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This week, the Department of Labor (DOL) and Office of Management and Budget (OMB) issued a memo directing all agencies to designate “agency labor advisers” who are responsible for advising agencies on “Federal contract labor matters.”  FAR Part 22 contemplates the appointment of “agency labor advisors,” and requires contractors to contact them about potential labor

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On December 19, 2022, DoD issued a DFARS proposed rule that seeks to (1) implement the data-rights portions of the May 2, 2019 Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive (SBIR/STTR Policy Directive), and (2) impose significant changes to technical data and computer software marking requirements.  The SBIR/STTR portion of the proposed rule follows DoD’s advance notice of proposed rulemaking issued on August 31, 2020 (see 85 FR 53758) and incorporates the eight written public comments that DoD received. The proposed changes to marking requirements go beyond the SBIR/STTR Policy Directive and respond to the Federal Circuit’s decision in The Boeing Co. v. Secretary of the Air Force, 983 F.3d 1321 (Fed. Cir. 2020).

Continue Reading DFARS Proposed Rule on SBIR/STTR Data Rights and the Marking of Unlimited Rights Data

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The Boeing Company (Boeing) and the U.S. Air Force have settled their long-standing data rights marking dispute two years after the U.S. Court of Appeals for the Federal Circuit held that contractors may include restrictive markings on unlimited rights technical data as long as those markings do not restrict the Government’s rights.  A copy of the settlement agreement is attached to the Armed Services Board of Contract Appeals’ order of dismissal.

Under the settlement agreement, the Air Force agreed to accept noncommercial unlimited rights technical data with the following legend, which puts third parties on notice of Boeing’s “continuing ownership of such deliverables”:

Although the settlement is limited to this particular dispute, the Air Force’s acceptance of the legend to preserve the company’s rights vis-à-vis unauthorized third parties without compromising the Government’s unlimited rights suggests that a carefully drafted legend like the one included in the settlement agreement may be an acceptable marking for other contractors with similar concerns under their contracts with the Air Force (and even other agencies).  The key is to ensure that the marking does not impermissibly restrict the Government’s rights in the data, as further illustrated by the ASBCA’s November 29, 2022 decision in FlightSafety InternationalASBCA No. 62659.  

Continue Reading Contractors May Mark Unlimited Rights Technical Data So Long as the Government’s Rights Are Not Impermissibly Restricted: A Study in Contrasts

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On October 17, 2022, President Biden signed the End Human Trafficking in Government Contracts Act of 2022 (“the Act”) into law, amending the 2013 National Defense Authorization Act (“2013 NDAA”) to require U.S. government agency heads to refer any suspected instances of human trafficking to the agency’s suspension and debarment official (“SDO”) for consideration and

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Challenging an agency’s failure to award a “strength” for a proposal feature can prove to be an exercise in futility.  GAO frequently characterizes this oft-rejected argument as mere disagreement and defers to the agency’s conclusions.  But, following GAO’s decision in Tech Marine Business, Inc., B-420872, Oct. 14, 2022, the tide may be turning.  Agencies are now required to demonstrate that their decision not to award strength credit was reasonable and consistent with the stated evaluation criteria.

The protester, Tech Marine Business, Inc. (Tech Marine) alleged that the Navy failed to award Tech Marine a strength for its transition plan.  The solicitation required the awardee to “begin work immediately and assume responsibility from the incumbent Contractor, if applicable, within 60 days after Task Order award.”  Tech Marine, the incumbent contract, explained that its transition plan exceeded the Navy’s schedule for workload turnover and that transition would be completed “well in advance of the 60–day requirement.”

Continue Reading GAO Breathes New Life into the Commonly Denied “Failure to Award a Strength” Protest Ground

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In Doubleshot, Inc., ASBCA No. 61691 (July 19, 2022), the Armed Services Board of Contract Appeals (“ASBCA”) granted the contractor’s motion for partial summary judgment, denying the Government’s claim for unallowable costs to the extent that it was based on missing or unsigned employee time cards.  The ASBCA held that the contractor was not required to maintain time card records to support the allowability of labor charges beyond the retention period specified in the contractor’s cost-plus-fixed-fee contracts (including applicable time extensions). 

