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Crowell & Moring’s “All Things Protest” podcast keeps you up to date on major trends in bid protest litigation, key developments in high-profile cases, and best practices in state and federal procurement. In this episode, Crowell attorneys discuss their recent “Feature Comment,” published in The Government Contractor, discussing the recent Court of Federal Claims decision rejecting GAO’s key personnel notification rule.

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As of April 4, 2022, the federal government will stop using the Dun & Bradstreet (D&B) Data Universal Number Systems (DUNS) Number to uniquely identify entities and will fully transition to using the Unique Entity Identifier (UEI). All entities will be using the UEI number for SAM and other government systems (including FPDS.gov, eSRS.gov, FSRS.gov, FAPIIS.gov, and CPARS.gov).  DUNS Numbers will no longer be searchable or viewable in SAM.  Those already registered in SAM should not need to take any action.

Purpose

The change is intended to allow for competition in the unique entity validation process by reducing the burden that would be associated with changing the vendors confirming that an entity is unique.  Now SAM will generate the UEI number so it is vendor independent.  The government will be able to compete and award contracts to do the unique entity validation process rather than be obligated to use D&B or any other particular vendor.

Timeline

The deadline to request a new DUNS Number or update existing entity information at D&B is March 29, 2022 at 5 p.m. EST.  SAM.gov will be down beginning April 1 at 8:00 p.m. EST until no later than April 4 at 9:00 a.m. EST.  During the transition, other government systems will experience intermittent downtime between March 31 and April 3.

Actions

No specific action is required for any entities already in SAM (active or inactive) and moving forward companies will no longer be required to update their DUNS registration (for instance in the event of a name change or address change) before updating SAM.  Those registering in SAM after April 4, 2022 or seeking a UEI after April 4, 2022 will request a UEI through SAM.gov.

Businesses can view their SAM UEI for each entity registered in SAM by logging into SAM and navigating to the entity’s registration page.  The SAM UEI is in the upper left corner under the DUNS currently, but the DUNS reference should be removed as of April 4, 2022.

SAM.gov has provided FAQs, videos, and an interactive graphic to help stakeholders understand the impacts of the UEI transition, new processes, and required actions.

   

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

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On March 17, 2022, the National Institute of Standards and Technology (“NIST”) published an initial draft of its Artificial Intelligence (AI) Risk Management Framework (“AI RMF”) to promote the development and use of responsible AI technologies and systems.  When final, the three-part AI RMF is intended for voluntary use and to improve the ability to incorporate trustworthiness considerations into the design, development, use, and evaluation of AI products, services, and systems.  NIST has only developed the first two parts in this initial draft:

  • In Part I, Motivation, the AI RMF establishes the context for the AI risk management process.  It provides three overarching risks & characteristics that should be identified and managed related to AI systems: technical, socio-technical, and guiding principles.
  • In Part II, Core and Profiles, the AI RMF provides guidance on outcomes and activities to carry out the risk management process to maximize the benefits and minimize the risks of AI.  It states that the core comprises three elements: functions, categories, and subcategories.  The initial draft examines how “functions organize AI risk management activities at their highest level to map, measure, manage, and govern AI risks.”

The forthcoming Part III will provide guidance on how to use the AI RMF—like a practice guide—and will be developed from feedback to this initial draft.

Overall, the goal of the AI RMF is to be used with any AI system across a wide spectrum of types, applications, and maturity, and by individuals and organizations, regardless of sector, size, or level of familiarity with a specific type of technology.  That said, NIST cautions that the AI RMF will not be a checklist and should not be used in any way to certify an AI system.  Similarly, it may not be used as a substitute for due diligence and judgment by organizations or individuals in deciding whether to design, develop, and deploy AI technologies.

Along with the AI RMF, the NIST also released Special Publication 1270 outlining standards to address bias in AI, titled “Towards a Standard for Identifying and Managing Bias in Artificial Intelligence” (“Guidance”).  NIST’s stated intent in releasing the Guidance is “to surface the salient issues in the challenging area of AI bias, and to provide a first step on the roadmap for developing detailed socio-technical guidance for identifying and managing AI bias.” Specifically, the Guidance:

  • describes the stakes and challenges of bias in AI and provides examples of how and why it can chip away at public trust;
  • identifies three categories of bias in AI—systemic, statistical, and human—and describes how and where they contribute to harms; and
  • describes three broad challenges for mitigating bias—datasets, testing and evaluation, and human factors—and introduces preliminary guidance for addressing them.

The Guidance provides a number of helpful recommendations that AI developers and risk management professionals may consider to help identify, mitigate, and remediate bias throughout the AI lifecycle.

