On March 1, 2023, the U.S. Department of Defense (“DoD”) adopted, without change, Defense Federal Acquisition Regulation Supplement (“DFARS”) Case No. 2022-D010, Employment Transparency Regarding Individuals Who Perform Work in the People’s Republic of China (88 Fed. Reg. 12861), updating provisions at DFARS 225.7021 and adding contract clauses at 252.225-7057 and 252.225-7058. This latest DFARS rule reflects a shifting regulatory landscape aimed at increasing transparency and oversight of U.S. transactions involving China.

Continue Reading Continuing Skepticism on China: Final Rule Requires Disclosure of Defense Contractor Personnel in China

On March 31, the Office of Federal Contract Compliance Programs (OFCCP) rescinded a Trump Administration rule that provided a faith-based carve-out exempting federal contractors from compliance with certain anti-discrimination obligations. Federal law has long recognized a religious exemption to anti-discrimination obligations for federal contractors. The Trump Administration rule, which went into effect on January 8, 2021, expanded this faith-based carve-out. The rescission of the 2021 rule, which was published in the Federal Register on March 1, returns OFCCP to its pre-2021 religious exemption rule.

Continue Reading Rescinding a Lame Duck Trump Administration Rule, DOL Returns to Its Longstanding Policy on Religious Exemptions for Federal Contractors

Welcome to the Cost Corner. This is the first in a series of articles exploring the complex cost and pricing regulations that apply to government contractors. This article provides an overview of the regulatory framework and its rationale. Subsequent articles will explain specific aspects of the regulations in further detail and provide periodic updates on new developments.

Continue Reading Government Contracts Cost and Pricing – A Brief Overview of the Regulatory Landscape

On March 2, 2023, the Biden Administration released its National Cybersecurity Strategy. The Strategy represents the latest push by the Administration to focus on cybersecurity concerns, following the release of Executive Order 14028, Improving the Nation’s Cybersecurity in May 2021. The Strategy lays out the cybersecurity goals and objectives for the federal government and outlines a fundamental change in how the federal government wishes to allocate roles, responsibilities, and resources for cybersecurity. It contemplates placing greater responsibility on industry, particularly owners and operators of systems that hold personal data and technology providers. 

Continue Reading Biden Administration Releases Highly Anticipated National Cybersecurity Strategy

On January 30, 2023, the Centers for Medicare & Medicaid Services (“CMS”) released the long-delayed final rule on risk adjustment data validation (“RADV”) audits of Medicare Advantage (“MA”) organizations (the “Final Rule”). CMS promotes the Final Rule as improving program integrity and payment accuracy as well as transparency and certainty. One thing that is certain, CMS can expect further challenges to its RADV audit methodology.

Continue Reading CMS Issues Long-Awaiting Medicare Advantage RADV Final Rule

Buying a small business government contractor may not be as simple as a standard acquisition. This is particularly true if the small business wants to continue to qualify for federal small business set-aside and sole-source awards during negotiations. The U.S. Small Business Administration (“SBA”) treats stock options, convertible securities, and agreements to merge (including agreements in principle), as having a “present effect” on the power to control a concern. So if a letter of intent is sufficiently firm to be considered an agreement in principle, the SBA’s regulations require such agreements be given “present effect” on the power to control a concern – deeming the two entities are immediately affiliated. In other words, the small business likely is no longer small (and, if it is a specialty small business concern, like woman-owned or service-disabled veteran-owned, it is likely ineligible for those programs as well) before the deal even is done. On the other hand, agreements to open or continue negotiations towards the “possibility of a merger or a sale of stock at some later date” are not considered agreements in principle, and are not given present effect. In practice what this means is that a letter of intent must be carefully drafted to ensure that it does not trigger the present effect rule before the parties are ready or willing to be considered affiliated.

Continue Reading Buying or Selling a Small Business Government Contractor? Draft the Letter of Intent Carefully to Avoid Immediate Affiliation

The Securities Exchange Commission (“SEC” or “Commission”) has taken action against Genesis Global Capital, LLC (“Genesis”) and Gemini Trust Company, LLC (“Gemini”) (collectively, “Defendants”) in a recently-filed complaint alleging that the crypto companies violated federal securities laws by engaging in the unregistered offer and sale of securities in the form of their “Gemini Earn Agreements.” In doing so, the Commission not only relied upon the mainstay Howey Test for determining whether an agreement is a security, but also summoned Howey’s lesser-known cousin, the Reves Test, notably leading with the latter in its complaint.

Continue Reading SEC Showcases Lesser-Known Legal Theory in Crypto Lending Suit

In a recent bid protest decision from the U.S. Government Accountability Office (“GAO”), the GAO clarified that, in evaluating the experience of a mentor-protégé joint venture for a small business set-aside procurement, when the joint venture itself does not have the required experience (normally because it’s a newly formed enterprise), the agency must evaluate each joint venture member’s experience individually.

Continue Reading To Each Their Own: Agency Must Consider Experience of Each Partner in a Small Business Set-Aside Joint Venture

On February 22, 2023, the U.S. Department of Justice (DOJ) announced a new nation-wide policy to incentivize companies to self-report criminal activity. Among the cited benefits of self-reporting are discounts on fines and non-prosecution agreements. This new policy arrives on the heels of the “Monaco Memo,” issued in September 2022 by Deputy Attorney General Lisa Monaco, which directed each prosecutorial DOJ component to review its policies on corporate voluntary self-disclosures and update to reflect the guidance’s core principles. The policy also is in addition to guidance from Attorney General Merrick Garland, who in December 2022 emphasized prosecutorial leniency in criminal cases. Together, these memos show a shift from prior administrations, which emphasized prosecuting the “most serious, readily provable offense,” not leniency for self-disclosures. Notably, the new policy does not impact individual actors, who, since the 2015 Yates Memo, still are a DOJ priority. Indeed, the new policy emphasizes that crediting voluntary self-disclosure by companies will help DOJ “ensure individual accountability” for individual criminal conduct. We break down key elements of the DOJ’s policy below, including our quick thoughts on how this policy may impact corporate decisions going forward.

Continue Reading Corporate Voluntary Self-Disclosure (VSD) of Criminal Activity: More of the Same or a Real Sea Change?

Coinciding nicely with the discussion of “Buy America” priorities at the February 7, 2023 State of the Union address, on February 9, 2023 the White House’s Office of Management and Budget (“OMB”) issued a proposed rule to implement Title IX of the Infrastructure Investment and Jobs Act (“IIJA”) – the Build America, Buy America (“BABA”) Act. See 88 Fed. Reg. 8374. The new Proposed Rule would amend OMB’s Guidance for Grants and Agreements to support federal agencies implementing the BABA requirements. In short, OMB is proposing to add a new Part 184 to Title 2 of the Code of Federal Regulations (“C.F.R.”), as well as clarifying language to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 C.F.R. Part 200 (the “Uniform Guidance”), that address Congress’ “Buy America” mandate involving iron, steel, manufactured products, and construction materials used in federally-funded infrastructure projects. Though this new Proposed Rule does not provide perfect clarity reconciling all “Buy America” requirements, the Proposed Rule is an important piece of the puzzle that companies performing infrastructure work must understand. OMB is accepting comments on the proposed rule through March 13, 2023.

Continue Reading Another Piece to the Puzzle: OMB Issues Proposed Guidance on “Build America, Buy America” Requirements