Government Contracts Legal Forum

OGE Finalizes Rule Regarding Solicitation and Acceptance of Gifts for Executive Branch Employees

Posted in Ethics & Compliance
Lorraine M. CamposGail D. ZirkelbachNkechi KanuJoelle Sires

On November 18, 2016, the Office of Government Ethics (OGE) issued a final rule revising the Standards of Ethical Conduct for Employees of the Executive Branch (“Standards”)  applicable to the solicitation and acceptance of gifts from outside sources. See 5 CFR § 2635. The final rule imposes a duty to decline otherwise permissible gifts when the appearance of impropriety is present, adds new examples of how to apply the rules, codifies previous interpretations of the gift rule, and retains the $20 de minimis exception (despite pushback in comments to the proposed rule to raise the standard commensurate with inflation. ) Although Government employees are the primary subject of the final rule, the changes will have a direct impact on how contractors, referred to as “prohibited sources” can interact with Government officials.   It is important for government contractors to understand that being implicated by a Government official’s violation of these Standards can lead to various consequences, such as facing public embarrassment, a tarnished reputation in the marketplace, suspension and debarment, or penalties for violating the bribery or illegal gratuities statutes.

The rule becomes effective on January 1, 2017. Continue Reading

Should Loose Lips Sink Qui Tam Suits? Supreme Court to Decide Whether FCA Seal Violations Should Result in Dismissal

Posted in False Claims
Brian Tully McLaughlinJason M. CrawfordSarah Hill

On November 1, 2016, the Supreme Court heard oral arguments in State Farm and Casualty Co. v. United States ex rel. Rigsby on the question of what standard should govern the decision whether to dismiss a relator’s claim for violation of the False Claims Act’s (“FCA”) seal requirement, which mandates that any FCA action brought by a whistleblower be filed with the court under seal and not publicly disclosed until the government has had an opportunity to investigate the allegations in the complaint and determine whether to intervene.  This is the third year in a row that the Court has heard a case involving the FCA and, while Rigsby is not likely to be a blockbuster ruling like last year’s implied certification decision in Escobar (description available here), the case presents an opportunity for the Court to address a three-way circuit split.

When deciding on the standard that should govern, the Court will have to weigh competing policy considerations. On the one hand, relators and their counsel should not be allowed to act with impunity by violating the seal in bad faith in order to gain a tactical advantage in settlement talks.  At the same time, the Court during the argument seemed to recognize that the government only has the resources to intervene in select cases and so the government relies heavily on relators to pursue recoveries.  As such, the government’s interests could be harmed if a relator is automatically dismissed from a case because of an insignificant or technical violation of the seal.  Indeed, the Rigsby case illustrates the tension between these competing policy considerations.  Here, relators’ counsel violated the seal in bad faith, but he then withdrew from the case, and the relators went on to win a judgment against State Farm.  Should that violation have caused the relators’ action to be dismissed altogether?  If not, was any type of sanction warranted?  Those questions and others were before the Court at oral argument.

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OGE Amends Executive Branch Ethics Program

Posted in Ethics & Compliance
Peter J. EyreAgustin D. Orozco

On November 2, 2016, the Office of Government Ethics (OGE) issued a final rule amending the regulations that set forth the elements and procedures of the executive branch ethics program by defining and describing the executive branch ethics program, delineating the responsibilities of various stakeholders, and enumerating key executive branch ethics procedures.  The final rule amends 5 C.F.R. part 2638 by creating six new subparts: (A) Mission and Responsibilities; (B) Procedures of the Executive Branch Ethics Program; (C) Government Ethics Education; (D) Correction of Executive Branch Agency Ethics Programs; (E) Corrective Action Involving Individual Employees; and (F) General Provisions.  The final rule is effective January 1, 2017.

Among the more notable amendments, the final rule centralizes the procedures for the executive branch ethics program under subpart B.  Currently, these procedures are not only found in various subparts of the existing regulations, including subpart C (Formal Advisory Opinion Service) and subpart F (Executive Branch Agency Reports), but also in several advisories available on OGE’s website.  These procedures relate to the furnishing of information, records and reports to OGE; the executive branch’s collection of financial disclosure reports; and the issuance of formal advisory opinions and other written guidance by OGE.  Further, the amended subpart B includes procedures that pertain to ethics preparations for presidential transitions.

The final rule also amends subpart D, which establishes procedures for the correction of executive branch ethics programs. These procedures are implemented when there are indications that an agency ethics program is not in compliance with the requirements set forth in applicable government ethics laws and regulations.  Subpart D amends the current procedures by enumerating several informal actions that the Director of OGE may take in order to bring the agency into compliance.  These informal actions are in addition to the formal action that may be taken by the Director of OGE in the event informal action does not resolve the deficiency.

 

Fastest 5 Minutes, The Podcast Gov’t Contractors Can’t Do Without (Oct. 28)

Posted in Legal Developments, Uncategorized
David B. RobbinsPeter J. Eyre

Crowell & Moring’s “Fastest 5 Minutes” is a biweekly podcast that provides a brief summary of significant government contracts legal and regulatory developments that no government contracts lawyer or executive should be without. This latest edition is hosted by partners David Robbins and Peter Eyre and includes updates on Fair Pay and Safe Workplaces, the Health IT Certification Program, and defense acquisition.

Click below to listen via the embedded player or access from one of these links:
PodBean | SoundCloud | iTunes

Hold That Thought: OFPP Memo Stops FPSW Implementation

Posted in Labor & Employment
Steve McBradyKris D. MeadeDavid B. RobbinsJason M. CrawfordLaura Baker

After a U.S. district court issued a preliminary injunction enjoining implementation of the “Fair Pay and Safe Workplaces” final rule (discussed here), OFPP issued a Memorandum for Chief Acquisition Officers on October 25 instructing federal agencies to refrain from implementing the enjoined portions of the final rule, and to “immediately” amend any solicitations containing such clauses. See the OFPP Memo here.

