Photo of Alan Pemberton

Alan Pemberton has practiced in the government contracts area since 1982, and chaired or co-chaired Covington’s government contracts practice from 2000 to 2016. His practice includes the full range of government contracts matters, including bid protest and other procurement litigation before GAO, agency boards, and federal and state courts and ADR tribunals. He advises large and small contractors and grantees about the full range of government proposal, performance, compliance, regulatory, suspension and debarment, transactional and legislative issues. He also directs the firm’s pro bono program as co-chair of the Public Service Committee.

The Court of Appeals for the Fourth Circuit recently published a decision that expanded on its prior Trimble ruling that a foreign government customer cannot sue a U.S. contractor in the Foreign Military Sales (“FMS”) context (at least in U.S. courts).  In BAE Sys. Tech. Solution & Servs., Inc. v. Republic of Korea’s Def. Acq. Program Admin., 884 F.3d 463 (4th Cir. 2018), the Korean government claimed that BAE Systems Technology Solutions & Services, Inc. (“BAE”) breached a side agreement that BAE executed with Korea (the “BAE-Korea Agreement”).  The BAE-Korea Agreement, which was separate from the FMS agreement between the U.S. and Korea (the “U.S.-Korea Agreement”), required BAE to use its best efforts to negotiate favorable pricing terms in the FMS transaction between the U.S. Government and Korea, and permitted the courts in Korea to hear disputes arising under the agreement.

BAE secured a favorable declaratory judgment from a U.S. district court to the effect that it had complied with the best efforts undertaking, and the Fourth Circuit affirmed on the broader ground that enforcing the BAE-Korea agreement would be contrary to the policy of the Arms Export Control Act (“AECA”) and the principles laid down by the Fourth Circuit in the 2007 Trimble decision, which held that foreign customers in an FMS transaction cannot sue U.S. contractors under a third-party beneficiary theory.  However, both courts declined to enjoin Korea’s lawsuit in the Korean courts.

The Fourth Circuit’s decision suggests some guidance for U.S. contractors about entering into similar FMS side agreements in light of both U.S. and foreign litigation risks.
Continue Reading Fourth Circuit Further Defines Scope of Contractor Risks in the FMS Sales Context

The Fourth Circuit recently held, in an unpublished opinion, that the anti-retaliation or “whistleblower” provisions of the False Claims Act (“FCA”) protect an individual’s efforts to stop a contractor from violating the FCA, even when there is no “distinct possibility” of litigation.  This “distinct possibility” standard was adopted prior to 2009 when the whistleblower provision protected employee activity that was in furtherance of an FCA action, “including investigation for, initiation of, testimony for, or assistance” in an FCA action.  Under that version of the whistleblower provision, courts had held that a retaliation suit under the FCA would only pass muster if “an employee engages in protected activity when litigation is a distinct possibility, when the conduct reasonably could lead to a viable FCA action, or when . . . litigation is a reasonable possibility.”  Amendments to the FCA in 2009 and 2010, however, broadened coverage of the whistleblower provision, creating two prongs of protected activity: (1) “lawful acts done by the employee . . . in furtherance of an action under [the FCA]”; and (2) “other efforts to stop 1 or more violations” of the FCA.  31 U.S.C. § 3730(h).  In this case, Carlson v. Dyncorp Int’l LLC, the Fourth Circuit held that the “distinct possibility” standard does not apply to the second prong of the whistleblower provision, as that prong was intended to be broader than the first prong. This case may open the door to broader liability for contractors who take adverse employment actions against employees who attempt to stop or prevent conduct that the employee reasonably believes to be in violation of the FCA.  Notably, in Carlson, the Fourth Circuit nevertheless affirmed the district court’s dismissal of plaintiff’s retaliation lawsuit because the plaintiff was alleging that his contractor-employer was under-billing the government and he could not reasonably believe that that practice would lead to a violation of the FCA. 
Continue Reading Employee Efforts to Stop Employer FCA Violation is Protected Activity Even When No Distinct Possibility of FCA Litigation, says Fourth Circuit

IT-acquisition reform remains an area of ongoing concern for Federal agencies and government contractors.  Indeed, as we previously discussed, the GAO has added IT Acquisitions and Operations to its bi-annual list of programs it identifies as posing a high risk for fraud, waste, abuse, and mismanagement.  Strengthened by Congress’ passage in December 2014 of the Federal IT Acquisition Reform Act (“FITARA”), OMB has implemented several initiatives to reduce redundancy, improve efficiencies, and lower costs with respect to the government’s procurement and management of IT resources.  However, a recent Department of Defense (“DoD”) Inspector General (“IG”) audit report analyzing one of these initiatives—the Federal Data Center Consolidation Initiative (“FDCCI”) —highlights the ongoing struggle that Federal agencies face when seeking to execute IT reform.  If DoD responds to this audit report by stepping up its efforts under FDCCI, one result could be increased opportunities for IT contractors offering cloud computing and other services.
Continue Reading DoD IG Report Reveals Ongoing Struggles in IT-Acquisition Reform

On February 17, 2016, the FAR Council proposed a rule that would add a new category of unallowable costs to FAR Part 31 — costs of responding to an inquiry by Congress, if that inquiry results from a judicial or administrative proceeding in which the contractor is found criminally liable, found liable for civil fraud, ordered to remedy a whistleblower reprisal, suspended or debarred, terminated for default, or in which the contractor paid to settle a proceeding that could have led to any of these outcomes.

