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.

Continue Reading The Long-Standing TAA “Substantial Transformation” Standard for Drug Products is Challenged at the Court of International Trade

Following recent efforts by Democrats to push for “Buy American” action, on January 9, 2018, Senator Chris Murphy (D-CT) proudly announced via Twitter that there now is “bipartisan support for strengthening our Buy American laws” and that he is “excited to have the Trump admin[istration] and partners like [Senators Rob Portman (R-OH), Lindsey Graham (R-SC) and Sherrod Brown (D-OH)] working together to get this done.” That same day, these senators reached across the aisle to sponsor the BuyAmerican.gov Act of 2018 (S.2284) to “strengthen Buy American requirements.”

This proposed legislation may be the most significant “Buy American” development since President Donald J. Trump issued his “Buy American” Executive Order (E.O. 13788, April 2017), which set forth a policy and action plan to “maximize . . . the use of goods, products and materials produced in the United States” through federal procurements and federal financial assistance awards to “support the American manufacturing and defense industrial bases” (and which we analyzed in a prior blog post).

Continue Reading Key Takeaways from Bipartisan Bill to “Strengthen Buy American Requirements”

Over the last few months, various Senate Democrats have pushed to strengthen “Buy American” requirements applicable to Federal Government procurements. This month is no different. On December 6, 2017, Senator Chris Murphy (D-CT) reintroduced the 21st Century Buy American Act (S.2196), which aims to “strengthen existing Buy American standards to ensure that the U.S. government prioritizes the purchase of American-made goods.” Then, on December 13, 2017, Senator Tammy Baldwin (D-WI) wrote a letter to President Trump inquiring about the status of the Administration’s “Buy American” report and urging bipartisan “Buy American” action.
Continue Reading Senate Democrats Continue Efforts to Strengthen “Buy American” Requirements

As we reported late last month, one-third of the Senate Democratic caucus doubled down on efforts to keep “Buy American” protections intact for certain defense items. Now Senate Democrats are declaring a “Buy American” victory as the FY 2018 NDAA conference report revealed that some of these protections will remain.
Continue Reading Senate Democrats Notch a “Buy American” Victory

As we reported last month, four Senate Democrats published an article about “strengthen[ing]” the U.S. Government’s “Buy American policies” through certain proposed amendments to the FY 2018 National Defense Authorization Act (“NDAA”). Although most of the proposed “Buy American” amendments were left out of the version of the bill that was sent to conference, 16 Senate Democrats – including Senators Tammy Baldwin (WI), Debbie Stabenow (MI), Al Franken (MN), Chris Murphy (CT) and Elizabeth Warren (MA) – are now doubling down on their efforts to remove a section in the Senate-passed FY 2018 NDAA that would eliminate “Buy American” protections for certain defense items.
Continue Reading Senate Democrats Double Down on “Buy American”

Last week a group of four Senate Democrats – led by Minority Leader Chuck Schumer (D-NY) – jointly published an article about “strengthen[ing]” the U.S. Government’s “Buy American policies.” While the senators acknowledged President Trump’s recent efforts to “re-examine the use of . . . Buy American waivers” (see our blog post regarding the “Buy American” Executive Order), they also expressed concern that these efforts would “not fundamentally change . . . Buy American policies.” In other words, both sides of the aisle are targeting “Buy American” reforms.

[A more in-depth version of this blog post was published in Law360.]

Continue Reading Senate Democrats Look to Strengthen “Buy American” Policies and Requirements

[This article also was published in Law360.]

On June 30, 2017, Commerce Secretary Ross and OMB Director Mulvaney issued a Memorandum to Federal agencies regarding the “assessment and enforcement of domestic preferences in accordance with Buy American Laws,” which includes the Buy American Act (“BAA”). Although the Memorandum purports to provide guidance to help agencies implement the vision expressed in President Trump’s April 2017 Buy American Executive Order (E.O. 13788), which we previously analyzed, the Memorandum focuses mostly on what agencies must include in the reports that they are required, under Section 3 of the Executive Order, to submit to the Commerce Department and OMB by September 15. It also offers some clues for contractors about how the Trump Administration plans to implement its “buy American” vision.
Continue Reading Key Takeaways from Trump Administration Memo on Buy American Laws

In a recent False Claims Act (“FCA”) case, United States ex rel. Louis Scutellaro v. Capitol Supply, Inc., the U.S. District Court for the District of Columbia held that the defendant’s failure to retain Country of Origin (“COO”) documentation for the products it sold to the government entitled the relator and the government to an adverse inference that the defendant did not comply with the Trade Agreements Act (“TAA”).  This ruling highlights the consequences of poor document retention practices and could have far-reaching effects in FCA cases and beyond.

