DoD Further Clarifies Its DFARS Cybersecurity Requirements

On January 27, 2017, the Department of Defense (DoD) issued an updated Frequently Asked Questions (FAQ) regarding the application and requirements of DFARS 252.204.7012 Safeguarding Covered Defense Information and Cyber Incident Reporting. Though questions remain regarding various nuances of the rule, the FAQ is a helpful document for those contractors still working on implementation of DFARS 252.204.7012.  Divided into three sections — (1) General Application, (2) Security Requirements, and (3) Cloud Computing — the FAC provides answers to 59 commonly asked questions and provides greater clarity on a number of important points, which are discussed in greater detail below.

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New Policies on Sustainable Acquisition: Among the Last Proposed FAR Rules of the Obama Administration

Just two days before Donald Trump’s Inauguration, the Federal Acquisition Regulatory Council published a proposed rule to implement Executive Order 13693, Planning for Federal Sustainability in the Next Decade, and certain biobased acquisition provisions of the Agricultural Act of 2014.  The Council characterized the rule as advancing policies put into effect by an interim rule from May 2011, which “established a culture within the Federal acquisition community to. . . foster markets for sustainable technologies and materials, products and services.”  The proposed rule represents a shift in the FAR towards greater alignment with existing government programs that set forth sustainability standards for products and services. Continue Reading

Reining in Regulation: New Year, New Administration, New Confusion

A new administration will often articulate its approach to the management of executive agencies through the issuance of an executive order.  President Clinton issued E.O. 12866 in the fall of 1993 and set forth both the process of regulatory review and a regulatory philosophy meant to guide executive agencies.  E.O. 12866 placed an emphasis on cost-benefit analysis and data with which the Office of Information and Regulatory Affairs (“OIRA”) was to review agency action.  President Obama, less than two weeks after taking office, announced his intent to adhere to the “fundamental principles and structures governing contemporary regulatory review set out in Executive Order 12866.”  The reinstatement of E.O. 12866 and eventual issuance of the substantially similar E.O. 13563 foreshadowed the Obama Administration’s focus on data and analysis principles that often resulted in industries submitting an ever-increasing amount of information to executive agencies.

A great deal of attention has been placed on agency regulation by President Trump, who has vowed to cut corporate-focused regulations by “75 percent – maybe more.” Although President Trump has yet to release an official approach to managing the administrative state, the new Administration has taken initial steps that seems aimed at reducing regulations.  Further, Congress has taken up the mantle of deregulation by passing two measures in the House that could severely hamper agencies wishing to issue major rulemaking.  However, without an articulated policy of managing executive agencies, it is unclear whether these measures would actually reduce regulation, or simply shift agency focus from major rulemaking to major guidance, leaving industries without a clear sense of the new playing field. Continue Reading

Endgame for the Blacklisting Order

Congress recently began the process to legislatively overturn the regulations implementing President Obama’s “Fair Pay and Safe Workplaces” Executive Order.  Under the Congressional Review Act, Congress can dismantle regulations that were finalized in the waning days of a presidential administration.  Our colleagues in the Public Policy & Government Affairs practice provide some details of the CRA here and here.  The process begins with a joint “resolution of disapproval” in Congress.  If the resolution is signed into law — a safe assumption when the presidency changes parties — the underlying regulation has no effect, and any “substantially similar” rule cannot be re-issued without specific re-authorization legislation.

On Thursday, the House passed the disapproval resolution for the Fair Pay and Safe Workplaces regulations on an almost straight party-line vote. It now goes to the Republican-controlled Senate and then to the White House, where the President’s advisors would recommend that he sign it.

Most of the Fair Pay and Safe Workplaces provisions had already been blocked since the U.S. District Court for the Eastern District of Texas issued a nation-wide injunction in October 2016, but this legislative strategy would dismantle the regulations altogether.  A portion of the regulations regarding pay transparency was allowed to take effect for new solicitations issued on or after January 1, 2017, but that portion will be overturned by this disapproval legislation.  Contractors should remember, however, that separate Labor Department regulations govern pay transparency.  Those regulations still remain in effect.

