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On April 26, the Federal Circuit issued a decision in Crawford v. United States (a C&M case), holding that a U.S. Army combat veteran is entitled to recover his attorneys’ fees arising from a dispute related to obtaining medical retirement benefits earned during his service.  In the underlying dispute on remand to the Army Board for Correction of Military Records from the Court of Federal Claims (COFC), Mr. Crawford obtained full relief, including nearly a decade of retirement benefits that he was unlawfully deprived of due to his erroneous administrative discharge, but Mr. Crawford was initially denied recovery of his attorneys’ fees under the Equal Access to Justice Act (EAJA).  Mr. Crawford appealed, and the Court of Appeals for the Federal Circuit unanimously reversed the COFC, holding that (1) even though the COFC’s remand order stated that it was based on judicial economy, the substance of the Government’s admissions in the case amounted to an “implicit” concession of error, and (2) the Government’s legal position was not “substantially justified” under the relevant EAJA standards.  The Federal Circuit then remanded the case to the COFC to determine the quantum of legal fees to be awarded to Mr. Crawford. 

Once recovered, Crowell & Moring’s legal fees will be provided to the National Veterans Legal Services Program (NVLSP), where they will be used to support future Veterans appeals.  NVLSP noted the decision makes important law on EAJA recovery in Veterans’ cases, and “will hugely impact all of Lawyers Serving Warriors’ work at the Court of Federal Claims.”  The full NVLSP press release is available here.

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In this episode, Jason Crawford, Brian Tully McLaughlin, and Agustin Orozco explore the issues before the Supreme Court in two consolidated cases involving the False Claims Act. The hosts discuss the April 18 oral argument in Schutte/Proctor where the question before the Justices is whether a defendant’s subjective knowledge about whether its conduct was legal is relevant to whether it “knowingly” submitted false claims.

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On May 1, 2023, the Biden Administration announced its plan to issue an Executive Order in the coming days to rescind the existing executive order that imposes COVID vaccine requirements and safety protocols on federal contractors.  Specifically, Executive Order 14042 on Ensuring Adequate COVID Safety Protocols for Federal Contractors will be rescinded effective May 12, 2023, and agencies have been instructed not to require compliance with the COVID-related requirements from covered contractors and subcontractors nor to enforce the implementing clause. 

The Administration also noted that guidance will be issued by the Safer Federal Workforce Task Force following the imminent Executive Order.  We will continue to monitor how contractors will be impacted by this change.

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On April 28, 2023 the Department of Homeland Security (DHS) Cybersecurity and Infrastructure Security Agency (CISA) published its long-awaited draft Secure Software Development Self-Attestation Form.  The form is a key component of the mandatory software supply chain security requirements introduced by last fall in Office of Management and Budget (OMB) Memorandum M-22-18. The Form requires certain software developers to attest to specific security elements of their software development life cycle (SDLC) and their development environment. 

Background

In May 2021, the Biden Administration issued Executive Order (EO) 14028, “Improving the Nation’s Cybersecurity.”  The EO directed the federal government to prioritize software supply chain security, including by creating secure software development practices for federal software acquisitions.  Pursuant to the EO, in February 2022 the National Institute of Standards and Technology (NIST) published NIST Special Publication 800-­218 and the NIST Software Supply Chain Security Guidance (collectively, the NIST Secure Software Development Framework, or NIST SSDF), providing software development-focused security controls and best practices for federal agencies and their commercial software partners. 

OMB Memorandum M-22-18, published on September 14, 2022, requires companies providing software to the federal government to complete the self-attestation form to certify that they comply with the NIST SSDF controls and guidance whenever third-party software is used on government information systems or otherwise affects government information. 

Continue Reading CISA Releases Draft Secure Software Development Self-Attestation Form
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This week’s episode covers resolution of False Claims Act allegations relating to alleged payments in violation of the Anti-Kickback Act, cessation of certain emergency contracting measures deployed early in the COVID-19 pandemic, and DoD Instruction 8310.01 relating to DoD IT, 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 Voxtel, Inc., ASBCA No. 60129 (March 9, 2023), the Armed Services Board of Contract Appeals (ASBCA) issued a decision that presents a primer on the resolution of indirect cost rate disputes.  The ASBCA granted the contractor’s appeal in part, finding that its claimed executive compensation and independent research and development (IR&D) costs were allowable, but that certain rental costs related to the “fit-up” of a leased facility were unallowable.

The Defense Contract Audit Agency (DCAA) performed “adequacy” and “nomenclature” reviews of Voxtel’s indirect cost rate proposals (or incurred cost proposals, “ICPs”) for fiscal years 2007 to 2009, but did not conduct audits.  The Contracting Officer (CO) then issued a final decision unilaterally setting indirect rates and finding that the ICPs included unallowable executive compensation, IR&D, and rental costs.  The contractor appealed. 

Continue Reading If At First You Don’t Succeed: Contractor Successfully Challenges Disallowed IR&D and Compensation Costs
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On April 6, 2023, the Civilian Board of Contract Appeals (CBCA), in BES Design/Build, LLC, CBCA 7585, dismissed a contractor’s appeal for lack of jurisdiction, finding the appeal untimely, and underscoring that a contractor cannot reset the 90-day appeal window by resubmitting its original claim.

On February 24, 2021, BES Design/Build, LLC (BES) submitted a certified claim for non-payment under a task order to replace two exterior stairs at a courthouse.  The contracting officer denied the claim in a final decision (COFD) on April 23, 2021.  BES did not appeal that denial.  More than a year later, on June 8, 2022, BES submitted a nearly identical certified claim.  The contracting officer responded on August 22, 2022, stating that a COFD had already been issued on the matter.  On November 18, 2022, BES appealed what it cited as the August 22, 2022 COFD to the CBCA.  The GSA then filed a motion to dismiss for lack of jurisdiction, citing BES’s appeal as untimely.

