This is a continuation of our series addressing ways companies can protect themselves during government enforcement actions related to COVID-19. For more information, see our previous articles focused on general corporate best practicesthe health care industry and public companies.

The economic disruptions wrought by the COVID-19 pandemic have been particularly acute for government contractors. State quarantine measures and the closure of both contractor and government worksites meant many contractors were unable to perform ongoing contracts, thus risking a lapse in payment and the need to lay off or furlough workers. To mitigate this risk, Congress passed §3610 as part of the March 27, 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act). That brief provision gives federal agencies authority to reimburse contractors for paid leave to employees who are unable to work due to the pandemic. The Department of Defense (DoD)—which obligated by far the most funds pursuant to §3610—has issued guidance, instructions, and regulations clarifying eligibility for relief and the procedures contractors must follow in order to be reimbursed. Eligible contractors should be mindful of this guidance, summarized below, and carefully monitor ongoing developments.

Section 3610: the Legislative Language

Section 3610 of the CARES Act gives agencies discretion (which they are not required to exercise) to “reimburse, at the minimum applicable contract rates (not to exceed an average of 40 hours per week) any paid leave, including sick leave, a contractor provides to keep its employees or contractors in a ready state” between January 31, 2020 through Sept. 30, 2020—which Congress recently extended to Dec. 11, 2020. Importantly, the maximum reimbursement authorized under §3610 must be reduced by the amount of credit a contractor is allowed under the Family and Medical Leave Act or any applicable credits a contractor already receives under the CARES Act. Beyond these general principles, the legislative language leaves much of the detail to be worked out by individual agencies. For example, the legislation authorizes agencies to reimburse at the “minimum applicable contract billing rates,” a term that is not defined, but only if the employees cannot perform work at a site that has been “approved by the Federal Government” without guidance on what such approval entails.

Continue Reading Important Considerations for DoD Contractors Seeking Relief Under §3610 of the CARES Act

Two recent enforcement actions taken by the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) serve as a reminder of the long-arm and broad scope of U.S. economic sanctions jurisdiction.  (Separately, perhaps nothing illustrates the breadth of OFAC’s purview as well as the agency’s recent Advisory on Potential Sanctions Risks Arising from Dealings in High-Value Artwork.)  OFAC is the main U.S. government agency that administers U.S. sanctions.

Berkshire Hathaway Agrees to Settlement for Violations of U.S. Sanctions on Iran

On October 20, 2020, OFAC announced a settlement with Berkshire Hathaway related to alleged violations of U.S. sanctions on Iran committed by Berkshire’s Turkish subsidiary.  Berkshire is the multinational holding company headed by billionaire Warren Buffett.

According to OFAC, Berkshire’s Turkish subsidiary made 144 shipments of cutting tools and related products to Turkish distributors with knowledge that the goods would be shipped on to Iran.  The products were valued at approximately $383,000.

Continue Reading OFAC Enforcement Update: November 2020

For over a year, we have been discussing the Department of Defense’s (DoD) eventual implementation of a Cybersecurity Maturity Model Certification (CMMC) program for Defense contractors, most recently during a webinar in September 2020 entitled CMMC is (Almost) Here! Latest Developments and Best Practices for Government Contractors.

The CMMC framework is part of DoD’s efforts to enhance the protection of controlled unclassified information (CUI) within the federal supply chain. On September 29, the Pentagon released an interim rule under the Defense Federal Acquisition Regulation Supplement (DFARS) providing details on the implementation timeline of CMMC and the requirements defense contractors will have to adhere to starting November 30, 2020.

CMMC Five-Year Rollout

The interim rule specifies that the CMMC program will be introduced in a five-year phased rollout that will be complete by September 30, 2025. After that date, all defense contractors will be required to reach some level of CMMC certification if they are to receive future DoD contracts and subcontracts, except for DoD acquisitions solely for commercially available off-the-shelf (COTS) items. During the rollout, the Under Secretary of Defense for Acquisition and Sustainment (USD (A&S)) will determine and communicate to Contracting Officers which contracts will require contractors to undergo a full third-party CMMC assessment.

