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On March 27, President Trump signed into law the $2 trillion coronavirus stimulus bill, named the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  The law, the most expensive single piece of legislation ever passed, includes hundreds of billions in funds to help businesses remain afloat.  To provide oversight into how these funds are used, the CARES Act establishes a Special Inspector General for Pandemic Recovery (SIGPR), along with two other oversight bodies.

This action is not without precedent, as Congress established a similar watchdog to oversee the stimulus funds disbursed in the wake of the 2008 financial crisis, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).  SIGTARP’s broad interpretation of its mandate, as well as its aggressive pursuit of fraud involving stimulus funds, are instructive to forecasting how SIGPR will fulfill its mission and to how recipients of CARES Act funds can protect themselves.

SIGPR Duties & Powers

The CARES Act tasks the SIGPR with monitoring fraud, waste and abuse involving the $500 billion of CARES Act funds allocated to the Treasury Secretary (Economic Stabilization Fund) to support businesses, states and municipalities impacted by the COVID-19 pandemic.

The SIGPR, who will be appointed by the president and requires Senate confirmation, will be empowered to “conduct, supervise, and coordinate audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments” relating to the Economic Stabilization Fund.

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Bass, Berry & Sims attorneys Richard Arnholt and Todd Overman will present a training webinar titled, “COVID-19 Update – What Every Government Contractor Needs To Know” for the Maryland Procurement Technical Assistance Center (Maryland PTAC). The interactive seminar will provide insight into the flurry of government contracting activity relating to the COVID-19 pandemic and government…

On March 18, President Trump issued an Executive Order invoking the Defense Production Act (DPA), a tool that may help the administration combat the COVID-19 pandemic. With companies like 3M, GE, and others voluntarily ramping production of medical supplies to accomplish the nation’s significant needs, the president is yet to unleash his recently invoked authority. Still, the Executive Order activates far-reaching executive powers to prioritize production of key medical supplies, including protective medical equipment and ventilators. With the apparatus needed to deploy the DPA now in place, government contractors should prepare themselves for what may come.

By way of background, Congress passed the DPA during the Korean War to ensure sufficient production of materials deemed critical to the nation’s defense. Echoing economic controls imposed in World War II, the DPA gives the executive branch extraordinary powers, including the authority to require manufacturers to produce and prioritize certain items; allocate raw materials and facilities for the production of these items; and, in certain circumstances, even set price and wage controls.

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Last night the Senate passed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act, (CARES Act), by a vote of 96 to 0.  This rescue package will now be considered by the House, which, according to the latest reports, will likely vote on the legislation this Friday.

The bill, which is 883 pages long, will provide immediate assistance to American workers and companies impacted by the COVID-19 pandemic.  For the 3.28 million Americans who filed initial unemployment claims last week, this is welcome, and much-needed legislative action that includes extended unemployment benefits, direct cash payments, small business loans, among other emergency assistance.

Like any complex legislation that is passed so quickly, it will take time to fully digest the implications of all of the provisions, many of which have not been debated or widely discussed.  Among them is a section that has received little notice to date that, if included in the bill when it is signed into law by the president, gives agencies the authority to provide relief to government contractors by authorizing them to pay contractors for paid leave, including sick leave, to maintain employees in a ready state during the shutdown.

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The federal government has taken and will continue to take a host of actions to deal with the COVID-19 crisis.  Our Government Contracts Practice Group at Bass, Berry & Sims is carefully monitoring these developments and will keep you updated through our blog and through our Firm’s COVID-19 Response website page.

While the health of our citizens is, as it must be, the primary focus of the response, Congress and the Executive Branch are scrambling to ensure that companies have sufficient liquidity to continue operations, and continue employing people, notwithstanding the global economic shutdown that could run for months.  Given that the federal procurement budget is in the hundreds of billions of dollars and government contracting involves hundreds of thousands of workers nationwide, our government procurement workers play an important role in facing this crisis.

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The Department of Veteran Affairs (VA) manages nine healthcare related ‘schedules,’ groups of umbrella contracts used to order medical supplies and services, under the Federal Supply Schedules (FSS) program. These schedules allow VA medical centers to more easily obtain goods and services to support veterans.

The VA requested the Government Accountability Office (GAO) to produce a report focusing on the following:

  • Program challenges.
  • The timeliness of contract awards.
  • The extent to which the schedules and the Medical Surgical Prime Vendor-Next Generation (MSPV-NG) program provide overlapping or duplicative offerings.

In addition to analyzing the requested issues, the report also contains a series of corrective recommendations to which the VA has largely agreed.

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By failing to object to solicitation terms before the close of bidding, a protester typically waives those objections in a post-award bid before the Court of Federal Claims (COFC). An exception exists, however, where a protester filed a timely pre-award agency-level protest challenging patent errors or ambiguities.

But, as powerfully illustrated by the COFC’s decision in Harmonia Holdings Group, LLC v. United States, this exception is limited. In that case, Harmonia, one of the offerors on the procurement, initially brought an agency-level protest to challenge the U.S. Customs and Border Protection’s (CBP) issuance of two amendments to the solicitation, arguing that the agency improperly denied offerors the opportunity to revise their proposals in response to these amendments. CBP denied the protest.

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A recent dispute between a government contractor and the Army in the Court of Federal Claims has raised the issue of whether procedures for validating restrictions on technical data apply to military contractors’ vendor lists. In Raytheon Co. v. United States, Raytheon had a contract with the Army to provide engineering support for the Patriot weapon system. The contract required Raytheon to supply the Army with vendor lists. The company, however, attached legends to those lists which purported to limit the Army’s ability to disclose the lists’ contents. The Army objected to these markings, and a contracting officer eventually ordered Raytheon to replace the offending legends with a standardized legend granting the Army “government purpose rights,” in their vendor lists.
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The Department of Defense (DoD) has now finalized its new cybersecurity standards, which we discussed last year.  The new cybersecurity standards, which are intended to protect controlled unclassified information, will be implemented by the Cyber Maturity Model Certification program (CMMC), which was finalized last week after multiple draft iterations.  CMMC Version 1.0 is available here.

CMMC Will Require Third-Party Certification of Cybersecurity Maturity Level

Among other changes from the prior cybersecurity compliance regime, this new approach will require that to be eligible for DoD awards, contractors must be certified by a third-party commercial certification organization to have achieved one of five cybersecurity maturity levels, with higher levels representing more advanced cybersecurity. Later this year, DoD solicitations will contain the applicable CMMC requirement, and contractors failing to meet this standard will be unable to bid. The requirements will apply to all parties within the supply chain (although subcontractors may not have to meet as high a CMMC standard as the prime contractor, depending on their scope of work).

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Please join the Bass, Berry & Sims Government Contracts & International Trade attorneys as they continue a series of complimentary briefings via webinar that will serve as an extension of our GovCon & Trade Blog and feature timely and practical guidance on key topics of interest.

The next GovCon & Trade briefing, hosted by Bass,…