Last week, the United States Supreme Court heard argument in State Farm Fire & Casualty Co. v. United States ex rel. Rigsby over the False Claims Act’s (FCA) “seal requirement.” The controversy highlights an important statutory tool for government contractors who face allegations of making false claims for payment. It also provides important lessons for those seeking to bring such allegations.
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Acquisition Reform Ramps Up Early in 2016
House Armed Services Committee Chairman Mac Thornberry is wasting no time in his efforts to build on last year’s reforms to the defense acquisition system. Less than a year after he launched his opening salvo in a new round of changes, Chairman Thornberry previewed the year ahead with a recent hearing and a presentation at the National Press Club.
Chairman Thornberry plans to circulate draft reform legislation and incorporate the finished product into the FY2017 National Defense Authorization Act (NDAA). Emphasizing (once again) the themes of agility and innovation, the hearing featured the senior acquisition executives from each of the military departments. Chairman Thornberry expressed particular interest in finding ways to support their drive for greater flexibility in experimentation and prototyping.
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OSAI Issues Guidance on the Government Contractor Defense for Certified Anti-terror Technologies
Congress enacted the SAFETY Act in 2002 in an effort to incentivize the development of anti-terrorism technologies following the attacks of September 11, 2001. The Act affords liability protections to sellers of Qualified Anti-Terrorism Technologies (“QATTs”) in the event of an act of terrorism where QATTs are deployed. Although the SAFETY Act’s protections have not yet been tested in court, a recent publication from the Department of Homeland Security’s Office of SAFETY Act Implementation (“OSAI”) further explains and reaffirms how the Act’s most significant liability protection—the government contractor defense—would operate to protect a SAFETY Act-approved company sued in court following a terrorist attack.
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NDAA — Vetoed for Now — Includes New Cybersecurity Provisions for Contractors
On October 22, 2015, President Obama vetoed the National Defense Authorization Act (“NDAA”) for Fiscal Year 2016. In so doing, the President cited concerns over provisions keeping in place the sequester, preventing reforms to modernize the military, and making it more difficult to close Guantanamo Bay. As a result, the acquisition provisions of the 2016 NDAA are likely to remain unchanged in the version of the bill that is ultimately passed. Those provisions will have a significant impact on government contractors. This post addresses some of the key cybersecurity aspects of the bill.
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Lock Down of Nuclear Site: False Alarm, with a Lesson Learned
Last week the Savannah River Site (“SRS”) in South Carolina, a large nuclear facility owned by the U.S. Department of Energy (“DOE”), went into a lock down after electronic and canine scans of a commercial delivery truck attempting to enter the facility indicated possible explosive residue on the vehicle. Fortunately, the lock down was lifted a few hours later after law enforcement determined that there were no explosives on the truck. The incident nonetheless attracted significant media attention presumably in view of the activities conducted at the facility, which is operated by private companies under contract with the DOE. SRS processes and stores nuclear materials in support of U.S. national defense. It also develops and deploys technologies to treat nuclear and hazardous waste left from the Cold War.
Based on publicly-available information about last week’s incident, SRS contractors did everything right: they screened the vehicle as it approached the facility, prohibited entry and locked the facility down when a potential threat was detected, and called in law enforcement to secure the area and investigate. There is, however, one more thing SRS contractors could have done — and still can do — obtain protection under the SAFETY Act, a post-9/11 risk mitigation program administered by the U.S. Department of Homeland Security (“DHS”) to incentivize the development and deployment of anti-terror technology.Continue Reading Lock Down of Nuclear Site: False Alarm, with a Lesson Learned
SAFETY First: Using the SAFETY Act to Bolster Cybersecurity
We have already seen tremendous fallout from recent cyber attacks on Target, the U.S. Office of Personnel Management, Sony Pictures, and J.P. Morgan. Now imagine that, instead of an email server or a database of information, a hacker gained access to the controls of a nuclear reactor or a hospital. The potential consequences are devastating: death, injury, mass property destruction, environmental damage, and major utility service and business disruption. Now what if there were a mechanism that would incentivize industry to create and deploy robust and ever-evolving cybersecurity programs and protocols in defense of our nation’s critical infrastructure?
