A Coronavirus Contractor’s Guide to the PREP Act

We’ve covered several topics already this week on the U.S. Government’s varied responses to the COVID-19 outbreak and how these responses will affect contractors that do business with the government, including BARDA’s EZ-BAA for COVID-19 diagnostics, mission-essential services during the outbreak, and how excusable delay provisions may help federal contractors affected by the outbreak. But one area that has yet to receive in-depth discussion is the federal government’s mechanisms for addressing liability concerns raised by the use and distribution of countermeasures to the virus. After all, while contractors are no doubt responding with appropriate speed and diligence in developing and deploying various COVID-19 countermeasures, no contractor wants to be the subject of a product liability, warranty, or negligence lawsuit later down the road.

Thankfully, Congress anticipated this concern and addressed it in 2005 by passing the Public Readiness and Emergency Preparedness Act (“PREP Act”), codified at 42 U.S.C. § 247d-6d. Since enactment, the PREP Act has been used to issue declarations covering various countermeasures, including therapeutics, diagnostics, devices, vaccines, and constituent materials for pandemic influenza, acute radiation syndrome, smallpox, Botulism, anthrax, Zika, nerve agents, certain insecticides, and Ebola. And earlier this week, the Secretary of the U.S. Department of Health and Human Services (the “Secretary”) issued a declaration pursuant to the PREP Act specifically for COVID-19 countermeasures.

This post will cover the PREP Act generally before discussing the implications of the COVID-19 declaration. Continue Reading

Expanding the Coronavirus Disease 2019 (COVID-19) Response through Diagnostic Development

By Jennifer Plitsch, Tyler Evans and Sarah Shepson on March 12, 2020 Posted in Biodefense, Health Care Contracting, Independent Research & Development, Insurance & Indemnity, Public-Private Partnerships

In the latest World Health Organization daily situation report, as of March 11, 2020, the WHO reported 118,326 COVID-19 cases confirmed and 4,292 deaths worldwide, and the U.S. Centers for Disease Control and Prevention (CDC) reported 938 cases and 29 deaths in the United States. The same day, WHO characterized COVID-19 as the first global pandemic sparked by a coronavirus. Additionally, the Secretary of the U.S. Department of Health and Human Services (HHS), issued a Declaration under the Public Readiness and Emergency Preparedness Act (PREP Act) to provide liability immunity for entities against any claim of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of covered medical countermeasures (MCMs). Prioritized pathways are now available to expedite review of new, responsive technology proposals for MCMs from diagnostics to therapeutics.

The Show Must Go On: Mission-Essential Services During the Coronavirus Outbreak

By Peter B. Hutt II, Susan B. Cassidy and Brooke Stanley on March 11, 2020 Posted in Biodefense, Claims and Contract Disputes, Defense Industry

As the COVID-19 virus extends its global reach, defense contractors may be called upon to begin implementing their contracts’ mission-essential services plans. These plans, required by DFARS 252.237-7023, facilitate mission-essential functions in extended crisis situations, including pandemics, which are explicitly noted in the DFARS. As the coronavirus outbreak continues, defense contractors should check whether their contracts include this clause and assess their readiness to implement the requirement if DoD requests activation of the company’s plan. Continue Reading

“Excuse Me, My Performance Has been Interrupted”– How Excusable Delay Provisions in the FAR May Help Federal Contractors Affected by the Coronavirus

By Evan R. Sherwood, Susan B. Cassidy and Michael Wagner on March 6, 2020 Posted in Biodefense, Claims and Contract Disputes, Supply Chain

The global spread of the COVID-19 virus may put many federal contractors at risk of missing contractual deadlines. In a growing number of cases, supply chains may become cut off, work spaces may be closed, or employees may need to stay home, all of which could impact a contractor’s ability to perform in a timely manner. This is the first in a series of blog posts aimed at helping contractors navigate performance delays, changes, and other complications caused by the coronavirus outbreak.

When confronting challenges caused by the coronavirus, contractors should know that their contracts may contain clauses that would excuse these delays such as FAR 52.249-14 (cost reimbursement and time and material contracts), FAR 52.249-8 (fixed price supply and service contracts), and FAR 52.212-4 (commercial contracts). All of these clauses share a common thread – a contractor should not be in default because of a failure to perform the contract if the failure arises from causes beyond the control and without the fault or negligence of the contractor. Continue Reading

A Coalition Grows: What WMATA’s Partnership with the Procurement Collusion Strike Force Means for Government Contractors

By Michael Pierce and Michael Wagner on March 4, 2020 Posted in False Claims Act, Procurement Fraud and Internal Investigations

On February 18, 2020, Washington Metropolitan Area Transit Authority (“WMATA”) Inspector General Geoffrey Cherrington announced that special agents from WMATA would be partnering with the Department of Justice’s Procurement Collusion Strike Force (“PCSF”) to prevent and detect fraud affecting WMATA. The announcement portends a growing partnership amongst federal, state, and local entities in the procurement fraud space that could reverberate well beyond the Washington metro area. Continue Reading

Senior DOJ Attorneys Speak About FCA Enforcement Priorities, Dismissal, and Cooperation

By Christopher Denig, Matthew Dunn and Krysten Rosen Moller on March 3, 2020 Posted in False Claims Act

On February 27 and 28, 2020, Joseph H. (Jody) Hunt, Assistant Attorney General for DOJ’s Civil Division, and Michael Granston, Deputy Assistant Attorney General, Commercial Litigation Branch, spoke about False Claims Act (“FCA”) enforcement at the Federal Bar Association’s annual Qui Tam Conference in Washington, D.C. They highlighted FCA enforcement priorities for 2020, and offered insights on the Department’s dismissal policy and cooperation policy – two topics that Deputy Associate Attorney General Stephen Cox also addressed in remarks earlier this year. Continue Reading

