Coronavirus and its Implications for Government Contractors

Coronavirus (COVID-19) is spreading throughout the globe at an accelerating pace, with the Center for Disease Control (“CDC”) warning of an imminent outbreak in the United States.  The disease has already impacted the global economy.  Fears of a coronavirus outbreak caused the largest one-week decline in the U.S. stock market since the 2008 financial crisis.  The spread of coronavirus creates unique challenges for companies doing business with the government.  Government contractors should anticipate the following issues: Continue Reading

CMMC Version 1.0: Enhancing DOD’s Supply Chain Cybersecurity

On January 30, 2020, the Department of Defense (“DOD”) released its Cybersecurity Maturity Model Certification (“CMMC”) v.1.0, after releasing several draft versions of the document over the past year.  In an effort to enhance supply chain security, the CMMC sets forth unified cybersecurity standards that DOD contractors and suppliers must meet to participate in future DOD acquisitions.  Select Requests For Proposals (“RFPs”) may include the CMMC requirement later this year, but widespread use is not expected until 2026.  Through the CMMC, DOD adds cybersecurity as a foundational element to the current DOD acquisition criteria of cost, schedule, and performance. Continue Reading

What Does it Mean to Manufacture? Federal Circuit’s Acetris Decision Fundamentally Alters Trade Agreements Act Compliance

On February 10, 2020, the U.S. Court of Appeals for the Federal Circuit issued its long-awaited decision in Acetris Health LLC v. United States, No. 2018-2399 (Feb. 10, 2020). In Acetris, the Federal Circuit was asked to interpret the country of origin requirements under the Trade Agreements Act of 1979 (“TAA”) and related regulations. For contractors with manufacturing facilities in the United States, the Federal Circuit did not disappoint. While the decision in Acetris is most immediately critical to the pharmaceutical industry (as discussed here and here ), the Federal Circuit’s decision has widespread consequences for all government contractors required to demonstrate TAA compliance. Continue Reading

Federal Circuit Changes the Game for Selling Single-API Drugs to the Government

Selling drugs to the Government just got a lot simpler.  In Acetris Health LLC v. United States, No. 2018-2399 (Feb. 10, 2020), the Federal Circuit opened the Government door to all drugs “manufactured”—that is, measured, weighed, mixed, and compounded—in the United States, regardless of where the active pharmaceutical ingredient (“API”) originates.  This is a vast departure from the status quo prior, where agencies relied on the U.S. Customs and Border Patrol (“CBP”) to determine whether foreign-made API had been substantially transformed so as to be compliant with the Trade Agreements Act of 1979 (“TAA”), and thus saleable to the Government. In Acetris, the Department of Veterans Affairs (“VA”) relied on a decision by CBP to take the position that processing and pressing API from India into pill form in the United States did not “substantially transform” the API so as to make the resulting drug compliant with the Trade Agreements Act (“TAA”).  The Federal Circuit disagreed, holding that “the source of the components (here, the API) is irrelevant in determining where a product is ‘manufactured’” for purposes of the Federal Acquisition Regulation’s (“FAR”) TAA clause.  For the time being, the Acetris decision thus ostensibly wipes out country of origin concerns for pharmaceutical companies who perform the final processing of their drugs in the United States. Continue Reading

SEC and FINRA Signal Renewed Focus on Vendor Management in Two Key Areas: Cybersecurity and Market Access Rule Compliance

The Securities and Exchange Commission (“SEC”) and Financial Industry Regulatory Authority (“FINRA”) recently issued guidance in connection with firms’ relationships with third-party service providers.  These publications serve as a reminder that while vendors often provide services away from the firm, the firm nonetheless maintains responsibility to ensure customer data is handled appropriately and all activity is subject to mandatory controls.

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Small Business Subcontracting for Cloud Computing Gets Easier

In response to widespread interest in allowing more small business participation in opportunities involving cloud computing, the Small Business Administration (“SBA”) has decided to exclude cloud computing from the limitation on subcontracting rule calculation, in certain circumstances. Thus, beginning December 30, 2019, small businesses are no longer limited in their ability to subcontract out cloud computing services to larger companies, in connection with performing a Government contract set aside for small businesses, where the small business will perform other services that are the primary purpose of the acquisition. Continue Reading

Let the Seller Beware – NASA’s Proposed Rule Seeks to Limit the Presence of Counterfeit Electronic Parts

On January 7, 2020, the National Aeronautics and Space Administration (“NASA”) published a proposed rule seeking to amend the NASA Federal Regulation Supplement regarding counterfeit electronic parts. The proposed rule would add new language to the NASA regulations, requiring that contractors procure electronic parts directly from manufacturers and select suppliers in an effort to lessen the use of counterfeit electronics on NASA programs. Continue Reading

DoD’s Squeeze of Chinese Telecom Equipment Continues

At the end of 2019, the Department of Defense (“DoD”) took another step to limit the potential cyber risks posed by telecommunications equipment manufactured by Chinese companies (and potentially Russian ones too). We previously have blogged on this topic here, here, here, here, here, and here, noting developments both in terms of general, government-wide regulations through the FAR Council, and those specifically emanating from DoD. On December 31, 2019, DoD issued a Defense Federal Acquisition Regulation Supplement (DFARS) interim rule to further implement parts of the 2018 and 2019 National Defense Authorization Acts (“NDAA”). Continue Reading

Why the Health Care Industry Should Be Concerned About Section 889 of the 2019 National Defense Authorization Act

On August 13, 2018, President Trump signed into law the National Defense Authorization Act (NDAA) of 2019. While the annual NDAAs are tracked, analyzed, and picked apart with great care by the federal contracting community, the health care industry typically pays them little mind. But ignoring the 2019 NDAA would be a big mistake, because tucked within its more than 1,000 sections is one that will have a significant impact on many health care industry players. It’s known as Section 889. Read our thoughts on Section 889’s impact on the Health Care industry here. Continue Reading

United States v. Blaszczak: Second Circuit Ruling Creates Opening for Significant Increase in Insider Trading Prosecutions

The Second Circuit recently took an unexpected plunge into the torrid waters of insider trading law. Following several years of decisions limiting the government’s broad interpretation of what constitutes a personal benefit in order to convict on insider trading charges, the Court has now done what might be considered an about-face. In United States v. Blaszczak, No. 18-2825 (2d Cir. Dec. 30, 2019) (“Blaszczak”), the Court refused to apply any personal benefit test whatsoever to insider trading charges brought under Title 18. As such, Blaszczak may well become powerful precedent for prosecutors seeking to lower the bar for insider trading prosecutions. Continue Reading

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