Last year, we wrote about a trial court’s decision to dismiss a False Claims Act (“FCA”) complaint regarding alleged Trade Agreements Act (“TAA”) non-compliances because the relator failed to plead fraud with “particularity” under Rule 9(b).  That decision offered a sweeping rebuke of speculative FCA claims, and emphasized why it can be difficult to present a valid FCA claim based on a potential violation of a complex regulatory scheme like the TAA.

Last month, the United States Court of Appeals for the Seventh Circuit unanimously affirmed that decision in United States ex rel. Berkowitz v. Automation Aids, Inc., — F.3d — , 2018 WL 3567836 (7th Cir. July 25, 2018).  In doing so, the Seventh Circuit provided additional guidance about various topics, including the Rule 9(b) standard for implied certifications and the power of the materiality defense.  Our takeaways are below.
Continue Reading Alleged Sales of Non-TAA-Compliant Products Under GSA Schedule Contracts Are Not False Claims, 7th Circuit Holds

On July 25, the GSA’s Office of Inspector General (“OIG”) published a report summarizing its audit of the GSA Transactional Data Reporting (“TDR”) pilot program.  That ongoing pilot program, which we have covered previously and have been tracking since the beginning, allows participating Federal Supply Schedule (“FSS”) contract-holders to report government-sales data each month, in exchange for relief from regulations that would require them to disclose their commercial sales practices.  According to the OIG report, however, GSA cannot objectively measure whether the TDR program is working as intended, because the pilot lacks specific objectives and performance targets.  Moreover, the data that GSA has collected from TDR participants is “not available for . . .  evaluation of the pilot.”  Although the Federal Acquisition Service (“FAS”) disagreed with some of the report’s findings, the report suggests that the TDR program remains a work-in-progress.
Continue Reading OIG Report Criticizes GSA’s TDR Pilot Program

The National Institute of Standards and Technology (NIST), in coordination with the Department of Defense (DoD) and the National Archives and Records Administration (NARA), will host a Workshop providing an overview of Controlled Unclassified Information (CUI) on October 18, 2018. The agenda for the Workshop shows a full day of panels, including those addressing DoD’s “Safeguarding Covered Defense Information and Cyber Incident Reporting” Clause (DFARS Cyber Rule), overviews of NIST Special Publications (SPs) 800-171 and 800-171A, and Government expectations when evaluating contractor implementation of the 800-171 security controls.
Continue Reading NIST to Host CUI Information Security Workshop

In a memorandum issued June 27, 2018, Deputy Secretary of Defense Patrick Shanahan ordered the establishment of the Joint Artificial Intelligence Center (“JAIC”) within DoD.  The JAIC will report to DoD Chief Information Officer (“CIO”) Dana Deasey and has the “overarching goal of accelerating the delivery of AI-enabled capabilities, scaling the Department-wide impact of AI, and synchronizing DoD AI activities to expand Joint Force advantages.”  With the creation of the JAIC, the DoD has acknowledged that the AI “effort is a Department priority,” and one to which government contractors should pay attention.

The JAIC will be the primary organizational component responsible for coordinating and executing DoD’s 2018 Artificial Intelligence Strategy, which was delivered to Congress in June. Although an unclassified version of the report is not out yet, the memorandum elaborates upon what is in the report by stating that “A new approach is required to increase the speed and agility with which we deliver AI-enabled capabilities and adapt our way of fighting.”Continue Reading Covington Artificial Intelligence Update: Department of Defense Establishes Joint Artificial Intelligence Center

A recent Virginia Supreme Court case underscores the hurdles government subcontractors may face when they seek to enforce common teaming agreement terms. CGI Fed’l Inc. v. FCi Federal, Inc., No. 170617 (Va. June 7, 2018). This case of the “disappearing workshare” also illustrates that strategic choices made during teaming agreement negotiations and in litigation may dictate whether the subcontractor has any recourse against the prime contractor.
Continue Reading Teaming Agreement Challenges for Subcontractors

For the first time in several years, the version of the FY 2019 National Defense Authorization Act (NDAA) that just passed the Senate does not contain any major reforms to limit bid protests.  But the bill the Senate sent to the conference committee process does contain two provisions aimed at bid protests.  Although they are minor, they portend and may lay the groundwork for future attempts to change the protest process.  Both provisions call for further study of issues addressed in the RAND Corporation’s January 2018 bid protest report.
Continue Reading Senate Largely Leaves Bid Protests Alone in Passed Version of FY 2019 NDAA After Threatening Major Revisions

Timothy M. Persons, GAO Chief Scientist Applied Research and Methods, recently provided testimony on artificial intelligence (“AI”) before the House of Representatives’ Subcommittees on Research and Technology and Energy, Committee on Science, Space, and Technology.  Specifically, his testimony summarized a prior GAO technological assessment on AI from March 2018.  Persons’ statement addressed three areas:  (1) AI has evolved over time; (2) the opportunities and future promise of AI, as well as its principal challenges and risks; and (3) the policy implications and research priorities resulting from advances in AI.  This statement by a GAO official is instructive for how the government is thinking about the future of AI, and how government contractors can, too.

The Evolution and Characteristics of AI

Persons stated that AI can be defined as either “narrow,” meaning “applications that provide domain-specific expertise or task completion,” or “general,” meaning an “application that exhibits intelligence comparable to a human, or beyond.”  Although AI has evolved since the 1950s, Persons cited today’s “increased data availability, storage, and processing power” as explanations for why AI occupies such a central role in today’s discourse.  And while we see many instances of narrow AI, general AI is still in its formative stages.Continue Reading Covington Artificial Intelligence Update: GAO Testimony Before Congress Regarding Emerging Opportunities, Challenges, and Implications for Policy and Research with Artificial Intelligence

In a case of first impression, a Court of Appeals has held that a government subcontractor’s claim for reimbursement of its actual indirect costs was time-barred. Fluor Fed’l Solns. LLC v. PAE Applied Techs, LLC, No. 17-1468, 2018 WL 1768233 (4th Cir. Apr. 12, 2018) (per curiam) (unpublished). It is the first case to directly address the interplay between the Allowable Cost and Payment Clause of the Federal Acquisition Regulation (“FAR”), 48 C.F.R. § 52.216-7, and a statute of limitations. It highlights the risks government subcontractors face when they choose to wait for a Government audit rather than litigate promptly after a payment dispute arises.
Continue Reading Waiting For the Final Government Audit May Be Too Late

The Department of Defense (DoD) has once again emphasized its willingness to engage with commercial companies and other non-traditional contractors to try to expedite and simplify its procurement of innovative technologies. In particular, the Defense Information Systems Agency (DISA) indicated that it plans to enter directly into Other Transaction Authority (OTA) agreements, and DoD issued a class deviation for a commercial solutions opening (CSO) pilot program.

These developments, in connection with the continued promotion of OTA agreements by DoD’s Defense Innovation Unit Experimental organization (DIUx), provide commercial companies with additional incentives to enter into creative collaborations with the U.S. Government.Continue Reading DoD Seeks Streamlined Procurements of Innovative Technologies – Other Transaction Agreements and the Commercial Solutions Opening Pilot Program

Due to the government’s increased focus on domestic preference requirements – for example, through President Trump’s formal policy and action plan for agencies to “scrupulously monitor, enforce, and comply” with the so-called “Buy American Laws,” and Congress’s proposed legislation to make certain Buy American requirements more robust – contractors should…
Continue Reading Takeaways From Recent FCA Decisions On Buy American Act and Trade Agreements Act Compliance