I commented on an article published in RealClearDefense, on the impact of the April executive order highlighting the Trump administration’s intention to renew the focus on sourcing domestic resources and employees for government contracts. The order requires increased enforcement of current “Buy American” laws, which date back to the Depression-era statutes Congress passed in 1933. The Office of Management and Budget (OMB) and the Commerce Department released follow-up guidance in late June requiring all federal agencies to prepare a compliance plan by September 15, 2017.
A recent report from the Department of Defense (DoD) Inspector General (IG) identified a number of significant flaws regarding the Defense Logistics Agency’s (DLA) compliance with the Buy American Act (BAA) and the Berry Amendment. The IG’s findings will likely result in a renewed focus on both BAA and Berry Amendment compliance. As a result, contractors are likely to experience increased frustration as they seek to remain aligned with DLA policies. The IG’s report also draws further attention to the previously discussed government-wide effort by President Trump to both enhance compliance with the BAA as presently drafted and potentially strengthen the BAA through legislative action in the future.
The GAO recently denied Leidos Innovations Corporation’s protest of a determination that Leidos was ineligible to receive a $272 million award by the U.S. Army despite Leidos having both the highest-rated technical proposal and the lowest evaluated cost. The GAO decision, which affirmed the agency’s determination that Leidos was non-responsible because one of Leidos’ subcontractors did not have the necessary base access, is an important reminder that prime contractors should thoroughly vet their subcontractors to ensure, to the extent possible, all necessary qualifications are satisfied for the associated contract.
- Proposed legislation would extend sanctions on Russia and Iran
- New restrictions aimed at Russian energy sector and cybercriminals
- Legislation may pit Senate against House and the president
On June 19, 2017, the U.S. Senate overwhelmingly passed a bill mandating sanctions against Russia and Iran and a 30-day congressional review period should the president attempt to reduce those sanctions.
The bill remains in the House after congressional leaders challenged the fact that the revenue-raising bill did not originate in the House. The White House nonetheless is in the unenviable position of having to defend (or oppose) the implementation of sanctions against both Iran and Russia while attempting to conduct diplomacy with the Kremlin. With a veto-proof majority in at least one chamber, the president’s options appear limited.
On April 18, 2017, Donald Trump signed a Presidential Executive Order on Buy American and Hire American (EO). As we reported at the time, Section 3 of the EO directed the heads of all federal agencies to, among other things: (1) assess the monitoring of, enforcement of, implementation of, and compliance with Buy American laws within their agencies; (2) assess the use of BAA waivers within their agencies; and (3) develop and propose policies to ensure federal funds maximize the use of materials produced in the United States. It also ordered the Department of Commerce (DOC) and the Office of Management and Budget (OMB) to issues guidance to agencies about how to comply with their obligations.
I provided insights for an article in Compliance Reporter discussing the Combating Money Laundering, Terrorist Financing and Counterfeiting Act of 2017 and the heightened compliance measures financial institutions may face if the bill is passed in the Senate. The bill would put forth an increased ability for regulators to crack down on questionable activity occurring beyond U.S. borders by reviewing records of coordinating institutions stateside.
- California company accused of sanctions violations challenges U.S. Treasury Department
- Appeals court generally sides with government but remands because of arbitrary and capricious decision related to five alleged violations
- Traditional interpretation of “inventory exception” is considered by Court
It is rare for companies to go to court to fight penalties imposed by the Office of Foreign Assets Control (OFAC) for violations of U.S. sanctions. It is even more rare for a court to make any sort of finding against the agency. Yet that is exactly what happened when the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) recently considered OFAC’s imposition of penalties against Epsilon Electronics (Epsilon) for alleged violations of U.S. sanctions against Iran.
- American Honda Finance Corporation pays for alleged violations of U.S. sanctions on Cuba
- Violation committed by American Honda’s subsidiary in Canada
- Penalty underscores breadth of U.S. jurisdiction, importance of compliance reviews
On June 8, the Office of Foreign Assets Control (OFAC) announced a monetary penalty against American Honda Finance Corporation (American Honda) for alleged violations of the Cuban Assets Control Regulations (CACR), the primary regulations by which the United States imposes economic sanctions on Cuba. A copy of the OFAC press release announcing the penalty is available here.
- Proposed legislation targets current gaps in U.S. financial crime law and enforcement
- Bi-partisan Senate legislation would likely expand compliance obligations for banks and others in financial services industry
- Proposed legislation is in line with U.S. and international efforts to fight terrorism and trafficking through economic sanctions and anti-money laundering (AML) rules
On May 25, 2017, Sen. Chuck Grassley (R-IA) introduced the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017” (the “Act”). The full text of the bill is available here.
I commented on an article published by PaymentsCompliance, a global leader in supporting the payments industry, on new legislation proposed in the U.S. Senate to target terrorism financing and money laundering. In the article, I point out that the proposed bill could create a greater compliance burden for banks and other financial entities and service providers. I also note that it is “nice to see a bipartisan effort to come up with something which most people would agree is a good measure.”