Join us next week as we present on the topic of “Complying with ITAR Requirements Amid Increased Enforcement” in a webinar hosted by Clear Law Institute. We will be speaking with Dave Hardin, Senior Counsel at Raytheon, as we cover how to comply with current U.S. export control requirements under the U.S. International Traffic in Arms Regulations. Participants will learn about:

  • Manufacturer and exporter registration requirements
  • Classification of defense articles and technical data
  • Licensing requirements and available exceptions
  • Preparation of license applications
  • Recent enforcement actions
  • Future developments and issues

The webinar was held on April 5, 2016 from 1:00 pm to 2:15 pm ET.

We recently authored an article discussing recent updates in U.S. sanctions and their effect on companies engaged in international business, including cyber-related sanctions and enforcement.

As stated in the article, “…through enforcement actions against both large and small companies, the government continues to underscore that any company conducting business internationally – whether directly or through manufacturing and exporting to non-U.S. customers – must proceed with caution.”

The full article, “International Business and Sanctions: Proceed with Caution,” was published March 18th  and is available on the Industry Week website.

Bass, Berry & Sims PLC announces the launch of its new blog, Inside the FCA, which will provide ongoing updates related to the False Claims Act (FCA), including insight on the latest legal decisions, regulatory developments and FCA settlements affecting federal programs and government contractors. Inside the FCA focuses on providing timely updates for corporate boards, directors, compliance managers, general counsel and other parties interested in the organizational impact and legal developments stemming from issues potentially giving rise to FCA liability. Bass, Berry & Sims’ experienced team of attorneys work to provide an up-to-date understanding of compliance strategies, practical tips in handling internal and government investigations, coverage of the latest legal strategies and an analysis of defenses to FCA claims.

FCA-highlightThe blog’s cross-disciplinary roster of authors includes attorneys from the firm’s Compliance & Government Investigations and Government Contracts Practice Groups, as well as the firm’s Healthcare Fraud and Government Procurement Fraud Task Forces. Many of those attorneys have worked with various government enforcement agencies including the Criminal Fraud Section of the U.S. Department of Justice, various U.S. Attorneys’ Offices throughout the United States and the Tennessee Attorney General’s Office.

According to American Express OPEN, “For the first time in history, the U.S. government has awarded 5 percent of federal government contracting dollars to women-owned small businesses—a big achievement for both the government and the approximately 9.4 million women-owned small businesses across the country.” On Thursday, March 17, I have the honor of presenting “The Impact of New Contracting Rules for WOSBs” at the 5th Annual Small Business Forum in Nashville, Tennessee. The session will address the unique issues related to WOSB size and status protests, as well as how to defend (or challenge) an award at the GAO.

On February 19, 2016, the UK Serious Fraud Office (SFO) convicted Sweett Group plc (Sweett), a London-based construction and professional services company, under Section 7 of the UK Bribery Act. This is the first conviction under Section 7, which requires companies to prevent bribery in the course of business, and the penalty imposed against Sweett – the company had to pay a total of GBP 2.25 million – was minimal in the context of penalties paid under the U.S. Foreign Corrupt Practices Act (FCPA). Yet this action provides further evidence that the SFO may really be able to meaningfully enforce the Bribery Act.

Under Section 7 of the Bribery Act, a company can be found liable if it – or any associated person, subsidiary or entity, anywhere in the world – engages in bribery with the intention of obtaining or retaining business or some sort of commercial advantage. Liability can be established even if company management does not authorize or encourage, and is not even aware of, the illicit conduct. (While a company will have a full defense if it can show that it maintained adequate procedures to prevent bribery, as appears evident from the resolution in this matter, Sweett was unable to present such a defense.)

According to news reports, the SFO began investigating Sweett, which is listed on the Alternative Investment Market (or AIM) in London, in July 2014. Through its investigation, the SFO found that a Sweett subsidiary in the United Arab Emirates (UAE), Cyril Sweett International Limited (Cyril), had made corrupt payments to the Vice Chairman of Al Ain Ahlia Insurance Company (AAAI) to help secure a contract to build a hotel in Abu Dhabi. After pleading guilty in December 2015, Sweett was ordered to pay a GBP 1.4 million fine, a GBP 851,152 confiscation amount and GBP 95,000 in SFO prosecution costs.

The SFO reportedly is continuing its investigation of individuals involved in the scheme.

Lessons Learned. We derive several interesting lessons from this action.

Continue Reading SFO Convicts UK Company for Middle East Bribery

On Thursday, February 25, 2016, the U.S. Department of Labor proposed new rules to implement Executive Order 13706, which requires certain federal contractors to provide qualifying employees with at least seven days of paid sick leave each year, including paid leave for family care. These new rules are scheduled to go into effect by September 30, 2016, and employers who contract with the federal government should prepare for their implementation now. Noncompliance could result in suspension of federal payments or even termination of a federal contract.

