Just a few days into Donald Trump’s presidency, he has already taken actions that raise potential challenges and opportunities for federal contractors. In his Memorandum of January 23, 2017, Trump imposed a hiring freeze on civilian employees. The order also states that “[c]ontracting outside the Government to circumvent the intent of this memorandum shall not be permitted.” The order requires the director of the Office of Management and Budget (OMB) to “recommend a long-term plan to reduce the size of the Federal Government’s workforce through attrition” within 90 days (i.e., late April of this year). The order will expire upon implementation of the OMB plan. In the short-term, this creates obvious challenges for agencies and their contractors seeking new employees to perform government services.
On February 2 the House of Representatives passed House Joint Resolution 37, which would nullify the Fair Pay & Safe Workplaces rule issued on August 25, 2016. If the identical pending joint resolution is passed by the Senate, S. J. Res. 12, and signed by the President, the entire rule will have no force and effect and no similar regulation could be issued in the future without express Congressional authorization. The legislation did not reverse the accompanying Department of Labor guidance or the underlying Obama Executive Order, but both would also be effectively nullified by voiding the regulation.
In an article published by Law360, I provided insight examining the Government Accountability Office’s (GAO) rejection of bid protests questioning an unusual contracting model based on point-scoring that emphasized technical factors over cost. In this case, the General Services Administration (GSA) awarded a $65 billion IDIQ contract for IT services, Alliant II, to 60 of the highest rated offerors by first ranking offerors technically and then determining if the top 60 offerors’ prices were fair and reasonable. As I point out in the article, “[y]ou want companies that are on the cutting edge of IT services … you want the guys that really know their stuff. If you think about the fact that these providers on Alliant II are likely going to be called into agencies to help them deal with cybersecurity issues that go far beyond IT, into national security, we want the best IT service providers in the country to be on this contract.”
The full article, “GAO Opens Door For More Point-Scored Contracts,” was published by Law360 on January 30, 2017, and is available online (subscription required).
I will be speaking at the National Contract Management Association (NCMA) East Tennessee Chapter February General Membership meeting on the topic of, “SBA’s New Mentor Protégé Program and How it Can Help You Win New Federal Contracts.” The NCMA meeting will be held on Wednesday, February 1, 2017 and will be held at the DoubleTree by Hilton Hotel in Oak Ridge, Tennessee. For more information and registration, click here.
- Canadian bank pays penalties for U.S. dollar transactions involving Cuba and Iran
- Bank receives Finding of Violation – but no penalty – for violations by European subsidiaries
- Disclosure and cooperation with OFAC mitigated penalties
Earlier this month, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $516,000 settlement with a large Canadian bank for allegedly violating U.S. sanctions against Iran and Cuba 167 times. OFAC also issued a separate finding of 3,491 additional violations by two of the bank’s European subsidiaries – an investment services company and another small bank. Yet OFAC imposed no penalty for the subsidiaries’ alleged violations.
In an article published by BNA’s Federal Contracts Report, I discussed three of the most costly of President Obama’s 2016 Executive Orders impacting government contractors, orders that are likely to be overturned by President-elect Trump. In the article, I argue that, while the Executive Orders – Fair Pay and Safe Workplaces, Minimum Wage, and Sick Leave – may have been intended to improve the federal acquisition process, they place expensive and burdensome compliance obligations on contractors, particularly those providing commercial goods and services, and may therefore be amended or overturned. In total, the Obama Administration estimated the regulations implementing just these three Executive Orders would cost $12 billion over the next decade, costs that will ultimately be borne by taxpayers, and there is reason to believe that estimate is low.
The full article, “The (Hopefully) Short, Costly Life of President Obama’s Executive Orders,” was published by BNA’s Federal Contracts Report on January 19, 2017, and is available online (subscription required) or in the PDF below.
I also provided comments on this topic for a February article in BNA’s Federal Contracts Report, “Executive Orders: Contractors in Regulatory Limbo Under Trump, Lawyers Say.” That article was published February 2, 2017 and is available online.
- Virtually all U.S. sanctions on Sudan lifted effective January 17, 2017
- Sanctions could be permanently lifted in six months
- There continue to be practical challenges to doing business in Sudan
In an unexpected development, on Friday, January 13, 2017, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced changes to lift U.S. sanctions on Sudan and thereby pave the way for trade with the North African country. The U.S. government is authorizing virtually “all prohibited transactions [involving Sudan], including transactions involving property in which the Government of Sudan has an interest.” Moreover, the United States is dangling the possibility that sanctions could be permanently lifted after six months. The amendments, announced by Executive Order, became effective on Tuesday, January 17.
As previously reported, on July 22, 2016, the Small Business Administration (SBA) issued a final rule establishing a government-wide mentor-protégé program encompassing all small business concerns. Though effective as of August 24th, the SBA didn’t fully transition into the new system until November 2016. And as with any new program, in an effort to eliminate confusion and provide clarity for the program’s participants, the SBA has issued corrections to the rule.
- New sanctions prohibit U.S. business with designated cyber attackers
- Russia opts not to retaliate for now
- Congressional briefings, and Republican senators, may force Trump’s hand
For those of us who live and breathe U.S. economic sanctions, we are used to most people largely ignoring what goes on in our world.
The United States’ recent imposition of new sanctions against Russia, however, was not one of those times.
The FAR Council issued a final rule on December 20, 2016, amending the Federal Acquisition Regulation (FAR) to add FAR Subpart 24.3, requiring privacy training for all contractor employees who (1) access a system of records; (2) handle personally identifiable information (PII); or (3) design, develop, maintain, or operate a system of records. A “system of records” is a “group of any records under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual.” 5 U.S.C. § 552a(a)(5); FAR 24.101.