Insights

On Monday, September 23, 2024, the Department of Justice (DOJ), released an update to its Evaluation of Corporate Compliance Programs (ECCP) guidance.  The ECCP guidance was last revised in March 2023, which brought a number of significant changes, including a focus on compensation and incentive structures (e.g., clawbacks), and third party messaging applications.  This 2024 update, while not as significant in scope as its predecessor, nonetheless highlights the DOJ’s focus on new and emerging technologies, such as artificial intelligence (AI), as part of its evolving assessment of what makes a corporate compliance program truly effective, and how prosecutors should evaluate risk assessments and other management tools at the time of a corporate resolution.

On May 30, 2024, the Department of Defense (DoD) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 803 of the 2023 National Defense Authorization Act, which modified 10 U.S.C. § 3455 to provide additional guidance regarding data requirements needed to support determinations of commerciality and price reasonableness under procurements for major weapon systems.  The rule applies to products that (i) have not previously been deemed commercial by the DoD; and (ii) are proposed as either a subsystem of a major weapon system or as a component or spare part of a major weapon system or subsystem. 

AI remains a critical focus of both the federal government and industry, with multiple efforts in recent weeks to address governance of the development and use of AI in the United States.  On February 26, 2024, a U.S. Department of State-commissioned report, titled “Defense in Depth: An Action Plan to Increase the Safety and Security of Advanced AI” (Action Plan), proposed multiple U.S. Government and partner nation lines of effort to address growing national security risks posed by rapidly expanding AI capabilities, including the expectation of achieving artificial general intelligence (AGI).  Just days later, on March 5, 2024, House Chairman Comer and Ranking Member Raskin introduced the Federal AI Governance and Transparency Act.  This bipartisan bill would focus government resources on increasing transparency, oversight, and responsible use of federal AI systems and centrally codifying federal governance of agency AI systems.  Additionally, on March 28, 2024 the Office of Management and Budget released the final guidance on Memorandum M-24-10, Advancing Governance, Innovation, and Risk Management for Agency Use of AI as we address here.

On January 11, 2024, the Department of Defense (DoD) announced its first-ever National Defense Industrial Strategy (NDIS) focused on building a modernized industrial ecosystem that provides a sustained competitive advantage to the US over its adversaries.  Specifically, the NDIS provides a strategic framework to guide the DoD’s engagement, policy development, and investment in the industrial base over the next three to five years.  As part of this investment strategy, the NDIS highlights several investment tools and opportunities that DoD is already using to spur growth and innovation in key industries.

On January 9, 2024, the FAR Council issued a proposed rule, seeking to amend the Federal Acquisition Regulation (FAR) in order to enhance consistency and alignment between the suspension and debarment procedures in the FAR and in the Nonprocurement Common Rule (NCR) system (contained in 2 CFR Part 180).  The FAR and NCR are two separate suspension and debarment regulatory regimes, with the former governing procurement matters and the latter governing grants, cooperative agreements, contracts of assistance, and loan guarantees.  While these suspension and debarment regimes are similar, the proposed rule would remove some differences—definitional and procedural—between the FAR and NCR.  

The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2024, signed into law on December 22, 2023, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that impose a new conflict of interest regime for government contractors with a connection to China, impose new restrictions and requirements, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2024 NDAA also includes the Federal Data Center Enhancement Act, the American Security Drone Act, and the Intelligence Authorization Act for FY 2024.

On November 8, 2023, the Biden-Harris Administration announced the Better Contracting Initiative (BCI), a four-pronged initiative to ensure that the federal government is getting the best terms and prices when purchasing goods and services.  The federal government purchases billions of dollars’ worth of goods and services each year; however, the Administration is concerned that agencies pay inconsistent prices and often more than market price.  The BCI strategy is to improve how federal agencies procure innovative technologies and leverage data to make smart buying decisions by utilizing the following four steps as detailed below.

When faced with a dissatisfying debriefing, a contractor may choose to respond to the agency to question or even rebut its evaluation.  However, the recent Government Accountability Office (GAO) decision in NikSoft Systems Corporation (NikSoft) serves as an important reminder that those communications can be interpreted as agency-level protests, with potential to render subsequent GAO protests untimely. 

On May 1, 2023, the Biden Administration announced its plan to issue an Executive Order in the coming days to rescind the existing executive order that imposes COVID vaccine requirements and safety protocols on federal contractors.  Specifically, Executive Order 14042 on Ensuring Adequate COVID Safety Protocols for Federal Contractors will be rescinded effective May 12, 2023, and agencies have been instructed not to require compliance with the COVID-related requirements from covered contractors and subcontractors nor to enforce the implementing clause. 

