Have DoD Contractors and Subcontractors Been Drafted? Once Voluntary Defense Industrial Base CS/IA Regulations Now Mandatory and Aligned With New DFARS Cybersecurity Rules

When last we left the Department of Defense, it had issued a rather wide-reaching interim DFARS rule addressing cybersecurity practices, data retention, and cloud services purchasing guidance. Now, effective October 2, 2015, before the ink can dry on those nascent rules (comments are due October 26, 2015), the DoD has applied them to all DoD contractors in regulations governing the once-voluntary DoD-Defense Industrial Base (DIB) Cybersecurity (CS) activities (32 C.F.R. Part 236). That’s right, what was once entitled a “voluntary” program is now a mandatory program; just in time for a host of data retention and cyber-reporting requirements! Continue Reading

Whew! That Was Close – D.C. Circuit Reaffirms Application of Attorney-Client Privilege and Attorney Work Product Doctrine in Internal Investigations

On August 11, 2015, the U.S. Court of Appeals for the D.C. Circuit issued a writ of mandamus supporting the robust applicability of the attorney-client privilege and attorney work product doctrines in the context of False Claims Act (“FCA”) investigations conducted under the direction of corporate and outside counsel. This marks a continuation of its repudiation of a 2014 lower-court decision that significantly eroded these privileges. Interpreting the scope of the privileges in the context of internal investigations of potential FCA violations is especially tricky because of the unique roles played by the parties (the Government as a potential plaintiff, the relator as a bounty hunter, and the corporation-as-defendant). This latest ruling from the D.C. Circuit, in a case arising out of wartime contracts in Iraq run by Kellogg, Brown & Root, Inc. (“KBR”)(formerly part of Halliburton), is a breath of fresh air for companies doing business with the Federal Government. The ruling from the Court of Appeals also sends a signal to the trial court that an overly narrow view of the attorney-client privilege and attorney work product doctrine creates unacceptable uncertainty that will ultimately be rejected on appeal. Continue Reading

DOD Issues White Paper Aimed at IR&D Costs

On August 26, 2015, the Department of Defense (“DOD”) issued a White Paper announcing that, beginning in FY 2017, all defense contractors will be required to notify DOD before undertaking any new Independent Research and Development (“IR&D”) projects if contractors would like their IR&D costs to be deemed allowable. Entitled “Enhancing the Effectiveness of Independent Research and Development,” the White Paper explains that both DOD and the Industrial Base need to work together to ensure the department has visibility into “government-reimbursed IR&D efforts.” Specifically, the White Paper states, “[t]o ensure that a two way dialogue occurs between the Department and IR&D performing organizations and to provide for some minimum oversight of IR&D, the department believes that proposed new IR&D efforts should be communicated to appropriate DOD personnel prior to the initiation of these investments and that results from these investments should also be shared with appropriate DOD personnel.” Continue Reading

DoD Addresses Cybersecurity Preparedness, Incident Reporting, and Cloud Computing Acquisitions with new DFARS interim rule

Announced and effective today, August 26, 2015, DoD has issued an interim rule that significantly expands existing DFARS provisions and clauses requiring contractors and subcontractors to report cyber incidents.  The interim rule will apply “to all contractors with covered defense information transiting their information systems,” an estimated 10,000 contractors.  Additionally, in an effort to ensure acquisition uniformity across the Department, the interim rule implements DoD policies and procedures to be used when contracting for or utilizing cloud computing services.  Due to “urgent and compelling reasons,” the rule was issued without an opportunity for public comment.
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Supreme Court to Hear VA Procurement Controversy This Fall

In a matter of keen interest to the small business community, last month the Supreme Court granted certiorari in Kingdomware Technologies, Inc. v. United States. The Court’s decision will hopefully bring some closure to the long-running dispute between the Department of Veterans Affairs (“VA”) and veteran-owned businesses over the VA’s refusal to set aside procurements under the so-called “Rule of Two.” Continue Reading

Heads Up! Inflation Adjustments to Acquisition Thresholds Are Just Around the Corner

On July 2, 2015, the FAR Council issued a Final Rule that amends the FAR, effective October 1, 2015, to implement inflation-based adjustments to certain acquisition-related monetary thresholds. 80 Fed. Reg. 38293. The modifications will be made to comply with 41 U.S.C. § 1908, which requires the FAR Council to calculate the adjustments every five years based on the Consumer Price Index for all urban consumers. The statute does not require adjustments to thresholds established by the Construction Wage Rate Requirements statute (the Davis-Bacon Act), the Service Contract Labor Standards statute, or the United States Trade Representative, pursuant to Title III of the Trade Agreements Act of 1979. Continue Reading

As GSA FAS Struggles to Reinvent Itself, Contractors Suffer

Note: The following post is adapted from the forthcoming 2015/2016 GSA Schedule Handbook, published by ThompsonWest, due out later this year.

The last year has been a tough one for the GSA Multiple Award Schedules (“MAS”) program.  The Federal Acquisition Service (“FAS”) – the agency charged with administering the MAS program – has struggled to re-invent itself and its contracting vehicles in order to ensure they both stay relevant in an increasingly competitive federal marketplace.  The byproduct of this struggle has been mostly negative for Schedule vendors. Continue Reading

The FCPA Challenges of Doing Business in Cuba

This article originally appeared in the June 24, 2015 edition of Corporate Counsel and is reprinted with permission. © 2015 ALM Media Properties, LLC.

On December 17, 2014, President Barack Obama announced a set of diplomatic and economic changes aimed at normalizing relations between the United States and Cuba after nearly 55 years of barriers between the two countries. Obama stated that diplomatic relations would be re-established with Cuba, and on May 29 his administration removed Cuba from the U.S. list of state sponsors of terrorism. New regulations issued by the U.S. Department of Treasury and U.S. Department of Commerce on January 16, 2015, allow certain U.S. exports of telecommunications, construction materials and farming equipment, and allow U.S. banking transactions in Cuba. Continue Reading

Government Contracting Abroad: Beware Compliance Risks

On June 16, 2015, IAP Worldwide Services Inc., a private defense and government contracting company, agreed to pay $7.1 million to settle criminal charges under the U.S. Foreign Corrupt Practices Act (“FCPA”) related to bribing Kuwaiti government officials to secure a Kuwaiti government contract. On the same day, James Michael Rama, IAP’s former Vice President of Special Projects and Programs, also pleaded guilty to FCPA charges. For U.S. Government contractors, the opportunities to provide services and expertise to foreign governments are lucrative, but this enforcement action also highlights the risks associated with obtaining such contracts. Continue Reading