Weekly Update for Government Contractors and Commercial Businesses – February 3, 2022

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LITIGATION & DISPUTE RESOLUTION

DOJ Recovers Over $5.6 Billion From Fraud and False Claims Act Matters in FY 2021: 6 Key Takeaways, February 3, 2022, Matt Feinberg and Jackie Unger
On February 1, 2022, the U.S. Department of Justice (DOJ) announced that it had recovered more than $5.6 billion in Fiscal Year (FY) 2021 settlements and judgments from civil cases involving fraud and the False Claims Act (FCA). This total represents the second-largest government haul for such matters ever and the largest recovery since FY 2014. The over $5.6 billion also far outpaces DOJ’s approximately $2.25 billion in FY 2020 recoveries. The announcement showcases DOJ’s heightened focus on fraud in government contracting and reinforces the FCA’s status as the government’s strongest weapon for combatting fraud. Read more here.

Whistleblowers Face High Bar to Show False Claims
Thomson Reuters reported that a federal appellate court recently became the latest to make it more difficult for whistleblowers to prove that companies knowingly made false claims to the government. In a 2-1 decision, the Fourth Circuit Court of Appeals said a former sales manager at Allergan LLC subsidiary Forest Laboratories LLC could not show that the drugmaker willfully reported inaccurate price data to Medicaid because the program’s rules are complex and open to different interpretations. The Fourth Circuit said a higher scienter bar the U.S. Supreme Court adopted in a 2007 case for showing that defendants knowingly violated a credit-reporting law also applied under the False Claims Act, which allows whistleblowers to sue on behalf of the government. The five other federal appeals courts to consider the issue have ruled the same way. Read more here.

Milwaukee Pharmacy Chain to Pay Over $2 Million to Resolve Allegations It Violated the False Claims Act
The Department of Justice reported that Hayat Pharmacy agreed to pay $2,050,000 to resolve allegations that it submitted false claims to Medicare and Medicaid for prescription medications. The U.S. alleged that Hayat Pharmacy submitted false claims to Medicare and Medicaid in 2019 for two prescription medications, a topical cream consisting of iodoquinol, hydrocortisone, and aloe, and a multivitamin with the trade name Azesco. Read more here.

Upcoming Litigation & Dispute Resolution Presentations

WEBINAR: 2021 FCA Year-in-Review and Emerging Trends for 2022, February 16, Matt Feinberg and Jackie Unger. Read more here.

GOVERNMENT CONTRACTS

Three’s Company: Court Decisions Clarify Company’s Role in FOIA Litigation Over Possible Release of Confidential Information, January 31, 2022, Kevin Barnett
Two recent appeals court decisions highlight a company’s role in Freedom of Information Act (FOIA) litigation challenging the government’s decision to withhold the company’s information from public release. These types of FOIA lawsuits arise when the government refuses to release a company’s confidential information after a FOIA request and the requester challenges the action in federal court. In federal court, the government bears the burden of proving that the withheld information falls within a FOIA exemption, but the company that submitted the information to the government plays a crucial role in providing the needed evidence to overcome that burden. In this blog, we review the recent decisions and offer important takeaways for any company, including government contractors, that provides confidential information to the government. Read more here.

PPP Loan Fall-Out: Expect More Audits and Investigations, January 28, 2022, Cy Alba
Unfortunately, the PPP Loan fall-out is far from over. As we noted in the last blog on PPP issues, we are seeing a number of PPP Forgiveness denials for a number of different reasons, and, along with that, we are seeing the first audits and investigations as well. Specifically, companies that already received forgiveness for loans over $2M are being audited and investigated by SBA on a rolling basis. As part of the audits and investigations, SBA is asking for additional supporting documentation for the amounts claimed, expenses incurred, and the needs analysis that was performed. Loan recipients are encouraged to keep all documentation related to the loan in case they face an audit or investigation. This is starting to ramp up, so it is not yet clear how aggressive SBA will be on its analysis, but we can expect investigations to continue for the next five years as the statute of limitations on False Claims Act issues is, generally, six years. This blog covers what you need to know. Read more here.

OHA Decision on Recertification May Impact Eligibility of Small Business Contractors Competing for Set-Aside Contracts, January 27, 2022, Sam Finnerty
Over the past few years, the Small Business Administration’s (SBA) recertification rules have been the subject of much debate, with some arguing that recertification impacts an offeror’s eligibility for award and for future set-aside orders under multiple-award contracts. These rules came under further scrutiny in a recent size protest and appeal to the SBA Office of Hearings and Appeals (OHA). OHA’s decision makes a number of important clarifications regarding the impact of recertification on small business contractors’ eligibility to compete for set-aside contracts. Read more here.

Congress in Jeopardy of Missing Shutdown Deadline
The Hill reported that congressional negotiators are in danger of missing the February 18, 2022, deadline for passing an omnibus package of the annual appropriations for Fiscal Year 2022. According to the Hill, while a shutdown is unlikely, if negotiators blow through the mid-February deadline, it increases the likelihood that President Biden will have to settle for a yearlong stopgap funding measure to keep the government open. As a result, Senate Democrats right now are prioritizing passage of the omnibus spending bill ahead of the Build Back Better Act. Read more here.