Tenth Circuit Provides New Material on FCA’s Materiality Standard

By Michael Wagner and Andrew Guy on February 25, 2020 Posted in Escobar, False Claims Act, Government Contracts Regulatory Compliance, Health Care Contracting, Procurement Fraud and Internal Investigations

Earlier this month, the United States Court of Appeals for the Tenth Circuit issued a decision that provided further clarity on the False Claims Act’s standard for materiality. The decision, United States ex rel. Janssen v. Lawrence Memorial Hospital, further demonstrated that materiality should be viewed through the eyes of the government customer rather than an hypothetical bystander. The decision also reconfirmed that the FCA is not a “general antifraud statute” and that contractual or regulatory language conditioning payment on compliance will not necessarily prove that noncompliance was material. Lawrence therefore serves as an important reminder to government contractors, practitioners, and other stakeholders about the significance of the materiality element in FCA litigation.

A New Path to TAA Compliance: U.S.-Made End Products in Acetris

By Jennifer Plitsch, Michael Wagner and Sarah Shepson on February 13, 2020 Posted in Bid Protests, Buy American, Country of Origin, Domestic Preferences, Government Contracts Regulatory Compliance, Procurement Policy, Supply Chain, Trade Agreements Act

On Monday, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Acetris Health, LLC v. United States, No. 2018-2399 (Fed. Cir. Feb. 10, 2020) (“Acetris”), that would permit pharmaceutical manufacturers to source a drug’s active pharmaceutical ingredient (“API”) from India, China and other non “designated countries” and yet still offer the end product for sale to the U.S. Government. Under the Trade Agreements Act (“TAA”), if a drug’s API was sourced from outside of the United States or a designated country, at least some Government agencies previously had taken the position that the U.S. Government could not purchase it. In Acetris, the Federal Circuit explained that the TAA inquiry should turn not on where the API (or some other component) is sourced, but instead on where the pill (or other end product) is manufactured. Consistent with this approach, the court held that a pill manufactured in the United States was compliant with the TAA and implementing regulations even though the pill’s API was sourced from India.

Although the full implications of the Acetris decision are not yet clear, there is no doubt that the ruling alters the TAA compliance landscape and offers broader lessons outside of the pharmaceutical manufacturing context. Consequently, the decision warrants close attention by contractors seeking to maximize supply chain efficiency. Continue Reading

A Closer Look at Version 1.0 of DoD’s Cybersecurity Maturity Model Certification

By Susan B. Cassidy, Ashden Fein, Samantha Clark, Ryan Burnette and Darby Rourick on February 13, 2020 Posted in Cybersecurity, Defense Industry, Supply Chain

On January 31, the Department of Defense (“DoD”) released Version 1.0 of its Cybersecurity Maturity Model Certification (“CMMC”). This is the fourth iteration of the CMMC that DoD has publicly released since it issued the first draft in October, and it is intended to be the version that auditors will be trained against, and that will eventually govern defense contractors’ cybersecurity obligations. (We discussed the draft versions of the CMMC in earlier blog posts, as well as DoD’s Version 1.0 release announcement.)

As outlined in more detail below, the CMMC is a framework that “is designed to provide increased assurance to the DoD that a DIB [Defense Industrial Base] contractor can adequately protect CUI [Controlled Unclassified Information] at a level commensurate with the risk, accounting for information flow down to its subcontractors in a multi-tier supply chain.”

DoD stated publicly that it plans to add CMMC requirements to ten Requests for Information (“RFIs”) and ten Requests for Proposals (“RFPs”) by the end of this year, with contractors and subcontractors expected to meet all applicable CMMC requirements at the time of award. DoD has indicated that these RFPs may involve relatively large awards, as it anticipates that each award will impact approximately 150 different contractors at all levels of the supply chain and at various levels of CMMC certification. DoD’s goal is to have CMMC requirements fully implemented in all new contract awards by Fiscal Year 2026.

U.S. Government Seeks Industry Solutions in Novel Coronavirus Response

By Jennifer Plitsch, Sarah Shepson, Tyler Evans and Alexander Hastings on February 11, 2020 Posted in Biodefense, Defense Industry, Government Contracts Regulatory Compliance, Health Care Contracting, Independent Research & Development

As of February 10, 2020, the World Health Organization (WHO) reported that 40,554 cases of the Novel Coronavirus (2019-nCoV) have been confirmed globally, with twelve cases confirmed in the United States. The WHO has been issuing situation reports on a daily basis since January 21, and each report in February alone has identified more than 2,000 to 3,000 new cases each day.

Due to the lack of approved therapeutics, vaccines, and diagnostics for this threat, developing new products and testing products already approved for other uses is a high priority for the U.S. interagency response effort—the Medical Countermeasure (MCM) Task Force. The Biomedical Advanced Research and Development Authority (BARDA), under the Office of the Assistant Secretary for Preparedness and Response (ASPR) in the U.S. Department of Health and Human Services (HHS), is leading this Task Force in partnership with U.S. Department of Defense, Food and Drug Administration, Centers for Disease Control and Prevention, and National Institutes of Health.

BARDA is currently looking at the effectiveness of existing countermeasures for similar viruses, as well as potential new responsive technologies, including vaccines, diagnostics, therapeutics, and medical supplies. BARDA is serving as the sole point of entry for product and technology submissions to ensure there is an expedited process for receipt and review of proposed solutions for 2019-nCoV. In this capacity, BARDA has released two opportunities to submit potential solutions for the 2019-nCoV response discussed below: (1) the EZ-BAA for 2019-nCoV diagnostics and (2) market research packages for any and all potential products and supplies. Covington encourages those with technology that could be potentially useful to respond.