Weekly Update for Government Contractors and Commercial Businesses – November 2, 2022

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GOVERNMENT CONTRACTS

Prohibition on Use or Delivery of Chinese Telecommunications and Video Surveillance Products and Services: The Potential Link Between Section 889 of the 2019 NDAA and Section 1260H of the 2021 NDAA, 10.26.22, Cy Alba
Over the past few days, PilieroMazza received a number of inquiries related to our recent posting entitled DOD Releases New List of Section 889 Banned Entities. In that post, we discussed how the Department of Defense (DOD) released a new list of entities determined by DOD to be deemed “Chinese Military Companies.” This release was not made under Section 889 of the 2019 National Defense Authorization Act (NDAA) but instead under Section 1260H of the 2021 NDAA. This caused confusion related to the potential intersection of the two laws and whether one impacts the other. This blog post offers further clarification. Read more here.

Navy to Break Up Some Big Contracts to Increase Small Business Participation
In an effort to meet the goals of Executive Order 13985, “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” the Navy plans to break up five of its prime contracts into smaller awards to allow small businesses to compete for the new bids. Read more here.

DOD Releases Unclassified 2022 National Defense Strategy
The Department of Defense (DOD) publicly released its unclassified National Defense Strategy (NDS). The NDS sets DOD’s strategic direction to support U.S. national security priorities and flows directly from President Biden’s National Security Strategy. It includes a Nuclear Posture Review and a Missile Defense Review. The Nuclear Posture Review is a legislatively mandated review that describes U.S. nuclear strategy, policy, posture, and forces. The Missile Defense Review is a review conducted pursuant to guidance from the President and the Secretary of Defense, which addresses the legislative requirement to assess U.S. missile defense policy and strategy. Read more here. A transcript of Secretary of Defense Lloyd Austin’s press release on the NDS is available here.

Class Deviation: Verification of Eligibility of Small Business Joint Ventures
The Department of Defense published a class deviation that provides contracting officers with alternate procedures for verifying small business joint venture offeror eligibility from those in the System for Award Management. The class deviation will remain in effect until rescinded. Read more here.

CISA Unveils Voluntary Cybersecurity Performance Goals
The Cybersecurity and Infrastructure Security Agency issued cybersecurity performance goals to establish a baseline for key security measures. The goals are based off the National Institute of Standards and Technology Cybersecurity Framework and will be followed by sector-specific goals to meet the requirements of the White House’s July 2021 memo, “National Security Memorandum on Improving Cybersecurity for Critical Infrastructure Control Systems.” Read more here.

GSA Issues Memo on Management’s Role in the Acquisition Process
The General Services Administration’s (GSA) Office of Acquisition Policy issued a memo, “Appropriate Internal Interactions in the Acquisition Process,” regarding management involvement in GSA acquisitions. The memo rescinds its 2014 policy, “Managing and Documenting Stakeholder Interest in Contracting Actions,” and its 2014 memo, “Enhancing Proper Procurement Controls and the Contracting Officer’s Autonomy Within the Procurement Function.” Read more here.

DARPA Kicks Off Prep for $1B Contract
The Defense Advanced Research Projects Agency (DARPA) has started to develop the next version of a technical and analytical support service that could have a $1 billion ceiling. DARPA awarded the first Technical and Analytical Support Services contract to seven companies in 2018, and the vehicle is slated to expire in August 2023. In a new sources sought notice, DARPA says it will likely make between five and ten awards for the new five-year contract. DARPA hopes to have the new vehicle in place by August 2023, and it is using its request for information to develop its strategy for the acquisition, including opportunities for small businesses to compete for and perform the work. Read more here.

DOD Publishes Final and Proposed DFARS Updates
The Department of Defense (DOD) published several final and proposed updates to the Defense Federal Acquisition Regulation Supplement (DFARS).