Ninth Circuit Rejects Heightened Standard for Demonstrating Likelihood of Competitive Harm Under FOIA Exemption 4

The Ninth Circuit recently confirmed that predicting the future with near certainty is not required when seeking to protect information from disclosure under Exemption 4 of FOIA. In a recent unpublished decision, the Ninth Circuit concluded that Sikorsky Aircraft’s small business subcontracting plan was “confidential commercial or financial information” exempt from disclosure under Freedom of Information Act, Exemption 4. See Am. Small Business League v. Department of Defense, No. 15-15120, 2017 WL 65399 (9th Cir. Jan. 6, 2017) (ASBL II). Although the non-precedential decision merely reaffirmed the existing standard for determining competitive harm, the decision was significant because it rejected the lower court’s position that Exemption 4 required a party to show that release in effect “would” produce competitive harm rather than simply “could” lead to such harm.  In addition, the ruling confirmed that employee contact information and signatures are protected from disclosure by Exemption 6 (Personal Privacy).

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The More You Know: Agencies Advised to Increase Use of Post-Award Debriefings

On January 5, 2017, as part of its “myth-busting” series, the Office of Federal Procurement Policy (“OFPP”) issued a memorandum encouraging federal agencies to improve their post-award debriefings to increase their “productive interactions with . . . industry partners.” Based on feedback from industry and federal agencies, the OFPP described the numerous benefits of effective debriefings, including affording unsuccessful offerors the opportunity to understand the weaknesses in their proposals and the areas for improvement in future competitions and offering agencies an opportunity to review and improve their evaluation processes.   To encourage agencies to take such measures, OFPP recommended that agencies adopt a “debriefing guide” and to consider commonly-perceived myths regarding the debriefing process. Continue Reading

ASBCA Shoots Down DCAA Overreach on Responsibility to Manage Subcontractors

A prime contractor is responsible for managing its subcontractors, but what exactly does that require? In a recent decision, the answer of the Armed Services Board of Contract Appeals was: not nearly as much as DCAA claimed.

In Lockheed Martin Integrated Sys., Inc., ASBCA Nos. 59508, 59509, the Board ruled on a Government claim seeking more than $100 million from LMIS for allegedly breaching an obligation to manage subcontracts. In DCAA’s reading, this obligation was extensive and required a number of concrete actions by the prime contractor. Continue Reading

DoD Reassures Major Contractors It’s Not Returning to Old IR&D Practices, But Significant Questions Still Remain

On January 4, 2017, the Department of Defense’s top acquisition official issued a memorandum further clarifying the implementation of a November 2016 final rule concerning the reimbursement of major contractors’ Independent Research & Development (“IR&D”) costs.  In a move likely intended to reassure major defense contractors, Undersecretary of Defense for Acquisition, Technology & Logistics, Frank Kendall, stressed that the recent final rule “merely codifies a long standing practice” used by contractors.  Mr. Kendall also emphasized that DoD does not require major contractors to obtain formal or “de facto” approval of IR&D projects before incurring such costs.

But while DoD’s efforts to comfort industry are commendable, some key questions remain, including most prominently: whether and how DoD auditors will utilize the results of pre-IR&D “technical interchange” meetings to question the allowability of IR&D costs.

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Contracting by Tweet: What Impact Can the New Administration Have on Existing Contracts and Future Awards?

Among the many subjects to receive President-elect Trump’s attention in advance of his swearing in on January 20 are venerable defense contractors and their performance of major systems contracts.  The Boeing Company (Boeing) and Lockheed Martin (Lockheed) have both felt the “heat of the tweet” – Boeing for the projected cost of the next generation of presidential aircraft and Lockheed for its F35 Joint Strike Fighter.  The pointed attention has led some to question the authority of a president to alter existing contractual relations or to impact the award of future contracts.  Can a president require contractors to lower prices on existing contracts or direct that future awards not be made to companies that fail to adopt practices the president favors, e.g., retaining jobs in the United States?  A president always has the bully pulpit to pressure high-profile government contractors to “voluntarily” take actions to their detriment and in favor of the government, but what legal tools or contractual remedies are available if a president forces a particular outcome? Continue Reading

A self-effectuating deemed release of claims? Say it ain’t so.

A few weeks ago, we provided a few tips for negotiating and assessing a release contained in a contract modification, and discussed why the Civilian Board of Contract Appeals (CBCA) found that a global release contained in one of many contract modification was ambiguous.

Now, we consider a different scenario: what happens when a final payment clause requires the government to present a “final [payment] voucher” and “draft release of claims” form to the contractor—as opposed to the typical reverse scenario prescribed by FAR 52.232-5(h)—and the contractor fails to sign and return that voucher and release of claims form before the deadline stated therein?  According to the CBCA in Ahtna Envtl., Inc. v. Dept. of Transp., CBCA 5456 (December 22, 2016) (AEI), this type of self-effectuating deemed release will not bar a contractor’s claim when the government knew about the claim and considered it despite the alleged release.

Continue reading for a summary of the AEI decision and our key takeaways. Continue Reading

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