Continue Reading The Perils of Bad Recordkeeping: A Lack of Country of Origin Documentation Results in Adverse Inference of Non-Compliance with the Trade Agreements Act

[This article was originally published in Law360.]

President Trump took a significant step this week towards implementing his often touted objective of protecting U.S. manufacturers and workers by signing the “Presidential Executive Order on Buy American and Hire American” (the “EO”) on April 18, 2017.  In addition to addressing reforms to the H1-B visa program to protect U.S. workers, the EO sets forth a policy and action plan intended to “support the American manufacturing and defense industrial bases” by “maximiz[ing]” the Federal Government’s procurement of “goods, products, and materials produced in the United States,” and mandates strict compliance with the statutory and regulatory regimes for domestic sourcing preferences and restrictions (jointly referred to as “Buy American Laws”), such as the Buy American Act (41 U.S.C. §§ 8301–8305) and other buy America legislation, and implementing regulations.

In short, and as to procurement, the EO:

  • Requires all agencies to assess their monitoring, enforcement, implementation, and compliance with Buy American Laws and the use of waivers to those laws, and to propose policies designed to ensure that the use of domestic sources is maximized, consistent with existing law.
  • Requires an assessment of the impact on domestic procurement preferences of all free trade agreements and the World Trade Organization Agreement on Government Procurement.
  • Elevates to the Head of the Agency the granting of any public interest waivers to Buy American Laws requirements and requires such determinations to consider whether the cost advantage of the foreign product is due to dumping or the use of an injuriously subsidized product.
  • Requires the Secretary of Commerce to submit a report to President Trump within 220 days of the date of the EO which shall include “specific recommendations to strengthen implementation of Buy American Laws, including domestic procurement preference policies and programs.”
  • Requires agencies to submit annual reports to the Secretary of Commerce and the Director of the Office of Management and Budget on agency efforts to maximize the procurement of domestic products, and requires the Secretary of Commerce to submit an annual report to the President based on the agency submissions.

Although this EO establishes the Administration’s policy to strictly enforce Buy American Laws to maximize the use of domestic manufacturers and labor, it does not change existing law or regulation.[1]

Here are our key takeaways.

Continue Reading Key Takeaways From President Trump’s “Buy American” Executive Order

A U.S. District Court recently dismissed a False Claims Act (FCA) qui tam action alleging that numerous GSA Schedule contractors violated their obligations under the Trade Agreements Act (TAA), resulting in the submission of false claims under the “implied certification” theory of FCA liability.  As discussed further below, the court’s decision — United States ex rel. Berkowitz v. Automation Aids, No. 13-C-08185, 2017 WL 1036575 (N.D. Ill. Mar. 12, 2017) — is important for at least two reasons:

  1. The court found that “often” it is “tougher” to satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) when FCA allegations are based on an implied certification theory.
  2. The court held that, when dealing with conduct arising from a “sprawling federal procurement statutory and regulatory framework” (like the TAA), general allegations of non-compliance may support a breach-of-contract claim, but are insufficient in an FCA case. Rather, “specific allegations” about the fraudulent scheme are needed.

This decision comes at a particularly opportune time for contractors, given the likelihood of increased TAA and Buy American Act (BAA) enforcement during the Trump Administration and the corresponding potential uptick in whistleblower FCA activity involving these country-of-origin issues.
Continue Reading Common Sense Prevails: “Tougher” To Satisfy Rule 9(b) Standard in “Implied Certification” FCA Case Arising from GSA Schedule Contractors’ Alleged TAA Non-Compliance