Weekly Update for Government Contractors and Commercial Businesses – December 7, 2022

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GOVERNMENT CONTRACTS

2022 GAO Bid Protest Annual Report: Key Takeaways for Government Contractors, 12.05.22, Jackie Unger and Dozier Gardner
The Government Accountability Office (GAO) recently released its 2022 Bid Protest Annual Report (Report), which reviews statistics compiled from the cases brought before the agency, including protests, cost claims, and requests for reconsideration. In this blog, PilieroMazza analyzes what the Report reveals about bid protests at GAO, including recent trends and how the information could affect a contractor’s decision to file a protest and its likelihood of success. Read more here.

Congressional Negotiators Agree on $45B Increase to FY23 NDAA Topline
Senate and House negotiators working on a compromise on the Fiscal Year 2023 National Defense Authorization Act’s (NDAA) agreed to add $45 billion to the Biden Administration’s defense spending plans, a move that would set the annual defense policy bill’s topline for national defense at $847 billion. Leaders of the House and Senate Armed Services Committees have addressed their differences on the NDAA and transitioned the bill to both chambers’ leadership to hash out issues on some language that could be added to the compromise version. Legislators aim to have the defense policy measure ready for a House vote this week and to move the bill to the upper chamber. Read more here.

Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business-Certification: Final Rule
The Small Business Administration (SBA) is amending its regulations to implement a statutory requirement to certify Veteran-Owned Small Business (VOSB) Concerns and Service-Disabled Veteran-Owned Small Business (SDVOSB) Concerns participating in the Veteran Small Business Certification Program. Section 862 of the National Defense Authorization Act for Fiscal Year 2021 amended VOSB / SDVOSB requirements to transfer the responsibility for certification of VOSBs and SDVOSBs to SBA as of January 1, 2023, and created a certification requirement at SBA for SDVOSBs seeking sole-source and set-aside contracts across the federal government. Effective on January 1, 2023, this rule will implement the changes. Read more here. SBA’s related press release on the transition is available here.

CIO-SP4 Bid Protests Dismissed After NITAAC Takes Corrective Action
The Government Accountability Office (GAO) dismissed 117 bid protests from unsuccessful offerors on the CIO-SP4 contract after the National Institutes of Health Information Technology Acquisition and Assessment Center (NITAAC) agreed to take corrective action. The protests all argued that NITAAC’s threshold for the self-scoring assessment on the request for proposals was arbitrary and led to proposals being unfairly excluded from the second phase of the competition. Per GAO, NITAAC has voluntarily agreed to reassess its scoring threshold and reconsider all submitted proposals, rendering the protests moot. Read more here.

Federal Acquisition Circular 2023-01
The Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) published four final Federal Acquisition Regulation (FAR) rules in Federal Acquisition Circular 2023-01. The FAR rules are all effective December 30, 2022, and summaries are below:

• Update to Title 10 Citations
  This final rule amends the FAR to update statutory references to Title 10 of the U.S. Code, which were revised by Title XVIII of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 116-283), Transfer and Reorganization of Defense Acquisition Statutes, and Title XVII of the NDAA for FY 2022 (Pub. L. 117-81), Technical Amendments Related to the Transfer and Reorganization of Defense Acquisition Statutes. The final rule is not expected to have a significant economic impact on a substantial number of small entities because it simply updates statutory references in existing regulations. Read more here.
• Effective Communication Between Government and Industry
  This final rule amends the FAR to implement section 887 of the NDAA for FY 2016 (Pub. L. 114-92). This rule clarifies that agency acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry, so long as those exchanges are consistent with existing laws and regulations and do not promote an unfair competitive advantage to particular firms. DOD, GSA, and NASA do not expect this final rule to have a significant economic impact on a substantial number of small entities. Any impact on small businesses is expected to be positive, since small businesses are expected to benefit from better communication with the government. Read more here.
• United States-Mexico-Canada Agreement
  This final rule implements the United States-Mexico-Canada Agreement Implementation Act (Pub. L. 116-113). The rule makes changes in the FAR to conform to Chapter 13 of the United States-Mexico-Canada Agreement (USMCA), which sets forth certain obligations between the U.S. and Mexico with respect to government procurement of goods and services, as specified in Annex 13-A of the USMCA. Chapter 13 of the USMCA applies only between Mexico and the U.S. and does not cover Canada. Although Canada is still a designated country under the World Trade Organization Government Procurement Agreement, Canada is no longer a Free Trade Agreement country. Therefore, references to Canada as a Free Trade Agreement country in the FAR are being deleted, including a $25,000 threshold. DOD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities. The effect on contracting officers is expected to be minimal, as they will continue to apply the rule implementing the USMCA to contracts to which the North American Free Trade Agreement applied, at the higher threshold for Mexico. Read more here.
• Technical Amendments
  This final rule makes administrative changes at FAR 17.701, and 53.300. Read more here.

A summary presentation of the final rules is available here, and a related small entity compliance guide is available here.

Pentagon Releases Zero Trust Strategy
The Department of Defense (DOD) released its Zero Trust strategy to establish a “never trust, always verify” cybersecurity strategy across the Pentagon by fiscal year 2027. As described in the DOD Zero Trust Reference Architecture, “the foundational tenet of the Zero Trust Model is that no actor, system, network, or service operating outside or within the security perimeter is trusted. Instead, we must verify anything and everything attempting to establish access. It is a dramatic paradigm shift in philosophy of how we secure our infrastructure, networks, and data, from verify once at the perimeter to continual verification of each user, device, application, and transaction.” Read more here.

