Weekly Update for Government Contractors and Commercial Businesses – December 16, 2022

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GOVERNMENT CONTRACTS

Inflation Relief Is Coming for DOD Contractors, 12.09.22, Kevin Barnett, Lauren Brier, and James Rhodes
As PilieroMazza has reported, rising costs due to inflation have been one of the most significant issues facing contractors with fixed-price contracts for the past year. Although the Department of Defense (DOD) and General Services Administration have taken some steps to ameliorate the situation, those solutions have left contractors wanting. But true relief may be in sight. Congress included a provision in the National Defense Authorization Act for Fiscal Year 2023 that would authorize DOD contractors to receive contract adjustments for inflation-related cost increases. Read more here.

Final Rule Establishes Requirements for New SBA Veteran Small Business Certification Program, 12.07.22, Meghan Leemon and Daniel Figuenick
The Small Business Administration (SBA) issued a final rule last week, officially transferring the responsibility for certification of veteran-owned small businesses (VOSB) and service-disabled veteran-owned small businesses (SDVOSB) to SBA, effective January 1, 2023. We previously blogged about this change here, indicating that Section 862 of the National Defense Authorization Act for Fiscal Year 2021 provided for the elimination of the Department of Veterans Affairs’ certification program altogether and implementation of a certification requirement for all VOSB / SDVOSB sole source and set-aside contracts across the Federal Government. As this PilieroMazza client alert highlights, SBA’s final rule not only transfers the VOSB and SDVOSB certification program to SBA, but implements several other notable regulatory changes. Read more here.

House Passes a One-Week Continuing Resolution, but Hurdles Remain in the Senate to Avoid a Shutdown
The House approved 224 to 201 a one-week stopgap funding bill to stave off a shutdown, but the process must still clear some hurdles in the Senate. Lawmakers are seeking to buy time until appropriators can draft and Congress can pass a full-year omnibus funding measure for Fiscal Year 2023 after negotiators struck a bipartisan deal on a framework. Read more here.

SBA Cyber Bill Clears House, Next Stop the President’s Desk
The House unanimously voted to pass legislation that requires the Small Business Administration (SBA) to improve its cyber defenses; the bill now heads to President Biden’s desk for his signature. The SBA Cyber Awareness Act would require SBA to develop a cyber strategy, assess the risks of foreign-sourced components that make up part of its IT systems, and report data breaches and other cybersecurity incidents to Congress. Read more here.

Class Deviation—Small Disadvantaged Business Threshold
The Department of Defense (DOD) published a class deviation that implements the Small Business Administration’s final rule that increased the small disadvantaged business concern threshold at 13 CFR 124.104(c)(2) for inflation from $750,000 to $850,000. Per the class deviation, effective December 19, 2022, DOD contracting officers shall use $850,000 in lieu of $750,000 for the net worth threshold in the small disadvantaged business concern definition at Federal Acquisition Regulation 2.101(b). Read more here. An attachment to the class deviation with alternate solicitation provisions and contract clauses that DOD contracting officers will use is available here.

Pentagon Awards $9B Cloud Contract to Amazon, Google, Microsoft, Oracle
The Department of Defense (DOD) announced the awardees of the Joint Warfighting Cloud Capability—or JWCC—contract, with Amazon Web Services, Google, Microsoft, and Oracle each receiving an award. The awards come after a years-long effort to provide enterprise-wide cloud computing across the DOD, with a significant delay in March 2022 as the DOD conducted due diligence with the four vendors. Read more here.

Federal Awardee Performance and Integrity Information System Integrates with the System for Award Management
On December 12, 2022, the Federal Awardee Performance and Integrity Information System, FAPIIS.gov, integrated with the System for Award Management, SAM.gov, as part of an ongoing Integrated Award Environment modernization managed by the General Services Administration. Once integrated with SAM, the integrity records previously available in FAPIIS.gov will be renamed Responsibility/Qualification (R/Q) and will be a part of the entity information domain in SAM. This will provide users with a single access point for information about entity management, exclusions, and R/Q. Read more here.

GSA Administrator Statement on New Actions to Cut Emissions and Lower Energy Costs for Federal Buildings
General Services Administration Administrator Robin Carnahan issued a statement regarding the Biden-Harris Administration’s new electrification standard for the country’s 300,000 existing federal buildings. The new Federal Building Performance Standard requires each agency to electrify 30 percent of their existing buildings by square footage through energy-efficient, cost-effective upgrades to equipment and appliances. Read more here.

