Weekly Update for Government Contractors and Commercial Businesses – February 17, 2022

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GOVERNMENT CONTRACTS

SBA HUBZone “Legacy Employee” Grace Period Ends: 3 Changes Affecting Recertification in 2022, February 14, 2022, Jon Williams
As part of sweeping changes to the HUBZone rules in the 2019 Final Rule, SBA implemented the so-called HUBZone “legacy employee” rule. This new rule was welcomed by HUBZone firms because it permits them to continue counting an employee as a HUBZone employee even after the employee moves out of a HUBZone, as long as certain requirements are satisfied. Specifically, to qualify as a HUBZone legacy employee, the rule requires that an employee (i) reside in a HUBZone for at least 180 days prior to the firm’s certification or recertification; (ii) continue to live in a HUBZone for at least 180 days immediately after the certification or recertification; and (iii) maintain continuous employment with the firm.

In 2021, SBA changed how it interpreted and applied the “legacy employee” rule. In FAQs, SBA placed limitations on how firms could take advantage of the legacy employee rule, depending on where the firm’s principal office was located and the status of the HUBZones in which the legacy employees resided. This sparked an outcry from HUBZone firms that relied in good faith on SBA’s prior guidance for the “legacy employee” rule. SBA listened to these concerns and implemented a grace period during the second half of 2021 during which HUBZone firms were permitted to use the legacy employee rule based on SBA’s prior guidance.

The grace period ended as of January 1, 2022. As a result, HUBZone firms must now follow SBA’s current guidance to take advantage of the legacy employee rule. Here are three key changes that HUBZone firms need to be mindful of when seeking to use the legacy employee rule in 2022. Read more here.

Operations at U.S. Embassy Kyiv
The U.S. Department of State published a press statement by Secretary of State Antony Blinken announcing that the U.S. is shuttering its embassy in Kyiv ahead of a possible Russian invasion of Ukraine. Read more here. Related reporting from the Hill is available here.

U.S. Cyber Defense Agency Warns of Possible Russian Cyberattacks Amid Tensions
The Hill reported that the Cybersecurity and Infrastructure Security Agency issued a “Shields Up” alert for American organizations. The alert states that U.S. systems could face Russian cyberattacks amid warnings from Biden Administration officials that a Russian invasion of Ukraine could be imminent. Read more here.

All CUI-Handling DOD Contractors Will Need Assessments Under CMMC 2.0
Federal News Network reported that the Pentagon’s revamped Cybersecurity Maturity Model Certification program is moving forward under the Department of Defense (DOD) chief information officer, but DOD is rolling back an aspect of the plan that would have allowed some 40,000 companies to self-attest to their cybersecurity practices. Read more here.

DOD Releases New Report on Safeguarding National Security by Promoting Competition in the Defense Industrial Base
The White House published a fact sheet on the Department of Defense’s (DOD) recent report on the state of competition in the defense industrial base. The report surveys the state of competition across key defense sectors and finds that extreme consolidation poses risks to our nation’s national and economic security. The report emphasizes that promoting competition is a top priority for DOD and outlines a series of actions that DOD will pursue to rebuild its competitive bench, lower costs for taxpayers, and safeguard our national security. Read more here.

DHS Wants to Know How Cyber-Hygiene Contract Clauses Are Affecting Vendors
FedScoop reported that the Department of Homeland Security plans to release a self-assessment questionnaire to a subset of vendors as it evaluates its overall cyber-hygiene. Read more here.

Pentagon Outlines Plan to Make Continuous ATOs the New ‘Gold Standard’ for Cybersecurity
Federal News Network reported that, while defense agencies and military services have dabbled with IT security approvals process reforms that acknowledge the realities of modern software development and cyber threats, the old way of doing things, a point-in-time grant of an Authority to Operate (ATO), takes too long and may have lost its relevance before the system actually gets up and running anyway. Now, the “continuous ATOs” (cATOs) that have taken ATOs’ place in some quarters of DOD IT development community have the full attention of the Office of the DOD Chief Information Officer. In a new memo, the Pentagon said it wants to make cATOs the “gold standard” for cybersecurity across department and bring more commonality to how Defense organizations use them. Read more here.