At the direction of Congress, NIST is seeking collaboration with both public and private sectors to develop the AI RMF.  NIST seeks public comments by April 29, 2022, which will be incorporated in the second draft of the AI RMF to be published this summer or fall.  In addition, from March 29-31, 2022, NIST is holding a two-part workshop on the AI RMF and bias in AI.

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On February 24, 2022, the Department of Defense, General Services Administration, and the National Aeronautics and Space Administration proposed to amend the Federal Acquisition Regulation (FAR) to account for changes made by the Small Business Administration (SBA) in its regulations in late 2019 to implement several provisions of the National Defense Authorization Acts of 2016 and 2017 and the Recovery Improvements for Small Entities After Disaster Act of 2015.

This proposed rule would conform FAR Part 19 with those updates to the SBA’s regulations in the following ways (among others):

First, the rule proposes to amend FAR 19.102 and 19.301-1 to address when size is determined for a multiple-award contract that does not require offers for the contract to include price.  The rule as to when SBA measures size has long been that “SBA generally determines small business size standards at the time of initial offer including price.”  By this proposed change, the FAR will make clear that for a multiple-award contract that does not require offers for the contract to include price, SBA will nonetheless determine size as of the date of the initial offer for the multiple-award contract—regardless of whether the offer includes price or the price is evaluated.

Second, multiple FAR provisions and clauses (including FAR 52.219-1, Small Business Program Representations and its Alternate II and FAR 52.219-28, Post-Award Small Business Program Representation) would be updated to reflect that an information technology value-added reseller under NAICS code 541519, proposing to furnish an end product it did not manufacture (i.e., a “nonmanufacturer”), is a small business if it has no more than 150 employees.  This change is meant to ensure that information technology value-added resellers can more easily understand the size standard that applies to them.

Third, this rule would amend FAR 19.504 to clarify that, if a multiple-award contract was totally set aside for small business. the contracting officer may—at his or her discretion—set aside orders for any of the small business socioeconomic concerns so long as doing so satisfies the Rule of Two and the specific socioeconomic program eligibility requirements are met.

Fourth, this rule would amend FAR 19.812 to provide that for 8(a) contracts exceeding 5 years (including options), contracting officers are required to verify in DSBS or SAM that the concern is an SBA-certified 8(a) participant no more than 120 days prior to the end of the fifth year of the contract.  Further, the clause would be amended to provide that if the concern is not an SBA-certified 8(a) participant at that time, contracting officers will not exercise the option.

The commentary discusses the impact that this change is expected to have—noting that FPDS data shows that for fiscal years 2017 through 2019, an average of 257 long-term contracts (greater than five years) were awarded to 227 unique entities each year under the 8(a) program.  The commentary also concedes that this proposed change may serve to reduce the number of long-term contracts awarded to 8(a) participants by agencies that are concerned about having a contract in place beyond the fifth year.

Fifth, the ostensible subcontractor rule will be added as a basis to protest the status of HUBZones (FAR 19.306), SDVOSBs (FAR 19.307), and WOSBs (FAR 19.308).  Each of these FAR clauses will add new grounds for a socioeconomic status protest based on an allegation that a contractor is unduly reliant on a small, non-similarly situated entity subcontractor or if such subcontractor performs the primary and vital requirements of the contract.

Comments are due on or before April 25, 2022.

 

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This week’s episode covers the final rule implementing further revisions to the Buy American Act, a proposed rule that would amend the FAR to account for recent changes in the Small Business Administration’s regulations, the NIST Secure Software Development Framework, and the first False Claims Act settlement under the DOJ’s Civil Cyber-Fraud Initiative, and is hosted by Peter Eyre and Yuan Zhou. 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.

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In a February 11, 2022 decision, the U.S. Court of Federal Claims (Court) dismissed for lack of interested party status a post-award protest filed by Colsa Corp. (Colsa) in which it challenged the status eligibility of other offerors.

In September 2018, the Missile Defense Agency (MDA) issued a solicitation seeking a single contractor to provide infrastructure, operations and maintenance and cybersecurity engineering.  The procurement was set-aside exclusively for woman-owned small businesses (WOSB).  Four contractors submitted proposals in October 2018.  Colsa, the incumbent, did not submit a proposal.

Following an initial award of the contract in May 2019, multiple Government Accountability Office protests prompted MDA to take corrective action and reopen the procurement.  MDA conducted multiple rounds of discussions, eventually narrowing the competitive range to two offerors— DTechLogic, LLC (DTechLogic) and Trident Technologies, LLC (Trident)—and amended the solicitation to incorporate an updated version of the performance work statement.