Stop the Press: District Court Enjoins Implementation of “Fair Pay and Safe Workplaces”

Posted in Labor & Employment
Steve McBradyKris D. MeadeDavid B. RobbinsJason M. CrawfordLaura Baker

On October 24, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction, enjoining the Government from implementing the “Fair Pay and Safe Workplaces” final rule (with a small carve out for the “paycheck transparency” requirements). Specifically, the Court enjoined the Government from (i) implementing any portion of the FAR Rule or DOL Guidance relating to the new reporting and disclosure requirements regarding labor law violations as described in the Executive Order and implemented in the FAR Rule and DOL Guidance, (ii) enforcing the new restriction on arbitration agreements.  Stay tuned for further analysis.

State of Suspension/Debarment: FY2016 Statistics and the Impact on Small Businesses

Posted in Suspension & Debarment
David B. RobbinsAngela B. StylesPeter J. Eyre

Changes in suspension and debarment data reported by the government can provide the American public with substantially more insight into the types of entities (and individuals) excluded through suspensions, proposed debarments, and debarments, including that the overwhelming majority of excluded companies are small businesses.  These changes likely show that more than 90 percent of the businesses excluded by the Department of Defense in Fiscal Year 2016 were small businesses. In this blog post we discuss the current counting method used by the government, and present a revised counting method using recently completed Fiscal Year 2016 exclusion statistics to understand the current state of the government’s suspension and debarment system in a more nuanced way.

Current Counting Method

The statistics reported by the Interagency Suspension and Debarment Committee (ISDC) in the annual ISDC Report cover only total numbers of suspensions, total proposed debarments, and total debarments.  This presentation could easily confuse readers because the aggregated data conceivably “triple counts” exclusions in a given year.  For example, a single individual or company may be suspended, proposed for debarment, and debarred in a given year and the ISDC Report would count that as three (3) separate actions. Continue Reading

Tough (Tax) Break: Federal Tax Delinquency and Felony Convictions Could Bar Corporations from Contract Award

Posted in Suspension & Debarment
Lorraine M. CamposDavid B. RobbinsM. Yuan Zhou

When assessing whether a contractor is eligible for award, contracting officers are required to conduct a meaningful present responsibility determination using the factors contained in FAR 9.1. However, a final rule issued by the FAR Council on September 30, 2016 has inserted a wild card into the process—the agency suspension and debarment official (SDO).

The final rule adopts an interim rule without change, which amends the FAR to establish the following representation and certification requirements:

  • Representation (FAR 52.209-11): Any corporation responding to a federal solicitation must represent whether it: (1) has any unpaid federal tax liability that has been assessed and is not being appealed or paid in a timely manner; or (2) has a felony conviction for a violation under any federal law within the preceding 24 months. There is no de minimus amount for reporting tax delinquencies. Consistent with the Consolidated and Further Continuing Appropriation Acts, an affirmative response to either prong would create an automatic exclusion that precludes the award of federal contracts in a “shoot first, ask questions later” fashion.
  • Certification (FAR 52.209-12): Corporate offerors must certify to tax matters contained in FAR 52.209-12(b) when responding to certain solicitations where the resultant contract (including options) may have a value greater than $5 million. If applicable, contractors must ensure that their certifications are accurate; otherwise additional liability could arise for the submission of false statements.

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Fastest 5 Minutes, The Podcast Gov’t Contractors Can’t Do Without (Sep. 30)

Posted in Podcast
David B. RobbinsLorraine M. Campos

Crowell & Moring’s “Fastest 5 Minutes” is a biweekly podcast that provides a brief summary of significant government contracts legal and regulatory developments that no government contracts lawyer or executive should be without. This latest edition is hosted by partners David Robbins and Lorraine Campos and includes updates on the Transactional Data Rule Pilot Program, proposed FAR amendments, and bid protests.

Click below to listen via the embedded player or access from one of these links:
Crowell.com | PodBean | SoundCloud | iTunes

C&M Publishes Article in BNA Federal Contracts Report on Whether the Exclusion Archives on SAM.gov Violate Contractors’ Liberty Interests

Posted in Suspension & Debarment
David B. RobbinsJason M. CrawfordLaura Baker

The suspension and debarment regulations at Federal Acquisition Regulation (FAR) Subpart 9.4 are focused on the present responsibility of a contractor.  Yet, the records of past, inactive exclusions are available for public view in perpetuity on the System for Award Management website (SAM.gov).   In a recent article (linked here) published in BNA’s Federal Contracts Report, C&M attorneys explore this important issue.

As discussed in this article, these past records on SAM.gov implicate the present liberty interests of contractors.  Because past exclusions on SAM.gov may be accessed by anyone, contractors are facing more questions than ever about their past exclusions from outside of the federal government.  Many state and local procurement agencies as well as banks and financial institutions are taking the time to review SAM.gov before granting opportunities or financial assistance to individuals and companies.  Accordingly, the intent of FAR Subpart 9.4 is stretching far beyond its purpose, which is to prevent contractors from receiving new contracts or federal financial assistance if they are not “presently responsible.”  “Present responsibility” is not defined in FAR subpart 9.4, but this subpart explicitly states that exclusions do not exist to punish contractors for past misdeeds.  Thus, it may be only a matter of time until a contractor prevails on a due process challenge to SAM.gov archives, as the reputational harm of these records continues to grow.