Yesterday the DoD, GSA, and NASA issued a final rule amending the FAR “by incorporating a new clause to provide accelerated payments to small business subcontractors.” This final rule implements the prior guidance found in OMB Memoranda M-12-16 and M-13-15. The new FAR 52.232-40(a) provides that “[u]pon receipt of accelerated payments from the Government, the Contractor shall make accelerated payments to its small business subcontractors under this contract . . . after receipt of a proper invoice and all other required documentation from the small business subcontractor.” This clause must be inserted “in all solicitations and contracts.” FAR 32.009-2. FAR 52.232-40(c) also provides that the “substance of this clause, including this paragraph (c), [must be included] in all subcontracts with small business concerns” – in other words subcontractors must flow it down.
I am pleased to announce that on Friday, November 22, 2013 at noon MLA colleague Mark Kaufman will address the ABA PCLS Privatization, Outsourcing and Financing Transactions Committee about recent developments in the Harrisburg, Pennsylvania bankruptcy matter. As lead counsel to the Harrisburg Receiver, Mr. Kaufman will offer unique insights about how his team helped Harrisburg avoid bankruptcy through the Harrisburg Strong Plan, which was recently approved by a Pennsylvania court. He also will provide his “lessons learned” from the matter, and comment on the successful role that public private partnerships played (i.e., how the sale of a debt-burdened incinerator and the restructure of lease of parking assets helped eliminate liabilities and generate revenues). Finally, he will address the current turmoil in Detroit, Michigan. The meeting will take place at MLA’s DC office. Please contact committee co-chairs Justin Ganderson and Marques Peterson if you are interested in attending the meeting in-person or by phone.
Earlier today, the DOD issued its final DFARS Rule imposing heightened security safeguards and mandatory reporting requirements on DOD contractors handling unclassified controlled technical information. 78 Fed. Reg. 69273 (Nov. 18, 2013). The rule specifically imposes two significant compliance obligations for contractors and subcontractors handling unclassified controlled technical information: (1) safeguarding information systems containing any unclassified controlled technical information; and (2) reporting and investigation of cyber incidents. These requirements are imposed through a new DFARS clause, DFARS 252.204-7012, Safeguarding of Unclassified Controlled Technical Information, which is mandatory for all DOD prime contracts and subcontracts.
Given the breadth of this rule, contractors at all levels in the DOD supply chain must be prepared to comply with this rule. Specifically, DOD contractors should:
On Wednesday, November 13, 2013, at noon MLA’s DC office will host the ABA PCLS Contract Claims and Disputes Resolution Committee’s monthly meeting, which will feature a panel discussion about fraud counterclaims – a hot topic which our blog has followed very closely over the last year. My colleague, Justin Ganderson, will moderate this panel comprised of Judge Marian Horn (Court of Federal Claims), J. Reid Prouty (Department of Justice), Thomas Barrett (KBR, Inc.) and Paul Debolt (Venable LLP). The panel will focus on current trends related to fraud counterclaims before the U.S. Court of Federal Claims and the impact of fraud counterclaims on a variety of topics including litigation tactics and scheduling, the scope of discovery, settlement negotiations, forum selection (i.e., the Boards of Contract Appeals versus the U.S. Court of Federal Claims) and the decision whether or not to appeal the denial of a certified claim. I expect this panel to be very informative and quite interesting. For more information, please contact Justin Ganderson.
Late last month we learned that the DOD issued an interim rule about “private sector notification of in-sourcing actions,” and invited small business concerns and other interested parties to submit written comments about its impact. This interim rule revises DFARS 237.102-79, and requires contracting officers to provide “written notification to affected incumbent contractors of Government in-sourcing determinations.” The notification must be provided within 20 business days of insourcing decision and must “summarize the requiring official’s final determination as to why the service is being in-sourced.” Although the interim rule essentially tracks much of the guidance found in the DOD’s January 2013 memorandum, the DOD’s invitation to submit written comments provides another great opportunity for contractors to voice their concerns about the current notification framework and its impact. For example, the interim rule is silent about what specific information the contracting officer’s written notice must contain; it appears to be discretionary. In our opinion, the contracting officer should be required to report on all aspects of an agency’s cost comparison analysis: more transparency will lead to better accountability and increased uniformity in insourcing decisions. Moreover, we believe the notification should be provided within a week of the insourcing decision to provide the contractor more time to prepare for the impacts of an insourcing decision. Written comments must be submitted by December 30, 2013.