In May 2021 as the corrective action was on-going, Colsa sent a letter to MDA advising the agency that it would not be able to award to any of the offerors as none were certified WOSBs and, therefore, all were ineligible for award.  In response, MDA contacted the Small Business Administration (SBA) to confirm its understanding that so long as the firm was an eligible WOSB at the time of the offer, the agency could award a contract to a firm that has become other than a WOSB (specifically asking whether it could still award to an offeror’s whose ownership had changed such that it is no longer a WOSB).  SBA agreed with MDA that the firms remained eligible.  In July 2021, MDA responded to Colsa, stating that it had coordinated with SBA regarding Colsa’s concerns and MDA would not be canceling the solicitation.

In August 2021, MDA reaffirmed award to its initial awardee, DTechLogic.  Subsequently, Colsa protested to the Court.  According to Colsa, neither the awardee nor the remaining offeror were WOSBs at time of award:

  • In May 2021, although DTechLogic was in the SBA’s dynamic small business search (DSBS), it was not certified as a WOSB as of May 14, 2021. By September 2021, DTechLogic was no even longer in DSBS.
  • In March 2019, a private equity firm acquired Trident and, as of September 2021, Trident is not in DSBS and was no longer certifying as small on the System for Award Management.

The Court dismissed Colsa’s protest on standing.  The Court held that a protester must have either submitted a proposal or protested the procurement prior to the award decision whenever facts giving rise to the protest are known.  Here, it was undisputed that Colsa was not an actual bidder.  The Court further determined, based on Colsa’s May 2021 letter, Colsa was aware of the two offerors’ alleged ineligibility prior to award.  MDA put Colsa on notice in July 2021 that it was proceeding in a manner that Colsa considered a violation of the applicable regulations and, per the Court, Colsa provided “no plausible argument that it could not have challenged the offerors’ eligibility for award” prior to award.  As such, Colsa failed to diligently pursue its protest rights, rendering it unable to claim prospective bidder status.

What is of note is SBA’s confirmation that MDA could award to offerors based on their eligibility as of their initial proposal submission date.  As is becoming increasingly common, procurements can last for years.  Here, the Agency had received and were evaluating initial proposals for over a year before SBA published new WOSB certification regulations.  Those regulations, which were published in May 2020 and went into effect on October 15, 2020, removed the WOSB self-certification option for WOSB Federal Contracting Program participants.  For WOSB Federal Contracting Program set-asides and sole-source contracts posted after October 15, 2020, all WOSB Federal Contracting Program participants are required to be certified by either SBA or an approved third-party certifier as a WOSB by the time of award.  SBA’s confirmation that MDA could award to the pending offerors notwithstanding an ownership change (that would have prevented such an offeror from becoming a certified WOSB by time of award) answers a question that we had not seen squarely addressed in SBA’s WOSB guidance to date—which is that WOSB certification is not required in WOSB procurements that were pending at the time the new certification rules took effect.

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On March 7, 2022, the FAR Council published a Final Rule implementing further revisions to the Buy American Act (BAA), as contemplated by President Biden’s Executive Order titled Ensuring the Future is Made in All of America by All of America’s Workers, which he issued his first week in office. The Final Rule makes three key changes to the BAA regulations, which are for the most part consistent with the Proposed Rule:

  • Initiating a staged increase in the percentage cost of domestic components to qualify as domestic end products and construction materials from the current 55% to 60% and then to 65% in 2024 and 75% in 2029.  These thresholds do not apply to commercially available off-the-shelf (COTS) items or to items made predominantly of iron and steel – each of which has its own special rules. For contracts with a period of performance that spans a scheduled threshold increase, the general rule is that contractors will have to comply with each increased threshold for the items in the year of delivery, although contracting officers will have discretion to issue exceptions fixing the domestic content threshold to the one in effect at the time of award. Unlike the Proposed Rule, the Final Rule builds in a grace period (until the next fiscal year) before the 60% threshold goes into effect.
  • Easing transition to the new higher component cost thresholds, by providing the contracting officer authority – based on a determination that no end products or construction materials meet the increased threshold – to “fallback” the threshold to the current 55% to qualify as domestic. This fallback threshold will remain available until 2030.
  • Creating a framework for applying higher price preferences for domestic end products and construction materials that are deemed “critical” or that contain critical components. The list of critical items and components and the associated price preferences will be implemented through subsequent rulemaking. While the Proposed Rule contemplated post-award reporting on the specific amount of domestic content for critical end products, construction materials, or components, the Final Rule defers the reporting requirement to subsequent rulemaking to allow for more industry comments on the scope and scale of the reporting obligations.

