Helping individuals, companies, and organizations understand key legal and practical considerations for promoting compliance and making better business decisions in these types of federal, state, and local government contracting matters MORE

Federal government contracts and grants require contractors to certify the delivery of domestic end products unless an exception applies. Domestic preference rules include the Buy American Act (BAA) and Trade Agreements Act (TAA). Recently, additional domestic preference requirements, such as Build America, Buy America and the Buy America Act, have also been applied to projects funded through the Infrastructure Investment and Jobs Act or energy savings contracts under the Inflation Reduction Act. Trillions of dollars in grants and contracts have been awarded on the condition that the federal funds spent on construction materials used in these projects will comply with applicable domestic preference laws and regulations.

Under these domestic preference provisions, contractors and grantees must certify their compliance accurately and completely. Even without a written certification, the delivery or installation of products under these contracts or grants may be viewed as an implied certification of compliance with domestic preference rules.

Failure to deliver compliant products or to accurately certify compliance with these laws and regulations has been the target of Federal False Claims Act (FCA) investigations and prosecutions. The FCA authorizes treble damages plus penalties for each FCA violation. Penalties currently range from $13,946 to $27,894 per claim.

Recently, LED Lighting Solutions, LLC settled an FCA claim and paid $300,000 to the government for failure to comply with domestic end product requirements under the BAA and TAA. The U.S. Department of Justice press release states that LED Lighting certified its compliance with the TAA in its letter of supply submitted for its General Services Administration Multiple Award Schedule contract without identifying any foreign end products on its product list. The press release notes that LED Lighting falsely certified the compliance of its end products under the BAA when, in fact, some of its products were foreign end products. In one instance, LED Lighting shipped products directly from China to the procuring agency. The settlement also required LED Lighting to withdraw its two contract appeals pending before the Armed Services Board of Contract Appeals in which LED Lighting challenged the Army’s termination of its contract due to BAA and FCA violations.

Notably, the Federal Acquisition Regulation, 48 C.F.R. part 42.15, requires the reporting of “for cause” terminations of government construction contracts in the Contractor Performance Assessment Reporting System (CPARS). CPARS reports of such terminations must be considered by contracting officers in evaluating contractors for future award decisions for a period of up to six years.

Procurement has clearly been on the President’s mind.  On March 20, 2025, President Trump issued Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement. While the devil will be in the details, this is a huge move to consolidate procurement of “common goods and services across the domestic components of the Government, where permitted by law” and place the GSA Administrator in the position of “executive agent for all Government-wide acquisition contracts for information technology.”

Proposals for this consolidation are due within 60 days of the Executive Order, and a comprehensive plan is due to OMB from the GSA Administrator within 90 days. A memorandum from OMB will be issued in two weeks to let us know more about this implementation. 

Because defense, civilian, and state and local government entities use GSA schedule contract vehicles to purchase common goods and services, as well as information technology, this type of centralization will have significant and wide-ranging effects on procurements at the federal, state, and local levels.

We will need to examine what is proposed closely and stay tuned to participate in the rulemaking process that is rolled out.  It is hoped that there will be an opportunity for fulsome input from the agencies and the government procurement community, which will be greatly affected by the changes.

The U.S. Office of Management and Budget (OMB) has now established a page addressing “Agency Contingency Plans” with myriad links to the plans for a variety of agencies.  The OMB webpage also links to FAQs that address what is to be done to conduct an “orderly [government] shutdown” where there is a “lapse in appropriations”. 

While these are directions for the agencies to follow, the documentation provides some guidance for contractors as well. Specifically, the FAQ provides that activities that are funded or “excepted” will be allowed to continue; those that aren’t won’t be. However, as a government contractor, if you are required to coordinate or be overseen by federal personnel then your activities – even if funded – may not be allowed to continue. This might occur because, among other reasons, (1) the personnel that oversee your activities are themselves placed on furlough or (2) the locations in which you are required to perform are shutdown during the lapse in appropriations.  Your contracting officer should be providing you with information and direction on your status and allowed activities. If you don’t receive any notice, you should reach out to them to obtain direction.

