This is part of an ongoing series of Covington blogs on the implementation of Executive Order No. 14110 on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” (the “AI EO”), issued by President Biden on October 30, 2023. The first blog summarized the AI EO’s key provisions and related OMB guidance, and subsequent blogs described the actions taken by various government agencies to implement the AI EO from November 2023 through September 2024. This blog describes key actions taken to implement the AI EO during October 2024. We will discuss developments during October 2024 to implement President Biden’s 2021 Executive Order on Cybersecurity in a separate post. Continue Reading October 2024 Developments Under President Biden’s AI Executive Order
Nooree Lee
Nooree advises government contractors and financial investors regarding the regulatory aspects of corporate transactions and restructurings. His experience includes preparing businesses for sale, negotiating deal documents, coordinating large-scale diligence processes, and navigating pre- and post-closing regulatory approvals and integration. He has advised on 35+ M&A deals involving government contractors totaling over $30 billion in combined value. This includes Veritas Capital’s acquisition of Cubic Corp. for $2.8 billion; the acquisition of Perspecta Inc. by Veritas Capital portfolio company Peraton for $7.1 billion; and Cameco Corporation’s strategic partnership with Brookfield Renewable Partners to acquire Westinghouse Electric Company for $7.8+ billion.
Nooree also counsels clients navigating the Foreign Military Sales (FMS) program and Foreign Military Financing (FMF) arrangements. Nooree has advised both U.S. and ex-U.S. companies in connection with defense sales to numerous foreign defense ministries, including those of Australia, Israel, Singapore, South Korea, and Taiwan.
Over the past several years, Nooree’s practice has expanded to include advising on the intersection of government procurement and artificial intelligence. Nooree counsels clients on the negotiation of AI-focused procurement and non-procurement agreements with the U.S. government and the rollout of procurement regulations and policy stemming from the Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence.
Nooree maintains an active pro bono practice focusing on appeals of denied industrial security clearance applications and public housing and housing discrimination matters. In addition to his work within the firm, Nooree is an active member of the American Bar Association’s Section of Public Contract Law and has served on the Section Council and the Section’s Diversity Committee. He also served as the firm’s Fellow for the Leadership Council on Legal Diversity program in 2023.
Federal Court Enjoins DOT Disadvantaged Business Enterprise Program On Equal Protection Grounds
In the wake of the U.S. Supreme Court’s decision in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College, there has been an increase in legal challenges to race and gender-based programs and initiatives in multiple contexts, including within government contracting. While the holding of Students for Fair Admissions did not address public contracting or disturb existing case law that considers the validity of similar government contracts programs, the decision has informed and reshaped the landscape for strict scrutiny challenges to these programs, and there has been a significant uptick in challenges to diversity-focused government procurement regulations.
Last month, in Mid-America Milling Company, LLC, et al., v. U.S. Department of Transportation, the U.S. District Court for the Eastern District of Kentucky temporarily enjoined the Department of Transportation (“DOT”) from mandating the use of race- and gender-based presumptions for DOT contracts impacted by Disadvantaged Business Enterprise (“DBE”) goals. The court found, among other things, that while DOT’s DBE program intends to combat historical discrimination and its lingering effects on the ability of disadvantaged businesses to equally compete for government contracts, the plaintiff was likely to prevail on the merits of its argument that the program’s “race and gender classifications” violate the Equal Protection clause.
Although the preliminary injunction currently remains geographically constrained to Kentucky and Indiana, the case is an important development for government contractors that are impacted by DBE related contracts. We summarize the key takeaways from the court’s holding, as well as its implications for government contractors, below.Continue Reading Federal Court Enjoins DOT Disadvantaged Business Enterprise Program On Equal Protection Grounds
September 2024 Developments Under President Biden’s AI Executive Order
This is part of an ongoing series of Covington blogs on the implementation of Executive Order No. 14110 on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” (the “AI EO”), issued by President Biden on October 30, 2023. The first blog summarized the AI EO’s key provisions and related Office of Management and Budget (“OMB”) guidance, and subsequent blogs described the actions taken by various government agencies to implement the AI EO from November 2023 through August 2024. This blog describes key actions taken to implement the AI EO during September 2024. It also describes related developments in California related to the goals and concepts set out by the AI EO. We will discuss developments during September 2024 to implement President Biden’s 2021 Executive Order on Cybersecurity in a separate post. Continue Reading September 2024 Developments Under President Biden’s AI Executive Order
Every Quarter, On the Quarter: BIS Proposes New Reporting Requirements for the Development of Advanced Artificial Intelligence Models and Possession of Large-Scale Computing Clusters
A key component of President Biden’s October 2023 Executive Order on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence is a directive to develop a mandatory industrial base survey for the development of advanced artificial intelligence (“AI”) models and computing clusters. Leveraging authority under the Defense Production Act, President Biden charged the Department of Commerce, Bureau of Industry and Security (“BIS”) to implement this industrial base assessment. On September 9, 2024, BIS proposed to amend its Industrial Base survey regulations by establishing reporting requirements for the development of advanced AI models and possession of large-scale computing clusters.
