The Department of State (“State”) recently announced the upcoming release of the model anti-human trafficking compliance plan. State and Verité, a global NGO, developed this highly-anticipated model compliance plan in response to the amendments to FAR 52.222-50, which require contractors to perform supply chain due diligence and implement a compliance plan for contracts exceeding $500,000 that are for the acquisition of services or non-COTS goods outside the United States. Because the rule contains relatively little guidance regarding these requirements, the model could provide the contracting community much needed direction regarding supply chain due diligence and compliance plan obligations.
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HRSA Seeks a Second Round of Comments on 340B Penny Pricing, New Drug Estimates, and Civil Monetary Penalties
On Monday, April 18th, the Health Resources and Services Administration (“HRSA”) and the Department of Health and Human Services (“HHS”) reopened the comment period for their proposed rule “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation” (“Proposed Rule”). Originally issued on June 17, 2015, the Proposed Rule sought to implement the civil monetary penalty (“CMP”) and ceiling price calculation provisions created by the 2010 amendment to Sec. 340B of the Public Health Service Act (“PHSA”) (for additional information on the Proposed Rule, please see our October 2015 webinar materials on the subject). Comments were due August 17, 2015 and stakeholders vigorously commented on HRSA’s proposed penny policy for the ceiling price calculation, the lack of clarity regarding the new drug estimate calculation, and the liability standard for CMPs.
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Non-TAA-Compliant Covered Drugs Must be Offered to the VA in the Coming Weeks
The United States Department of Veterans Affairs (“VA”) recently announced a significant change in policy that will allow it to purchase drug products that were previously unavailable due to the Trade Agreements Act (“TAA”) because they were manufactured in countries with whom the United States does not have a procurement agreement in place. The VA has issued a mass modification to its Federal Supply Schedule (“FSS”) contracts for pharmaceutical products, Schedule 65 I B, requiring that contractors offer to the Government all single source and multiple source drug products (also referred to as SIN 42-2A products) that do not comply with the TAA (i.e., they are not U.S.-made or designated country end products). Despite its prior position, less than three years ago, that it would “remove all [SIN] 42-2A covered/branded drug products manufactured in a non-designated country . . . from all 65 I B Schedule contracts,” the VA has decided that “[w]e now accept covered drugs that were formally excluded due to their ‘TAA non-compliant’ nature.” Although this change in policy could represent significant opportunities for drug manufacturers to sell non-TAA-compliant drug products to the Government, the VA’s anticipated timeline may present a cause for concern.
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SBA Proposes New Data Rights and Phase III Preferences under SBIR/STTR Awards
The U.S. Small Business Administration (“SBA”) recently issued a notice detailing proposed amendments to the policy directives governing the Small Business Innovation Research (“SBIR”) and Small Business Technology Transfer (“STTR”) programs. The notice indicates that the SBA intends to implement significant changes to the current data rights provided under SBIR/STTR awards, as well as the method by which program participants—or their successors in interest—receive preferences in the third phase of efforts to develop technologies under either program.
The proposed changes open up new possibilities for a company’s competitors to benefit from its participation in the SBIR/STTR programs. However, the changes also provide additional certainty that may encourage increased participation by small research and development companies and investors that are currently unsure as to whether SBIR/STTR awards can effectively be used to commercialize new technologies.Continue Reading SBA Proposes New Data Rights and Phase III Preferences under SBIR/STTR Awards
Labor Department Invites Comments on Regulations Governing Paid Sick Leave
Following up on President Obama’s Labor Day release of an executive order requiring government contractors to offer paid sick leave to employees, the Labor Department issued proposed implementing regulations and invited comments by April 12. Contractors with service contracts should consider submitting comments, especially if they already offer paid sick leave and rely on that leave to meet their fringe benefit obligations under the Service Contract Act.
Under the SCA, contractors cannot take credit for offering benefits that they are legally required to provide. By setting a minimum required level of paid sick leave, the proposed regulations convert seven days of those benefits into legal requirements, rendering them ineligible for bona fide fringe benefit status under the SCA. Contractors would remain free to continue to account for the value of excess paid sick leave in discharging their SCA obligations, but not the base requirements. As a result, contractors may have to recalculate their fringe benefit packages by extracting the value of current paid sick leave benefits, and then offer some other offsetting bona fide fringe benefit or an equivalent cash payment. In sum, the paid sick leave executive order could have the effect of penalizing contractors who were already offering the very same benefit that the government now requires.
