The Office of New York State Attorney General Letitia James (“NYAG”) has filed a lawsuit to shut down technology company Coinseed.  The state has accused the firm of selling unregistered securities in the form of digital tokens and operating as an unregistered broker-dealer while making material misrepresentations about the company, its management team, and fees charged to investors in connection with cryptocurrency trades.
Continue Reading New York Attorney General Sues to Shutter Cryptocurrency Trading Firm Coinseed

With a new presidential administration promising vigorous antitrust enforcement, and a new Democratic majority in Congress seeking to make drastic changes to U.S. antitrust laws, the technology and healthcare industries have found themselves the main targets of increased antitrust scrutiny.  Though companies engaging in government contracting, particularly in the aerospace and defense industries, already have had to deal with a range of antitrust issues – for example, the Department of Justice, Antitrust Division (the “DOJ”) launched the Procurement Collusion Strike Force (“PCSF”) in 2019 (discussed in more detail here), which focused on “deterring, detecting, investigating and prosecuting antitrust crimes … in government procurement, grant and program funding” – they may find themselves subject to increased antitrust enforcement in 2021.  In fact, on February 23, 2021 PCSF Director Daniel Glad confirmed he is “focus[ed] on three things in 2021: expanding our platform with PCSF building out our data analytics program; and bringing investigations to the recommendation/disposition stage.”
Continue Reading How a New Era in Antitrust Enforcement May Impact Government Contractors

The Secretary of the U.S. Department of Health and Human Services recently added government contractors to the list of entities eligible for immunity from liability under the Secretary’s March 17, 2020, Public Readiness and Emergency Preparedness Act (“PREP Act”) declaration.  The PREP Act protects individuals and companies from liability for death or other tort-like harm in connection with the pandemic response, except for cases involving “willful misconduct.”  Under the recent amendment, government contractors acting with authorization from an executive department or agency—or who could be so authorized—are protected from liability when they prescribe, administer, deliver, distribute, or dispense Covered Countermeasures, as long as they meet the other requirements of the Act.  Covered Countermeasures could include the COVID-19 vaccine or personal protective equipment like respirators.  We wrote previously about the evolving list of masks and respirators qualifying as Covered Countermeasures here, here, and here.   
Continue Reading Authorized Government Contractors Now Covered Persons Under the PREP Act

On January 25, 2021, President Joe Biden signed an Executive Order on “Ensuring the Future is Made in All of America by All of America’s Workers,” laying his administration’s foundation for further strengthening Buy American laws and encouraging domestic procurement. Using the broad phrase “Made in America Laws,” the EO aims to strengthen “all statutes, regulations, rules, and Executive Orders relating to Federal financial assistance awards or Federal procurement, including those that refer to ‘Buy America’ or ‘Buy American.’” This comes just days after the FAR Council’s implementation of President Trump’s Executive Order 13881, which required significant changes to the regulations implementing the Buy American Act, 41 U.S.C. §§ 8301-8305 (“BAA”), as discussed in our prior blog article. While only time will tell if the FAR Council will revisit the newly released regulations – they probably will, but not until later this year – we have provided below several key points from the EO so companies can start planning now for future developments.
Continue Reading Made in America – President Biden’s Executive Order on Buying (Even More?) American

On December 21, 2020, the Department of Defense (“DoD”) published a final rule in the Federal Register that codifies the National Industrial Security Program Operating Manual (“NISPOM”) in the Code of Federal Regulations (“CFR”) at 32 CFR part 117. The rule will become effective on February 24, 2021, giving contractors six months from the effective date to comply with the changes. Comments on the proposed change are due by February 19, 2021.[1]
Continue Reading The NISPOM is Becoming a Regulation & Contractors Have Six Months to Comply

On December 28, 2020, the FAA issued a new rule, published in the Federal Register on January 15, 2021, which will impose a requirement (subject to two exceptions described below) for every unmanned aircraft weighing over 0.55 pounds and operated in U.S. navigable airspace to incorporate a remote identification capability so that it can be tracked in U.S. air traffic.  The new rule takes effect 60 days after publication in the Federal Register, but operators of unmanned aircraft have 30 months to bring their operations into compliance with the new rule.  Manufacturers of unmanned aircraft have 18 months to incorporate such systems into the unmanned aircraft they manufacture.
Continue Reading New Rules Governing Remote Identification of Unmanned Aircraft

According to a recent decision in United States ex rel. Scollick v. Narula, Case No. 14-cv-1339 (D.D.C. Nov. 6, 2020), the fraudulent inducement theory of False Claims Act (“FCA”) liability does not require plaintiffs to satisfy the “demanding” materiality standard set forth in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).  Though that may sound like good news for plaintiffs, it is not.  The fraudulent inducement theory holds that fraud in a contractor’s proposal can taint every claim for payment it submits under the resulting contract, making them all “false claims” under the FCA.  This bears hefty consequences if proven: the defendant could be liable for civil penalties on every single claim for payment submitted over the life of the contract, in addition to treble damages the government may have suffered as a result of the fraud.  Perhaps in recognition of these severe consequences, the U.S. District Court for District of Columbia held that a plaintiff must plead and prove an even higher standard than Escobar materiality to establish fraudulent inducement liability—actual causation.  Rather than alleging that misrepresentation by the defendant merely was material to the government’s decision to award the contract to defendant, the Scollick decision concludes that “a misrepresentation in the defendant’s bid must have caused the government to award the defendant the contract.”  If the FCA materiality standard is “demanding,” then the actual causation standard is formidable.
Continue Reading “Would You Rather…” – Escobar’s Demanding Materiality Standard or Actual Causation?

On January 19, 2021, the Federal Acquisition Regulatory Council published the final rule amending the Federal Acquisition Regulation (“FAR”) in accordance with President Trump’s Executive Order 13881, “Maximizing Use of American-Made Goods, Products, and Materials.” As we discussed in our prior blog articles here (discussing the September 2020 proposed rule) and here (discussing the July 15, 2019 order), the Executive Order required significant changes to the regulations implementing the Buy American Act, 41 U.S.C. §§ 8301-8305 (“BAA”). The final rule varies very little from the September 14, 2020 proposed rule (discussed in greater detail here). Accordingly, the final rule amends applicable FAR clauses with three key impacts:
Continue Reading “Buy (More) American” – Final Rule Implements Changes to the Buy American Act Regulations

Legislation directing the National Institute of Standards and technology (“NIST”) to create standards and guidelines for securing Internet of Things (“IoT”) devices used by Federal agencies and their contractors recently passed the Senate and is heading to the President’s desk. We have been following this legislation closely for the past two years, here and here.  The bill passed in the Senate without amendment by unanimous consent.
Continue Reading IoT Legislation Passes Congress

A Securities and Exchange Commission (“SEC”) plan to create a registration exemption for certain finders has generated a mixed response.  The nearly 90 comments received by the SEC by the November 12, 2020 close of the comment period reflect a clear divide along predictable lines.  Broker-dealers, issuers, and some practitioners lauded the proposal for bringing regulatory clarity to what has long been a cloudy issue while regulatory groups and investor advocates criticized the plan for allowing unregistered finders to conduct brokerage activities without sufficient investor protection mechanisms.
Continue Reading SEC Proposal to Exempt Finders from Registration Generates Split Reaction