New VA CIO Talks Digital Transformation
Federal Computer Week reported that the new chief information officer of the Department of Veterans Affairs laid out his vision for enhanced information technology management and expanded collaboration with the contracting community in his first congressional testimony. He told lawmakers he plans to act as a change-agent and lead a department-wide digital transformation, modernizing its IT systems and improving internal software development offerings, including low-code and no-code solutions. Read more here.

Senate Confirms Andrew Hunter as Air Force Acquisition Chief
FedScoop reported that Senate lawmakers confirmed Andrew Hunter as Assistant Secretary of the Air Force for Acquisition, Technology and Logistics. Hunter was previously director of the Center for Strategic International Studies’ defense-industrial initiatives group and also worked as a senior fellow within the Center’s international security program. Read more here.

DOD Acquisition and Sustainment Leadership Transition
The Department of Defense published a press release to announce that Andrew Hunter, Assistant Secretary of the Air Force for Acquisition, Technology and Logistics, assumed the duties of Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)). In performing the duties of USD(A&S), Hunter is responsible for all matters pertaining to: acquisition; contract administration; logistics and materiel readiness; installations and environment; operational energy; chemical, biological, and nuclear weapons; the acquisition workforce; and the defense industrial base. Read more here.

Companies Ask GSA to Address Inflation in Government Contracts
Federal News Network reported that the Coalition for Government Procurement (CGP) wrote a letter to the Federal Acquisition Service asking what GSA’s plans are to address inflation in government contracts. The CGP also wants GSA to address the Economic Price Adjustment process, which is the only way vendors can currently request a change in prices and can take months to finalize. The CGP says the current rate of inflation is having a negative impact on all vendors but particularly small businesses. Read the letter here.

NNSA Releases Annual Performance Reviews of Management and Operations Contractors
The National Nuclear Security Administration (NNSA) announced the FY 2021 results of the performance of its Managing and Operating contractors in meeting NNSA’s performance expectations. The results can be found in NNSA’s Performance Evaluation Summaries posted on NNSA’s website. The summaries feature an easy-to-read and transparent assessment scorecard for each lab and site assessment and include links to NNSA’s performance goals, called the Performance Evaluation and Measurement Plans. Read more here.

NRO Looks to Ease Companies in the Door with Tiered Cybersecurity Requirements
Federal News Network reported that the National Reconnaissance Office (NRO) is attempting to lower barriers to entry for commercial satellite firms competing for NRO business, including through tiered cybersecurity requirements that don’t ask as much from companies, at least at first. The tiered cybersecurity requirements are a feature of new contracts the NRO awarded last month to five companies under a Broad Agency Announcement, which, according to Pete Muend, the director of the NRO’s commercial systems program office, the agency has just begun using to test out commercial capabilities. Read more here.

Federal Award Community Should Plan for Expected Downtimes in SAM.gov and Other Award Related Systems During the DUNS Number to Unique Entity ID Transition
The General Services Administration (GSA) published a blog post to explain that users should expect intermittent system downtime across its entire portfolio (SAM.gov, FPDS.gov, eSRS.gov, FSRS.gov, FAPIIS.gov, and CPARS.gov) as GSA prepares its systems for the shift to use of the new Unique Entity ID as the official, government-wide identifier used for federal awards. Read more here.

GSAR: Contract Requirements for GSA Information Systems
The General Services Administration (GSA) published a final rule that amends the General Services Administration Acquisition Regulation (GSAR) to streamline and update requirements for contracts that involve GSA information systems. The revision of GSA’s cybersecurity and other information technology requirements will lead to the elimination of a duplicative and outdated provision and clause from the GSAR, replacing the outdated text with existing policies of the GSA Office of the Chief Information Officer (OCIO) and providing centralized guidance to ensure consistent application across the organization. The updated GSA policy will also align cybersecurity requirements, based on the items being procured, by ensuring contract requirements are coordinated with GSA’s Chief Information Security Officer and included in all applicable solicitations and contracts. The rule is effective March 11, 2022. Read more here.