Continue Reading FAR Council Proposes to Disallow Costs of Congressional Investigations That Result From Adverse Legal and Administrative Proceedings

Congress is currently considering a bill that if enacted would require “major rules” to receive approval from both the House of Representatives and the Senate before going into effect. The bill defines major rules using current standards—which, among other categories, cover rules that have or are likely to have an annual economic impact of $100 million or more—as well as a new standard covering rules issued under the Patient Protection and Affordable Care Act. The bill’s stated purpose is to “increase accountability for and transparency in the Federal regulatory process” in response to a perception that Congress has “excessively delegated” legislative power to executive agencies over time. The bill passed in the House of Representatives at the end of July, and a Senate version of the bill has already garnered support.
Continue Reading Bill Providing for Congressional Approval of Major Rules Passes House of Representatives

The key word is “suffer.”

Government contractors already face painful compliance burdens associated with the Fair Pay and Safe Workplaces Executive Order, the proposed implementing regulations, and the Labor Department’s “Guidance” amplifying the proposed regulations.  Last week, the Department added another layer of complexity when it issued an Administrator’s Interpretation of the Fair Labor Standards Act.  (Covington’s Employment group analyzed the Interpretation here.)  The fifteen-page Interpretation stems from the Department’s conclusion that companies are increasingly misclassifying employees as independent contractors.  It explains the Department’s view that the statutory definition of employ (“to suffer or permit to work”) informs the distinction between those classes of workers.  We hate to spoil an ending, but the bottom line is clear:  “most workers are employees.”

The Interpretation applies across a broad range of industries, but it presents special issues for government contractors.  Federal contracts in excess of $500,000 trigger obligations under the Paycheck Transparency provisions (section 5) of the Executive Order.  The proposed regulations require employers with covered contracts to provide each worker whom they classify as an independent contractor with “a document … informing the individual of that status.”  Contractors must look elsewhere for guidance on format and content of the document.


Continue Reading Labor Department’s Interpretation of the FLSA’s “Suffer or Permit” Standard Triggers More Compliance Burdens for Government Contractors

The private sector is likely to produce critical cyber innovations—at least, that is what the U.S. Defense Advanced Research Projects Agency (“DARPA”) and the U.K. Centre for Defence Enterprise (“CDE”) would like to see.

In the United States, although the internet may have been invented at DARPA, DARPA is turning to a private sector competition

On June 26, 2015, the United States Agency for International Development (“USAID”) published a final rule extending its pilot Partner Vetting System (“PVS”) program to assistance awards and cooperative agreements.  This final rule comes nearly two years after USAID issued a proposed rule applying PVS to USAID assistance and resembles USAID’s existing vetting program for its procurement contracts.  The final rule goes into effect on July 27, 2015.

PVS is intended to prevent USAID funds and resources from inadvertently benefitting terrorists and their supporters or affiliates.  In pursuit of that goal, applicants for USAID assistance subject to PVS must submit identifying information about their key individuals, which an independent vetting official then checks against government databases to determine potential affiliations with or links to terrorism.  Any applicant that does not pass the vetting process is deemed ineligible for award.


Continue Reading USAID Publishes Final Rule Extending Partner Vetting to Assistance Awards

The Office of Management and Budget (“OMB”) has issued final guidance (the “Guidance”) implementing the Federal IT Acquisition Reform Act (FITARA).  We have previously discussed FITARA’s requirements that seek to reform and streamline the Government’s information technology (“IT”) acquisitions, which account for approximately $80 billion in annual spending.

At its core, the Guidance implements the mandate of FITARA to increase the involvement and responsibility of agencies’ Chief Information Officers (“CIOs”) in IT procurement and management.  According to Tony Scott, the United States Chief Information Officer, the Guidance also “position[s] CIOs so that they can reasonably be held accountable for how effectively their agencies use modern digital approaches to achieve the objectives of effective and efficient programs and operations.”  Indeed, although CIOs may delegate some of their decisions concerning IT resources to other agency officials through CIO Assignment Plans, the Guidance makes clear that CIOs remain accountable and must monitor those to whom they delegate decision-making authority.


Continue Reading OMB Issues Final Guidance Implementing FITARA

On April 10, the Federal Acquisition Regulatory Council issued an interim rule “amending the Federal Acquisition Regulation (FAR) to implement Executive Order (E.O. 13672) . . . and a final rule issued by the Department of Labor.”  As we previously blogged, Department of Labor’s (DOL’s) final rule implements E.O. 13672 and effectively “prohibit[s] discrimination on the bases of sexual orientation and gender identity in the federal contracting workforce.”  Despite the April 10 issuance of this interim rule, the DOL regulation actually became effective on April 8 of this year.
Continue Reading FAR Council Issues Interim Rule Implementing LGBT Protections