There have been a number of legal developments in the past month that may affect government contracts, with respect to legislative and executive branch activity, and to notable federal reports. This article gives a brief review of those developments.
Regulatory Developments That Will Be Affecting Contractors
- The Small Business Administration (SBA) has proposed a new rule to amend its small business size regulations. The amendment would result in the inclusion of the Office of Management and Budget's (OMB) 2017 NAICS revision (known as NAICS 2017) into the SBA's small business size standards table, effective October 1, 2017. The SBA proposed size standards for the 21 new NAICS 2017 industries, which resulted in a size standards increase for six NAICS 2012 industries and part of one industry, a change in one industry of the size standards measure from average annual receipts to number of employees, and no change in the remaining industries.
- The U.S. Department of Defense (DoD) is hosting an Industry Information Day on Friday, June 23, 2017 at 1:00 p.m. EDT. The DoD plans "to present a briefing, and receive and address industry feedback on the implementation of Defense Federal Acquisition Regulation Supplement (DFARS) Case 2013-D-18, 'Network Penetration Reporting and Contracting for Cloud Services.'" Keir Bancroft, of Venable LLP, will be in attendance and is available to submit questions on clients' behalf.
Executive Action That Will Be Affecting Contractors
- On April 18, 2017, President Trump signed an Executive Order on Buy American and Hire American. The executive order does not contemplate any immediate action; instead, it is an information-gathering exercise that may or may not result in changes in enforcement, legislation, or trade agreements. The various and often complicated compliance issues associated with Buy American laws remain intact, and should be broached with legal counsel, since—even with a greater articulation from the Trump administration about the government's approach to buying American—there is still no "one size fits all" Buy American test. For more information on this, please see our more fulsome article on this action.
- Shortly after taking office, President Trump issued a hiring freeze applicable to most agencies across the government. On April 12, 2017, White House Budget Director Mick Mulvaney announced that the administration was lifting the freeze. Mulvaney explained that the freeze was being replaced with a "smarter plan, a more strategic plan, a more surgical plan." The administration has not provided specific details on what this "more surgical plan" might entail, but certainly it is potentially good news that agencies may be able to add resources to assist in their ability to get the work done.
Compliance Considerations
- On April 20, 2017, the United States District Court for the District of Columbia ruled that the government may not ignore a contractor's performance during sentencing for procurement fraud. In U.S. v. Crummy, No. 16-cr-133 (D.D.C. filed Apr. 20, 2017), a government contractor fraudulently competed for and won a Section 8(a) small business set-aside award for which it was not eligible. The government proposed a harsher sentence because it claimed that the pecuniary harm from the fraud was the face value of the contracts awarded. However, the court ruled that the actual pecuniary harm is the contract award amount, less the value of the services provided to the government by the contractor. Federal appellate courts are divided on this issue, and the DC circuit has yet to address it.
- Protesters must be well aware of all solicitation requirements and must be sure to follow them accordingly. In The Arbinger Company – Advisory Opinion, the Government Accountability Office recently concluded that a submitted proposal using incorrect attachments was reasonably rejected because of the agency differences in the attachment provided and the explicit solicitation warnings and instructions.