In EM Logging v. Department of Agriculture, 2014-1227 (Feb. 20, 2015), the Federal Circuit reversed the Civilian Board of Contract Appeals, holding that substantial evidence did not support the Board’s conclusion that the US Forest Service had properly terminated a timber sale contract for the Kootenai National Forest in Northern Montana for “flagrant disregard” of the terms of the contract. On appeal, the court found that the record supported only four instances of route deviation, load limit violations, or delayed notifications, and held that the contractor’s actions did not justify termination because termination for “flagrant disregard” must be “predicated on more than technical breaches of minor contract provisions or isolated breaches of material contract provisions which caused no damage.”
On January 7, 2015, DCAA issued guidance to auditors for determining whether certain costs are “expressly unallowable” – and therefore subject to penalties – even when the regulations “do not state in direct terms that the cost is unallowable.” This guidance, which is intended to “enhance” the equally troubling December 18 guidance to similar effect, is inconsistent with the CAS 405 definition of “expressly unallowable cost” (i.e., “a particular item or type of cost which, under the express provisions of an applicable law, regulation, or contract, is specifically named and stated to be unallowable“) and will likely lead to confusion in the audit process and undoubtedly result in DCAA auditors assessing more penalties against contractors on dubious grounds.
On February 12, 2015, the Federal Circuit issued an opinion in K-CON Building Systems, Inc. v. United States, addressing jurisdiction over contractor claims under the Contract Disputes Act (“CDA”).
Specifically, K-CON Building Systems explores the implications of claim identification, and whether a contractor can add a new claim to a pending matter when the new claim seeks a different remedy or is based upon a different legal theory. In this case, K-CON Building Systems, Inc. (“K-CON”) contracted with the federal government to construct a “cutter support team building” for the U.S. Coast Guard. The contract included a liquidated damages clause and obligated K-CON to pay $589 for each day of delay. When K-CON completed the building 186 days after the contract’s completion date, the Coast Guard withheld $109,554 in liquidated damages due to alleged delay. Continue Reading
In conjunction with his remarks at the White House Summit on Cybersecurity at Stanford University earlier this month, President Obama signed Executive Order 13691, entitled “Promoting Private Sector Cybersecurity Information Sharing.” Published in the Federal Register last week, the Order is intended to encourage and facilitate cybersecurity information sharing within the private sector, and also between government and the private sector. The Order emphasizes that, because a large majority of the nation’s critical infrastructure is privately owned, cybersecurity is necessarily a shared public-private mission. At the same time, however, it also recognizes that cybersecurity must balance the exigency of security against the privacy and civil liberties of the American people.
For a complete summary of the Order and its implications, continue reading here.
On February 18, 2015, the Architectural and Transportation Barriers Compliance Board (“Access Board”) released a proposed rule revising and updating the standards for electronic and information technology developed, procured, maintained, or used by federal agencies covered by section 508 of the Rehabilitation Act of 1973.
Why Section 508 of the Rehabilitation Act Matters to Contractors
Section 508 of the Rehabilitation Act of 1973, as amended, requires federal agencies to make their electronic and information technology (“EIT”) accessible to individuals with disabilities. Specifically, Section 508 mandates that federal agencies develop, procure, maintain or use EIT in a manner that ensures (1) federal employees with disabilities have comparable access to and use of information and data relative to other federal employees, and (2) that members of the public with disabilities have comparable access to publicly-available information and services – except when either would impose an undue burden on the agency. Continue Reading
On February 25 at 12 pm ET, I’ll be joining Joseph McCaffrey from BDO for a webinar focusing on the market for government contractors. We’ll be talking about DCAA trends, high priority compliance and ethics matters, new final and proposed regulations impacting the industry, and insights into recent M&A activity and financing trends. It will be an interesting session and we hope you can make it. Click here to register.
Yesterday, the FAR Council published the much-anticipated final rule amending the Federal Acquisition Regulation to expand the definition of trafficking in persons in government contracts and to finalize expansive compliance and certification requirements for certain government contractors. The new regulations present a substantial compliance challenge for contractors and leave contractors open to significant risks for inadequate compliance or violations of the new regulations.
A challenge now facing contractors is how to implement the compliance plan and certification requirements of the new rule, discussed in detail below – Crowell & Moring has done an analysis of many of the other compliance requirements and key provisions of the new rule, including the prohibited conduct, here. Continue Reading
On January 29, 2015, the FAR Council published a final rule amending the Federal Acquisition Regulation (FAR) to strengthen existing regulations against trafficking in persons. The new rule, which will be effective March 2, 2015, includes a variety of new compliance provisions that will impact government contractors of all shapes and sizes. The agencies first published a proposed rule on September 26, 2013, implementing Executive Order 13627 and the National Defense Authorization Act for Fiscal Year 2013, to strengthen the government’s zero-tolerance policy regarding contractors engaging in prohibited trafficking activities. The proposed rule enhanced the existing FAR clause in all government contracts (which prohibits trafficking in persons, procuring commercial sex acts, and using forced labor) by adding mandatory notification of possible violations, reporting channels for employees, investigation mechanisms, and subcontractor monitoring and flow down requirements, among other requirements.
The proposed rule left contractors with many lingering questions regarding their compliance obligations and, while the final rule answered some questions, many questions remain. One thing is clear – contractors should pay attention and determine whether, and to what extent, this final rule will impact them. Continue Reading
As we discussed during Crowell & Moring’s webinar last week Top Headlines, Headaches, and Developments for Government Contractors to Watch in 2015, the CDA’s six-year statute of limitations has been a hot topic for both contractor and Government claims over the past several years.
Until recently, the case law at the Federal Circuit, the Boards, and the Court of Federal Claims was unanimous that the statute of limitations was jurisdictional. That meant that claims that accrued more than six years prior to their assertion would be null and void – contractors and the Government could not waive or toll the statutory deadline, and the tribunals had no jurisdiction to hear cases based on untimely claims. Continue Reading
On December 29, 2014, the Small Business Administration issued long overdue proposed amendments to its regulations (with 60 days for comments) to implement many of the provisions of the National Defense Authorization Act of 2013 relevant to small business contracting.
Most notable is the complete overhaul of the calculation of the limitations on subcontracting requirement. The amendment proposes a major shift in the way the calculation is performed. The current method requires the prime contractor to be responsible for the specified percentage of cost of performing the contract (with variations depending on whether it is a contract for services, supplies, construction, or specialty trade construction). The amendment proposes shifting the calculation from this cost-based approach to the amount paid to the prime, which must be more than the specified percentage paid to other than “similarly situated” subcontractors. The proposed revision is intended to be easier to calculate, but complexities remain. Continue Reading