On March 26, 2019, the Senate Armed Services’ Subcommittee on Cybersecurity held a hearing to receive testimony assessing how the Department of Defense’s (“DOD”) cybersecurity policies and regulations have affected the Defense Industrial Base (“DIB”).

To gain a better understanding of the DIB’s cybersecurity concerns, the Subcommittee invited William LaPlante, Senior Vice President and General

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.


Continue Reading Signs of Progress with the Limitations on Subcontracting, but Outstanding Questions Remain

Pursuant to Sections 817 and 881(b) of the FY 2017 National Defense Authorization Act (“NDAA”), the Department of Defense (“DoD”) recently issued a proposed rule to amend certain sourcing restrictions found in DFARS subpart 225.70 and related clauses.  Specifically the proposed rule would amend the DFARS to:

  • extend the Berry Amendment’s domestic sourcing restrictions to the acquisition of certain athletic footwear for members of the Armed Forces, when the procurement is valued at or below the simplified acquisition threshold [Section 817], and
  • recognize that Australia and the United Kingdom of Great Britain and Northern Ireland (the “UK”) are now members of the National Technology Industrial Base (“NTIB”), thereby permitting the United States to acquire certain items (that are subject to the sourcing restrictions in 10 U.S.C. 2534) if they are manufactured in the UK, Australia, Canada or the United States [Section 881(b)].

We provide our takeaways below.
Continue Reading Takeaways from DoD’s Proposed Changes to Certain Sourcing Restrictions

[Updated August 13, 2018]

If an agreement qualifies as a “subcontract” under a government contract, then it may be subject to certain flow-down, compliance, and reporting requirements.  These requirements are intended to protect the government’s interests, and have significant ramifications for contractors, e.g., increasing transaction costs, expanding potential areas of exposure.  These compliance obligations and risks can even deter some companies from performing under government contracts, especially those companies offering commercial items.

Currently, there is no uniform definition of “subcontract” in the applicable procurement regulations or in the procurement chapters under Titles 10 and 41 of the U.S. Code.  Indeed, there are more than twenty varying definitions of “subcontract” in the FAR and DFARS, with many clauses failing to specify which definition applies.  Now Congress is looking to address this lack of uniformity through the FY 2019 National Defense Authorization Act (NDAA).


Continue Reading Congress Aims to Redefine the “Subcontract”

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

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

Recently, the General Services Administration (“GSA”) issued a proposed rule to codify a class deviation regarding GSA’s approach to common Commercial Supplier Agreement (“CSA”) and End User License Agreement (“EULA”) terms.  We have previously addressed the class deviation here and in an article for the Coalition for Government Procurement available here.  While the Proposed Rule apparently is intended to assuage contractor concerns about the class deviation, it falls short of this goal, so contractors must remain vigilant if and when the Proposed Rule is finalized and GSA begins to attempt to implement it through contract modifications.  Comments on the Proposed Rule are due by August 1, 2016.

Continue Reading GSA Doubles Down on CSA/EULA Deviation

On Monday, April 18th, the Health Resources and Services Administration (“HRSA”) and the Department of Health and Human Services (“HHS”) reopened the comment period for their proposed rule “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation” (“Proposed Rule”).  Originally issued on June 17, 2015, the Proposed Rule sought to implement the civil monetary penalty (“CMP”) and ceiling price calculation provisions created by the 2010 amendment to Sec. 340B of the Public Health Service Act (“PHSA”) (for additional information on the Proposed Rule, please see our October 2015 webinar materials on the subject).  Comments were due August 17, 2015 and stakeholders vigorously commented on HRSA’s proposed penny policy for the ceiling price calculation, the lack of clarity regarding the new drug estimate calculation, and the liability standard for CMPs.

Continue Reading HRSA Seeks a Second Round of Comments on 340B Penny Pricing, New Drug Estimates, and Civil Monetary Penalties

As part of an ongoing Department of Defense (“DoD”) effort to increase its energy efficiency,  late last month the U.S. Army committed to develop its largest renewable energy project to date — a 65MW  wind and solar  project at Fort Hood.  This ambitious project will need to comply with the latest DoD rules regarding sourcing requirements for photovoltaic (“PV”) devices.  We previously analyzed the proposed rule issued by DoD in May 2015 that placed stricter sourcing requirements on PV devices.  Toward the end of last year, DoD issued a final rule implementing the requirements of the proposed rule with relatively minimal, but still notable, changes.  The solicitation for the Fort Hood project was amended to add the updated DFARS clause implementing this final rule.  The final rule tightens the sourcing restrictions for PV devices and may raise some compliance challenges for contractors.
Continue Reading Strict DoD Sourcing Requirements for PV Devices

Over the past decade, Congress has focused on eliminating excessive “pass-through” charges—charges defined as overhead costs or profits passed to the Government by contractors adding negligible value over work done by lower-tier contractors.  The efforts began with the Post-Katrina Emergency Management Reform Act of 2006, which introduced limitations on tiered subcontracts after allegations that the Government grossly overpaid for goods and services provided largely by lower-tier subcontractors in the reconstruction following Hurricane Katrina.  However, until the passage of the instant rule to be implemented in FAR 15.404-1(h) effective June 8, 2015, such efforts have had little impact on agencies’ procurement processes.  This latest rule has the potential to significantly reduce the appetite for such contracts, and impact proposal and bid protest strategies.
Continue Reading Contracting Officers Must Soon Separately Justify Awards to Offerors Proposing High-Percentage or “Pass-Through” Subcontracting