Two recent developments have the potential to change the landscape for contractors providing services to the Government. Government contractors and subcontractors are required to comply with a host of regulations governing their hiring practices and the wages they pay and benefits they provide to certain categories of employees. A recent Executive Order and court decision, however, have the potential to alter these requirements drastically.
On January 7, 2015, the U.S. Department of Defense (“DoD” or “the Department”) released an update for DoD Instruction 5000.02, on the “Operation of the Defense Acquisition Service.” The new Instruction is designed to assist acquisition personnel in tailoring the acquisition process to the specific item or system being purchased and to further the Department’s Better Buying Power initiative, launched in 2010. The Instruction focuses largely on the acquisition of DoD-specific software and weapons systems.
In early December 2014, the United States Court of Appeals for the First Circuit reaffirmed that circuit’s broad interpretation of the False Claims Act’s “first-to-file” bar, 31 U.S.C. § 3730(b)(5), in United States ex rel. Ven-a-Care of the Fla. Keys v. Baxter Healthcare Corp., 772 F.3d 932 (1st Cir. 2014). The first-to-file bar, as we have discussed in previous posts, prohibits a second relator from going forward with a False Claims Act (“FCA”) case that is similar to an earlier relator’s case.
On November 20, 2014, the District Court for the District of Columbia once again ordered Kellogg, Brown and Root (“KBR”) to produce all documents prepared as part of an internal investigation. The District Court’s decision comes after the D.C. Circuit, in an opinion that was welcome news for in-house counsel, found that the documents prepared during an internal investigation were protected by the attorney-client privilege since one of the “significant purposes” of the communications was to obtain or provide legal advice. On remand, the District Court nonetheless ordered KBR to produce the documents because it found that, under the doctrine of implied waiver, KBR waived the privilege by placing in dispute what otherwise would have been privileged matters when it represented to the Court that the internal investigation resulted in no evidence of fraud.
On January 15, 2015, the Department of Treasury’s Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations to implement changes in U.S. policy toward Cuba announced by President Obama on December 17, 2014.
Sheppard Mullin’s Government Contracts, Investigations & International Trade Group Wishes You And Yours The Happiest Of Holidays In 2014 And Much Success In 2015.
Most companies are worried about external threats – things that are coming at their people, their group, their company, their government, all from an outside actor. Like government’s with an eye on counter-intelligence, however, savvy businesses also realize that their employees can also pose a very real, internal threat. While an insider breach is not necessarily a common event, when it does happen, it tends to happen on a large scale. Last year, the FBI reported that when a malicious insider breach surfaced, it cost industry $412,000 per incident, on average. Over ten years, the average loss per industry is $15 million. And, unless you’ve been hiding under a rock, you know that the Government is not immune to insider breaches and the reputational impact to federal contractors resulting therefrom. Exacerbating, or perhaps facilitating, this threat is the manner in which companies (and governments) store, transfer, and maintain vital company records and data. With the right password and a $16 thumb drive, an intern can steal the corporate keys to the kingdom, and still be home in time for lunch. Simply put, all employers face the risk of insider threats which are more perilous than ever in the computer age. Recognizing that internal threats are real, the issue, then, is how to stop these threats from manifesting. Learning from recent high-profile mistakes, the Government is trying to make sure its contractors stay ahead of the risk of an internal breach.
The pricing of spare parts has been a subject of Government criticism for decades. Pick up any DCAA or IG audit report relating to spare parts or any intra-agency memorandum on the topic and you will sense the dudgeon with which the Government reacts to the prices of those parts.
On November 18, 2014, the General Services Administration (“GSA”) hosted an Industry Day seeking feedback on its proposal to add a Cloud Computing Special Item Number (“SIN”) on its IT Multiple Award Schedule 70 (“MAS IT-70”). A SIN is GSA’s categorization method that groups similar products, services, and solutions together to make the acquisition process easier. This move is not surprising in light of the Government’s “Cloud First” policy (announced in 2011), which requires agencies to evaluate cloud computing options “whenever a secure, reliable, and cost-effective option exists.” Further, GSA’s latest proposal noted that a cloud SIN “would … enabl[e] agencies to take full advantage of cloud computing benefits to maximize capacity utilization, improve IT flexibility and responsiveness, and minimize cost.” In the end, by offering a cloud-specific SIN, GSA hopes to drive more value into the schedules program by providing cloud-based options more rapidly and easily than before. This article will give you a brief overview of the new, proposed SIN.
On November 18, 2014, the U.S. Government Accountability Office (“GAO”) published its Annual Report to Congress (B-158766, November 18, 2014), which contains the statistics for bid protests filed at GAO in FY 2014. Frankly, it’s a mixed bag – protests are up, sustained protests are down, but the overall “effectiveness rate” (where the agency grants some type of remedy or corrective action for a protestor) remains flat. Because there are many who think that the bid protest process is broken, it might be worth a closer look at some of the statistics to see if bid protests are being abused (as some in Government might claim) or if the process is working.