Government Contracts Law

The U.S. Department of Veterans Affairs (“VA”) Medical Surgical Prime Vendor (“MSPV”) 2.0 Program (discussed previously here and here) has yet to make it off the ground, but in March 2021 the VA announced plans to eliminate the program by September 2023 and instead purchase from the Defense Logistics Agency’s (“DLA”) separate MSPV catalog. The VA and DLA MSPV programs are how the VA and DLA (separately) purchase most of their medical, surgical, and laboratory equipment for care centers across the country (and abroad, in the case of DLA). The VA and DLA have been exploring the possibility of consolidation since at least January 2019, but many vendors relied on the VA’s representations that it would not make any decisions on potential consolidation until at least 2025. So when the VA informed stakeholders of its new September 2023 target, Medline Industries, Inc. (“Medline”), one of the prime vendor awardees under the VA’s MSPV 2.0 Program, responded by filing a bid protest at the U.S. Court of Federal Claims. On May 28, 2021, the VA and DLA decided to take corrective action, asking the Court for six months to re-evaluate the issues raised by the protest. It seems that the government did not have all of its ducks in a row prior to announcing the targeted transition.
Continue Reading Ducks (Not) in a Row – VA Agrees to Take Corrective Action in Transitioning MSPV 2.0 Requirements to DLA

The Biden Administration has taken (at least temporarily) the teeth out of a Trump-era Executive Order that directed the government to “Buy American” for essential drugs and medical devices. President
Continue Reading “Buy American” Update: Essential Medicines May Continue to Come From Abroad (For Now)

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

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 October 30, 2020 the FDA published a list of essential medicines, medical countermeasures, and critical inputs as required by President Trump’s August 2020 Executive Order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs Are Made in the United States (Executive Order 13944), which required the U.S. government to purchase “essential” medicines and medical supplies produced domestically, rather than abroad. We previously wrote about this Executive Order in August (available here), expecting that once the list was issued, government agencies would begin implementing the “Buy American” priorities for these products and materials. The FDA has identified around 227 drugs and 96 devices, along with their respective critical inputs or active ingredients, that the FDA believes “are medically necessary to have available at all times” for the public health. Agencies across the federal government should now begin making non-competitive awards “to the maximum extent permitted by law,” for drugs and medical supplies on this list that are produced in the United States. We have yet to see how agencies will implement these requirements in regulations or class deviations, but publication of this list is an important first step in implementing the rest of the “Buy American” priorities in the Executive Order.
Continue Reading “Buy American” Update: FDA Issues List Of Essential Medicines Required By Executive Order

On July 15, 2020, the Department of Justice (“DOJ”) charged Andrew Marnell with bank fraud in connection with $8.5 million worth of Paycheck Protection Program (“PPP”) loans he obtained for fake business expenses, that were then spent on gambling and stock market bets, incurring millions of dollars in losses.  See United States v. Marnell, No. 2:20-mj-03313-DUTY (C.D. Cal. Jul. 15, 2020).
Continue Reading DOJ Cracks Down on COVID-Relief Fraud

Whistleblowers are a common character in investigations into governmental abuse.  They famously have exposed covert government surveillance programs, political corruption scandals, and even led to the impeachment of the president of the United States.  Some statutes also empower whistleblowers to bring claims against private businesses on behalf of the government for financial misconduct involving fraud, waste, and abuse.  In the wake of the COVID-19 pandemic, we expect to see a surge of new whistleblower claims alleging misconduct under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  Whistleblower claims could be detrimental or even fatal for businesses already struggling to recover from the economic impact of COVID-19.  Now more than ever, businesses must understand the risks and prepare for the inevitable emergence of whistleblowers to protect themselves from future claims.  
Continue Reading Prepare for a Perfect Storm of COVID-19 Whistleblower Claims

On June 4, 2020, the Jury Subgroup of the COVID-19 Judicial Task Force of the U.S. federal courts issued a report (the “Report”) containing recommendations for conducting jury trials and convening grand juries during the pandemic.  Although many federal courts have continued to hold remote hearings and conferences over the last few months, jury trials have largely been suspended across the country to protect the safety of potential jurors and court personnel.  However, as government stay-at-home orders are lifted and courts prepare to reopen their doors, advocates have called for the reinstatement of jury trials to maintain litigants’ constitutional rights and preserve public confidence in the courts.  Convened to recommend directives and policy changes related to the COVID-19 health emergency, the Task Force is made up of federal judges, clerks, attorneys, and executives from a number of circuits across the U.S.
Continue Reading COVID-19 Judicial Task Force Proposes Protocols to Reinstate Jury Trials

With the Department of Justice’s (DOJ) decision to drop charges against Michael Flynn, materiality has come to the forefront of popular legal discourse.  At the same time, prosecutors and whistleblowers will carefully consider enforcement/false claims actions against entities who may have wrongfully received relief funds under the Coronavirus Aid, Recovery, and Economic Stability Act (CARES Act).  Such actions likely will turn on whether alleged misrepresentations were materially false.  Those applying for CARES Act funds, such as those under the Paycheck Protection Program (PPP), must ensure all of their representations and certifications are truthful.  However, those accused of making misrepresentations in order to receive government funds may find refuge in a more narrow view of the materiality requirement.
Continue Reading Materiality Concerns For CARES Act Enforcement Cases

Immunity under the Public Readiness and Emergency Preparedness (“PREP”) Act is a moving target for government contractors and other companies manufacturing or distributing personal protective equipment (PPE) in the COVID-19 public health response. We wrote previously about new liability protections afforded to manufacturers and distributors of certain face masks approved by National Institute for Occupational Safety and Health (“NIOSH”) through the Families First Coronavirus Response Act, and the later expanded scope of that protection provided by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and amended PREP Act declaration by Department of Health and Human Services. Until recently, the list of devices eligible for liability immunity seemed to be continuously growing as the COVID-19 public health response required more and more PPE. But last week, the Food and Drug Administration (“FDA”) took a significant step back, retracting its Emergency Use Authorization (“EUA”) for respirators from 75 manufacturers in China, which previously had been approved for use in the response to COVID-19. This retraction has the additional effect of disqualifying government contractors, and other companies that distribute newly unauthorized respirators, from PREP Act immunity in connection with these devices.
Continue Reading Not So Fast – FDA Retracts Authorization for Some Respirators Made in China