Further, whether you are kept on as “excepted” and allowed to work, or you are notified at the start that you are to “stop work,” bear in mind that your status may change over time based on ongoing developments within the government.  Thus, in the event that there is a lapse in appropriations and the government engages in a shutdown, you will need to pay close attention to emails, phone calls, and other contact routes to ensure that you are able to reactivate or deactivate at their direction.

If this occurs, opening up separate tracking numbers and documenting the directions you receive, actions and impacts will be important to any potential recovery.  There are a number of ways in which your contracts, and the personnel and contractors you use to perform these contracts, could be affected.  Because this event is unfolding in real time, please don’t hesitate to contact Susan Warshaw Ebner or Eric Whytsell, or your Stinson counsel. We are here and available to answer questions and assist if needed.

The AbilityOne Program, established by the Javits-Wagner-O’Day (JWOD) Act in 1971, requires federal government agencies to procure certain products and services from community-based nonprofit agencies that employ individuals who are blind or have significant disabilities.

Facts

In a recent U.S. Court of Federal Claims decision, SEKRI, Inc. (SEKRI), a Kentucky nonprofit textile and apparel manufacturer that employs severely disabled individuals, filed a pre-award bid protest, claiming that the Defense Logistics Agency (DLA) and the United States Ability One Commission violated the JWOD Act by proposing to award 50% of the solicitation for Advanced Tactical Assault Panels (ATAP) competitively to a commercial supplier.  SEKRI argued that 100% of the award should go to SEKRI, the nonprofit agency that AbilityOne had designated to be the mandatory source of supply for 100% of the Department of Defense’s ATAP requirements.  Further, SEKRI claimed that DLA could not negotiate a more favorable contract price for ATAP.

Holding

The U.S. Court of Federal Claims agreed with SEKRI finding that AbilityOne’s designation of a nonprofit agency as a mandatory source for only 50% of the requirement was unlawful.  The Court found that no statutory or regulatory exception allows AbilityOne to limit the scope of ATAP on the procurement list.  The nonprofit agency was available to produce the entire quantity of ATAP for DLA within the required time.  Moreover, DLA had not issued any purchase exception, and the Court found that no deletion from the procurement limit was appropriate.  Accordingly, the Court ordered AbilityOne to update SEKRI’s status on the procurement list to indicate that it is the mandatory source for 100% of the ATAP requirement.

Takeaway

This decision makes clear that all federal agencies must comply with the mandatory purchasing requirements under the JWOD Act.  The AbilityOne Commission does not have the regulatory authority to reduce the mandatory source requirement.  In the future, any attempts by agencies participating in the AbilityOne Program to make purchases below the 100% threshold to nonprofit agencies will certainly be scrutinized and will likely be found unlawful.

If you have questions about the AbilityOne Program, government contracts, or investigations, contact the author of this advisory or your Stinson counsel.

Case Citation:  SEKRI, Inc. v. United States, No. 21-778, 2023 WL 2473533 (Fed. Cl. Mar. 13, 2023)

On January 6, 2023, the White House’s Council on Environmental Quality (CEQ) announced new interim guidance for evaluating greenhouse gas (GHG) emissions and climate change under the National Environmental Policy Act (NEPA). CEQ published the guidance in the Federal Register on January 9, 2023, and it is immediately effective for all federal agencies. Nevertheless, the agency is taking comments on the guidance until March 10, 2023 and may revise the guidance thereafter. The guidance’s impact will extend beyond federal projects, though, and include private projects with a sufficient federal nexus.

