Weekly Update for Government Contractors and Commercial Businesses – April 2, 2021

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LITIGATION & DISPUTE RESOLUTION

Whistleblower Retaliation Liability Under the False Claims Act for PPP Loan Recipients, March 24, 2021, Camilla Hundley
Earlier this year, my colleague, Matt Feinberg, and I reviewed the False Claims Act (FCA) statistics for 2020. We forecasted that the Paycheck Protection Program (PPP) and other small business loan programs initiated through the Coronavirus Aid, Relief, and Economic Security Act would generate a surge in new FCA matter reporting. This month, a former employee of a government contracting firm filed a complaint against the firm under the federal FCA anti-retaliation clause and Florida state whistleblower statutes. This lawsuit serves as a reminder for recipients of PPP loans to ensure that they are properly using funds. Otherwise, recipients risk enforcement under the FCA: not only by the federal government and qui tam relators, but also under its whistleblower provisions. Read more here.

Keeping Your PPP from Turning into FCA, March 17, 2021, Jon Williams
Last month, I had the privilege of being a panelist during the Federal Bar Association’s 2021 Qui Tam Conference. Referred to as “the Oscars for False Claims Act nerds,” this year’s conference included such speakers as Senator Chuck Grassley and focused on the False Claims Act (FCA) in times of crisis. The panel I spoke on, titled “Civil Fraud Issues Arising from SBA’s CARES Act Programs,” covered the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), FCA liability risks small businesses may face participating in the PPP, and how small businesses can protect against or avoid those risks. During our discussion, a representative from the Department of Justice (DOJ) indicated that there are several dozen qui tam cases currently filed related to the PPP and that several settlements have already been announced. This comes as no surprise. Given the unprecedented outlay of money last year through the PPP, enforcement actions were sure to follow. And it appears this is just the beginning. SBA is starting to ramp up the process through which it will determine forgiveness of PPP loans, and this is sure to renew a lot of the eligibility questions we grappled with at the start of the program. Read more here.

PilieroMazza Litigators Win Dismissal for Defense Industry Government Contractor in Employment Litigation Case, March 16, 2021
PilieroMazza is pleased to announce the Firm obtained a full dismissal, with prejudice, of an employment and security clearance litigation in the U.S. District Court for the Eastern District of Virginia on behalf of a government contractor in the defense industry. “This victory highlights the collaborative nature of our practice,” said Matt Feinberg, Chair of PilieroMazza’s Litigation & Dispute Resolution Group and lead counsel on the client’s litigation. “Our representation of this valued client involved attorneys from three of our four main practice groups, combining their specific knowledge on different issues affecting government contractors to earn this important win for the client. And, more critically, this litigation shows that our client acted appropriately and in accordance with the law.” Read more here.

IRC Agrees to Pay $6.9 Million to Settle Allegations That It Performed Procurement Fraud
The Department of Justice announced that the International Rescue Committee (IRC) has agreed to pay $6.9 million to settle allegations under the False Claims Act related to United States Agency for International Development (USAID)-funded programming for beneficiaries affected by the conflict in Syria. The settlement—announced on March 16, 2021—is part of a civil resolution involving the U.S. Attorney’s Office for the District of Columbia, USAID, and the USAID Office of Inspector General. Read more here.

BUSINESS & TRANSACTIONS

5 Fundamentals of the Corporate Transparency Act: Impacts on Small Businesses, March 19, 2021, Laura Sims
On January 1, 2021, Congress enacted the 2021 National Defense Authorization Act. In an effort to strengthen the fight against money laundering and the funding of terrorist activities, it included broad amendments to the U.S. Anti-Money Laundering Act, the most significant of which was the Corporate Transparency Act (CTA). The CTA will greatly impact the way businesses are formed and how they operate, and it will require regular reporting practices that businesses need to prepare for before the CTA takes effect. Below are five fundamentals of the CTA that small businesses need to understand now. Read more here.

Upcoming Business & Transactions Presentations

WEBINAR: Teaming Secrets of Successful Government Contractors, April 20, 2021, Kathryn Hickey and Katherine Burrows. Read more here.