GSA Proposes Increased Data Collection on Login.Gov
The General Services Administration (GSA) is proposing to make changes to its secure sign-in service, Login.gov. The changes will increase the amount of data GSA collects for anti-fraud purposes. Under GSA’s proposal, Login.gov—designed to provide a single account that allows users to interact with multiple federal agencies—would begin collecting information about the device, browser type, internet protocol address, and usage patterns (such as keystrokes and mouse behavior) used to access Login.gov accounts. During log-in, that information would be transmitted to a third-party verification service that would assess the information and flag log-in attempts that may be fraudulent. GSA is accepting comments on the proposal through December 21, 2022. Read more here. Reporting on concerns regarding the proposed changes is available here.

FCC Bans Sale of Communications Equipment from Several Firms from China
The Federal Communications Commission (FCC) announced a ban on the sale of communications equipment from several firms from China due to the threat it poses to national security. The companies banned from selling and exporting communications technology to the U.S. are Huawei Technologies, ZTE Corporation, Hytera Communications, Hangzhou Hikvision Digital Technology, and Dahua Technology, along with any subsidiaries or affiliates. This action follows federal investigation into Huawei and its role in espionage through equipment installed on telecommunication towers. The new rule implements a directive in the Secure Equipment Act of 2021, a bill requiring the FCC to cease review or approval of any authorization application for equipment that is on the list of covered communications equipment or services. The new regulations, which affect the entirety of the U.S. commercial market, mirror earlier actions taken by Congress to safeguard Federal procurement. Read more here.

Statement from SBA Administrator Isabella Casillas Guzman on the DOD’s New Office of Strategic Capital
Administrator Isabella Casillas Guzman, head of the Small Business Administration, issued a statement regarding the Department of Defense’s (DOD) recent announcement on the creation of the Office of Strategic Capital. “DOD’s creation of the Office of Strategic Capital marks a significant milestone in the Biden-Harris Administration’s investment in critical technologies that drive innovation, power our nation’s technological leadership, and strengthen our national security,” she said. “This new mission-driven office will continue to build and align incentives for private investment in innovators who are producing frontier technologies that advance America’s security and economic competitiveness.” Read more here. DOD’ related press release is available here.

SBA and DOD Announce Groundbreaking Joint Initiative to Drive Investment to Entrepreneurs Scaling Critical and Emerging Technologies
The Small Business Administration (SBA) and Department of Defense (DOD) announced a new joint effort to establish a Small Business Investment Company Critical Technologies Initiative, designed to grow investment in critical technologies vital to U.S. national security. The new partnership will support the Biden-Harris Administration’s whole-of-government effort to bolster America’s leadership in global innovation and to strengthen our national security by incubating and scaling technologies. SBA Administrator Guzman joined Defense Secretary Austin at the Reagan National Defense Forum in Simi Valley, California, where they held a joint letter signing event, announcing this groundbreaking milestone in the longstanding partnership between SBA and DOD. “Earlier this week, I announced the creation of the Department’s Office of Strategic Capital and I’m delighted that OSC’s first official activity will be a partnership with the Small Business Administration,” said Defense Secretary Austin. Read more here.

Upcoming Government Contracts Presentations

WEBINAR: Termination for Convenience: How to Prepare Your Settlement Proposal, December 15, Peter Ford and Meghan Leemon. Read more here.

LABOR & EMPLOYMENT

Treasury Guidance and Briefing on Labor Standards and Tax Incentives
The Department of the Treasury announced initial guidance on the Inflation Reduction Act’s labor standards (e.g., prevailing wages and employ apprentices) that companies must meet to qualify for enhanced clean energy and climate tax incentives. The Treasury’s guidance will apply to qualifying facilities, projects, property, or equipment for which construction begins on or after January 29, 2023. Additional proposed regulations are expected in the coming months. Read more here.

Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights
The Department of Labor published a final rule to adopt amendments to the Investment Duties regulation under Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The amendments clarify the application of ERISA’s fiduciary duties of prudence and loyalty to selecting investments and investment courses of action, including selecting qualified default investment alternatives, exercising shareholder rights, such as proxy voting, and the use of written proxy voting policies and guidelines. The amendments also reverse and modify certain amendments to the Investment Duties regulation adopted in 2020. The final rule is effective January 30, 2023. Read more here.

NLRB Updates Comment Due Date for Proposed Rule on Filing and Processing Petitions for NLRB-Conducted Representation Elections
The National Labor Relations Board (NLRB) published a notice of proposed rulemaking in the Federal Register on November 4, 2022, seeking comments from the public on its proposed rule concerning the filing and processing of petitions for NLRB-conducted representation elections. The date to submit comments to the notice has been extended by 30 days. Comments to the notice of proposed rulemaking must now be received by February 2, 2023. Comments replying to the comments submitted during the initial comment period must be received by February 16, 2023. Read more here. The NLRB’s initial press release regarding the notice of proposed rulemaking is available here.

LITIGATION & DISPUTE RESOLUTION

Government Contractor Agrees to Pay $8.4 Million to Resolve Claims Related to its Failure to Disclose Cost or Pricing Data
The Department of Justice announced that PowerSecure, Inc. has agreed to pay $8.4 million to resolve allegations that it violated the False Claims Act arising from its failure to provide certified cost or pricing data when negotiating rates with the U.S. Army Corps of Engineers in connection with a sole source contract for the repair and restoration of Puerto Rico’s power grid following the damage caused by Hurricane Maria in September 2017. Read more here.