NEPA’s General Environmental Review Requirements

NEPA requires the federal government to analyze the potential effects of agency actions on the natural and human environment. A federal agency action subject to NEPA review involves direct department actions such as constructing a highway, providing funding for projects conducted by non-governmental entities, managing federal lands, and approving permits for private projects. The type of NEPA review depends on the size and scope of a proposed action. Major federal actions require the development of an environmental impact statement. Agencies may also conduct environmental assessments and categorical exclusion determinations for activities with smaller impacts. In any case, a NEPA analysis should identify and assess the direct and indirect effects that a proposed federal action will have on the environment and consider appropriate mitigation measures.

NEPA’s environmental review requirements are procedural, and the existence of adverse impacts do not themselves forestall a federal decision when appropriate mitigation measures are implemented. However, NEPA’s reviews can be time consuming, financially burdensome, and may disclose sensitive information to the public. Evaluating GHG emissions in the NEPA process could add to these delays and expenditures.

Analyzing Greenhouse Gas Emissions Under NEPA

CEQ’s guidance directs agencies to quantify the reasonably foreseeable gross GHG emission increases or decreases for proposed federal actions. This quantification must be compared to the emissions that would result from no federal action being taken or any reasonable alternatives over their projected lifetime. Agencies are directed to identify and evaluate project alternatives with the fewest resulting GHG or the greatest net climate benefits, although the guidance does not mandate that any one alternative be selected over another.

GHG data should be calculated to determine direct and indirect emissions per CEQ’s guidance. Direct GHG emissions will be relatively easy to determine for smokestacks and other visibly apparent GHG sources. However, calculating indirect GHG will involve consideration of land use changes, changing behavioral patterns, and other foreseeable emissions from a project. CEQ has not identified a “significant” emissions threshold, resulting in a broader scope of potential GHG for consideration.

The guidance also notes that emissions should be reflected in terms of carbon dioxide-equivalence (CO2-e). Federal projects or decisions may accordingly have greater overall GHG emissions portfolios if the relevant emissions are determined to have larger global warming potential than carbon dioxide. Specifically, the use of an equivalence factor will be relevant when addressing the climate change impacts of methane and nitrous oxide sources.

CEQ’s guidance further states that, when “helpful,” NEPA environmental reviews should detail how a proposed federal action undermines or improves the ability for government entities to meet relevant climate change goals. In making that determination, CEQ directs agencies to apply a “rule of reason” when construing “science-based GHG reduction policies” and assessing covered projects. The guidance refers to the United Nations’ Framework Convention on Climate Change, as well as United States’ commitments under the Paris Climate Accord, as areas for consideration in making these assessments and ultimate determinations.

CEQ Guidance Gives Explicit Preference to Certain Industries

The guidance will impact all projects with a federal nexus, but language in the Federal Register reflects that certain industries will not be subject to increased scrutiny. CEQ’s published notice states that:

“Absent exceptional circumstances, the relative minor and short-term GHG emissions associated with construction of certain renewable energy projects, such as utility-scale solar and offshore wind, should not warrant a detailed analysis of lifetime GHG emissions.”

Presumably, the rationale underlying this exclusion is that renewable energy projects will produce little emissions over the life of the assets. It also conversely implies that federal agencies should take a harder look at their decisions involving fossil fuel resources. For example, Federal Energy Regulatory Commission proceedings for natural gas pipelines must still evaluate and document all foreseeable and cumulative GHG figures.

Infrastructure Investment and Jobs Act and Inflation Reduction Act

The interim guidance specifically calls for the use of these environmental assessments in identifying and carrying out projects under the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. Given the time required to conduct some NEPA assessments, environmental reviews will undoubtedly add to the duration of funding timeframes.

Public Comments Accepted until March 2023

CEQ is accepting public comments on its guidance through March 10, 2023. Federally regulated industries, entities, and individuals subject to federal contracts should review the guidance and consider its impacts on future projects. If there are concerns with the implementation of the guidance as it is currently written, such as the standards and costs of compliance, comments should be submitted. Affected businesses should also reevaluate their environmental compliance protocols in light of this guidance.

Contact Us

For more information on the new greenhouse gas emissions guidance, please contact one of the authors of this blog or the Stinson LLP contact with whom you regularly work.