Insights

On July 28, 2021, the GSA shared a blog post on its outreach site, GSA Interact, announcing the final transition deadline of April 4, 2022, from using the 9-digit Data Universal Numbering System (DUNS number) to the new 12-digit alphanumeric Unique Entity ID (UEI) codes in SAM.gov.  On that date, no new DUNS numbers will be issued, and only the new UEI will be provided in SAM.gov data and reports.  All entities already registered in SAM.gov have been assigned a UEI, which is viewable in the entity registration record in SAM.gov.  Contractors should prepare their own internal systems and processes to accept the new UEI numbers and to stop using the DUNS number for federal awards processes by April 2022.

In a string of recent cases following the Supreme Court’s 2019 decision in Food Marketing Institute v. Argus Leader Media, multiple courts have held that a party submitting information to the government need not demonstrate it obtained an assurance of confidentiality from the government in order for the agency to justify withholding that information in response to an information request made under the Freedom of Information Act (FOIA).  (Crowell & Moring previously wrote about the new test instituted by Argus Leader here.) 

On July 21, 2021, the Department of Labor (“DOL”) announced that it is seeking public comment on a proposed rule which would require federal contractors to pay a $15.00 per hour minimum wage by January 30, 2022. The rule would implement President Biden’s April 27, 2021 Executive Order 14026 (“EO 14026”), which mandated an increase in the minimum wage of workers on federal government contracts (and associated subcontracts). Currently, the minimum wage for workers on federal contracts is $10.95 per hour and the tipped minimum wage is $7.65 per hour.  EO 14026 builds on President Obama’s 2014 Executive Order 13658, which established a $10.10 per hour federal contractor minimum wage that would increase annually. The final rule covering EO 14026 is scheduled to be issued by November 24, 2021, and the new minimum wage obligations are slated to go into effect on January 30, 2022. 

On January 6, 2021, the DoD issued a class deviation, effective immediately, to implement the nationwide court order enjoining Sections 4 and 5 of Executive Order (EO) 13950, Combating Race and Sex Stereotyping, as well as guidance provided by the Office of Federal Contract Compliance Programs (OFCCP). EO 13950 prohibits federal agencies, contractors, and grant recipients from using workplace diversity and inclusion trainings to “promote race or sex stereotyping or scapegoating,” with Section 4 applying specifically to government contractors.

Last week, the Department of Justice issued new guidance regarding the application of Exemption 4 to the Freedom of Information Act (FOIA) following the Supreme Court’s decision this past June in Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019). (Crowell & Moring previously wrote about Argus Leader here.)

In Conway v. United States (October 3, 2019), the U.S. Court of Federal Claims granted summary judgment in favor of C&M client Colorado HealthOp, in a case of first impression relating to Reinsurance payments owed pursuant to §1341 of the ACA, which HHS had offset against other ACA payments it claimed Colorado HealthOp owed to HHS. The Court decided on the merits that: (i) Section 1341 of the ACA is money-mandating, (ii) Colorado insurance liquidation law applies to prohibit HHS’ unilateral offset of Reinsurance payments to Colorado HealthOp; and (iii) HHS’ “Netting Rule” does not preempt Colorado law. Importantly, the Court held that HHS’s Netting Rule, which explains the method by which HHS would aggregate and offset monies owed by or to different insures under various ACA payment programs, lacks statutory authority and therefore does not preempt state law, and as a result, HHS does not have an offset right in an insurance liquidation proceeding. Analyzing the ACA, the McCarran-Ferguson Act, Colorado insurance liquidation statute, and Colorado Supreme Court case law, the Court agreed with Colorado HealthOp that HHS cannot leap-frog claimants with higher priority under the liquidation priority scheme by effectuating an offset. The Court noted that the federal policy expressed by the McCarran-Ferguson Act and its application to priority schemes that protect policyholders’ commercial expectations weigh against displacing Colorado’s policyholder-protecting priority scheme with a uniform federal rule of administrative efficiency. The Colorado HealthOp decision is a significant decision regarding the ACA’s Reinsurance program, and the most recent in a string of ACA-related decisions involving C&M (previously discussed here and here).

