Supply Chain

The Office of Strategic Capital (“OSC”) within the Department of Defense (“DOD”) has launched a Credit Program, under which it will provide debt financing in critical technology areas that drive national and economic security.  As an initial step, OSC is soliciting applications for equipment loans, which may be submitted between…

Continue Reading DOD Office of Strategic Capital Begins Its Direct Lending Efforts to Secure U.S. Industrial Base

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

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 May 2024.  This blog describes key actions taken to implement the Cyber EO, as well as the U.S. National Cybersecurity Strategy, during June 2024.  It also describes key actions taken during May 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 June 2024 Developments Under President Biden’s Cybersecurity Executive Order, National Cybersecurity Strategy, and AI Executive Order

On May 16, 2024, the Internal Revenue Service (“IRS”) and Department of Treasury (“Treasury”) published Notice 2024-41 (the “2024 Guidance”), which provides new guidance for securing the domestic content bonus credit established by the Inflation Reduction Act (“IRA”).  As described in more detail below, the 2024 Guidance builds on the existing framework contained in Notice 2023-38 (the “2023 Guidance”), which was released last May.  Most notably, the 2024 Guidance expands the range of applicable projects subject to the safe harbor in the 2023 Guidance and adds a “New Elective Safe Harbor” to determine cost percentages for the domestic content calculation in solar, onshore wind, and battery storage projects.Continue Reading Treasury and IRS Release New Guidance on Inflation Reduction Act Domestic Content Bonus Credit

Today, the Federal Acquisition Regulatory Council (“FAR Council”) released an Advance Notice of Proposed Rulemaking (the “ANPRM”) describing the agencies’ plan to implement Section 5949 of the National Defense Authorization Act (“NDAA”) for FY 23 (Pub. L. 117-263).

Section 5949 prohibits the Federal Government from procuring certain semiconductor parts, products, or services traceable to named Chinese companies and potentially other foreign countries of concern.  To that end, the ANPRM invites public comment on the proposed contents of an implementing FAR clause, to take effect December 23, 2027.

As discussed below, the FAR Council proposed applying the regulations broadly to all solicitations and contracts, including commercial item and commercially available off-the-shelf (“COTS”) contracts, subject only to a limited waiver.  Although not set out in the statute, the clause would require contractors to conduct a “reasonable inquiry” into their supply chain to detect potential violations.  It would also require both disclosure and the taking of corrective action in the event that nonconforming products or services are discovered. 

More details are below, and our previous coverage of Section 5949 is available here.Continue Reading Chips on the Table: FAR Council Releases Advance Notice of Proposed Rulemaking to Implement Prohibition on Purchase and Use of Certain Semiconductors

On March 11, 2024 the Cybersecurity Infrastructure Security Agency (CISA), released the much anticipated final version of its common Secure Software Development Attestation Form.  Finalization of the form is a notable development for developers of software that is sold to the U.S. Government for two reasons.  First, the form is expected to be used widely by Government agencies to fulfill requirements set forth in recent OMB memoranda for those agencies to ensure that the software they procure or use is secure by requiring attestations from software developers.  Second, as set forth under OMB guidance, final approval of the form by the Office of Information and Regulatory Affairs (OIRA) triggers a countdown wherein agencies need to begin collection of the forms within three months for “critical software” and within six months for all other software.Continue Reading OMB Approves Final CISA Secure Software Attestation Common Form, Triggering Clock for Collection

On March 7, 2024, the Department of Transportation’s (“DOT”) Federal Highway Administration (“FHWA”) announced a proposed rule to rescind a longstanding general waiver of Buy America requirements for manufactured products (the “Manufactured Products Waiver”).  If finalized, this would be a major change for the agency, reversing a policy that has been in place for more than 40 years.

FHWA has imposed Buy America requirements for domestic iron and steel on its projects since 1978 (see 23 U.S.C. § 313; 23 CFR § 635.410), but in 1983, the agency determined that it was in the public interest to waive the requirement as to manufactured products based on the agency’s belief that manufactured products were not used in federal highway projects in sufficient quantities to have an effect on the overall cost of a project and therefore did not require Buy America protections.  That general waiver has been in place ever since.

This change in policy comes in the wake of the 2021 Infrastructure Investment and Jobs Act’s Build America, Buy America (“BABA”) provisions, which expanded Buy America coverage broadly in federal financial assistance programs for infrastructure.  BABA requires that all steel, iron, construction materials, and manufactured products used in such products be “produced in the United States.”  BABA also discourages the use of general applicability waivers like FHWA’s Manufactured Products Waiver and required review of existing waivers. 

FHWA sought comments on its longstanding manufactured products waiver in March 2023 and received over 9,400 comments from the public.  Commenters included manufacturers, labor organizations, construction contractors, industry associations, State departments of transportation, and even members of Congress.  Based on a consideration of this feedback and in recognition of other domestic content policies, including Executive Order 14005, “Ensuring the Future Is Made in All of America by All of America’s Workers,” FHWA is proposing to discontinue its Manufactured Products Waiver and modify its regulations to include domestic content requirements for manufactured products.Continue Reading Federal Highway Administration Announces Proposed Rule Ending Longstanding Buy America Waiver for Manufactured Products

On January 4, 2024, the U.S. Attorney’s Office for the District of New Jersey announced that it has filed criminal wire fraud and false statement charges against the Chief Executive Officer (CEO) of a company that knowingly sold certain surveillance and security cameras to prosecutors’ offices, sheriffs’ offices, and police…

Continue Reading U.S. Government Brings Criminal Charges Against Individual Alleged to be Responsible for Falsely Representing that Cameras Sold to Government Customers were Compliant with Section 889 Requirements

This post continues our ongoing coverage of the FY 2024 NDAA. 

The FY 2024 NDAA includes numerous supply chain and stockpile management provisions aimed at addressing a host of perceived vulnerabilities and weaknesses in Department of Defense (“DoD”) supply chain networks used to secure goods and services for our national defense.  Of particular note, this year’s NDAA seeks to address China’s and Russia’s continued dominance in the global supply chain for many critical materials and rare earth elements.  Supply chain- and stockpile-related measures in the NDAA could present significant opportunities for contractors poised to support the U.S. Government’s efforts to on-shore and friend-shore U.S. and DoD sourcing and manufacturing, but Congress’s focus on increasing supply chain visibility could also herald new rounds of compliance and reporting requirements attached to federal procurements.Continue Reading Key Supply Chain Provisions of the National Defense Authorization Act (“NDAA”) for Fiscal Year (“FY”) 2024