SBA Announces End-of-Year Capital Benchmarks Showing Historic Support for Small Businesses
Small Business Administration (SBA) Administrator Isabella Casillas Guzman announced that the Agency reached nearly $43 billion in funding to small businesses, providing more than 62,000 traditional loans through its 7(a), 504, and Microloan lending partners and over 1,200 investments through SBA licensed Small Business Investment Companies for Fiscal Year 2022. Read more here.

Additions of Entities to the Entity List and Removal of an Entity from the Entity List
The Department of Commerce published a final rule to amend the Export Administration Regulations by adding twenty-four entities under twenty-six entries to the Entity List. These entities have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the U.S. and will be listed on the Entity List under the destinations of Latvia, Pakistan, Russia, Singapore, Switzerland, and the United Arab Emirates (U.A.E.). The final rule also removes from the Entity List one entity listed in three entries under Oman, Saudi Arabia, and the U.A.E. The rule is effective December 8, 2022. Read more here.

LABOR & EMPLOYMENT

New Penalties for Companies That Illegally Fire Workers Who Unionize
In a big win for labor unions, the National Labor Relations Board ruled to expand the fees and penalties the agency can collect from employers that illegally terminate workers for labor activism, both union and nonunion. Companies that illegally fire or demote unionizing workers can now be held responsible for workers’ financial demise—including credit card late fees, lost housing or cars and health-care costs. Read more here.

LITIGATION & DISPUTE RESOLUTION

SBA Statement on the House Select Subcommittee on the Coronavirus Crisis Report Concerning Fraud in the Paycheck Protection Program
The Small Business Administration (SBA) issued a statement regarding findings from the House Select Subcommittee on the Coronavirus Crisis report on Paycheck Protection Program (PPP) fraud. The report details serious problems of fraud and self-dealing by lenders and by companies who were paid fees by lenders to help PPP funds reach small business owners. In response to new revelations detailed in the report of possible fraud facilitated by third-party companies, SBA is taking additional action. Read more here.

Three Health Care Providers Agree to Pay $22.5 Million for Alleged False Claims to California’s Medicaid Program
Dignity Health, a not-for-profit health system that owns and operates three hospitals and one clinic, along with Twin Cities Community Hospital and Sierra Vista Regional Medical Center, two acute healthcare facility subsidiaries of Tenet Healthcare Corporation, have agreed to pay a total of $22.5 million pursuant to two separate settlements to resolve allegations that they violated the federal False Claims Act and the California False Claims Act by causing the submission of false claims to Medi-Cal related to Medicaid Adult Expansion under the Patient Protection and Affordable Care Act. Read more here.

Opioid Abuse Treatment Facility to Pay $3.15 Million for Kickback Violations, Obstructing Federal Audit, and False Claims Submitted to Government Insurance Programs
An opioid abuse treatment facility in Camden will pay a total of $3.15 million to resolve criminal and civil claims that it caused kickbacks, obstructed a federal audit, and fraudulently billed Medicaid. Specifically, Camden Treatment Associates LLC (CTA) agreed to pay $1.5 million in criminal penalties to resolve allegations that it violated the federal Anti-Kickback Statute and obstructed a Medicaid audit. As part of the resolution, a criminal information was filed on December 2, 2022, in Camden federal court charging CTA with this conduct. CTA entered into a three-year deferred prosecution agreement that requires it to abide by certain measures to avoid conviction. CTA also entered into a civil settlement agreement to pay $1.65 million to the U.S. to resolve claims that it violated the federal False Claims Act by submitting fraudulent claims to Medicaid. Read more here.

Former Federal Contractor Sentenced to 42 Months and $172,500 Fine for Bribery Involving Millions in U.S. DOD Contracts
A former government contractor and owner of Best Choice Construction LLC (Best Choice) was sentenced to 42 months in prison followed by two years of supervised release and a criminal fine of $172,500 by Senior U.S. District Court Judge Ralph Beistline for conspiracy and bribery of a public official. According to court documents, Ryan Dalbec, agreed to pay over $460,000 in bribes to former U.S. Air Force contracting official, Brian Lowell Nash II, in exchange for confidential bidding information on over $8,250,000 in U.S. Department of Defense contracts at Eielson Air Force Base and Joint Base Elmendorf-Richardson. The confidential bidding information Nash provided helped Dalbec and Best Choice win some of those contracts, including a $6,850,000 construction contract related to the F-35 aircraft program at Eielson Air Force Base. Dalbec and his wife, Raihana Nadem, also helped Nash launder the bribery proceeds through family members and third-party bank accounts to conceal the nature and source of the funds. Dalbec previously pleaded guilty to the charges on September 2, 2022. Read more here.