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

On March 21, 2008, the Executive Director of Contracts for the Defense Contract Management Agency, David E. Ricci, indicated that DCMA is considering a single process initiative (SPI) approach to streamline the morass of specialty metals rules that have come about in the last 18 months due to various legislative and regulatory changes.  This announcement follows a new Class Deviation issued by DCMA on January 29, 2008 to implement the latest legislative directives, superseding prior announcements.

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Introduction

By John W. Chierichella

In an August 2007 article entitled "Political Connections and the Allocation of Procurement Contracts," Eitan Goldman, Jorg Rocholl and Jongil So constructed an analytical model that, in the authors' opinion, establishes an empirical link between "political connections" and the allocation of Government contracts.  The authors' conclusions are perhaps best encapsulated by the following passage from page 4 of their study:

…companies that are connected to the winning party experience an increase in their contracts upon a change in control of the House or Senate or upon a change in control of the administration, while those connected to the losing party suffer a decrease in their procurement contracts following these changes … The paper thus highlights one crucial way in which political contributions can have a direct influence on company value.

Readers are, of course, free to agree or disagree with the study, to disregard it, or to attack it premises and methodologies.  The fact that the study exists, however, is probably reflective of an increasing cynicism with respect to the operation of Government as a whole.  Those who have worked with the Government procurement system, whether as participants, advisors, or counselors, while no less cynical than the population as a whole – and perhaps more so in some respects – are not likely to embrace or applaud the study, or to compliment its methodological approach to a highly complex issue.

In this latter regard, we are pleased to provide in this issue a Guest Commentary relating to the above-referenced study.  Our Guest Commentator needs no introduction to those whose Government Contracts experience predates the advent of cell phone technology, the internet and MTV.  William P. Rudland is the former Chief Trial Attorney of the United States Air Force.  Following his retirement from the Air Force, Bill practiced Government Contracts law, both in private practice and in the corporate world, and authored the well known book "Defective Pricing" (Federal Practice Press, 1990).  Bill's comments on the study are as refreshingly candid as those he reserved for unmeritorious appeals in his prior life.

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In March 2008, the U.S. Department of Justice ("DOJ") issued guidelines for the selection, scope of duties, and duration of corporate monitors in cases of deferred prosecution and non-prosecution agreements.  Although such agreements have become increasingly common, the process pursuant to which monitors are selected has recently drawn scrutiny in the wake of a no-bid, multi-million dollar monitoring contract awarded to the consulting firm of former Attorney General John Ashcroft, which was selected for the assignment by a former colleague of Mr. Ashcroft who worked under him when he headed the DOJ.  The ensuing controversy has prompted the DOJ to announce nine principles for the appointment and use of corporate monitors.  Foremost among these is sensitivity to conflicts of interest, nomination of the monitor by an ad hoc committee in the office negotiating the agreement, and approval by the Deputy Attorney General.  Other principles stress the monitor's primary responsibility to "address and reduce the risk of recurrence of the corporation's misconduct" through involvement with crafting the corporation's internal controls and compliance programs and familiarity with the "full scope of the corporation's misconduct."  All the while, the monitor should remain in "open dialogue" with the Government and the corporation and keep the former apprised of the latter's amenability to the monitor's recommendations.  Depending on the particular circumstances of a case, a monitor may be required to report undisclosed or new misconduct to the Government and should be prepared to remain in place if, "at the discretion of the Government," the corporation has not complied with the agreement to the Government's satisfaction.

Click here for the DOJ's memorandum on the selection and use of monitors in deferred prosecution agreements and non-prosecution agreements.

Authored by:

Daniel J. Marcinak

202.772.5391

dmarcinak@sheppardmullin.com

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• Check, is the patent rights clause in your RFP?
• Should it be?
• The clause gives government rights in "subject inventions."
• You have a "subject invention" if:
  • It is "conceived" or "reduced to practice" during contract performance;
  • And there is a "close" relationship between invention and SOW;
  • Or you can't prove otherwise - record keeping is all important
• You may have a "subject invention" even if:
  • You filed your patent application before contracting;
  • Your invention cost was properly charged to IR&D
• You must disclose a "subject invention" within:
  • 2 months of your internal "invention" report; or
  • 6 months of learning of the "invention."
• Disclosure is required for "inventions" - this means inventions that "are" or "may be" patentable.
• Failure to timely disclose can result in your forfeiture of all rights.
• "Subject inventions" cannot be exclusively licensed for foreign manufacture.

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