The FAR Council noted that the majority of comments on the proposed rule were on potential changes that are not implemented in this Final Rule, such as eliminating the waiver for commercial item information technology (IT) end products and the waiver of the component test for COTS items. For now, end products and construction materials that qualify as COTS or commercial item IT remain unaffected by these changes. In addition, it is important to note that the Final Rule makes no changes to the regulations implementing the Trade Agreements Act (TAA), which apply to a broad swath of federal procurements, including all products and services sold under Federal Supply Schedule contracts administered by the General Services Administration.

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This week’s episode covers DoD’s Software Modernization Strategy Memorandum, proposed updates to the DoD’s Mentor-Protégé Program, a GAO report examining the current status of the DoD artificial intelligence weapon systems capabilities, and the National Security Telecommunications Advisory Committee report on Zero Trust and Trusted Identity Management, and is hosted by Peter Eyre and Monica Sterling. 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.

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On February 28, 2022, the Department of Defense (“DoD”) published a proposed rule to reauthorize and improve DoD’s Mentor-Protégé Program (“the Program”).

Briefly, under the Program, approved mentor firms enter into mentor-protege agreements with eligible protege firms to provide developmental assistance to enhance the capabilities of the protégé firms to perform as subcontractors and suppliers under DoD contracts and other contracts and subcontracts.  The mentor may receive either cost reimbursement or credit against applicable subcontracting goals established under contracts with DoD or other Federal agencies.

This proposed rule implements Section 872 of the National Defense Authorization Act (“NDAA”) for Fiscal Year (“FY”) 2020, which among other actions, extended the date through which participants could enter into a mentor-protégé agreement from September 30, 2018 to September 24, 2024 and shortened the program participation term.

DoD reports that this Program has since the following changes in participation since the expiration of authority to enter into new agreements in September 30, 2018 followed by the reauthorization in the FY 2020 NDAA:

  • In FY 2018 and FY 2019, there were 90 on-going agreements, with 4 expiring in FY 2019 and no new agreements approved in FY 2019;
  • In FY 2020, there were 86 on-going agreements, with 29 expiring in FY 2020;
  • As of June 2021, there were 57 on-going agreements, with 12 expiring, as well as 50 new mentor-protégé agreements; and
  • DoD estimates there will be 66, 82, and 98 new agreements in FY 2022, FY 2023, and FY 2024, respectively.

Among other administrative changes, the proposed rule would impact Defense Federal Acquisition Regulation Supplement (“DFARS”) subpart 219.71 and Appendix I, Policy and Procedures for the DoD Pilot Mentor-Protégé Program by the following:

  • The date for entering into a mentor-protégé agreement will be extended to September 30, 2024 in Appendix I-103;
  • The date for mentor reimbursements to be paid for developmental assistance costs incurred under the Program will be extended to September 30, 2026 in DFARS 219.7104(b);
  • The date for a mentor to receive credit toward attainment of the subcontracting goals in its small business subcontracting plan for developmental assistance costs incurred under the Program will be extended to September 30, 2026 in DFARS 219.7104(d);
  • Program participation reduced from three to two years—unless approval is otherwise obtained for an additional period not to exceed three years—in Appendix I-107;
  • Eligibility of protégés expanded by removing the requirement that an entity be “less than half” the SBA size standard for its primary NAICS code in Appendix I-102 and rendering eligible to be a protégé all entities that do not exceed the size standard of their primary NAICS code; and
  • DoD Office of Small Business Programs cybersecurity readiness assessment is added in DFARS 219-7102 as a benefit of program participation to be provided to protégés.

No new solicitation provisions or contract clauses would be created.  In addition to expanding the industrial base, DoD anticipates the proposed rule change will benefit all parties involved—i.e., large contractors, small businesses, and the Government.

Comments are due on or before April 29, 2022.  Crowell will continue to report on any developments concerning the DoD’s Mentor-Protégé Program.

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2021 was another busy year in False Claims Act enforcement and litigation. Significant decisions were issued across the circuits, spanning government dismissal authority, materiality, scienter, Rule 9(b) pleading standards, the Eighth Amendment’s Excessive Fines Clause, and more. The year also saw proposed amendments introduced by Senator Chuck Grassley aimed at strengthening the statute and overruling certain case law developments, as well as a renewed and confirmed focus on COVID-19 funding fraud enforcement and the launch of a new cybersecurity fraud initiative. These highlights are among the important developments discussed by C&M attorneys in a “Feature Comment” published in The Government Contractor.