The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023, signed into law on December 23, 2022, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that provide new opportunities for contractors to recover inflation-related costs, authorize new programs for small businesses, impose new clauses or reporting requirements on government contractors, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2023 NDAA also includes the Advancing American AI Act, the Intelligence Authorization Act for FY 2023, and the Water Resources Development Act of 2022, all of which include provisions relevant for government contractors.

On October 28, 2022, the Department of Defense (DoD) amended the Defense Federal Acquisition Regulation Supplement (DFARS) by issuing two final rules related to contract cost and pricing.  Specifically:

The Safer Federal Workforce Task Force issued updated guidance for federal contractors on October 14, 2022, announcing that it will reevaluate enforcement of the federal contractor vaccine mandate and safety requirements issued under Executive Order 14042.  This is the first pronouncement from the Task Force after it had indicated that it would not enforce the vaccine mandate without further notice in the wake of the Eleventh Circuit’s August 26, 2022 decision limiting the scope of the injunction against implementation and enforcement of the EO 14042 contractor mandate.  The mandate officially narrowing the injunction was issued on October 18. 

On August 31, 2022, the Safer Federal Workforce Task Force announced that the Federal Government “will take no action to implement or enforce Executive Order 14042,” the contractor vaccine mandate, “to ensure compliance with an applicable preliminary nationwide injunction, which may be supplemented, modified, or vacated, depending on the course of ongoing litigation.”

As Congress considers legislation prohibiting government contractors from doing business in Russia, over 20 states have already acted. In this alert, we highlight: (i) how different states are defining Russian business operations, and the corresponding risks to differently situated government contractors; and (ii) unique aspects of certain state actions that contractors need to be aware of as they develop their compliance strategy.

As we covered in a prior alert, the recently introduced Federal Contracting for Peace and Security Act (H.R. 7185) could have a profound impact on government contractors. The Act would require termination of existing contracts and prohibit awards, extensions, and renewals of prime contracts and subcontracts with companies doing business in the Russian Federation during its ongoing war of aggression against Ukraine.

As discussed in our previous alert on the Federal Contracting for Peace and Security Act, many state governors and legislatures have issued or are contemplating actions to limit state contracts with companies doing business in Russia.  A growing number of states have already passed legislation that codifies Russia-related prohibitions.  These fast-moving developments could significantly impact government contractors’ operations.   

Contractors that encounter problematic solicitation provisions have many avenues to address them, such as industry days, questions and answers, and even communications directly with an agency.  However, the recent Government Accountability Office (“GAO”) decision in Science and Technology Corporationserves as an important reminder that contractors must be thoughtful about when and how they communicate directly with an agency.  Depending on the specific content of their communications, contractors can unwittingly create a timeliness trap that will shorten their deadline to file a GAO protest.

On January 21, 2022, the District Court for the Southern District of Georgia issued an Order in Georgia v. Biden, No. 2:21-cv-163 (S.D. Ga. Jan. 21, 2022), which responded, in part, to the Government’s requests for clarification regarding the scope of the court’s nationwide injunction of the federal contractor vaccine mandate promulgated under Executive Order 14042. The Government sought clarification of two questions: (1) Whether the injunction “prohibit[s] private federal contractors from mutually agreeing with Defendants to include COVID-19 safety clauses in their federal contracts, thus allowing those federal contractors to voluntarily comply with the Task Force guidelines, including requiring their employees to be vaccinated”; and (2) Whether the Government could continue enforcing compliance with the other requirements associated with the mandate, including masking, social-distancing, and the requirement that contractors must designate employees to serve as coordinators who manage contractor compliance efforts. 

Following the Supreme Court’s granting of the emergency motion to stay enforcement of the Occupational Health and Safety Administration’s (“OSHA”) COVID-19 Vaccination and Testing Emergency Temporary Standard (“ETS”) on January 13, 2022 (which we previously covered here), OSHA announced on January 25, 2022 that it is withdrawing the ETS as an enforceable emergency temporary standard, effective January 26, 2022, and will instead prioritize its resources on finalizing a permanent COVID-19 Healthcare Standard, per OSHA’s statement on its website. OSHA noted that it is not withdrawing the ETS as a proposed rule, which will continue to work its way through the ongoing notice and comment rulemaking process. 

On January 6, 2022, the U.S. Department of the Treasury published the Final Rule governing the eligible uses of the $350 billion dollars in Coronavirus State and Local Fiscal Recovery Funds (SLFRF) under the American Rescue Plan (ARPA). Treasury also issued an Overview of the Final Rule, which identifies the notable changes and clarifications made in the Final Rule from the Interim Final Rule (IFR) published on May 17, 2021, as we previously covered here.