The CBCA granted the GSA’s motion to dismiss, noting that there are three jurisdictional prerequisites for it to hear a contractor’s claim under the Contract Disputes Act (CDA): (1) the contractor’s submission of a claim to the contracting officer; (2) the issuance of a COFD or occurrence of a deemed denial; and (3) a timely appeal.  Under the CDA, a contractor has 90 days from the date of receiving a COFD to appeal the decision to the relevant agency board.  BES argued that, because the agency responded to its second claim on August 22, 2022, it should be entitled to 90 days from that date to appeal the agency’s denial.  The CBCA disagreed, explaining that claims based on a common or related set of operative facts will be considered the same claim for the purposes of an appeal if “a court will have to review the same or related evidence to make its decision.”  Here, because the contractor’s allegations and the relief sought in each claim were substantially the same, the CBCA found both of BES’s submissions were for the same claim, and the relevant date for calculating the 90-day appeal window was the issuance of the first COFD, on April 23, 2021.

This decision underscores the importance of timely appealing a claim upon the receipt of a COFD, as a contractor cannot revive its appeal rights by simply re-submitting an old claim it failed to timely appeal. 

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On April 18, 2023, the Department of Defense (“DoD”) issued guidance to DoD contracting officers directing the cessation of certain emergency contracting measures utilized during the COVID-19 pandemic.  Following the termination of the COVID-19 national emergency declaration through President Biden’s April 10, 2023 signing of H.J. Res. 7, DoD released a memorandum titled “Contracting Updates with the Termination of the COVID-19 Emergency,” which orders contracting officers to cease utilizing all “emergency acquisition flexibilities that were permitted by the national emergency declaration” and terminated all guidance implementing those flexibilities.  The memorandum also identified class deviations issued during the pandemic that “will either be rescinded or addressed through a follow-on effort” including:

  • Class Deviation 2020-O0010, which increased the progress payment rates to 90% for large businesses and 95% for small businesses, will be revised to return large businesses to the customary progress payment rate of 80% “in a manner that minimizes disruption” whereas DOD “anticipates” retaining the 95% rate for small businesses;
  • Class Deviation 2020-O0012, which relaxed various DFARS requirements for undefinitized contract actions (“UCAs”), will be rescinded in full; and
  • Class Deviation 2020-O0021-Rev. 3 and Class Deviation 2020-O0013-Rev. 4, which both relate to reimbursement of covered paid leave costs under CARES Act Section 3610, will be fully maintained until all reimbursement actions are complete.

While this memorandum only addresses to DoD contracts, contractors should watch for other federal agencies to terminate their pandemic-related emergency acquisition flexibility measures as the federal government emerges from the shadow of the COVID-19 pandemic.  Government-wide pandemic-related requirements for government contractors—including the contractor vaccine mandate that remains unenforced and partially enjoined—may also terminate.

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On April 3, 2023, the U.S. Attorney’s Office for the District of New Jersey announced a settlement with a public relations firm to resolve allegations that the New Jersey company violated the False Claims Act (FCA) by receiving a $2 million second-draw loan from the Paycheck Protection Program (PPP) to which the company was not entitled.  The public relations firm had also sought and received forgiveness for the full amount of the loan.

Congress created the PPP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency financial support to qualifying small businesses affected by the disruption of the COVID-19 pandemic.  The CARES Act was subsequently amended to provide for a second round of disaster funding, but applicants were ineligible for this second-draw funding if the applicant was a required registrant under the Foreign Agent Registration Act (FARA).

Here, the FCA action was initiated in New Jersey when a relator filed a qui tam suit alleging that the public relations firm was the agency of record (AOR) for foreign tourism offices such as the Cayman Islands Department of Tourism.  As alleged in the complaint, these foreign tourism offices are “foreign principals” within the meaning of FARA, which meant that the public relations firm was an “agent of a foreign principal” and was therefore required under FARA to submit a registration statement.  As a result, the public relations firm was allegedly ineligible for the second $2 million PPP loan that it received and which was subsequently forgiven.

The relator in this action—a corporate entity named GNGH2, Inc.—is one of several serial relators that have sprung up since the government made more than $800 billion available through loan guarantees and subsidies in response to the pandemic.  Incentivized by the FCA’s bounty provisions—which reward qui tam relators with a share of the government’s recovery—repeat relators such as GNGH2 and “Relator, LLC” have scoured publicly available data to identify ineligible PPP loan recipients.  Here, GNGH2 will be rewarded with a relator’s share of $203,183 for its efforts in bringing to light the New Jersey company’s alleged loan ineligibility.  Last year, GNGH2 received a relator’s share of an undisclosed amount when a Wisconsin advertising agency paid $2.25M to settle similar allegations that it was ineligible for a second-draw PPP loan because of its required registrant status.

The fact that GNGH2’s two successful lawsuits were based on publicly available information demonstrates the relatively low barrier to entry for filing suits alleging PPP fraud and suggests that this recently unsealed action may be a harbinger of more to come.  This settlement also reinforces the fact that PPP borrowers may still face further inquiry about PPP loan eligibility even after the Small Business Administration has approved forgiveness of a PPP loan. 

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This week’s episode covers GSA’s Acquisition Guidance for Procuring 5G Technology, implementation of OMB’s memo focusing on “No TikTok on Government Devices,” and an ASBCA matter involving intracompany lease payments, 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.

Listen: Crowell.com | PodBean | SoundCloud | Apple Podcasts