On June 10, the COFC granted summary judgment in Maine Community Health Options v. United States (a C&M case), in which the Plaintiff sought to recover $19.2M in “cost-sharing reduction” (CSR) payments pursuant to Section 1402 of the Affordable Care Act for 2017 and 2018. Under the CSR program, health insurers providing insurance on the exchanges are required to reduce certain individuals’ cost-sharing obligations, and the government is required to reimburse the insurer for the cost-sharing reductions. The health plan argued that the government’s payment obligation was mandatory under the terms of statute and moved for summary judgment. The government, cross-moving to dismiss, argued that the government did not have a mandatory payment obligation because Congress did not specify a source of appropriations. The court granted the health plan’s motion and denied the government’s cross-motion, holding that the obligation to make payment under a money-mandating statute is distinct from the appropriation used to fund it, and that the lack of an appropriation merely restricts the government’s agents (here, HHS), but does not negate the United States’ statutory payment obligation. The court also found in favor of the plaintiff under a breach of implied-in-fact contract theory, finding significant the quid-pro-quo nature of the CSR program, where health plans are reimbursed by the government for cost-sharing reductions they are statutorily required to make.

In Sanford Health Plan v. U.S. (October 11, 2018), the U.S. Court of Federal Claims granted summary judgment in favor of Sanford Health Plan (a C&M client) in a lawsuit seeking to recover “cost-sharing reduction” (CSR) payments pursuant to Section 1402 of the Affordable Care Act.  Following recent precedent in Montana Health, the Court held on the merits that (i) Section 1402 of the ACA is money-mandating, (ii) Sanford is entitled to full payments owed to it under the statutory formula set forth in the ACA, and (iii) the federal government has a statutory obligation to provide Sanford with the CSR payments notwithstanding the purported lack of appropriations to fund such payments. The Court agreed with Sanford Health Plan that the obligation to make payment under a money-mandating statute is distinct from the appropriation used to fund it, and that the lack of an appropriation merely restricts the Government’s agents (here, HHS), but does not negate the United States’ statutory payment obligation.     

On July 30, the U.S. District Court for the Northern District of Texas issued a decision in Air Center Helicopters Inc. v. Starlite Investments Ireland Ltd et al. (Case No. 18-599), upholding a temporary injunction issued by the American Arbitration Association that granted Defendant Starlite Aviation Group (a C&M client) the right to continue performing helicopter services in support of U.S. military operations in Afghanistan. In seeking to vacate the AAA’s Injunction Order, Plaintiff argued that the arbitrator exceeded his powers by granting Defendant relief under an implied-in-fact contract theory, and contemporaneously sought a preliminary injunction preventing Defendant from enforcing the AAA Injunction Order (which the parties briefed on an expedited basis). The Court rejected Plaintiff’s arguments and denied both motions, holding that (i) “[Plaintiff] cannot show a likelihood of success on the merits regarding its petition,” such that “[Plaintiff]’s motion for preliminary injunction must necessarily be denied;” (ii) Plaintiff had “not met its high burden to show that the arbitrator imperfectly executed or exceeded his powers” in the AAA Injunction Order, and thus Plaintiff was not entitled to vacatur. The Court noted that its rulings were subject to a later determination as to whether the Court had jurisdiction to review the AAA Injunction Order.

On Monday, August 13, 2018, President Trump signed into law the H.R. 5515, the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (FY 2019 NDAA), the earliest an NDAA has been signed in over a decade.  The FY 2019 NDAA includes several provisions relevant to contractors, including replacing the definition of “commercial item” with “commercial product” and “commercial services,” discouraging the use of lowest price technically acceptable contracting, and a clause designed to accelerate payments to small businesses.

In St. Bernard Parish Gov’t v. U.S. (No. 15-637C), the Court of Federal Claims granted the Government’s motion to dismiss, finding that the cooperative agreement on which the Parish brought suit did not contemplate money damages, and thus the Court did not have jurisdiction under the Tucker Act. The Court found that the agreement obligated the Government to provide financial and other assistance to the Parish to repair damage from Hurricane Katrina, but did not “‘acquir[e] (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government.’ 31 U.S.C. § 6505.” Thus, the Court construed the agreement as a cooperative agreement, under which “damages cannot be implied,” and the Parish did not point to any specific provision in the agreement contemplating money damages in the event of breach. The Court went on to find that, even assuming that the cooperative agreement contemplated money damages, it nonetheless provided no direct benefit to the Government, and therefore was unenforceable for lack of consideration. The Court concluded that, “[w]hile debris removal is a worthy project, it cannot be construed as providing consideration (i.e.: a direct benefit) to the government in this context.”