Section 4.2(a)(ii) of the October 2023 Executive Order directed BIS to “require companies, individuals, and other organizations or entities that acquire, develop, or possess a potential large-scale computing cluster to report any such acquisition, development, or possession,” as its authority for the proposed rule. BIS had previously released a mandatory survey for companies it had identified as “developing or planning to develop potential dual-use foundation models.” This proposed rule now sets forth further reporting requirements, as well additional details on the rationale for the survey – rationale that could have serious implications for government contractors.Continue Reading Every Quarter, On the Quarter: BIS Proposes New Reporting Requirements for the Development of Advanced Artificial Intelligence Models and Possession of Large-Scale Computing Clusters
July 2024 Developments Under President Biden’s Cybersecurity Executive Order and AI Executive Order
This is part of an ongoing series of Covington blogs on implementation of Executive Order 14028, “Improving the Nation’s Cybersecurity,” issued by President Biden on May 12, 2021 (the “Cyber EO”). The first blog summarized the Cyber EO’s key provisions and timelines, and subsequent blogs described the actions taken by various government agencies to implement the Cyber EO from June 2021 through June 2024. This blog describes key actions taken to implement the Cyber EO during July 2024. It also describes key actions taken during July 2024 to implement President Biden’s Executive Order on Artificial Intelligence (the “AI EO”), particularly its provisions that impact cybersecurity, national security, and software supply chain security.Continue Reading July 2024 Developments Under President Biden’s Cybersecurity Executive Order and AI Executive Order
It’s Time to Re-Imagine FAR Subpart 42.12: Ways to Improve the Novation Process
Earlier this month, the FAR Council took action to extend its existing authority to collect information from government contractors for novation requests with a notice in the Federal Register. While this was a routine action, it is a reminder that the novation process is in need of serious attention. The…
Continue Reading It’s Time to Re-Imagine FAR Subpart 42.12: Ways to Improve the Novation ProcessOffice of Federal Contract Compliance Programs Releases New Guidance on the Use of Artificial Intelligence in Federal Contracting Employment Processes
Recently, the Department of Labor (“DOL”) Office of Federal Contract Compliance Programs (“OFCCP”) unveiled new guidance regarding the use of automated systems and artificial intelligence (collectively referred to as “AI”) in the workplace. This guidance was issued as a part of a series of actions that the Biden administration has taken to address AI in various contexts and industries.
The OFCCP guidance follows President Biden’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, which directed the Secretary of Labor to “publish guidance for Federal contractors regarding nondiscrimination in hiring involving AI and other technology-based hiring systems.” Specifically, the guidance addresses how federal prime contractors and subcontractors should approach employment nondiscrimination risks and best practices when using AI in the context of the laws that OFCCP enforces.Continue Reading Office of Federal Contract Compliance Programs Releases New Guidance on the Use of Artificial Intelligence in Federal Contracting Employment Processes
Should Bid Protest Losers Pay?
Section 804 of the House-enacted version of the National Defense Authorization Act for Fiscal Year 2024 would establish a “loser pays” pilot program to require contractors to reimburse the Department of Defense for costs incurred in “processing” bid protests that are ultimately denied by the Government Accountability Office. The accompanying House Armed Services Committee report explains the provision’s intent as “curtailing wasteful contract disputes.” Continue Reading Should Bid Protest Losers Pay?
The Department of Defense Targets FMS Program Enhancements
On June 13, 2023, the Department of Defense announced that the Secretary of Defense approved recommendations for strengthening the Foreign Military Sales program and instructed FMS-implementing agencies to move forward with these recommendations. It remains to be seen how the DoD agencies will implement the recommendations, and there is a possibility that legislative action will impact FMS reform and supplement or supersede these recommendations.
Last year, the Pentagon formed a Tiger Team to evaluate the FMS program and consider potential improvements. As part of that process, the Tiger Team solicited industry input in the form of a November 2022 report compiled by the Aerospace Industries Association, the Professional Services Council, and NDIA, and a follow-on set of seven industry recommendations released in February of this year. Last month, the Tiger Team released (and the DoD adopted) its own set of six recommendations which largely mirror the broad goals – if not the specific action items – set forth in the industry recommendations. Continue Reading The Department of Defense Targets FMS Program Enhancements
Show Me the Documentation: NIH Pushes Grantees to Formalize Subaward / Consortium Agreements
On May 19, 2023, the National Institutes of Health (“NIH”) issued notice that it would be updating its requirements for consortium/subaward agreements on NIH-funded grants. This update, which will be effective October 1, 2023, will bring NIH’s subaward and consortium requirements in line with the Office of Management and Budget Guidance set forth in Title 2 and push NIH grant recipients and subrecipients towards a higher degree of formality in their agreements. Failure to formalize these relationships may endanger eligibility for NIH funding. Continue Reading Show Me the Documentation: NIH Pushes Grantees to Formalize Subaward / Consortium Agreements