Biden Administration Touts ‘Significant Progress’ in Made in America Office’s First Year
Nextgov reported that the Office of Management and Budget recognized “significant progress” undertaken by its Made in America Office, one year after the Made in America Office was created through an executive order designed to increase the federal government’s use of domestically produced materials, goods, and services. The first-of-its-kind office was structured to oversee government-wide “Buy American” efforts that have already resulted in changes to federal procurement policies. Read more here. A recent White House blog post outlining the nascent office’s major accomplishments is available here.

NITAAC Extends Due Date for CIO-SP4 After Bid Submission Problems
Federal News Network reported that the National Institutes of Health IT Acquisition and Assessment Center (NITAAC) extended the deadline for bids on its $40 billion CIO-SP4 vehicle amid complaints and problems with the proposal submission portal it is now requiring vendors to use. In a previous update to its request for proposals, NITAAC had required all contractors who had previously submitted proposals to resubmit bids through the third-party portal by January 28, 2022. Under the updated deadline, bids for CIO-SP4 are now due by February 11, 2022, at 5:00 PM. Read more here.

Addressing the Impact of Inflation on Government Contracts
The Coalition for Government Procurement published a blog post regarding the impact of supply chain challenges and inflation on the federal procurement system. It covers cost increases for businesses performing on government contracts, issues government customers face in meeting contract requirements, and inflation’s consequences for the General Services Administration’s Multiple Award Schedule program. 

OMB Memo: Moving the U.S. Government Toward Zero Trust Cybersecurity Principles
The Office of Management and Budget published a memorandum that sets forth a federal zero trust architecture strategy. The memorandum requires agencies to meet specific cybersecurity standards and objectives by the end of Fiscal Year 2024 to reinforce the government’s defenses against increasingly sophisticated and persistent threat campaigns. Read more here. Related reporting from Federal Computer Week is available here.

DISA Makes $7M Award to Start Proving Out DOD Zero Trust Strategy
Federal News Network reported that the Defense Information Systems Agency (DISA) issued a multimillion-dollar award to start building the foundations of what could become an entirely new cybersecurity and network architecture for the Department of Defense (DOD), starting to move DOD toward the concept of zero trust. DISA chose Booz Allen Hamilton for the $6.8 million zero trust prototype project, which the agency calls “Thunderdome.” Booz Allen will spend the next six months building the first testbed implementation of a zero trust reference architecture DISA first published nearly two years ago. Read more here.

SBA Administrator Guzman Signs New Tribal Consultation Policy
The Small Business Administration (SBA) reported that SBA Administrator Isabella Casillas Guzman signed SBA’s Tribal Consultation Policy of 2022. The agreement, which directs the SBA’s coordination with Tribal governments, also recognizes the federal government’s unique relationship with Native American governments and its responsibility to ensure small businesses from Tribal communities are fully considered and can equitably benefit from all of the resources offered by the U.S. government. Read more here.

GSA to Replace Federal IT Dashboard at Next White House Budget Proposal
FedScoop reported that the General Services Administration will replace the federal IT Dashboard when the White House submits its proposed Fiscal Year 2023 budget to Congress in about a month. Two applications—the IT Collect Application Programming Interface and the Office of Government-Wide Policy Visualization Platform—will supplant the legacy dashboard following a year-long modernization effort. Read more here.

Tech Leaders Want FITARA Scorecard to Target Cyber EO, Zero Trust
MeriTalk reported that private sector IT firms that supply federal government agencies with advanced technologies acknowledged the minor trend toward better grades on the 13th edition of the Federal Information Technology Acquisition Reform Act (FITARA) Scorecard, but told MeriTalk they want to see the House Oversight and Reform Committee follow through on aims to align grading categories with newer federal tech policies that steer toward better cybersecurity and modernization of legacy systems. At a January 20, 2022, House Government Operations Subcommittee hearing to discuss the FITARA 13 results, lawmakers from both sides of the aisle agreed they want to explore making big changes to grading categories on the Scorecard, which, since 2015, has been issued twice a year to rank major federal agencies on progress toward IT-related goals. Read more here.

NIST Releases Final Cybersecurity Assessment Guidance
Nextgov reported that the National Institute of Standards and Technology (NIST) issued its newest copy of guidance for organizations to assess their internal security IT systems. The document focuses on helping entities manage cybersecurity risks across their individual networks. Read more here. The guidance, NIST Special Publication 800-53A Revision 5, Assessing Security and Privacy Controls in Information Systems and Organizations, is available here.

Acquisition.gov Enhancements
The General Services Administration announced that Acquisition.gov BETA has migrated to Acquisition.gov. The announcement provides detailed information on how to use new features on Acquisition.gov, including a Definitions Tool, an Enhanced Search User Interface, and a List of Sections Affected Highlighter designed to draw reader attention to the latest changes in the Federal Acquisition Regulation that are associated with the most recently effective Federal Acquisition Circular. Read more here.

