On Saturday, January 28, President Trump issued an Executive Order setting forth the ethics regulations governing current and future executive agency appointments, which is both more restrictive and less restrictive than the 2009 Obama Executive Order addressing the same issue. Specifically, and with respect to the former, President Trump’s order bans all executive agency appointees from engaging in “lobbying activities” with respect to the particular agency in which the appointee served for a period of five years after leaving the Administration, and further prohibits such appointees from lobbying on behalf of a foreign government or political party during the remainder of their lifetimes (if such activities would require registration “under the Foreign Agents Registration Act of 1938”). See §§ 1.1, 1.4. These two prohibitions were absent from the Obama-era counterpart and mirror two of Trump’s promises outlined in his Contract with the American Voter.
The Armed Services Board of Contract Appeals published its FY16 Report of Transactions and Proceedings, which provides statistics regarding the adjudication of appeals between contractors and the Army, Navy, Air Force, Corps of Engineers, DLA, DCMA, CIA, NASA, other Defense agencies, and the Washington Metropolitan Area Transit Authority. This year’s report once again reflects the Board’s impressive success at resolving matters via alternative dispute resolution. In total, 93% of ADRs concluded in FY16 – including binding ADR, non-binding ADR, and ADR of undocketed appeals – were successfully resolved. The report also reflects a slight uptick in successful appeals at the Board, noting that the appellant prevailed in 57% the appeals decided in the merits (up from 53% in FY15).
We have already seen many changes from the new administration and it seems more and more are happening every day. What more can you expect and how will this effect government contractors? The team of Crowell & Moring lawyers from our Government Contracts, Labor & Employment, White Collar, Corporate and Privacy & Cybersecurity practice groups discussed this topic during a 90-minute webinar this week. Areas covered included: update on executive orders and other labor and employment issues, costs, claims, commercial item contracting, cyber and privacy issues, compliance, data rights and bid protests (plus many more). If you were not able to participate, we have posted the presentation and the recorded session on our webpage here. As important changes and developments occur, we will continue to provide updates. The best way to stay informed is through these free resources – Bullet Points, blog posts and Podcasts – subscribe today!
Many companies who work with government agencies are concerned this week as several news outlets have run stories about contract and grant “freezes” at the Environmental Protection Agency and potentially at other agencies. The new administration has provided few details about the freezes, their objectives, the programs affected, or whether there are more to come. But, in the case of the EPA, it appears to be a temporary agency-wide suspension of new contract and grant awards. It remains uncertain whether (or how many) other agencies may follow suit. While broad-brush freezes might not last long, now is a good time to consider your business and how you can manage through freezes and disruptions of various types that might impact contractors.
Even in the absence of details, there are common-sense steps that potentially affected contractors and awardees can consider to prepare for any freezes, and to protect themselves should a freeze impact their business. We highlight some of the important steps below, and many will be familiar to contractors impacted by Sequester-era budgets.
On January 13, 2017, the FAR Council released a final rule (available here) that: (1) prohibits agencies from contracting with entities that require employees/subs to sign internal confidentiality agreements or statements that restrict the lawful reporting of waste, fraud, or abuse; and (2) requires bidders on federal contracts to certify that they do not utilize such agreements. Starting on January 19, 2017, the rule will apply to all solicitations and contracts using fiscal year 2015 funds and subsequent fiscal year funds, unless the solicitation or contract already contains a comparable provision/clause.
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, with the latest edition hosted by partners David Robbins and Peter Eyre and including updates on the National Defense Authorization Act for Fiscal Year 2017, a new policy by the OMB for responding to a breach of PII, and DOL enforcement actions. Click on one of the options listed below to listen.
Congress amended the civil False Claims Act in 1986 to give the statute more teeth as a fraud enforcement tool. Thirty years later, FCA litigation is as active as ever with more than 800 new cases filed in 2016, which is the second highest number of new cases on record. Not only was 2016 a major year for FCA recoveries (the third-highest ever) but the year also saw major developments ranging from a massive increase in civil penalties and a landmark decision on the implied certification theory of liability. In a “Feature Comment” published in The Government Contractor, C&M attorneys highlight some of the most important settlements and decisions from 2016 on key issues—from liability to damages, qui tam provisions, and more.
In a recent decision, the Court of Federal Claims rejected the Government’s motion to dismiss a lawsuit filed under the Tucker Act seeking to recover “risk corridors” payments pursuant to §1342 of the Affordable Care Act. In Health Republic Insurance Co. v. U.S. (Jan. 10, 2017), the Court held that “HHS is required to make annual risk corridors payments to eligible qualified health plans” under the ACA, and that the “plaintiff’s claim for unpaid risk corridors payments is ripe for adjudication.” The Court – which based its decision on several factors, including the risk corridors program’s purpose of stabilizing insurance premiums in the health insurance marketplace – also held that even if the ACA were ambiguous and the court were to apply a Chevron deference analysis, HHS has interpreted the program to require annual payments, and the agency’s own actions (i.e., making partial annual payments) indicate it believes the program is annual in nature.
In Lockheed Martin Integrated Systems, Inc. (ASBCA Dec. 20, 2016), a case involving a $100 million breach of contract claim stemming from purportedly unallowable direct subcontractor costs, the Board granted Lockheed Martin’s motion to dismiss the Army’s untenable claim “for failure to state a claim on which relief could be granted,” concluding that the government had “gone forward with a claim for over $100,000,000…based on nothing more than a plainly invalid legal theory.”
Specifically, the Board held that final decisions based solely on an audit report’s “conclusory assertions” and “unsupported conclusions” failed to satisfy the standards required by the Board’s rules for a valid claim and that although prime contractors have a generalized responsibility to manage subcontractors, the Army failed to establish that Lockheed Martin had breached any particular contractual obligation, express or implied, and specifically that Lockheed Martin had no obligation to (1) obtain or audit incurred cost submissions from subcontractors; or (2) to retain documentation supporting prime contractor billings for longer than the contract’s “applicable records retention” period.
ABS Development Corp. (ASBCA Nov. 17, 2016) highlights the importance of providing a fully-compliant certification for CDA claims over $100,000—which includes, according to the Board, the requirement for contractors to provide an identifiable and verifiable handwritten signature or digital e-signature. As the contractor in ABS discovered, the Board considers “typewritten” signatures, regardless of font, to be insufficient.
In ABS, the Board dismissed for lack of jurisdiction certain contractor claims that had been “certified” by means of typewritten names (in signature-font) because a typewritten name “cannot be authenticated, and, therefore, is not a signature.” The Board made clear that the CDA’s purpose is to bind contractors by means of a signed certificate that “cannot be easily disavowed by the purported author.” The Board explained that a signature “is a discrete, verifiable symbol that is sufficiently distinguishable to authenticate that the certification was issued with the purported author’s knowledge and consent or to establish his intent to certify.” Because anyone could type another person’s name on a signature block, the purported author could
disavow the certification and the signature would be nearly impossible to authenticate.