Government Contracts Blog : Government Contracts Lawyer & Attorney : Sheppard Mullin Law Firm : Bids, Licenses, Awards, Conflict of Interest.

The intrusive nature of the oversight mechanisms that are available to the Government under the Recovery Act is unprecedented in federal contracting. It is a subject that has been dealt with previously in this blog (click here, here, here and here). For a useful PowerPoint summary of these mechanisms, click here. This link was used as the basis for a presentation at the recent 16th Annual Procurement Institute in which the acceptance of ARRA dollars was said to evoke memories of a 1959 movie starring James Cagney and Don Murray entitled "Shake Hands With the Devil." We leave it to you to decide if the title is apt.
 

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At their December 2009 Plenary Session, the member countries of the Wassenaar Arrangement on dual-use export controls adopted a new Note 4 to Category 5 - Part 2 of the Dual-Use List covering information security and encryption. 
 

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A recent California Court of Appeals case, Coito v. Superior Court of Stanislaus County, __ Cal. App. 4th __ (March 4, 2010), highlights an important discrepancy between state and federal protection of attorney work product as it applies to witness statements. While the federal rules and case law support a qualified privilege with regard to such statements (requiring a showing of substantial need to permit discovery), the law applicable in state courts may differ. The court in Coito, as further discussed below, followed a line of California cases that place witness statements outside of the attorney work product doctrine.
 

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Following the publication of the FAR’s Mandatory Disclosure Rule in late 2008, the Public Contracts Section of the American Bar Association organized a Task Force of leading Government contracts attorneys, DOJ fraud lawyers, federal investigators, and other experts to consider the implications of the new requirements and to draft written guidance to fill the many gaps inherent in the Rule. Sheppard Mullin’s Jonathan Aronie served on the ABA Task Force.
 

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On January 19, 2010, the Department of Justice (“DOJ”) unsealed sixteen indictments charging twenty-two individuals with violations of the Foreign Corrupt Practices Act (“FCPA”), allegedly arising from schemes to bribe foreign government officials. The DOJ also announced that, in connection with the indictments, the FBI had executed fourteen search warrants across the U.S., and the City of London police had executed seven search warrants in the U.K. The product of an FBI sting operation hailed in a DOJ press release as “the largest single investigation and prosecution against individuals in the history of the DOJ’s enforcement of the [FCPA],” the indictments may signal a fundamental shift in the DOJ’s ongoing campaign “to erase foreign bribery from the corporate playbook.”
 

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In our claims practice, we frequently represent clients seeking compensation for constructive changes. One of the most common obstacles to recovery arises where the Government employee who ordered the additional or changed work lacked the authority to do so. Invariably, the Government’s first line of defense in these cases is the well-established principle that the Government is not bound by the unauthorized conduct of its agents. Although there are certain narrow exceptions to this general rule, the absence of actual express authority can make it significantly more difficult to recover for a constructive change.
 

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On January 15, 2010, the Department of Defense announced plans to amend the Defense Federal Acquisition Regulation Supplement (“DFARS”) to allow contracting officers to withhold payments from companies with “deficient” business systems in an effort to prevent “unallowable and unreasonable costs on government contracts.” 75 Fed. Reg. 2457. Contracting officers would have the authority to withhold payments on cost reimbursement, incentive, time-and-materials, and labor-hour contracts. 
 

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On January 8, 2010, the Government Accountability Office (“GAO”) submitted its Bid Protest Annual Report to the Congress for Fiscal Year 2009. Overall, the Report reflects that FY 2009 was a busier year for GAO, and a more successful year for protestors, than FY 2008.
 

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On January 20, 2010, the President issued a Memorandum ordering the Department of the Treasury and the Office of Management and Budget (“OMB”) to block the award of government contracts to companies that are delinquent on their taxes. The Memorandum calls for the review of certifications of non-delinquency, which was added in 2008 to FAR 52.209-5, “Certification Regarding Responsibility Matters.” Citing GAO reports as a justification, the Memorandum states that “Federal contracts are awarded to tens of thousands of companies with serious tax delinquencies.”
 

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