LABOR & EMPLOYMENT

DOL Announces Proposed Rulemakings Related to Tipped Workers
The Department of Labor (DOL) announced two Notices of Proposed Rulemaking (NPRM) related to tipped workers that would impact DOL’s “Tip Regulations Under the Fair Labor Standards Act” final rule published in December 2020 (2020 Tip final rule). The effective date of the 2020 Tip final rule was delayed until April 30, 2021, to provide additional time to consider issues of law, policy, and fact.

• The first NPRM proposes to narrow the circumstances in which DOL can assess civil money penalties for violations. DOL is also seeking comments on whether to revise the portion of the 2020 Tip final rule regarding “managers or supervisors” to better address the fact that some managers and supervisors perform tipped work. Read the published version here.
• The second NPRM proposes to extend further the effective date of three portions of the 2020 Tip final rule to December 31, 2021. Two of the portions proposed for extension address the assessment of civil money penalties, and the third portion addresses the application of the Fair Labor Standards Act tip credit to tipped employees who perform both tipped and non-tipped duties (i.e., dual jobs). The eight-month extension would provide DOL the opportunity to evaluate additional information about the questions of law, policy, and fact raised by these portions of the 2020 Tip final rule. Read the published version here.

Read more here.

DOL Announces Proposed 18-Month Delay to Prevailing Wage Rule
On March 22, 2021, the Department of Labor (DOL) announced that it has proposed an 18-month delay in the effective date of a final rule on calculating prevailing wages of certain immigrants and non-immigrant workers. Published in January 2021, the final rule affects employers seeking to employ foreign workers on a permanent or temporary basis through certain immigrant visas or through H-1B, H-1B1, or E-3 non-immigrant visas. The proposed delay would give officials sufficient time to compute and validate prevailing wage data covering specific occupations and geographic areas, complete necessary system modifications, and conduct public outreach. This proposed rule follows an initial 60-day delay announced earlier this month. Read more here. Read the published delay here.

GOVERNMENT CONTRACTS

PPP Eligibility Increases Under American Rescue Plan Act, March 16, 2021, Christine Fries
On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (Act). The Act allotted an additional $7.25 billion in Paycheck Protection Program (PPP) funding for small businesses. Moreover, nonprofit entities and digital media companies are now allowed to receive funding. Below are key PPP eligibility updates made under the Act. Read more here.

President Biden Signs PPP Extension Act of 2021 into Law
The White House announced that, on March 30, 2021, President Biden signed H.R. 1799, the “PPP Extension Act of 2021,” into law. The act extends the Paycheck Protection Program (PPP) application deadline to May 31, 2021, and extends the PPP authorization through June 30, 2021, to provide the Small Business Administration additional time to process applications received by the application deadline. Read more here. Read President Biden’s remarks at the signing here.

SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans
The Small Business Administration (SBA) announced that it is increasing the maximum amount small businesses and non-profit organizations can borrow through its COVID-19 Economic Injury Disaster Loan (EIDL) program. Starting the week of April 6, 2021, SBA is raising the loan limit for the COVID-19 EIDL program from six months of economic injury with a maximum loan amount of $150,000 to up to twenty-four months of economic injury with a maximum loan amount of $500,000. Read more here.

SBA Launches Portal to Begin Accepting Shuttered Venue Operators Grant Applications on April 8
The Small Business Administration (SBA) announced the launch of a splash page for the Shuttered Venue Operators Grant (SVOG) application portal in anticipation of opening applications for the long-awaited critical economic relief program on April 8, 2021. The SVOG program was established by the Economic Aid to Hard Hit Small Businesses, Nonprofits and Venues Act, which appropriated $15 billion for the program. The American Rescue Plan Act, signed into law by President Biden on March 11, 2021, appropriated an additional $1.25 billion, bringing the program funding to a total of $16.25 billion, with more than $16 billion allocated for grants. 

