Change is in the air for the Buy American Act (“BAA”). On July 30, 2021, the Federal Acquisition Regulatory Council published a proposed rule to the Federal Acquisition Regulation (“FAR”) to implement President Biden’s Executive Order 14005, on “Ensuring the Future is Made in America by All of America’s Workers,” which seeks to further strengthen U.S. Buy American laws and further encourage domestic procurement (previously discussed here). A public meeting to discuss the proposed rule is scheduled for August 26, 2021, and comments will be due September 28, 2021. This blog article summarizes the new BAA proposed rule, offering a primer in advance of the public meeting next week and the public comment deadline next month. Yes, folks – change is in the air. Fasten your seatbelts; we may encounter some turbulence ahead.

Continue Reading Fasten Your Seatbelts – Proposed Rule Implementing Biden’s “Buy American” Mandates

Procedural History

In August 2016, the Department of Homeland Security proposed an “International Entrepreneur” parole rule that would allow qualifying foreign entrepreneurs to develop and grow their start-up companies in the United States. After public comment, the rule was finalized and released in the closing days of the previous Administration.
Continue Reading Dear Congress: Your District Needs a New E-4 Visa for Promising Entrepreneurs

The Department of Defense intends to issue a proposed rule to ensure that substantial future independent research and development (“IR&D” or “IRAD”) expenses, which can be used as a means to reduce bid prices in competitive source selections, are evaluated in a uniform way during the competitive process.   81 Fed. Reg. 6488 (February 8, 2016).  However, interested parties and industry leaders can help formulate this regulation before the DoD issues the proposed rule.
Continue Reading DoD Seeks Public Comments Before Issuing a Proposed Rule on IR&D Costs

On February 11, 2016, the Financial Industry Regulatory Authority (“FINRA”) filed a proposed rule with the Securities and Exchange Commission (“SEC”) that would require individuals who “design, develop or significantly modify algorithmic trading strategies” (or “ATS”) as well as individuals responsible for the “day-to-day supervision or direction of the development process,” to pass a qualification exam and register with FINRA as securities traders. During the comment period, FINRA clarified that the rule would not apply to every person who touches or is otherwise involved in the design of a trading system, but that it would be up to each firm to determine who is primarily responsible for the design of the ATS system.  The rule defines ATS as “any program that generates and routes (or sends for routing) orders (and order-related messages, such as cancellations) in securities on an automated basis” and identifies eight typical programs that it would consider an ATS.  (FINRA Reg. Notice 15-06.)  The rule was prompted by FINRA’s concern that programmers be properly educated in securities regulations in order to avoid inaccurate orders, inadequate risk management controls, and other problematic conduct. Commentators criticized the proposal as having a “potential chilling effect” by “discouraging well-qualified developers from participating in the design, development or modification of algorithmic trading strategies, and even from affiliating with FINRA member firms.”
Continue Reading REGULATORS, QUANT UP! New Rules from FINRA, SEC and CFTC Target Automated Algorithmic Trading

By Anthony N. Moshirnia

Much has been written in this space and others regarding the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), and its likely and observed impact on the business and legal landscape (e.g., executive compensation, whistleblower incentives, and “conflict minerals”. Not least among the Act’s effects is its mandate for a large number of rulemakings across government regulatory bodies. In total, the Dodd-Frank Act mandated 398 different rulemakings from 20 different regulatory agencies. In some cases, the Act requires more than one agency to issue rules on the same topic. Congress also specified a rulemaking schedule that applies to most of the rules required under the Act. 275 of the required rulemakings carry Congressionally mandated deadlines or annual requirements.


Continue Reading The Sisyphean Task Of Dodd-Frank Rulemaking

By David S. Gallacher and Kerry O’Neill

Last April, we wrote about proposed changes to Department of Defense ("DoD") reporting requirements for independent research and development ("IR&D"), raising concerns about how the proposed change would tie recoverability of IR&D costs to new reporting and disclosure requirements. Recently, Defense Federal Acquisition Regulation Supplement ("DFARS") 231.205-18(c) was finalized, with changes. See 77 Fed. Reg. 4632 (Jan. 30, 2012). This final rule is a mixed bag that got some things right, but also leaves some of the most serious issues unresolved.


