Government Contracts Regulatory Compliance

Last month, DeepSeek, an AI start-up based in China, grabbed headlines with claims that its latest large language AI model, DeepSeek-R1, could perform on par with more expensive and market-leading AI models despite allegedly requiring less than $6 million dollars’ worth of computing power from older and less-powerful chips.  Although…

Continue Reading U.S. Federal and State Governments Moving Quickly to Restrict Use of DeepSeek

The FY 2025 National Defense Authorization Act (“NDAA”) sustains Congress’s continued focus on countering China’s expanding influence and enhancing U.S. resilience in an era of great power competition.  This year’s legislation reflects the practice of carrying the State Department and Intelligence Authorization Acts within the NDAA—marking the third consecutive year that these critical measures have been advanced in tandem.  The Foreign Relations and Intelligence Committees in both chambers of Congress have increasingly adopted the Armed Services Committees’ playbook, embedding China-focused legislation modeled on past defense measures in their respective authorizations.  This blog examines key provisions designed to address what Congress views as strategic challenges posed by China while closing loopholes that could confer military, economic, or technological advantages to Beijing.  We divide these provisions into the following five categories:  (1) provisions that address potential security risks linked to Chinese-origin technology; (2) provisions that limit the transfer of U.S. technology or data to China; (3) so-called “time to choose” provisions that curtail Department of Defense (“DoD”) engagement with third parties that engage with China; (4) provisions that tackle a range of broader geopolitical concerns; and (5) studies and reports to identify emerging issues and concerns.
Continue Reading FY2025 NDAA: Congressional Efforts to Bolster U.S. Resilience Against Chinese Tech and Influence

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