Generally, government agencies are given broad discretion to define their needs; however, last month, the United States Court of Federal Claims chose to curtail an agency’s authority to cancel and amend bid solicitations in Seventh Dimension, LLC v. U.S., No. 21-2275C (May 2022).
Continue Reading Broad Agency Discretion to Cancel Bid Solicitations Curtailed with Recent Court Decision – “The Tribe has Spoken”
And … They’re Off! Contractors Race to Comply Now that the COVID-19 Vaccination Deviations Have Arrived
Well, that was quick. In four memos dated September 30 and October 1, contractors learned the terms of the contract provisions implementing the COVID-19 vaccine and masking requirements mandated by President Biden’s Executive Order (EO) 14042, discussed here, and the implementing guidance issued by the Safer Federal Workforce Task Force (Task Force) on September 24. In the next 10 days we expect to see most other agencies issue deviation memos similar to the General Services Administration (GSA) and Department of Defense (DoD) memos discussed below.
As discussed in this post, while the contract provisions, along with updated guidance from the Task Force, answer some of the open questions, contractors are still in the unfortunate position of rushing to ensure they are compliant with these requirements when the contract provisions apply to them without knowing the answers to some fundamental questions. Despite these open questions, companies have little time, for example, to ensure that covered employees are vaccinated by the December 8, 2021 deadline. After that deadline, any contractor that becomes subject to these requirements will have to ensure that on new contracts or options/extensions that incorporate the new clause, covered employees are fully vaccinated by the first day of performance, which of course is impossible unless contractors enforce these vaccine mandates in advance. That said, the memos do seem to clarify that compliance with the Task Force guidance will not be required for prime contracts solely for the manufacturing of products.
The FAR Clause
On September 30, the Federal Acquisition Regulation (FAR) Council issued a memo providing agencies with “initial direction” requiring the implementation of the Task Force guidance. It includes FAR 52.223-99, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (OCT 2021) (Deviation), along with directions that agencies “expeditiously” issue class deviations to ensure that contracting officers can begin using the clause on or before October 15, 2021.
Federal Circuit Confirms DoD Contractor’s Expanded Restrictions on Non-Government Parties Rights in Data
Last month, the U.S. Court of Appeals for the Federal Circuit’s (Federal Circuit) opinion in The Boeing Co. v. Secretary of the Air Force shed additional light on the technical data rights of contractors under defense contracts. The decision hinges on the fact that technical data provided by a contractor to the government remains the property of the contractor. Additionally, contractors retain certain rights in connection with technical data even when the government has so-called “unlimited rights” to use it.
Case Background
In this case, Boeing held two contracts with the U.S. Air Force (USAF) for work on the F-15 Eagle Passive/Active Warning Survivability System. The contracts included the requirement for delivery of technical data to the USAF with Unlimited Rights and the DFARS 252.227-7013, non-commercial technical data rights clause (Subsection 7013). The parties did not dispute that Boeing retained ownership of technical data delivered to the USAF under the contracts, but Boeing contended that its legends on the technical data were intended to protect its rights as they pertained to third parties. Namely, putting third parties on notice of the proprietary nature of the data and directing that “Non-US Government Entities May Use and Disclose Only As Permitted In Writing By Boeing Or By The US Government.” The USAF rejected the data deliverables marked in this manner, finding them nonconforming and Boeing requested a final Contracting Officer’s decision on the matter.
The Contracting Officer’s final decision confirmed that the USAF was correct in rejecting the legends and directed Boeing to correct them. Boeing appealed the decision to the Armed Services Board of Contract Appeals (ASBCA) on the ground that Boeing’s legend was “not nonconforming” under Subsection 7013(f) since its legend did not address restrictions on government rights, only third-party rights. The ASBCA, ruling on the motion for summary judgment, disagreed, siding with the USAF’s position that only the legends listed in Subsection 7013(f) are authorized and Boeing’s legend was not one of those. Boeing appealed this decision to the Federal Circuit.
Administration Ready to Use DPA to Address COVID-19 Shortages
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.
