Government Contracts Regulatory Compliance

On January 14, 2025, the Department of Transportation’s (“DOT”) Federal Highway Administration (“FHWA”) published a final rule ending its longstanding waiver of Buy America requirements for manufactured products (the “Manufactured Products Waiver”) and setting out new standards for the use of domestic content on FHWA-funded infrastructure projects.  As discussed in our previous post, FHWA proposed rescinding its decades-old waiver in March 2024 in accordance with the 2021 Infrastructure Investment and Jobs Act’s Build America, Buy America (“BABA”) focus on expanding Buy America coverage and discouraging the use of general applicability waivers.  The final rule is similar in substance to the proposed rule but adds a staggered implementation period, which will allow contractors additional time to come into compliance.Continue Reading Federal Highway Administration Publishes Final Rule Rescinding Longstanding Buy America Waiver for Manufactured Products

Yesterday, the FAR Council issued a proposed rule that would update the U.S. Government’s approach to organizational conflicts of interest (OCIs).  While the proposed rule is not finalized and may change in response to forthcoming comments from interested parties, the proposed rule contemplates major changes to the FAR’s existing framework in this area.  In this post, we summarize the background leading up to the proposed rule and highlight key areas of proposed change.

Background

Continue Reading The Proposed FAR Rule on OCIs: Big Changes May Be Coming

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 October 2024.  This blog describes key actions taken to implement the AI EO during November 2024 and potential implications of the 2024 U.S. election.  We will discuss developments during November 2024 to implement President Biden’s 2021 Executive Order on Cybersecurity in a separate post. Continue Reading November 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 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

This is part of a 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 the subsequent blogs described the actions taken by various government agencies to implement the Cyber EO from June 2021 through August 2024.  This blog describes key actions taken to implement the Cyber EO, as well as the U.S. National Cybersecurity Strategy, during September 2024.  We discuss developments during September 2024 to implement President Biden’s Executive Order on Artificial Intelligence in a separate post. Continue Reading September 2024 Developments Under President Biden’s Cybersecurity Executive Order and National Cybersecurity Strategy

The Small Business Administration (“SBA”) recently issued a proposed rule that would significantly change the rules concerning small business recertification in M&A transactions and other events (the “Proposed Rule”).  SBA has framed the Proposed Rule as a consolidation of what is currently a scattered set of regulations, but the rule goes further than consolidating and clarifying existing law.  It would expand recertification requirements in several key ways, including eliminating exemptions that currently allow contractors to continue to utilize set-aside multiple award vehicles after a so-called “disqualifying recertification” (i.e., a recertification as other than small or other than disadvantaged).

SBA invited public comment on the Proposed Rule.  The deadline for submitting comments passed last week.  We have spent some time reviewing the comments submitted thus far, which provide insight into the issues that affect both small business contractors and the industry writ large.  As discussed below, many of the comments describe the potential chilling effects of the Proposed Rule, which could deprive contractors of key income streams just as they graduate from small business status and discourage investors and other contractors from acquiring small businesses that hold multiple award contracts. 

The sections below describe the Proposed Rule in greater detail and provide an overview of the comments to the Proposed Rule.Continue Reading Public Comments to Proposed Rule Underscore the Need for Additional Clarity on SBA Recertification Requirements

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

The U.S. Department of Labor (“DOL”) recently announced its annual update to the hourly minimum wage for federal contract workers.  Beginning January 1, 2025, the minimum wage for employees performing work on or in connection with covered contracts will increase from $17.20 to $17.75 per hour.  The increase applies to tipped and non-tipped employees, as well as employees with disabilities.

The DOL announcement follows President Biden’s Executive Order 14026, issued in April 2021, to “promote economy and efficiency in procurement by contracting with sources that adequately compensate their workers.”  We discuss the types of federal contracts and workers subject to the wage rate increase, and its implications for contractors, below.Continue Reading Bigger Pay Days Are Coming for Some Federal Contract Workers in 2025

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

GAO’s recent protest decision in HPI Federal, LLC, B-422583, Aug. 9, 2024, 2024 WL 3823852, highlights the importance of making clear and precise Trade Agreements Act (TAA) compliance certifications when offering products for sale to the U.S. Government.   

  • On the one hand, GAO found that it was unreasonable for an agency to accept an offeror’s certification that certain of its products were “assembled in” a TAA-compliant country as evidence of the product’s TAA compliance.  GAO reasoned that the referenced assembly — which was not described in the proposal — may not satisfy the TAA’s requirement for “substantial transformation” in that country. 
  • In contrast, GAO found that it was reasonable for the agency to accept the same offeror’s certification that other products had a TAA-compliant “country of origin”. 

As these contrasting examples show, offerors should take care to ensure that their certifications are adequate to establish TAA compliance.  A certification falling short of that standard could place an award at risk, and could even render an offeror ineligible for award. Continue Reading Trade Agreements Act Certifications Undergo New Scrutiny