The new rules generally apply to any employer who contracts with the federal government, whether pursuant to a prime contract or a subcontract, provided that the contract is either: (1) covered by the Davis-Bacon Act (DBA); (2) covered by the Service Contract Act (SCA); or (3) a contract in connection with federal property or lands and related to offering services for federal employees, their dependents or the general public. A contract is covered by the DBA if the contract is in excess of $2,000 and the principal purpose of the contract is for the construction, alteration and/or repair of public buildings or public works. A contract is covered by the SCA if the contract is in excess of $2,500, and the principal purpose of the contract is to provide services in the United States through the use of service employees.

Continue Reading New Mandatory Paid Sick Leave Rules Could Ensnare Unwary Federal Contractors

Recent mergers and acquisitions activity among government contractors has been frothy, especially in the government services sector. What has been driving all the activity? Elevated stock prices and readily available credit has certainly accounted for some of it, at least until the recent decline of capital markets at the end of 2015 and thus far in 2016. However, even with the capital markets decline, there are macro trends specific to government services that at least partially counteract the decline of the broader market and cause many in the sector to remain relatively bullish on continued M&A activity.

The most important of these macro trends are contract vehicle consolidation and a shift toward low price-technically acceptable (LPTA) awards. During President Obama’s term, in the name of budgetary concerns, the administration has worked with agencies to reduce the number of federal contracts by consolidating contracts into fewer and larger vehicles. Mid-sized government services players need to grow larger to be able to continue to compete for these larger vehicles. They often seek growth by acquiring other contractors with sought-after, differentiated capabilities and deep customer relationships. Buyers are choosy when it comes to acquisitions, and contract consolidation has made it more difficult to accurately analyze whether a target’s contracts will be eliminated altogether or consolidated into a larger vehicle. This makes valuations a challenge, which helps explain why we see a fair number of earn-outs based on renewals of specific contracts. However, companies with coveted prime positions on full and open contract awards with a good backlog can find themselves highly desired targets.

Continue Reading Will M&A in Government Services Continue to Outperform?

Confused about the VA Federal Supply Schedule? Let Tom Fuchs, Managing Director at BDO, and I help you navigate the FSS contracting rules that apply to the sale of medical devices. During our interactive webinar we’ll share our accounting and legal perspectives with you. Specific to the medical/surgical supply and equipment industry, we will review:

  • Basics of the VA FSS program
  • Key objectives of FSS contracts
  • Subcontracting requirements
  • Audits and areas of concern

The webinar will be March 1 from noon to 1:30 Eastern Standard Time. To register or learn more, visit the BDO event page. Hope you can join us!

In a February 4, 2016, decision, United States ex rel. Wall v. Circle C. Construction, LLC, the Sixth Circuit summarily rejected the government’s assertion that the measure of damages in a False Claims Act (FCA) suit involving a violation of prevailing wage rate requirements was the total amount paid for the work.  The Sixth Circuit’s rejection of the “total contract value” theory of damages in the prevailing wage rate context is a welcome development for FCA defendants who are faced with increasingly creative damages theories asserted by the government and the relator’s bar.

Circle C’s Army Contract

For a case that involved a relatively minor non-compliance with the prevailing wage rate requirements applicable to federal construction contracts, the Circle C. Construction case has a long history.  Circle C entered into a contract to construct warehouses at the U.S. Army base at Fort Campbell, located in Kentucky and Tennessee.  Pursuant to the Davis-Bacon Act, Circle C was required to pay electrical workers at least $19.19 per hour, plus a fringe benefit rate of $3.94 per hour.  Circle C was also required to submit certified payroll for itself and its subcontractors.

Continue Reading DOJ’s “Fairyland Damages” Calculation Rejected in Prevailing Wage Rate False Claims Act Case

On January 27, 2016, the U.S. Commerce Department Bureau of Industry and Security (BIS) and the U.S. Treasury Department Office of Foreign Assets Control (OFAC) amended their regulations to further facilitate trade between the United States and Cuba. This is only the most recent set of steps the U.S. government has taken since President Obama announced, in December 2014, that the United States would move toward normalizing relations with Cuba.

While many limitations on trading with Cuba remain in place, the recent amendments ease restrictions related to certain exports and re-exports to Cuba, and travel to the island. The amendments also should make it easier to engage in financial transactions in and with Cuba (so long as the underlying conduct is permitted). Below is a brief summary of the amendments; the amendments themselves are available at 81 Fed. Reg. 4580 (BIS) and 81 Fed. Reg. 4583 (OFAC).

BIS Amendments. BIS controls exports and re-exports of commercial or so-called “dual use” items. Until January 2015, with limited exceptions, BIS prohibited virtually all exports and re-exports of U.S. commercial goods to Cuba. (U.S. defense exports, which are controlled by the State Department, have been and continue to be prohibited for export or re-export to Cuba. This prohibition is unlikely to be lifted any time soon.)

Continue Reading The United States (Yet Again) Eases Trade Restrictions on Cuba

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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