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

By Keith R. Szeliga

On July 8, 2010, the FAR Councils issued an interim rule, effective immediately, that requires contractors to report information regarding executive compensation and first-tier subcontract awards. See 75 Fed. Reg. 39414. The interim rule implements the Federal Funding Accountability and Transparency Act of 2006 (“FFATA”) (Pub. L. No. 109-282), as amended by the Government Funding Transparency Act of 2008 (“GFTA”) (Pub. L. No. 110-252). In accordance with the requirements of FFATA and GFTA, the Government will disseminate the information reported under the interim rule – including the names and total compensation of the contractor’s five most highly compensated executives – to the general public via the USASpending.gov website.
 

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By Bethany Hengsbach

The United Kingdom’s answer to the Foreign Corrupt Practices Act (“FCPA”) has arrived.  The UK Bribery Act 2010, which received Royal Assent on April 8, 2010, is both stricter and broader than the FCPA.  The U.K. Ministry of Justice announced on July 23, 2010 that the implementation of the Act will be delayed until April 2011, which gives companies much-needed time to prepare for the changes it will bring.

The following article by Bethany Hengsbach was originally published in the Financial Executive. To read the article please click here, or visit the Financial Executive website.

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By Christopher Noon

On July 22, 2010, President Obama signed into law the Improper Payments Elimination and Recovery Act of 2010 (the “Act”). The Act significantly modifies and expands the Improper Payments Information Act of 2002 by placing a greater obligation on the federal government to reduce the amount of improper payments made every year. The President estimated that approximately $110 billion was improperly paid by the government last year, including improper payments made to government contractors. The new legislation will now require executive agencies to conduct recovery audits in an effort to reduce this figure by $50 billion by 2012.
 

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By W. Bruce Shirk and Anne B. Perry

It has long been questioned whether the “Christian Doctrine,” pursuant to which mandatory contract clauses reflecting core procurement policy are incorporated into government prime contracts by operation of law, can be used to incorporate such clauses into subcontracts. That question may now have an answer. In a non-CDA decision issued last year that has flown somewhat “under the radar,” the Department of Labor’s Administrative Review Board (“ARB”) held that at least some such clauses are incorporated into subcontracts by operation of law. OFCCP v. UPMC-Braddock, ARB Case No. 08-048 (“UPMC-Braddock”).
 

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By Anne B. Perry and Jessica M. Madon
 

On July 16, 2010, the Court of Federal Claims (“COFC”) determined that a Government Accountability Office (“GAO”) bid protest recommendation that an awardee, Turner Construction Co. (“Turner”), be disqualified on the basis of organizational conflicts of interest (“OCI”) under an Army Corps of Engineers (the “Army”) hospital renovation contract was irrational. See Turner Construction Co., Inc. v. United States, Fed. Cl., No. 10-195C, July 16, 2010. We previously discussed the implications of the GAO decision here.
 

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By John W. Chierichella and W. Bruce Shirk

Under our system of laws, legal liability has customarily been based on certain showings, e.g., that an act or omission actually caused an injury, with liability usually measured by the aggrieved party’s actual loss.  These useful legal constructs have served us well over the years in helping to avoid misuse of the law through the imposition of liabilities without proof of injury or without regard to the damage actually caused by the alleged misconduct.  Proximate cause, injury in fact and proportionality of response were nice concepts while they lasted, but they appear to have outworn their welcome within the Department of Defense.  Under regulations proposed by DOD, it would soon have the power to withhold anywhere from 10 percent to 100 percent of the payments otherwise due and owing to its contractors.  The basis for this withholding would be a mere determination by the Defense Contract Audit Agency that one or more “deficiencies” exist in any of the following contractor systems: cost estimating, earned value management, or EVMS; material management and accounting, or MMAS; accounting; purchasing; and property management.

Click here to read this entire article by John W. Chierichella and W. Bruce Shirk, which was originally published by Thomson Reuters in its July 12, 2010 issue of the Westlaw Journal Government Contract (formerly Andrews Litigation Reporter) and is reprinted here with permission.

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By Bethany Hengsbach

Primarily as a result of the recent dramatic increase in the U.S. government’s enforcement effort, the Foreign Corrupt Practices Act (“FCPA”) has received a great deal of attention of late. The financial reform legislation signed by President Obama on July 21, 2010 adds an incentive that will likely further increase the dangers posed to companies and individuals by the FCPA. The law contains a provision that will reward whistleblowers who voluntarily provide information leading to the successful enforcement of U.S. securities laws, including the FCPA, with between 10% and 30% of any recovery over $1,000,000. The whistleblower must provide “original” information, not already known to the SEC and not merely derived from existing investigations, audits, or reports. The SEC will have discretion to set the amount within the 10% - 30% range, based on the significance of the information to the success of the action, the whistleblower’s degree of assistance, and the interest of the SEC in using whistleblower payments to deter problematic conduct in the future. The provision also extends the reward to “related actions” taken by other prosecuting agencies based on the reported information, and thus will apply to actions initiated by the DOJ and other federal, state, and foreign law enforcement agencies. 
 

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By John W. Chierichella and Jessica M. Madon

As a follow-up to our previous blog article, available here, we provide this month a more in depth analysis of some of the key features of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”) passed July 1, 2010. Our focus this month is on the expansion of the types of activities and persons that may be sanctioned. We also address the new mandatory representation and certification for government contractors. Finally, we note that the EU and Canada have imposed similar sanctions against Iranian transactions and we provide a brief synopsis of those sanctions.
 

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By John W. Chierichella and W. Bruce Shirk

The Department of Defense recently proposed a rule that would revise guidance for award-fee evaluations to require:
 

• The incorporation of award-fee plans into all DOD award-fee contracts,
   
• The use of objective criteria to the maximum extent possible to measure contract performance including, where appropriate, use of formula-based incentives rather than or in addition to an award fee,
   
• The elimination of provisional award-fee payments, i.e., payments made prior to evaluation of contractor performance, which have been allowed since 2003 in accordance with DFARS 216.405-2, and
   
• Reservation of at least 40% of the available award fee pool for payment after the final evaluation period.

75 Fed. Reg. 22728-29 (April 30, 2010).
 

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