SBA Updates PPP Regulations to Implement American Rescue Plan Act
The Small Business Administration (SBA) published an interim final rule that revises Paycheck Protection Program (PPP) rules to incorporate the American Rescue Plan Act’s amendments to the PPP. Additionally, it clarifies the eligibility for first draw PPP loans for applicants that are assigned a North American Industry Classification System code beginning with 72 and have more than one physical location and clarifies certain payroll cost exclusions included in the Economic Aid Act. The rule was made effective March 18, 2021. Read more here.

DOD Releases New WOSB Eligibility Verification Procedures
The Department of Defense (DOD) released a class deviation that provides updated procedures for contracting officers when verifying eligibility of a contractor for a procurement set aside under the Women-Owned Small Business (WOSB) Program. Read more here.

The VA Receives Supplemental Funding in American Rescue Plan
The Department of Veterans Affairs (VA) announced that the American Rescue Plan includes $17 billion to support the VA in responding to the pandemic. The funding for the VA includes:

• $100 million to modernize the VA supply chain system and transition to Defense Medical Logistics Standard Support;
• $14.5 billion for healthcare, including information technology and facilities; and
• $1 billion of debt forgiveness for copayments for veterans’ care and prescriptions provided from April 6, 2020, through September 30, 2021.

Read more here.

DOD: Closing Contracts, Returning Dollars
The Department of Defense (DOD) provided an update on its new Contract Lifecycle Management Center, which focuses on closing and terminating overaged contracts. There are approximately 579,000 overaged contracts across DOD, and while typically benign, they carry potential unnecessary or preventable government risks. The potential solutions represent millions of dollars that can be returned to the military services. Closing these contracts is a priority for the Defense Contract Management Agency, which administers tens-of-thousands of the overaged contracts on behalf of DOD customers. Read more here.

Vulnerability Scanning Requirements for Containers
The Federal Risk and Authorization Management Program (FedRAMP) announced the release of a Vulnerability Scanning Requirements for Containers document. The document addresses FedRAMP compliance pertaining to the processes, architecture, and security considerations specific to vulnerability scanning for cloud systems using container technology. Existing scanning requirements are outlined in the FedRAMP Continuous Monitoring Strategy Guide and FedRAMP Vulnerability Scanning Requirements. The new document’s requirements are considered supplemental and are applicable for all systems implementing container technologies. Read more here.

Executive Order to Address Cloud Security Through Procurement
Nextgov reported that the White House plans to double down on commercial cloud technology through an upcoming executive order in response to the SolarWinds hack. Read more here.

Update to Administrative Process for Unfavorable Security Clearance Eligibility Hearings and Appeals
The Department of Defense (DOD) published a memorandum to streamline administrative processes for DOD contractor employees seeking to occupy or occupying sensitive positions. To simplify, centralize, and unify the established administrative processes for unfavorable security clearance eligibility determinations for DOD civilians, military members, and contractor employees, including contractor employee unfavorable Sensitive Compartment Information determinations, all hearings, appeals, and final denials and revocations of security clearance eligibility will be performed by the Defense Office of Hearings and Appeals with the established administrative due process procedures. The policy should be effective no later than September 30, 2022. Read more here. Additional reporting from Federal Times is available here.

Upcoming Government Contracts Presentations

WEBINAR: Roadmap to Joint Venture Agreements: Legal and Accounting Considerations, April 6, 2021, Tony Franco. Read more here.

WEBINAR: CIO-SP4: Is Your Business Equipped to Compete? April 8, 2021, Cy Alba and Meghan Leemon. Read more here.

WEBINAR: Top Cybersecurity & Data Privacy Initiatives Under the Biden Administration, April 13, 2021, Anna Wright and Emily Rouleau. Read more here.

WEBINAR: Teaming Secrets of Successful Government Contractors, April 20, 2021, Kathryn Hickey and Katherine Burrows. Read more here.

WEBINAR: ChallengeHER: Joint Ventures and the WOSB Program, April 22, 2021, Meghan Leemon. Read more here.

WEBINAR: Navigation the FAR/DFARS: The Most Confusing and Little Known Clauses, April 26, 2021, Tim Valley and Christine Fries. Read more here.

WEBINAR: The First 100 Days: Deciphering Key Provisions in the Buy American Act for Government Contractors, April 27, 2021, Jackie Unger and Anna Sullivan. Read more here.