Continue Reading It’s Here! DoD Issues Interim Rule Launching Two Cyber Assessment Programs

We will present a training webinar titled, “GSA Schedules – Status of Modernization & Simplification Efforts” for the Maryland Procurement Technical Assistance Center (Maryland PTAC). The interactive seminar will provide insight into GSA Schedule contracts. Through GSA Schedule contracts, also known as Federal Supply Schedules, the GSA makes available to federal, state, and local government customers more than 11 million commercial supplies and services. Once a GSA Schedule contract is in place, the ease with which an order can be placed has made Schedule contracts a favored vehicle of both government customers and contractors.

In the past few years GSA has been working to modernize and simplify the Schedule program, consolidating the 24 different contracts into a single Schedule for products, services, and products, as well as implementing a pilot Transactional Data Reporting program, among other changes. While some of these changes have been welcomed by the contracting community, significant compliance challenges remain.

Among other topics, the webinar will cover:

  • Schedule Consolidation – what is the status? Does the price reduction clause still apply?
  • Transactional Data Reporting – is the pilot program still in place? Will it impact Schedule obligations going forward?
  • Domestic source restrictions under Schedule contracts – what country’s products are restricted? How has the Trump Administration’s focus on domestic production impacted the GSA Schedule program?

This webinar will be held on Wednesday, October 7, 2020 from 10:00 a.m. to 11:00 a.m. EDT. For more information and registration, please visit the Maryland PTAC website.

As states and cities begin to ease COVID-19 restrictions and organizations return their employees to the workplace, employers are forced to navigate an unprecedented and fluid landscape of post-pandemic compliance issues.

This virtual seminar will address the difficult issues facing employers as they return their employees to the workplace and provide practical guidance for understanding the associated legal challenges.

Bass, Berry & Sims labor & employment attorneys will present tools for developing and implementing a strategic plan that mitigates employer risk and liability.

This complementary webinar will cover:

  • Safety measure enforcement.
  • Employer’s obligations under OSHA.
  • Latest CDC guidance for employers.
  • Issues arising under the ADA and FMLA.
  • Responding to COVID-19 cases in the workplace and an employer’s liability.
  • Work from home issues under the FLSA.

WEBINAR DETAILS

Title: Employer Obligations for Returning to the Workplace Amid COVID-19

Date: Wednesday, September 30, 2020 Time: 10:00 a.m. – 11:00 a.m. EDT

Who Should Attend

  • In-house legal counsel.
  • Human resources professionals.
  • C-level executives, consultants and principals in companies that are working to bring employees back to the workplace.

This program is pending approval for HRCI and Tennessee CLE credit (1 hour)

On January 30, the Department of Defense (DoD) released the Cybersecurity Maturity Model Certification (CMMC) outlining cybersecurity requirements that DoD contractors and subcontractors must meet to certify they adequately satisfy the DoD standards. These new requirements may go into effect for certain procurements as soon as the end of September 2020.

In this 60-minute webinar, Bass, Berry & Sims’ Government Contracts attorneys Richard Arnholt and Todd Overman will be joined by Tim Trickett, Chief Technology Officer (Public Sector) at BDO to discuss these timely developments and offer practical guidance on key topics of interest, including:

  • What is the purpose behind implementing the CMMC?
  • How are the new standards defined?
  • Who is directly impacted by the new standards?
  • What is required to attain certification?
  • How can contractors effectively manage risk throughout the certification process?

Who Should Attend?

  • DoD contractors and subcontractors.
  • Private equity professionals.
  • Management professionals.
  • General counsel.
  • Technology officers.
  • Other in-house legal and compliance personnel of government contractors, financial institutions, aerospace firms, and manufacturers.

Details
Wednesday, September 23, 2020 at 1:00 – 2:00 p.m. EDT
Register Here

CLE Credit
This program is pending approval for one hour General Tennessee CLE credit. Certificate of completion and other necessary application forms provided for use in other jurisdictions.

Questions?
Please contact Claire Krummenacher.

Information technology (IT) and consulting businesses have continued to attract private equity attention and dollars.  For IT businesses contracting with the federal government, there are additional attractions for private equity investors.