Continue Reading Final Rule for IR&D Reports Fails to Address Most Serious Questions

By David Gallacher and John Bonn

On January 2, 2011, the President signed the James Zadroga 9/11 Health and Compensation Act of 2010, Pub. L. No. 111-347, which set up a relief fund for victims, first responders, and construction workers who were injured in the September 11 terrorist attacks in New York City. To pay the estimated $4.3 billion price tag for the Act, Section 301 of the Act imposed on any foreign person a tax equal to 2% of federal procurement payment received by that foreign person. See 26 U.S.C. § 5000C. In addition, any person who makes or otherwise is a withholding agent with respect to such a payment is required to withhold the 2% tax from the federal procurement payment and remit the tax withheld to the Internal Revenue Service (“IRS”) under tax laws and regulations applicable to withholding of United States taxes from payments made to foreign persons. Although the tax has been in place for more than 14 months and the IRS has issued a revised Form 1042 with revised instructions to implement withholding and reporting obligations, the Government is only now turning to the details of how this tax will be accounted for in connection with the procurement process. And – as is often the case – there is quite a lot of devil in those details.


Continue Reading Terrorism and Taxes – Proposed FAR Rule Imposes 2% Tax on Foreign Offers to Fund 9/11 Relief Fund

By Curt Dombek, Thad McBride and Mark Jensen

In a significant step in the reform of U.S. export controls, the Department of Commerce issued a proposed rule on Friday, July 15, 2011, that would fundamentally affect the overlap between, and operation of, the International Traffic in Arms Regulations (“ITAR”) administered by the U.S. Department of State, Directorate of Defense Trade Controls, and the Export Administration Regulations (“EAR”) administered by the Department of Commerce, Bureau of Industry and Security. See Proposed Revisions to the Export Administration Regulations (EAR): Control of Items the President Determines No Longer Warrant Control Under the United States Munitions List, 76 Fed. Reg. 41,958 (July 15, 2011) (amending 15 C.F.R. Pts. 730, 732, 734, 738, 740, 742, 743, 744, 746, 748, 756, 762 ,770, 772 and 774). The changes, which are based on the interagency review of the U.S. export control system that was initiated by President Obama in August 2009, would create a regulatory construct for harmonizing the United States Munitions List (“USML”) of the ITAR and the Commerce Control List (“CCL”) of the EAR, as well as standardizing certain key definitions between the two regulatory systems.
 


Continue Reading Proposed Rule Details Major Changes to U.S. Export Controls

By David S. Gallacher

Those familiar with Government contracting know at least a little bit about the elusive and fickle regulatory requirements for Independent Research and Development (“IR&D” or “IRAD”) costs. IR&D is a means by which the U.S. Government supports a Contractor’s independent R&D efforts. By reimbursing a Contractor’s independent R&D costs, the Government long has hoped to advance the state of the art without stifling a contractor’s innovation under the weight of a federal bureaucracy, while simultaneously banking on the fact that the U.S. Government also will benefit from the technology advancements. But two recent developments may change the essential nature of IR&D, making it less “independent” and more “dependent” on Government rights and oversight. To quote Bob Dylan – “the times they are a changin’.” 
 


Continue Reading The Times They Are A Changin’ – Independent Research and Development May Not Be So “Independent” Any More

By Curtis M. Dombek

On March 15, 2011, the State Department Directorate of Defense Trade Controls published a proposed new rule that marks a significant change in the approach to ITAR regulation. Historically, ITAR controls have always applied to commercial end products incorporating any ITAR controlled components. This was the basis of the highly publicized QRS chip case, in which the State Department asserted continuing ITAR control over avionics chips that had originated on a military program but had come to be widely used in civilian jet aircraft. That case resulted eventually in a special exception to allow jet aircraft to remain in production and passenger service with the QRS chip and without ITAR licensing.
 


Continue Reading Proposed ITAR Rule To Relax ITAR Licensing For Components Incorporated Into Commercial Products

By: John W. Chierichella and W. Bruce Shirk

We previously noted DCAA’s hasty implementation of the Court of Appeals for the Federal Circuit’s (“CAFC’s”) decision in Gates v. Raytheon Co., 584 F.3d 1062 (Fed. Cir. 2009), requiring daily compounding of interest on adjustments made to rectify Cost Accounting Standards (“CAS”) noncompliances. DCAA Implements Federal Circuit Decision Requiring Interest Compounded Daily on Adjustments for CAS Noncompliances (June 14, 2010). We say “hasty” because – while noting that its holding was required by Canadian Fur Trappers v. United States, 884 F.2d 563 (Fed. Cir. 1989) – the panel expressed reservations regarding that decision’s validity, commenting that appellee’s (Raytheon’s) arguments “may support the proposition that Canadian Fur Trappers was erroneously decided.” Not surprisingly, Raytheon accepted this implicit invitation to petition for rehearing en banc, and that petition is currently pending. Nonetheless, the FAR Councils are now rushing to mimic DCAA by proposing in equally hasty fashion to extend the holding to overpayments under the Truth in Negotiations Act (“TINA”). 75 Fed. Reg. 57719-57721 (Sept. 22, 2010).
 


Continue Reading Rush To Judgment – FAR Councils Propose Daily Compounding Of Interest For TINA Violations