Continue Reading Administration Ready to Use DPA to Address COVID-19 Shortages
COVID-19 and National Security: Federal Government Defines Essential Business
The U.S. government continues to take action in an effort to slow the spread of the COVID-19 virus. In so doing, the government has provided insight into those industries and operations deemed to be essential to U.S. national security. Lessons learned from these actions will almost certainly help inform U.S. policymakers and regulators when the current crisis has eased, particularly with respect to reviewing foreign investment in the United States. (Such investment, when it could implicate U.S. national security, is subject to review and approval by the Committee on Foreign Investment in the United States.)
DHS Outlines Essential Businesses for Quarantine Purposes
On March 19, the Department of Homeland Security (DHS) issued guidance to identify those industries and businesses considered to be “essential” for U.S. continued operational purposes. That Guidance on the Essential Critical Infrastructure Workforce was published by the Cybersecurity and Infrastructure Security Agency (CISA), which forms part of DHS. The guidance is available here.
Continue Reading COVID-19 and National Security: Federal Government Defines Essential Business
Increased Progress Payments: DoD Adjusts Procurement Rules to Increase Liquidity
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.
Continue Reading Increased Progress Payments: DoD Adjusts Procurement Rules to Increase Liquidity
DoD Implements Statutory Restrictions on LPTA Evaluations
As we noted in a blog post in December 2016, “LPTA Out, Fixed Price Contracts In,” the Department of Defense (DoD) has been moving to restrict the Lowest Price Technically Acceptable (LPTA) evaluation methodology, which requires award to the lowest-price offeror that meets the minimum requirements regardless of whether more expensive solutions are optimal. Further, in 2016 legislation went into effect requiring that limitations on the use of LPTA evaluations be codified in the Defense Federal Acquisition Regulation Supplement (DFARS).
New Restrictions on LPTA Evaluations
On September 26, 2019, DoD issued a final rule that amends the DFARS to implement that legislation. The new rule, which was mandated by Section 813 of the National Defense Authorization Act (NDAA) for 2017, as amended by section 822 of the NDAA for 2018, establishes that the LPTA evaluation methodology shall only be used when the following conditions are met:
Continue Reading DoD Implements Statutory Restrictions on LPTA Evaluations
DoD’s Recently Released Draft Framework Signals Significant Changes in Cybersecurity Requirements
A major shift in cybersecurity requirements for Department of Defense (DoD) contractors is about to come into effect—earlier this month the DoD released for public comment the long-anticipated Version 0.4 of the draft Cybersecurity Maturity Model Certification (CMMC). This new framework to safeguarding controlled unclassified information (CUI), which includes a certification requirement by a third-party auditor, presents both significant opportunities and challenges for DoD contractors.
In an overview briefing on the new model, DoD emphasized that the new framework will impose a unified cybersecurity standard for all DoD acquisitions and, in so doing, “reduce exfiltration of [CUI] from the Defense Industrial base.” To achieve this goal, the new model significantly bolsters the existing compliance regime around cybersecurity—which currently, for the most part, requires compliance with the security standards set forth in NIST SP 800-171 through DFARS 252.204-7012.
Vulnerable Systems: Contractor Protection of Controlled Unclassified Information at Risk
The Department of Defense (DoD) Inspector General recently issued a report summarizing the findings of an audit into the protection of Controlled Unclassified Information (CUI) on contractor networks. Based on an in-depth review into nine contractors, the audit uncovered some common practices that fall short of meeting the standards set forth in NIST SP 800-171, which contractors are obligated to follow under DFARS 252.204-7012.
Shortcomings Discovered in DoD Audit
These common lapses include the following, among others:
- Inconsistent tracking of cybersecurity threats
- Failure to consistently mitigate network vulnerabilities
- Uneven use of strong passwords
- Inconsistent use of multifactor identification
Protest Challenges for the Defense Department’s “JEDI” Cloud
I recently provided insight into delays to the procurement timeline in the Department of Defense’s (DoD) important $10 billion “JEDI” cloud procurement due to pending and potential protests.
In a recent court filing, DoD said it would not award the contract until at least July 19, but the resolution of Oracle’s pending suit, as well as other potential related actions, may push the award and implementation dates out past this summer.
Continue Reading Protest Challenges for the Defense Department’s “JEDI” Cloud