The contracts incorporated both the Audit and Records – Negotiation clause (FAR 52.215-2) and the Allowable Cost and Payment clause (FAR 52.216-7), which grant the Government the right to examine the contractor’s records reflecting all claimed costs and reduce payments for amounts that are unallowable.  Following the contractor’s delayed submission of two final indirect cost rate proposals, the Defense Contract Audit Agency (“DCAA”) did not begin auditing the proposals until eight months after the contractual obligation to maintain records had expired.  DCAA then questioned the contractor’s labor costs for which there was no time card support, even though the contractor was able to demonstrate that it paid its employees.  The Government’s claim and the contractor’s appeal followed. 

Continue Reading Too Late: Government’s Failure to Timely Audit Did Not Extend the Contractor’s Document Retention Obligations

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On September 23, 2022, the FAR Council issued a number of final rules amending the Federal Acquisition Regulation (FAR) to reflect changes previously implemented by the Small Business Administration (SBA) to its regulations on women-owned small businesses and HUBZones, as well as to clarify policy on joint ventures in small business contracting. 

The final rule on HUBZones (87 FR 58232) aligns the FAR’s definition of a HUBZone in provisions and clauses such as FAR 2.101, 52.212-3, 52.219-1, 52.219-8 and 52.219-9 to refer to the requirements described in 13 C.F.R. § 126.200 and SBA’s designation of a HUBZone small business concern in the Dynamic Small Business Search (DSBS). This is in line with the SBA’s recent revisions to the HUBZone regulations via which SBA annually certifies HUBZone entities in order to allow such entities to remain eligible for HUBZone contracts for the entire year rather than such entities being required to represent their status for each offer. Higher-tier contractors are required to confirm that a subcontractor representing itself as a HUBZone small business concern is certified by SBA as a HUBZone small business concern by accessing SAM or by accessing DSBS. The rule also allows contracting officers to award HUBZone set-aside and sole-source contracts at or below the simplified acquisition threshold. 

Continue Reading FAR Updated to Reflect Revised SBA Regulations

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On September 15, 2022, the Biden Administration issued a new executive order (“EO”) and accompanying fact sheet, designed to sharpen the current U.S. foreign investment screening process as administered by the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”). [1] This EO is the first to specifically identify certain additional national security factors for CFIUS to consider when evaluating transactions involving foreign investors. 

While the EO does not expand the jurisdiction of CFIUS or establish new requirements, the EO formally directs CFIUS to focus on transactions that could give foreign parties access to U.S. technologies, data, or critical supply chains that the Biden Administration has identified as important for maintaining U.S. economic and technological edge. The EO does not mention any specific country, but underscores the threat posed by inbound investments “involving foreign adversaries or other countries of special concern,” which may appear to be only economic transactions for commercial purposes but could “actually present an unacceptable risk to United States national security due to the legal environment, intentions, or capabilities of the foreign person, including foreign governments involved in the transaction.” [2]

Continue Reading Biden Administration Announces Presidential Directive on Sharpening Foreign Investment Screening by CFIUS

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On September 8, 2022, the Department of Defense (“DoD”) issued Class Deviation 2022-O0009 (the “Deviation”) immediately authorizing contracting officers to allow active registration in the System for Award Management (“SAM”) within 30 days of contract award or three days prior to submission of the first invoice (whichever comes first) rather than at the time of award—provided the contractor can prove it has initiated or attempted to start the SAM registration process.  The Deviation is in effect through October 31, 2022 unless rescinded or extended.

The SAM registration process, which changed in April 2022 when GSA switched from the DUNS number to the Unique Entity Identifier (“UEI”), has suffered from significant delays and system errors.  These system challenges continue, and SAM incident tickets continue to take weeks to process in many cases.  With this Deviation, DoD joins a number of other agencies that have already issued guidance for managing SAM delays that may affect contracts or grants.

Continue Reading DoD Issues Deviation for SAM Registration Requirement Due to Ongoing Processing Delays

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On August 31, 2022, the Safer Federal Workforce Task Force announced that the Federal Government “will take no action to implement or enforce Executive Order 14042,” the contractor vaccine mandate, “to ensure compliance with an applicable preliminary nationwide injunction, which may be supplemented, modified, or vacated, depending on the course of ongoing litigation.”

This announcement