Earlier this year, the Department of Labor’s Office of Federal Contractor Compliance Programs (“OFCCP”) opened the Contractor Portal, a new platform where covered federal contractors and subcontractors must annually certify whether they are meeting their requirement to develop and maintain written Affirmative Action Programs (“AAPs”).  As we previewed in June, OFCCP required covered contractors and subcontractors to submit their AAP compliance certifications by June 30, 2022. 

Although this deadline has passed, covered contractors and subcontractors that have not yet assessed their affirmative action plan obligations and made their certifications should do so immediately.  OFCCP confirmed that it will provide federal agency contracting officers with a list of all contractors who have not certified AAP compliance by September 1, 2022.  Inclusion on this list could result in not only audits by OFCCP, but additional scrutiny by contracting officers, as well as contracting-level actions that could range from payment delays, contract-level audits, and even the possibility of non-responsibility determinations resulting in suspension or debarment proceedings.

For covered contractors and subcontractors that have not yet made their AAP certification, OFCCP has made a number of resources available, including a user guide and FAQ as well as a help desk and hotline (1-800-397-6251).  The Covington team is similarly available to discuss whether these requirements are applicable to your entity, and to assist with the certification process more generally.

On August 25, 2022, the Department of Defense (“DOD”) published — with immediate effect — two new Defense Federal Acquisition Regulation Supplement (“DFARS”) clauses requiring defense prime contractors and subcontractors disclose any work in China on certain DOD contracts.  Under the interim rule, the DOD is prohibited from awarding or extending certain new contracts if a contractor fails to disclose its use of workers in China in performance of a covered DOD contract.  Although there is no prohibition on DOD awarding a covered contract to an entity that makes a disclosure, the Department can rely on a variety of authorities to exclude certain contractors and products that represent supply chain risks, especially if the products or services involve information technology.

Continue Reading New DFARS Clauses Require Defense Contractors to Disclose Work Performed in China

On July 28, 2022, the United States Department of Transportation (“DOT”) published a Request for Information (“RFI”) on the implementation of the Infrastructure Investment and Jobs Act’s Build America, Buy America Act (“BABA”).  As discussed in our previous post, BABA expanded Buy America preferences to cover all infrastructure projects and sets new domestic content standards for federal financial assistance programs.  The RFI focuses specifically on implementing these domestic content standards for construction materials, which were not subject to the Buy America regime prior to BABA.  Given the wide range of products that might conceivably constitute a “construction material,” industry participants would be wise to closely monitor both the RFI and DOT’s implementation progress and to take steps to ensure that policymakers understand their views on the subject.

Continue Reading DOT Seeks Additional Stakeholder Input on Build America, Buy America Implementation

This is the fourteenth in 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 May 2022.  This blog describes key actions taken to implement the Cyber EO during June 2022.

Continue Reading June 2022 Developments Under President Biden’s Cybersecurity Executive Order

The Eastern District of New York has enjoined a New York contractor’s federal debarment, in a rebuke of agency debarment actions that fail to honor contractors’ procedural rights.  On July 8, 2022, part supplier Precision Metals Corporation (“Precision”) was granted a Temporary Restraining Order (“TRO”) vacating and setting aside a Defense Logistics Agency (“DLA”) debarment and enjoining debarment while court proceedings are pending.  The decision, which emphasizes two procedural violations, serves as a reminder that an agency’s authority to debar contractors is not unlimited, and that it must strictly adhere to the rights granted contractors before taking action.  Each procedural violation, and its practical implications, is discussed below.

Continue Reading Department of Defense Debarment Enjoined Due to Procedural Missteps

All existing supply or service contractors (at the prime and subcontract level) that meet the OFCCP’s jurisdictional thresholds must register and certify compliance with the AAP requirements.  New contractors have 120 days to develop their AAP(s), and must register and certify compliance through the Contractor Portal within 90 days of developing their AAP(s).  At present, the registration and certification obligation does not extend to contractors performing on only construction contracts.

With a June 30, 2022 deadline looming, covered federal contractors and subcontractors have just one week remaining to register and submit required affirmative action certifications on the new Contractor Portal created by the Department of Labor’s Office of Federal Contractor Compliance Programs (“OFCCP”).  Announced by OFCCP in December 2021, the Contractor Portal requires covered federal prime contractors and subcontractors to both register and submit a formal certification by June 30, 2022 as to whether they have developed and maintained an Affirmative Action Program (“AAP”) in accordance with all applicable OFCCP requirements.  Certifications will be required on an annual basis in the portal thereafter. 

Every contractor is required to certify that they have developed and maintained AAPs pursuant to all of the laws OFCCP enforces under which the contractor is covered: Executive Order 11246, as amended; Section 503 of the Rehabilitation Act of 1973, as amended; and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended.  For each establishment or functional/business unit, the certification requires the contractor to select one of the below options:

  1. Entity has developed and maintained affirmative action programs at each establishment, as applicable, and/or for each functional or business unit;
  2. Entity has been party to a qualifying federal contract or subcontract for 120 days or more and has not developed and maintained affirmative action programs at each establishment, as applicable; or
  3. Entity became a covered federal contractor or subcontractor within the past 120 days and therefore has not yet developed applicable affirmative action programs.