In late 2014, Representative Michael McCaul (R-TX), Chairman of the House Committee on Homeland Security, proposed legislation that would surgically amend the SAFETY Act, which currently offers liability protection to sellers and users of approved anti-terrorism technologies in the event of litigation stemming from acts of terrorism. Rep. McCaul’s amendment would broaden this protection to cybersecurity technologies in the event of “qualifying cyber incidents.” The proposed legislation defines a “qualifying cyber incident” as an unlawful access that causes a “material level[] of damage, disruption, or casualties severely affecting the [U.S.] population, infrastructure, economy, or national morale, or Federal, State, local, or tribal government functions.” Put simply, under the proposed legislation, a cyber incident could trigger SAFETY Act protection without being deemed an act of terrorism.Continue Reading SAFETY First: Using the SAFETY Act to Bolster Cybersecurity
The D.C. Circuit’s Message to Injured Government Contractor Employees: ‘There’s an Exclusive Remedy For That’
Last week, in an important decision for contingency contractors supporting U.S. stability operations overseas, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) reaffirmed that the Defense Base Act (DBA) prescribes the exclusive remedies available to employees of government contractors who are injured while working abroad. In doing so, the D.C. Circuit sent injured contractor workers, turned would-be tort plaintiffs, a clear message: federal courts will dismiss tort lawsuits alleging that a DBA-covered government contractor wrongfully−or even intentionally−interfered with an employee’s receipt of DBA benefits.
Enacted in 1941, the DBA establishes a comprehensive workers’ compensation scheme for employees of government contractors who are killed or injured while providing services to the government outside the United States. See 42 U.S.C. § 1651 et seq. The DBA, which incorporates most of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq, includes a provision that makes contractors’ liability under the statute “exclusive”−that is, putative plaintiffs are barred from suing their employers for damages beyond the statutory compensation scheme established by Congress. See id. § 1651(c) (“The liability of an employer . . . shall be exclusive and in place of all other liability . . .”) (emphasis added).
Despite the Act’s broad exclusivity provision, in Brink v. Continental Insur. Co., an estimated class of 10,000 contractor employees who were injured in Iraq and Afghanistan brought a purported class-action lawsuit for $2 billion against dozens of government contractors, alleging that the contractors conspired with their respective insurance carriers to deny the workers DBA benefits. But a three-judge panel of the D.C. Circuit unanimously rejected plaintiffs-appellants’ claims and, in a 17-page opinion, made five key findings that will help government contractors defend similar lawsuits in the future.
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Proposed “Fair Pay and Safe Workplaces” Regulations Clarify New Responsibilities for Government Contractors
On May 28, 2015, the Federal Acquisition Regulatory (FAR) Council published proposed regulations that create additional obstacles for offerors seeking to obtain government contracts. As we previously discussed, these regulations implement the “Fair Pay and Safe Workplaces” Executive Order 13673 that President Obama signed on July 31, 2014. The regulations, which were accompanied by and incorporate proposed implementing guidance published by the Department of Labor (DOL), would amend the FAR to require contractors to disclose certain labor law violations when submitting bids for federal work. The purpose of the Executive Order and proposed regulations is to advance the longstanding principle that contractors must be responsible in order to conduct business with the federal government. The government’s goal is to promote and maintain economy, efficiency, and integrity in the procurement process by only awarding contracts to contractors who comply with labor laws.
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Recent GAO Bid Protest Decisions Remind Contractors of Strict Filing Requirements
A pair of recent bid protest decisions serve to remind contractors of the strict requirements for filing of protests before the Government Accountability Office (GAO). While many contractors are generally aware of the rapidly expiring filing periods of post-award bid protests, and jurisdictional limits on task order protests, even the most seasoned contractors can confuse the labyrinthine web of GAO filing requirements, as shown by these recent cases.
In Gorod Shtor, B-411284 (May 22, 2015), Gorod Shtor protested the award of an indefinite-delivery, indefinite-quantity contract to provide the U.S. Embassy in Moscow with draperies. Gorod Shtor received the notice of award on March 10, requested an agency debriefing, and received a written debriefing on March 17. Gorod Shtor then filed its protest on March 27.
Gorod Shtor was presumably acting under the belief that a protest could be timely filed within 10 days of the date of the debriefing, pursuant to 4 C.F.R. § 21.2(a)(2). However, the bid protest regulations state that 10-day post-debriefing filing period applies when only a debriefing is required. Because this procurement was structured as a commercial item acquisition with simplified procedures under FAR Part 13, Gorod Shtor was not entitled to a “required” debriefing. See FAR 13.106-3(d) (“If a supplier requests information on an award that was based on factors other than price alone, a brief explanation of the basis for the contract award decision shall be provided.”). Consequently, the 10-day period to file the protest began from the date of the award notice, not the date of the written debriefing, and the protest was dismissed as untimely.
The Gorod Shtor decision reminds disappointed offerors that debriefings are not required for all procurements. In addition to simplified acquisitions under FAR Part 13, acquisitions under FAR Part 8, the Brooks Act, and Broad Agency Announcements are among those that do not require debriefings. Disappointed offerors should consult with their counsel before the award decision to ensure that they understand the timing requirements for protests related to a particular procurement.Continue Reading Recent GAO Bid Protest Decisions Remind Contractors of Strict Filing Requirements