Government Contracts Monitor

Suspension of Affiliates: It’s Worse Than You Think. A Lot Worse, Actually.

In the Old Testament, a jealous God threatens on various occasions to visit the sins of the father to the third or fourth generations.  See, e.g., Exodus 20:5.  Think this has no application to the suspension and debarment context?  Think again.  In the updated version of the narrative, however, the aggrieved blameless contractors are appealing to another higher authority – the United States District Court for the Northern District of Alabama - and the complete story has yet to be written.

SBA Proposes Harsher Penalties for Small Businesses that Misrepresent their Size and/or Status

On October 7, the Small Business Administration (SBA) issued a proposed ruleto strengthen penalties for small businesses that misrepresent their size and/or special socioeconomic status.  Under the proposed rule, any business that willfully seeks and receives a Federal award[1] by misrepresenting itself as a small business or a small business with special socioeconomic status[2] will be required to repay the entire amount of award that the business has received at the point the misrepresentation is discovered.  In the past, contractors have successfully argued that, despite being ineligible for the original set aside procurement, they should be allowed to keep some or all of the award because the Government received a benefit from the goods or services provided.  However, under the proposed rule, there will be an “irrefutable presumption” that the misrepresentation caused a loss to the Government equal to the entire amount of award expended.

Recent GAO Decision Reveals That "Name That Offeror" Is Not Just a Game

Every once in awhile there’s a Government Accountability Office (“GAO”) bid-protest decision that causes the reader to ask, “What was the protestor thinking?”.

Obama Administration Encourages Increased Use of Suspensions and Debarments to Hold Contractors Accountable

As part of the President’s Campaign to cut Fraud, Waste, and Abuse, the Office of Federal Procurement Policy (OFPP) has directed agencies to “ensure they are fully equipped to suspend and debar contractors and other recipients whenever necessary to protect the government’s interest.”  The Administration believes that effective suspension and debarment programs play an important role in protecting taxpayer money.  By using suspension and debarment procedures effectively, agencies can ensure that contractors who lack business integrity and honesty do not receive any portion of the public fisc.  However, the Administration does not believe agencies are currently taking full advantage of these essential tools.

New FCPA Guidance Coming

Assistant Attorney General Lanny Breuer recently announced that in 2012, the Department of Justice will release detailed new guidance on the Foreign Corrupt Practices Act’s (FCPA) civil and criminal enforcement provisions.  In simple terms, the FCPA prohibits bribery of foreign government officials.  However, in practice, FCPA compliance is anything but simple.  For example, it can be unclear whether something constitutes a bribe or a legitimate business expense.  It may also be difficult to determine if the foreign party is a government official or employee, as defined by the Act.   Because most bribery cases result in settlements, there is very little case law available to provide needed direction.  It is expected that this proposed guidance will provide answers to many of the complicated issues facing companies who do business with foreign governments.   Additionally, Breuer announced that the DOJ has further developed its “lay person’s guide” to the FCPA, which can be found here, along with other information about the Act such as statutes and regulations, legislative history, and related enforcement actions. 

Look for information regarding the upcoming guidance here when it becomes publicly available.

 

Katie Calogero is the attorney responsible for the content of this article.

Contractors Performing Acquisition Functions Must Prevent Personal Conflicts of Interest

Effective December 2, 2011, contractors and subcontractors who are performing acquisition functions will be required to identify and prevent personal conflicts of interest of their employees and prohibit employees who have access to non-public information from using such information for personal gain.  This Final Rule applies to certain contracts, as well as task orders and delivery orders, over the simplified acquisition threshold (currently $150,000) awarded on or after the effective date.

Exporters Beware: What You Don’t Know About Your Offshore Partners Can Hurt You

You may understand the financial rewards of selling goods and services abroad, but do you understand the risks?  Whether you are dealing with an offshore partner, distributor or representative, there are proactive steps you should take to protect yourself against potential claims of violating the Foreign Corrupt Practices Act.

Jackson Kelly attorneyE. Leslie “Pete” Hoffman will speak on the importance of knowing your prospective offshore partner and the due diligence necessary to avoid violations of the Foreign Corrupt Practices Act. Mr. Hoffman’s presentation will take place during the Global Market-Balancing Risks and Rewards Conference sponsored by the West Virginia District Export Council in cooperation with the U.S. Department of Commerce’s U.S. Commercial Service and the West Virginia Development Office.  This two-day program will take place on Nov. 14-15, 2011 in Charleston, West Virginia, at the Summit Conference Center. Click here for more information about the conference or to register.  If you have questions about compliance strategies, click here to email Mr. Hoffman directly.

New Pro-Union FAR Provisions

On November 2, 2011, two new pro-union FAR provisions were published as final rules.  First, FAR 22.1600 through 1605 and 52.222-40 – concerning Notification Of Employee Rights Under The National Labor Relations Act were finalized.  See http://www.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27779.pdf.  Interim regulations on the same subject were published on December 13, 2010, http://www.gpo.gov/fdsys/pkg/FR-2010-12-13/pdf/2010-30559.pdf, requiring the public posting of specific workplace posters advising employees of their rights under the National Labor Relations Act.  Those regulations now become immediately effective as final rules.

OMB Adopts New Accelerated Payment Policy for Small Businesses

The Office of Management and Budget (“OMB”) recently established a new policy requiring agencies to make payments to small business contractors as soon as possible, with the goal of making the payments within 15 days of receipt of proper documentation. Office of Mgmt. & Budget, Executive Office of the President, OMB Bull. No. M-11-32, Accelerating Payments to Small Businesses for Goods and Services. available at http://www.whitehouse.gov/sites/ default/files/omb/memoranda/2011/m11-32.pdf. Under the Prompt Payment Act (“PPA”), agencies are generally only required to pay contractors within 30 days.  In practice, agencies generally do not initiate payment until 21 days after receipt of the invoice.  It should be noted, however, that OMB’s new 15 day time period for small business payments is only a goal.  The late-payment interest penalty under the PPA will generally only apply to payments made after 30 days.  Agencies were required to report to OMB by November 1 when they will implement the accelerated payments so small business contractors should soon see an impact on their accounts receivable.

Jeffry Cook is the attorney responsible for the content of this article.

Agencies Deviate From Standard FAR Clauses At Their Own Peril

Federal agencies with special and articulated needs may deviate from standard FAR clauses and craft their own proposed contract clauses.  However, such custom, non-standard clauses must be rational and reasonable, as the Government recently learned the hard way in U.S. Foodservice, Inc. v. United States, No. 11-376C (Oct. 12, 2011), which involved a pre-award bid protest before the U.S. Court of Federal Claims (“COFC”).