When a contractor selects a response to the certification statement through the portal, the contractor is selecting the response that reflects their AAP status, as of the date they certify.  It is widely expected that OFCCP will utilize certification responses to conduct more – and more targeted – audit, compliance review, and enforcement efforts.  Nonetheless, certification accuracy remains a paramount consideration for contractors, as a knowingly false certification of compliance with AAP requirements could raise the specter of the civil False Claims Act. 

The OFCCP Contractor Portal User Guide provides additional information regarding the registration and certification process and the platform’s functionality. 

The Department of Justice (“DOJ”) recently announced a $5.2 million settlement with Numet Machining Techniques, LLC and affiliated entities (collectively, “Numet”) concerning alleged misrepresentations of size and ownership in connection with pursuing U.S. Government contracts.  The Numet settlement is an important reminder to the contractor community that representations and certifications—particularly those concerning small business status—should be made with due caution and that the discovery of incorrect representations during M&A due diligence can be a significant finding.  In this post, we explore the recent Numet settlement, examine the Small Business Administration (“SBA”) size and affiliation rules, and offer guidance to companies assessing the significance of incorrect representations.

Continue Reading DOJ Settlement Underscores the Significance of Incorrect Small Business Representations

In response to industry-wide questions about price adjustments for economic inflation, the Department of Defense (DoD) has released guidance about when and how contracting officers may provide financial relief to contractors working on fixed-price contracts.  The guidance generally discourages contracting officers from granting adjustments under the Changes clause due solely to inflation.  But it does not completely close the door to adjustments, and it offers modest options for fixed-price contracts that contain an economic price adjustment clause.  Moreover, DoD encourages contracting officers to consider inserting economic price adjustment clauses in new solicitations.

This blog post summarizes DoD’s guidance, explains the mechanics of economic price adjustment clauses, and offers views about evaluating other grounds for relief.

Continue Reading DoD Releases Guidance on Inflation and Economic Price Adjustments for Fixed-Price Contracts

This is the thirteenth in 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 describe the actions taken by various Government agencies to implement the Cyber EO from June 2021 through April 2022.  This blog reflects on the one year anniversary of the Cyber EO and discusses the status of various implementation activities.  It also describes key actions taken to implement the Cyber EO during May 2022.

Continue Reading May 2022 Developments Under President Biden’s Cybersecurity Executive Order: One Year Anniversary Update

Last Friday, the National Telecommunications and Information Administration (“NTIA”) took a major step in furtherance of the Biden Administration’s goal of connecting all Americans to broadband by releasing its widely anticipated Notice of Funding Opportunity (“NOFO”) for the landmark $42.5 billion Broadband Equity, Access, and Deployment (“BEAD”) Program, along with NOFOs for two smaller programs.  All of these programs were created by the Infrastructure Investment and Jobs Act (“IIJA” or “the Act”) which was signed into law in November 2021.  The NOFO marks the beginning of the BEAD Program’s implementation and provides important guidance to states on the process for obtaining funds that they, in turn, will award to service providers and other qualified recipients for building out broadband to unserved and underserved areas. 

On timing, the NOFO clarifies that states will be eligible to receive some initial funding in the near-term, and that the bulk of funding will become available after the FCC releases broadband maps identifying broadband access across the country.  Commerce Secretary Gina Raimondo and FCC Chairwoman Jessica Rosenworcel have indicated that the FCC expects to release the maps as early as November 2022, meaning that BEAD funds will begin to flow to states and service providers and other qualified recipients in 2023. 

On substance, the NOFO expresses a clear preference (but not an absolute requirement) for fiber-to-the-home projects by defining “Priority Broadband Projects” as those “that will provision service via end-to-end fiber-optic facilities.”  Further, the NOFO retains the IIJA’s requirement that service providers must offer broadband service at a speed of at least 100 Mbps downstream/20 Mbps upstream and a latency less than or equal to 100 milliseconds.  Last, the NOFO defines “eligible subscribers” that will be eligible for a low-cost broadband service option that providers are required to offer as “any household seeking to subscribe to broadband internet access that (1) qualifies for the Affordable Connectivity Program (ACP) or any successor program, or (2) is a member of a household that” was at or below 200 percent of the Federal poverty line or qualifies under a low-income program such as Medicaid.

Despite the NOFO’s guidance in these areas and supply chain concerns raised by broadband providers, the NOFO leaves unanswered the question of whether there will be any waiver of the “Build America, Buy America” requirement that funded broadband networks be deployed using at least 55% domestic materials.

For an expanded discussion of the BEAD Program, please visit our Client Alert here.