Coronavirus State and Local Fiscal Recovery Funds
The Department of the Treasury published a final rule that implements the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund. The funds were established under the American Rescue Plan Act to provide state, local, and Tribal governments with the resources needed to respond to the pandemic and its economic effects and to build a stronger, more equitable economy during the recovery. The rule is effective April 1, 2022. Read more here.

DFARS: Noncommercial Computer Software
The Department of Defense (DOD) published a proposed rule. The proposed rule would amend the Defense Federal Acquisition Regulation Supplement to implement a section of the National Defense Authorization Act for Fiscal Year 2018 that requires DOD to consider all noncommercial computer software and related materials necessary to meet the needs of the agency. Specifically, the proposed rule would provide direction to DOD both to improve acquisition planning and to identify and negotiate for software deliverables and license rights at a fair and reasonable price before contract award. Comments are due March 29, 2022. Read more here.

Upcoming Government Contracts Presentations

WEBINAR: Understanding and Avoiding Affiliation for Small Business Government Contractors, February 8, Eric Valle and Meghan Leemon. Read more here.

WEBINAR: Office of Hearing and Appeals (OHA) Year-In-Review: Impactful Decisions from 2021, February 17, Peter Ford and Meghan Leemon. Read more here.

WEBINAR: Joint Ventures – A Roadmap for Small Business Government Contractors, February 22, Lauren Brier and Anna Sullivan. Read more here.

WEBINAR: 2021 Bid Protest Decisions with Far-Reaching Impacts for Government Contractors, February 23, Katie Burrows and Eric Valle. Read more here.

BUSINESS & TRANSACTIONS

Delaware to Permit Directors and Officers Captive Cover
Captive International reported that Delaware’s state legislature passed a bill to allow companies to use captives for directors’ and officers’ liability insurance. The Delaware General Assembly’s Senate Bill No.23 amends existing state corporation laws limiting companies to buying traditional directors and officers insurance policies. The bill explicitly authorizes the use of captive insurance. Read more here.

Key Trends That Will Drive the ESG Agenda in 2022
S&P Global reported that, following the unprecedented market and policy momentum behind Environmental, Social, and Governance (ESG) evaluation criteria in 2021, investors, corporate boards, and government leaders have raised expectations for progress on climate pledges in 2022. According to S&P Global, alongside climate, biodiversity, and other environmental concerns, social issues—like diversity, equity, and inclusion and worker wellbeing—appear poised to remain in the spotlight, particularly as they are increasingly woven into broader ESG discussions. Read more here.

LABOR & EMPLOYMENT

Raising Wages for Federal Contract Workers
The Department of Labor (DOL) published a press release on its recent rule that, as of January 30, 2022, raises the minimum wage for federal contract workers to $15.00 per hour. According to DOL, the rule also protects workers on federal contracts by:

• ensuring the minimum wage is adjusted each year;
• raising the wage for workers with disabilities who may otherwise earn less than the minimum wage;
• ensuring that federal contract workers that receive tips receive at least 85% of the full minimum wage as their cash wage starting January 1, 2023, and 100% starting January 1, 2024; and
• restoring minimum wage protections to workers that provide recreational services on federal lands.

Read more here. DOL’s final rule is available here.

FAR: Increasing the Minimum Wage for Contractors
The Department of Defense, General Services Administration, and National Aeronautics and Space Administration published an interim final rule that amends the Federal Acquisition Regulation (FAR) to implement an Executive Order titled “Increasing the Minimum Wage for Federal Contractors” and a final rule issued by the Department of Labor. Effective as of January 30, 2022, the interim rule revises FAR subpart 22.19 and FAR clause 52.222-55 to increase the minimum wage for federal contract workers to $15.00 per hour. Read more here. A summary presentation of the rule is available here, and a small entity compliance guide is available here.

Staffing Agency to Pay More Than $7.2M in Back Wages, Damages After Federal Investigation, Litigation
The Department of Labor (DOL) reported that a federal court in Virginia has entered a judgment ordering a Norfolk-based medical staffing agency to pay more than $7.2 million in back wages and liquidated damages. The action follows an investigation by DOL’s Wage and Hour Division and litigation by the Solicitor of Labor, which found the company intentionally violated federal laws and denied 1,105 certified nursing aides, licensed practical nurses, and registered nurses overtime wages. Read more here.

Upcoming Labor & Employment Presentations

WEBINAR: Issues In Focus: What is the Minimum Wage Again? Navigating the $15 Minimum Wage for Government Contractors, February 8, Nichole Atallah. Read more here.

WEBINAR: Service Contract Act Compliance Challenges in a COVID 19 Environment, February 10, Nichole Atallah and Sarah Nash. Read more here.

WEBINAR: Government Contractors: Preparing for OFCCP’s Affirmative Action Program Compliance Certification, February 24, Sara Nasseri. Read more here.