• Requiring Data Other than Certified Cost or Pricing Data
  This final rule adds DFARS requirements relating to the submission of data other than cost or pricing data. Specifically, the rule seeks to implement section 803 of the 2020 National Defense Authorization Act, which prohibits contracting officers from determining that the price of a contract or subcontract is fair and reasonable based solely on historical prices paid by the government and states that an offeror is ineligible for award if the contracting officer is unable to determine proposed prices are fair and reasonable by any other means, when an offeror fails to make a good faith effort to comply with a reasonable request to submit data other than certified cost or pricing data, unless the head of the contracting activity determines that it is in the best interest of the government to make the award to that offeror. Read more here.
• Prohibition on Award to Contractors That Require Certain Nondisclosure Agreements
  This final rule amends the DFARS to prohibit the award of any DOD contracts to an entity that requires its employees to sign internal confidentiality agreements or statements that would prohibit or otherwise restrict its employees from lawfully reporting waste, fraud, or abuse related to the performance of a DOD contract to a designated investigative or law enforcement representative of DOD authorized to receive such information. Read more here.
• Reporting Tax Information on Certain Foreign Procurements
  This final rule amends the DFARS to allow for the efficient and accurate identification of contracts subject to excise tax withholding. It also amends the DFARS to prohibit use of the government-wide commercial purchase card as a method of payment when a tax on certain foreign procurements applies. Read more here.
• Repeal of Preference for Fixed-Price Contracts
  This final rule amends the DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2022 that repeals section 829 of the National Defense Authorization Act for Fiscal Year 2017. Section 829 required contracting officers to first consider fixed-price contracts, including fixed-price incentive contracts, when determining contract type and to obtain approval from the head of the contracting activity for certain cost-reimbursement contracts. Read more here.
• Removal of Passive Radio Frequency Requirements
  This final rule amends the DFARS to remove requirements for the use of passive radio frequency identification tags for shipments that meet the criteria at DFARS 211.275-2. DOD no longer requires the use of passive radio frequency identification tags for shipments due to the use of more cost-effective technologies. Read more here.
• Requirement for Firms Used to Support DOD Audits
  This final rule amends the DFARS to require accounting firms that provide financial statement auditing or audit remediation services in support of the Financial Improvement and Audit Remediation Plan to provide to DOD a statement setting forth the details of any disciplinary proceedings with respect to the accounting firm or its associated persons before any entity with the authority to enforce compliance with rules or laws applying to audit services offered by the accounting firm. Read more here.
• Removal of Pilot Program for Acquisition of Military-Purpose Nondevelopmental Items
  This final rule amends the DFARS to remove the Pilot Program for Acquisition of Military-Purpose Nondevelopmental Items, since the statutory authority for the program has expired. Read more here.
• Undefinitized Contract Actions
  This proposed rule would amend the DFARS as recommended by the DOD Inspector General to refine the management of undefinitized contract actions. The DOD Inspector General recommended changes to the DFARS to encourage contractors to provide timely qualifying proposals, including the possibility of the Government withholding a percentage of payments yet to be paid under an undefinitized contract action until it receives a qualifying proposal from the contractor. Comments are due December 27, 2022. Read more here.
• Quick-Closeout Procedures Threshold
  This proposed rule would amend the DFARS to update the quick-closeout procedures and expand contracts eligible for quick closeout. Comments are due December 27, 2022. Read more here.

Upcoming Government Contracts Presentations

EVENT: Realistic Steps Between Federal Partners: Winning Strategies for SDVOSB and HUBZone, November 3, Tony Franco. Read more here.

EVENT: Labor and Employment for Government Contractors, November 4, Nichole Atallah. Read more here.

WEBINAR: Small Government Contractors and the FCA: Is More Enforcement on the Horizon? November 8, Jackie Unger and Matt Feinberg. Read more here.

WEBINAR: 5 W’s of Bid Protests: The Who, What, When, Where, and Why, November 10, Katie Burrows and Eric Valle. Read more here.

EVENT: Expectations for Government Fiscal Year 2023: Small Business Expectations, November 16, Jon Williams. Read more here.

LABOR & EMPLOYMENT

Notice of Proposed Rule: Employee or Independent Contractor Classification Under the Fair Labor Standards Act
On October 13, 2022, the Department of Labor (DOL) published a notice of proposed rulemaking to revise DOL’s guidance on how to determine who is an employee or independent contractor under the Fair Labor Standards Act. On October 25, 2022, DOL announced that the deadline to submit comments would be extended by fifteen days, making comments due December 13, 2022. Read more here.

A New Law Aims to Stop Human Trafficking by Federal Contractors
President Biden signed a bill aimed at further preventing federal contractors’ involvement with human trafficking. The bill builds on previous anti-human trafficking compliance efforts for federal contractors. It “refers all potential instances of human trafficking to suspension and debarment officials, who ultimately terminates contracts found to be involved in human trafficking and importantly contractors known to have participated in trafficking and prevent them from trafficking people with U.S. taxpayer dollars ever again,” said a press release from Senator James Lankford, who introduced the bill with Senator Joni Ernst. The bill also requires the director of the Office of Management and Budget to submit a report to Congress on implementation of the provisions within ninety days of the bill’s enactment. Read more here.

Ohio Manufacturer Faces $1.2M in Penalties After 7th Worker in 5 Years Suffers Severe Injuries when Caught in Machine Employer Failed to Lock Out
An Ohio vinyl tile manufacturer faces $1,232,705 in proposed penalties after Department of Labor Occupational Safety and Health Administration inspectors responded when a worker suffered severe injuries as a result of being caught in a machine on April 28, 2022. The incident marks the seventh injury at the NOX US LLC plant since February 2017 related to the company’s failure to follow required machine safety procedures. Read more here.

Upcoming Labor & Employment Presentations

EVENT: Labor and Employment for Government Contractors, November 4, Nichole Atallah. Read more here.

LITIGATION & DISPUTE RESOLUTION

Columbus Pain Medicine Practice Agrees to Pay $1 Million to Resolve Violations Under the Controlled Substances Act, False Claims Act
Kenneth Barngrover, M.D., and his practice, Southeast Regional Pain Center (SRPC), has agreed to a $1,000,000 civil penalty to resolve allegations that the pain medicine practice violated the Controlled Substances Act by failing to comply with recordkeeping requirements and violated the False Claims Act by billing Medicare and Tricare for medically unnecessary evaluation and management services. Read more here.

Upcoming Litigation & Dispute Resolution Presentations

WEBINAR: Small Government Contractors and the FCA: Is More Enforcement on the Horizon? November 8, Jackie Unger and Matt Feinberg. Read more here.