices and mitigation considerations” designed to inform contracting officers’ assessments of whether contractors are effectively carrying out their compliance responsibilities. Although the guidance states that it is “not intended to augment or otherwise change existing regulatory requirements,” it does specify that, in the event the government becomes aware of a trafficking violation, a contractor’s compliance with the practices identified in the guidance are to be construed as mitigating considerations weighing in the contractor’s favor.
Continue Reading New Guidance on Contractor Risk Management Under the Human Trafficking Rule Released
The GAO Is Not Down With OFCCP: Report Criticizes Agency’s “Weak” Compliance Evaluations and May Trigger Increased Contractor Oversight
The Government Accountability Office (“GAO”) recently released a study of the Office of Federal Contract Compliance Program’s (“OFCCP” or the “Agency”) oversight functions for fiscal years 2010 to 2015. GAO’s report explains that “OFCCP has not found violations in the vast majority of its compliance evaluations,” noting that in the time period GAO studied, OFCCP found violations in 17% of evaluations. GAO pointed out that OFCCP resolved 99 percent of these violations through agreements between the agency and contractor that outlined remedial measures.
Continue Reading The GAO Is Not Down With OFCCP: Report Criticizes Agency’s “Weak” Compliance Evaluations and May Trigger Increased Contractor Oversight