Regulatory Updates
The U.S. Department of Defense (DoD) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 823 of the National Defense Authorization Act (NDAA) for Fiscal Year 2020 (Pub. L. 116-92). Section 823 increases the threshold for requiring a justification and approval to award a sole source contract to a participant in the 8(a) program to actions exceeding $100 million (the current threshold is $22 million).
DoD has also proposed a DFARS amendment to implement 10 U.S.C. § 2330a, as amended by Section 812 of the NDAA for Fiscal Year 2017. This rule will require contractors to report data (including the total dollar amount invoiced for, and the total number of direct labor hours expended on, services performed) in the System for Award Management annually for DoD contracts or task orders of more than $3 million for logistics management, equipment-related, knowledge-based, or electronics and communications services.
The DoD’s Office of the Under Secretary of Defense, Acquisition and Sustainment issued Class Deviation 2020-O0018, stating that, absent a waiver, DoD contracting officers shall not award a contract for the acquisition of furnished energy for a covered military installation if the contract uses any energy sourced from inside the Russian Federation.
The Defense Contract Audit Agency (DCAA) issued guidance on implementing the 2018 revision of the Generally Accepted Government Auditing Standards (GAGAS). DCAA’s guidance to its auditors highlights as a “major change” the requirement to ask contractor management if any investigations or legal proceedings that are significant to the engagement objectives have been initiated or are in process, and to consider the effect of any investigations or legal proceedings on the examination.
Congressional Developments
H.R. 7156 would amend Title 10 of the U.S. Code to establish a program to enhance the participation of DoD contractors in science, technology, engineering, and mathematics activities.
Section 321 of S. 3905, the Intelligence Authorization Act for Fiscal Year 2021, adds to prohibited personnel practices a knowing, willful, or negligent disclosure that reveals an Intelligence Community (IC) whistleblower’s identifying information without consent. It also provides a private right of action if such disclosure is made in reprisal for bringing a complaint.
The U.S. Senate issued S. Res. 634, designating July 30, 2020 as “National Whistleblower Appreciation Day” and encouraging each executive agency to inform employees, government contractors, and members of the public about the legal right to report misconduct, fraud, misdemeanors, or other crimes.
Compliance and Oversight
The U.S. Environmental Protection Agency’s (EPA) Inspector General issued a report on the EPA’s implementation of Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which authorizes agencies to reimburse contractors that provide pandemic-related paid leave to their employees or subcontractors to keep them in a ready state. The report summarized EPA’s requirements for contractors seeking reimbursement and found no evidence that the EPA’s guidance was inconsistent with the CARES Act.
A DoD Inspector General audit concluded that the Army Contracting Command–Afghanistan (ACC-A) did not award and administer any of the 15 contracts sampled in accordance with applicable federal regulations and ACC procedures, in part because the ACC A contracting officials did not have the required knowledge, training, or experience.
The DoD Inspector General also audited nine Defense Health Agency (DHA) information technology/telecommunications contracts, finding that 76 of 383 contractor employees did not meet minimum labor qualifications required in the contracts, and that another 143 may not have met minimum requirements. The audit questioned $8.81 million in costs as a result.
The U.S. Government Accountability Office (GAO) issued a report finding that selected agencies did not consistently follow all required procedures for oversight of small business subcontracting plans, both before and after contracts were awarded. The GAO also issued its 18th annual assessment of DoD acquisition programs. The 240-page report summarizes the characteristics of 121 weapon and IT programs, examines cost and schedule measures and other topics for these same programs, and summarizes selected organizational and legislative changes.
Recent Court Cases
The U.S. District Court for the District of Columbia denied Academy Express, LLC’s motion for a preliminary injunction in relation to the Washington Metropolitan Area Transit Authority’s (WMATA) decision to award a bus transportation services contract to Transportation Management Services, Inc. The Court noted that “whether the [Administrative Procedure Act] applies to WMATA procurement decisions appears to be an open question in this Circuit,” but denied the motion without deciding this issue because it found that the plaintiff had not established a substantial likelihood of success on the merits.
The U.S. District Court for the Western District of Virginia dismissed as time-barred a fraud claim brought by subcontractor Fluor Federal Solutions, LLC against prime contractor BAE Systems Ordnance Systems, Inc. The Court held that Fluor’s fraud claim accrued when it knew of BAE’s alleged misrepresentation concerning the scope of the subcontract, not when Fluor later determined that any such misrepresentation by BAE was intentional.