Fiscal Year 2023 started on October 1 and, without a final set of Department of Defense (DoD) authorizations and appropriations, the DoD currently is operating under continuing resolution. A version of the National Defense Authorization Act (NDAA) for Fiscal Year 2023 bill passed the House of Representatives and has been sent to the Senate for its consideration. The House version, H.R. 7900, in addition to authorizing the procurement of various items, would provide for further environmental and equity initiatives, such as providing for (i) electric vehicle charging stations at commissary stores and military exchanges, (ii) a pilot program to facilitate the transition of certain nontactical vehicles to electric vehicles, (iii) a temporary prohibition on cost-sharing requirements for contraceptive prescriptions and related services, (iv) imposition of data standards for certain agencies, (v) development of “gender-neutral fitness standards” for certain military occupational specialties, as well as (vi) prohibition on barring a veteran from federal employment solely because the veteran consumes or has consumed cannabis, and more.
Continue Reading National Defense Authorization Act for Fiscal Year 2023 Bill Passes House and Moves to Senate Where Amendments Are Being Proposed
DC Circuit Sets FCA Offset Standard to Limit What the Government Can Recover in USA v. Honeywell International Inc.
The civil False Claims Act (FCA) prohibits entities from fraudulently inducing the Government to contract, take or refrain from taking action, or make payment. Under the FCA, contractors that falsely certify their compliance with contract specifications can be assessed a civil penalty for each false claim in addition to treble damages. In USA v. Honeywell International Inc., the Court of Appeals for the District of Columbia Circuit was asked to determine the appropriate measure of damages arising from allegedly false claims made about the ballistic performance of Z Shield material made from Zylon fiber purchased from third parties and sold by Honeywell to Armor Holdings for the production of bullet proof vests, which were then sold to the federal Government and federally-funded state and local government entities. In the case, the Government sought approximately $35 million in damages for the full amount paid for the vests, trebled. During the proceedings, the Government recovered $36 million in settlements with Armor Holdings and the Zylon providers for their role in the manufacturing and supply of the vests. Honeywell, which had not settled, moved for summary judgment to apply a pro tanto approach to the calculation of damages that would be owed in light of these settlements. Specifically, Honeywell argued that since the Government only sought $35 million in damages, its recovery of $36 million in settlements should preclude the Government from recovering any damages from Honeywell even if the facts alleged in the case were true. The Government sought to recover a proportionate share of damages from Honeywell under its proposed offset standard, which would allow for the Government to recover more than the $35 million sought in the case.
Continue Reading DC Circuit Sets FCA Offset Standard to Limit What the Government Can Recover in USA v. Honeywell International Inc.
Growing Issue of Inflation in Government Contracts Supply Chain Leads to DoD Clarification on Potential for Relief
Traditionally, a fixed price government contract is one in which the contractor absorbs the risks and costs of performance. Absent an economic price adjustment (EPA) clause in the contract, an unforeseeable event, such as a force majeure, or government imposed contract change, the contractor is stuck with the benefit or lack of benefit of the particular contractual bargain. In a cost reimbursement contract, while actual allowable, allocable and reasonable costs will be captured and paid, any fee contemplated to address the risks of performing that commitment are typically low.
However, the current landscape is not a normal one. It may be due to the COVID-19 pandemic sickness, restrictions and lockdowns, the war in Ukraine, China’s belt and road initiative, US spending of trillions of public dollars on entitlement programs, or something else, however, we see the impact in growing workforce, materials and product shortages. Economic theory aside, we know that so long as there is a continuing demand for limited services and supplies inflation will continue to grow. And, if price controls are instituted, they will not aid existing product shortages, and in fact may compound them.Continue Reading Growing Issue of Inflation in Government Contracts Supply Chain Leads to DoD Clarification on Potential for Relief
SEC Issued Proposed Rule on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure
Increasingly, the Federal government implements a rule for government contractors which then makes its way in some form into all of US industry. Cybersecurity regulations, mandating that government contractors, grant and agreement holders, and their subcontractors, maintain certain security controls and report on cyber incidents, have been in effect for a number of years. Indeed, Deputy Attorney General Lisa Monaco announced a Civil Cybersecurity Fraud initiative to go after government contractors, grant and agreement holders that falsely represent the cybersecurity of their products and services or the state of their compliance with cybersecurity requirements in seeking or performing government contracts. With a reported 1885% increase in ransomware attacks and high profile cyber events such as Colonial Pipeline in 2021, therefore, it is not surprising that the Securities and Exchange Commission (SEC) is making the move to require public companies to increase their cybersecurity activities and to report cyber incidents so investors have greater insight into their investments.
Continue Reading SEC Issued Proposed Rule on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure
For DoD Acquisitions Greater than $10 Million, Enhanced Debriefing Is Here to Stay
Effective immediately, the Department of Defense (DoD) Federal Acquisition Regulation (DFARS) issued its final rule to provide enhanced post-award debriefing rights in competitive negotiated contracts, task orders, and delivery orders exceeding $10 million. The final rule applies to DoD acquisitions greater than $10 million of commercial products, including those for Commercially Available Off-the-Shelf items, and