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Congress Advances Efforts to Define “Recruitment Fees” as the Department of State Prepares a Model Anti-Human Trafficking Compliance Plan
Almost one year after the amendments to the FAR’s anti-human trafficking rule went into effect, Congress is showing signs of bi-partisan support for enforcement of human trafficking prohibitions through the House’s passage of the Trafficking Prevention in Foreign Affairs Contracting Act (H.R. 400) (the “Act”). As we have previously discussed, the Act would require the United States Agency for International Development (“USAID”) to propose a definition of recruitment fees within 180 days of its enactment. Although the definition would apply to the Trafficking Victims Protection Act of 2000, 22 U.S.C. § 7104(g)(iv)(IV), it is likely to inform undefined references to recruitment fees in other contexts, such as in the FAR’s anti-human trafficking rule at FAR 52.222-50. Indeed, until the open FAR case to define recruitment fees moves forward, the Act may serve as the only definition of recruitment fees for anti-human trafficking regulations.
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Zika Virus Complications Lead to Expected Government Partnership with Private Industry
Concerns about the spread of Zika virus and potential complications associated with infection may soon lead to new research and development opportunities for government contractors and grant recipients. Similar to developments after the recent Ebola outbreak in West Africa, a need to better understand Zika’s characteristics and develop an effective countermeasure or vaccine has led both domestic and international public bodies and private industry to begin mobilizing resources in response to the virus. As a result, both new and existing contractual vehicles will likely be used to fund a wide array of activities, extending from epidemiological studies to the development of new diagnostics and countermeasures.
Similar to yellow fever, dengue, West Nile, and Japanese encephalitis viruses, Zika is a flavivirus that is generally transmitted through mosquitoes. Although Zika was first discovered in 1947, it has only recently been identified as a significant threat to public health based on a potential connection between Zika and microcephaly in newborns—a condition associated with incomplete brain development. Recent events have also provided additional evidence of a potential link between Zika and Guillain-Barré syndrome, which is a nervous system disorder that could affect Zika’s carriers.
Previously, the virus was understood to have relatively limited consequences, only causing mild, flu-like symptoms in one of five of its hosts. However, an outbreak of the virus in French Polynesia in 2013 and 2014 has now been associated with an increase in cases of Guillain-Barré syndrome. In addition, an ongoing outbreak of the virus that began in Brazil last year has affected over one million individuals and been linked to both an increased incidence of Guillain-Barré syndrome and a dramatic rise in cases of microcephaly. Zika RNA has been discovered in the amniotic fluid of women with affected fetuses in Brazil, and a recent report indicates that an affected newborn in Hawaii acquired Zika in the womb.Continue Reading Zika Virus Complications Lead to Expected Government Partnership with Private Industry
FAR Council Finalizes Federal Contractor Minimum Wage Rule
The FAR Council published a final rule to implement the President’s February 2014 Executive Order establishing a minimum wage for federal contractors. The final rule adopts almost all of the provisions of last year’s interim rule, with a few changes that employers should note.
First, the final rule clarifies
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Recent CRS Report Reveals Long-Term Trends in GAO Protests
A recent study from the Congressional Research Service (CRS) identified several notable trends in bid protests before the Government Accountability Office (GAO) from FY 2001 to FY 2014. Foremost among these trends are (1) a significant increase in bid protests filed over the past fourteen years but relative stability in
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Self-Reporting Provision at Heart of New Inversion Rules
Last week, the FAR Council issued two final rules designed to reinforce existing restrictions on corporations that relocate overseas in inversion transactions. The rules, which were issued without change from the proposed and interim rules announced in December 2014, further tighten restrictions on government contracting with inverted domestic corporations (IDCs), but they also impose new tracking and self-reporting obligations on all contractors. In this sense, and as discussed further below, the new inversion rules represent a continuing trend towards the shifting of compliance monitoring and reporting from government agencies to those in the contracting community.
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