On the eve of the recent government shutdown over border security, Congress and the President were in agreement on a different issue of national security: mitigating supply chain risk. On December 21, 2018, the President signed into law the Strengthening and Enhancing Cyber-capabilities by Utilizing Risk Exposure Technology Act (the “SECURE Technology Act”) (P.L. 115-390). The Act includes a trio of bills that were designed to strengthen the cyber defenses of the Department of Homeland Security (“DHS”) and mitigate supply chain risks in the procurement of information technology. The last of these three bills, the Federal Acquisition Supply Chain Security Act, should be of particular interest to contractors that procure information technology-related items related to the performance of a U.S. government contract. Among other things, the bill establishes a Federal Acquisition Security Council, which is charged with several functions, including assessing supply chain risk. The bill also gives the Secretary of DHS, the Secretary of the Department of Defense (“DoD”) and the Director of National Intelligence authority to issue exclusion and removal orders as to sources and/or covered articles based on the Council’s recommendation. Finally, the bill allows federal agencies to exclude sources and/or covered articles deemed to pose a supply chain risk from certain procurements.
Domestic Sourcing Requirement Doesn’t Fit DOD’s Gloves
(This article was originally published in Law360 and has been modified for this blog.)
The Government Accountability Office (GAO) recently issued a bid protest decision regarding the application of the Berry Amendment’s domestic sourcing requirement to a U.S. Department of Defense (DOD) solicitation for leather combat gloves with touchscreen capability. In that decision, the GAO found that the nonavailability exception to the Berry Amendment applied to the glove’s kidskin leather even though the agency determined, through market research, that this type of leather was available domestically. Importantly, this decision provides an opportunity for stakeholders to consider the nuances associated with the Berry Amendment’s nonavailability exception and to reflect upon the complex regulatory landscape of domestic sourcing requirements.
Lowest Price Technically Acceptable Solicitations No Longer Acceptable? Reviewing the Department of Defense’s Proposed Changes to the DFARS
In a proposed rule issued earlier this month, the Department of Defense (“DoD”) seeks to incorporate into the Defense Federal Acquisition Regulations Supplement (“DFARS”) restrictions on the use of the lowest price technically acceptable (“LPTA”) source selection method from the National Defense Authorization Act (“NDAA”) for Fiscal Years 2017 and 2018. This proposed rule makes clear that these NDAA-imposed restrictions are not going away any time soon, and that DoD contracting officers need to engage in a thorough and reasoned analysis before conducting an LPTA procurement. Continue Reading
Signs of Progress with the Limitations on Subcontracting, but Outstanding Questions Remain
A recently proposed rule would update the Federal Acquisition Regulation (“FAR”) to incorporate statutory changes to limitations on subcontracting that have been in effect since 2013. The U.S. Small Business Administration (“SBA”) has long since revised its own regulations to implement these changes, but some contracting officers have been reluctant to follow these changes in the SBA regulations because the FAR contains contradictory provisions.
The proposed rule is a sign of progress. In particular, it should add significant clarity to the current disconnect between the FAR and SBA regulations. However, the proposed rule is not perfect, and a number of recent developments highlight that outstanding questions remain.
More Novation Complexity In Gov’t Contracts M&A?
(This article was originally published in Law360 and has been modified for this blog.)
Government contractors undergoing an asset transaction know all too well the peculiarity and uncertainty associated with the transfer of a U.S. government contract through the required novation process. In two recent decisions, the Government Accountability Office considered the impact of such transactions and the novation process on the pursuit of new task orders from the U.S. government, with disappointing results for the affected contractors. Continue Reading
DoD Issues Final Guidance for Assessing Contractor Compliance with NIST SP 800-171
The Department of Defense (DoD) recently issued final guidance for requiring activities to assess contractors’ System Security Plans (SSPs) and their implementation of the security controls in National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171. A draft of this guidance was made available for public comment in April 2018. As noted in our original post on the draft guidance, DoD’s proposed approach raised significant questions as to what role offerors’ implementation of the security controls in NIST SP 800-171 would play in bid protests, contract performance, and post award audits. In the memorandum accompanying the final guidance documents, DoD notes that it has incorporated comments it received from the public into the final guidance. As discussed below, although the DoD has addressed some of the issues raised by the April draft, the final guidance adds some additional concerns and ambiguities.
Time to Resolve a Question About Time: Supreme Court to Consider FCA’s Statute of Limitations
When does a private party need to file a qui tam action under the False Claims Act (“FCA”)? Such a seemingly simple question has resulted in three different answers from six different courts. This past Friday, November 16, 2018, the Supreme Court announced it would resolve that circuit split — by granting a request to review the Eleventh Circuit’s decision in United States ex rel. Hunt v. Cochise Consultancy, Inc. The case will merit close attention, as the ultimate outcome could help protect government contractors from intentional and prejudicial delay in litigation.
Still Just A Rat In A CAGE: Recent GAO Decisions Underscore the Need for Precision in Identifying Corporate Entities During the Procurement Process
Many government contractors are part of corporate families consisting of multiple corporate entities. One entity may be named as the official contracting party, but use the resources of affiliates, parents, or subsidiaries during performance. The distinction between those members of the corporate family may not seem important in terms of day-to-day operations — in fact, the synergy and seamlessness between the corporate entities may be a selling point. Two recent GAO decisions make clear, however, that when it comes to bidding on government work, it is important to precisely identify which corporate entity is going to do what and which corporate entity has which resources.
In BDO USA, LLP and Intermarkets Global USA, LLC, GAO’s decisions turned on a perceived misidentification of corporate entities at some point in the procurement process. In BDO, the problem occurred during bid submission. In Intermarkets, the problem occurred when the protest was filed.
What’s in a Brand Name? DoD to Limit Use of “Brand Name or Equal” Contract Competitions
The Department of Defense (“DoD”) has proposed a new rule limiting the use of “brand name or equal” contract competitions, calling on contracting officers to publicly justify their need for a brand name-type product before issuing a solicitation. The rule would implement Section 888(a) of the National Defense Authorization Act of 2017, which directed the Secretary of Defense to “ensure that competition in [DoD] contracts is not limited” by brand name references without a justification under 10 U.S.C. § 2304(f).
“Hey Big Spender . . .”: GAO Reiterates That Agencies Must Meaningfully Consider Price In Best Value Tradeoffs
In three related bid protest decisions made public last week, the Government Accountability Office (“GAO”) reaffirmed the principle that agencies must meaningfully consider price when making best value tradeoff decisions. GAO sustained the protests, stressing that merely paying lip service to price while selecting a more expensive, higher-rated offeror is not sufficient — agencies must provide a rational explanation for why they have decided to pay a premium for the awardee’s technical superiority.