Benefits of Federal Businesses

For starters, federal government business is not as exposed to the vagaries of the U.S. consumer economy as pure B2B or B2C businesses. It is true that the federal sales cycles can be much longer than in the commercial sector.  However, this cuts both ways as once a contract is awarded, it tends to be relatively long-term (up to five years in most cases) and the Federal Acquisition Regulations (FAR) procurement requirements disincentivize the government from terminating a contract for convenience, thus protecting the business from cost-undercutting, at least until a re-compete.

There are also high barriers to entry into the federal marketplace, including regulatory compliance programs and requirements to demonstrate experience. Finally, the size and creditworthiness of the customer, coupled with the relative “stickiness” of contracts awarded, make these investments financeable by lenders knowledgeable about the sector.  Given these attributes, it is little wonder that more and more private equity sponsors are expanding into the federal market space.

Continue Reading Revisiting Private Equity Investment in Federal IT Contractors

Since August 13, 2019, the government has been prohibited from procuring equipment or services using “covered telecommunications equipment or services” as a substantial or essential component of any system according to the implementation of Section 889(a)(1)(A) of the National Defense Authorization Act for Fiscal Year 2019 (FY19 NDAA).

Beginning on August 13, 2020, according to the implementation of Section 889(a)(1)(B), the government is prohibited from contracting with an entity that uses any equipment or services using “covered telecommunications equipment or services” as a substantial or essential component of any system or as critical technology as part of any system. This applies regardless of whether the use of the prohibited equipment or services is in the performance of work under a government contract.

Continue Reading Section 889 Prohibitions Expanded from Procurement to “Use”

We recently wrote about the impacts of mergers and acquisitions (M&A) on pending bids in Bloomberg Law and our GovCon & Trade Blog. A key point discussed in both articles is that a bidding company’s buyer may not have standing to protest if the buyer is not the complete successor-in-interest to the bidding company. The U.S. Court of Federal Claims recently affirmed this principle in a decision it handed down in the case of Centerline Logistics Corp. v. United States issued in May 2020.

The case involved Centerline’s protest of the U.S. Shipping Command’s determination that Centerline’s proposal to transport bulk fuel was “unacceptable.” Prior to the determination, the agency inquired as to whether Centerline was the complete successor-in-interest to Harley Marine Services (Harley Marine), the company that originally submitted the proposal to the agency, to which Centerline chose not to respond. Despite Centerline’s assertion to the court that it was the same legal entity as Harley Marine, the court found that Centerline was incorporated in Delaware, while Harley Marine was incorporated in Washington state, and that Mr. Harley, Harley Marine’s namesake, did not have an equity stake in Centerline. Further, the court could not ascertain whether Harley Marine retained some of its assets or if Centerline had sufficient assets to perform the contract. For these reasons, the court held that Centerline was not the complete successor-in-interest to Harley Marine and, thus, lacked standing to protest the agency’s determination.

Continue Reading Recent Decision Impacts Complete Successor-In-Interest Claims

On Wednesday, June 24, Bass, Berry & Sims continued its COVID-19 M&A Environment: Dealmaker Perspectives Webinar series with leading professionals in the government contracts services industry. The panelists included Bass, Berry & Sims members Jason Northcutt and Todd Overman, who were joined by Craig Reed, Chief Growth Officer and Senior Vice President at Serco; Kate Troendle, Director at KippsDeSanto & Company; and Eric Wolking, Operating Partner at Bluestone Investment Partners. A recording of the webinar can be found here.

The panelists’ discussion focused on market considerations for deal professionals in the new and evolving era of COVID-19. Some of the key takeaways from this installment are listed below.

  • Market Improvement Observations. As with other sectors, the government contracts services industry experienced a slowdown in deal flow as participants assessed the uncertainty surrounding the pandemic and endured the chilling effects of the implementation of quarantine procedures. However, the government contracts services industry was impacted less severely than other industries as smaller, quality transactions continued to close over the past few months. Notably, the indexed share price performance for government services continued to trade above the S&P 500 and recently rebounded to near-record highs achieved in February. Continue Reading Key Takeaways from the COVID-19 M&A Environment: Government Contracts Dealmaker Perspectives Webinar