Government contractors in the Aerospace and Defense sector are poised to see new opportunities for domestic growth as the U.S. Department of Transportation’s Federal Aviation Administration (FAA) released its first annual Roadmap outlining efforts needed to safely integrate unmanned aircraft systems (UAS) into the nation’s airspace late last week. Should the FAA stay on schedule, drones are likely to start flying regularly in the US by late 2015, and the FAA predicts as many as 7,500 commercial drones flying in domestic airspace within the next five years, and as many as 30,000 non-military UAS’s are expected to be in the sky by the middle of the next decade. Some analysts predict this industry could generate as many as 70-100,000 new jobs within the next five to ten years.
The White House recently announced plans to overhaul the process for submitting Freedom of Information Act (FOIA) requests to the federal government. See Draft Report, “The Open Government Partnership: Second Open Government National Action Plan for the United States of America.” These plans include the creation of a single online portal for submission of all FOIA requests, as well as an effort to standardize FOIA regulations and practices across agencies. The administration hopes a coordinated FOIA process will reduce the amount of time and effort needed to obtain responsive information and navigate through each agency’s unique FOIA processes and procedures. A final version of the plan is expected in December 2013.
At present, however, the White House’s proposal is far more aspirational than operational. The plan contains few specifics and leaves many unanswered questions, including how the new process will affect: (1) overall processing times for FOIA requests; (2) the procedures for filing administrative appeals (i.e., whether such appeals will be handled on a consolidated basis or continue on an agency-by-agency basis; or (3) a requester’s ability to interact directly with agency personnel who are tasked with searching for responsive records.
Given these and other unanswered questions, the true impact of the White House’s proposal remains to be seen. We will continue to monitor the status of the administration’s plan to create a unified FOIA system. If you have any questions about this Post or the FOIA in general, please contact Joanne Zimolzak, Alejandro Sarria or Kevin Barnett.
Yesterday HASC Chairman Rep. Buck McKeon (R-CA) announced that Committee Vice Chairman Rep. Mac Thornberry (R-TX) will lead “a long term DOD reform effort that includes a hard look at acquisition.” During the HASC hearing Rep. McKeon noted that there are “still significant challenges facing the Defense acquisition system,” and explained that “we cannot afford a costly and ineffective acquisition system, particularly when faced with devastating impacts of repeated budget cuts and sequestration. The Congress together with the Department of Defense and industry must be willing to do the hard work to find root causes, look past band-aid fixes and parochial interests, and have the courage to implement meaningful, lasting reform.”
I’m pleased to announce the addition of Hunter Bennett as Of Counsel in our Washington, DC office. Hunter is an experienced practitioner who joins the firm from the U.S. Department of Justice, Civil Division, Commercial Litigation Branch, National Courts Section. During his time with the DOJ, Hunter primarily focused on defending the United States against bid protests filed in the U.S. Court of Federal Claims. In addition, he successfully briefed and argued multiple cases in the United States Court of Appeals for the Federal Circuit. Before joining the DOJ, Hunter spent two years in private practice as an associate with Washington based London and Mead. Prior to that, he worked as an Assistant District Attorney in the in the federal litigation unit of the Philadelphia District Attorney’s office.
Hunter’s previous experience with the Justice Department and in private practice nicely complement our talented bench in Washington and we anticipate that he will be an invaluable resource to this department and, more importantly, to our clients. Welcome Hunter!
Today, the National Institute of Standards and Technology (“NIST”) published the Preliminary Cybersecurity Framework (“Preliminary Framework”), a proposed framework to guide owners and operators of critical infrastructure in managing cybersecurity risks. NIST developed the standards in accordance with Executive Order 13636, “Improving Critical Infrastructure Cybersecurity,” which called for a framework providing a “prioritized, flexible, repeatable, performance-based, and cost-effective approach” by working with industry through a Request for Information and a series of workshops.