DOT: Enhancing Highway Workforce Development Opportunities Contracting Initiative
The Department of Transportation (DOT) published a notice: the recently enacted Bipartisan Infrastructure Law (BIL), enacted as the Infrastructure Investment and Jobs Act, authorizes a recipient or subrecipient of a grant provided by the DOT Secretary, to implement a local or other geographical or economic hiring preference relating to the use of labor for construction of a project funded by the grant subject to any applicable State and local laws, policies, and procedures. Based on this statutory authorization, the Federal Highway Administration (FHWA) is announcing a transition from its initiative announced in May 2021, which permitted, on an experimental basis, recipients and subrecipients of Federal funds for Federal-aid highway projects to utilize geographic, economic, or other hiring preferences or innovative contracting approaches not otherwise authorized by law. The May 2021 initiative was carried out as a pilot program under FHWA’s existing experimental contracting authority and the legal authority in Section 199B of the Consolidated Appropriations Act, 2021, authorizing such hiring preferences “not otherwise authorized by law.” Now that BIL creates the legal authority for local or other geographical or economic hiring preferences, an experimental pilot program for such hiring preferences is no longer needed. In addition, the use of such preferences going forward are subject to Section 25019 of the BIL, not Section 199B of the Consolidated Appropriations Act, 2021. This action is applicable immediately. Read more here.

Upcoming Government Contracts Presentations

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.

WEBINAR: Commercial Businesses New to Government Contracting: GovCon Basics, March 10, Lauren Brier and Eric Valle. 

LITIGATION & DISPUTE RESOLUTION

Catholic Medical Center Agrees to Pay $3.8 Million to Resolve Kickback-Related False Claims Act Allegations
The Department of Justice reported that that Catholic Medical Center (CMC) has agreed to pay $3.8 million to resolve allegations that it violated the civil False Claims Act by providing free call coverage services to a cardiologist to induce patient referrals, in violation of the Anti-Kickback Statute. Read more here.

BUSINESS & TRANSACTIONS

The Army Is Trying to Jump-Start Its Venture Capital Arm
FedScoop reported that the Department of the Army is seeking to revitalize its internal venture capital firm, the Army Venture Capital Corporation (AVCC), which was created by Congress in 2002 but has sat dormant for 10 years without funding. Read more here.

LABOR & EMPLOYMENT

Seven States Are Challenging Biden’s $15 Minimum Wage Policy for Contractors
Government Executive reported that seven states have sued the Biden Administration this past week over its new requirement that contractors pay their employees a $15 per hour minimum wage. Read more here.

Facilities Access – USAID’s COVID-19 Workplace Safety Protocols
The U.S. Agency for International Development (USAID) published a letter to update contractors on Agency-specific workplace safety protocols for access to USAID’s domestic facilities in the United States. Read more here.

Paid COVID Leave Granted to California Workers Through September
Bloomberg Law reported that, starting February 19, 2022, California employers must provide up to two weeks of paid COVID-19 leave under legislation Gov. Gavin Newsom signed on February 9, 2022. Read more here.

DOL Announces Worker Initiative to Safeguard Rights, Ensure Protections for Workers in Warehouse, Logistics Industries
The Department of Labor published a press release to explain that the department’s Wage and Hour Division has announced a Warehouse and Logistics Worker initiative designed to help ensure that workers in these industries, including delivery drivers, truck drivers and others are:

• Paid all their legally earned wages, including minimum and overtime.
• Safe from workplace harassment and retaliation when they claim their rights.
• Not prevented from taking time off from work under the Family and Medical Leave Act.

The initiative will also target misclassification of employees as independent contractors, a common occurrence in both industries that denies workers their full wages and legal protections. Read more here.

DOL Provides States with Updated Guidance to Waive Recovery of Certain Unemployment Insurance Benefits Overpayments
The Department of Labor published a press release on its issuance of an Unemployment Insurance Program Letter to states to address overpayments under the CARES Act’s Unemployment Compensation Programs when the claimant is not at fault. The updated Unemployment Insurance Program Letter augments guidance the department issued on May 5, 2021. Read more here.

As Workers’ Injury and Illness Rates Soar, DOL Urges Healthcare Facilities, Providers to Employ Effective Safety, Health Programs
The Department of Labor published a press release that calls on healthcare employers, and those in healthcare and social assistance industries, to take immediate actions to help make 2022 less hazardous and reduce worker injuries and illnesses. Read more here.

Upcoming Labor & Employment Presentations

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