Legislative

On November 16, 2017, the Conference Report for the National Defense Authorization Act (NDAA) for fiscal year (FY) 2018 was sent to the President for his signature after it passed both the House of Representatives and the Senate. For more details on the NDAA's proposed bid protest reforms, please see our recent Government Contracts Update.

Regulatory

It should be kept in mind that pursuant to DFARS 252.204-7012, effective December 31, 2017, all U.S. Department of Defense contractors must verify that their IT systems are compliant with the National Institute of Standards and Technology (NIST) Special Publication 800-171, Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations. In addition, prime contractors covered by this clause must flow down the requirements to their subcontractors. Covered contractors should be aware of this deadline to remain compliant.

On November 8, 2017, the Office of the Under Secretary of Defense issued Class Deviation 2018-O0001, granting additional special emergency procurement authority to heads of contracting activities. This Class Deviation incorporates sections 816 and 1641 of the National Defense Authorization Act for FY 2017, which added international disaster assistance, emergency or major disasters, and cyber-attacks to grounds for deviation.

On November 6, 2017, the U.S. Department of the Treasury (Treasury) published an interim rule requiring verification that prospective Internal Revenue Service (IRS) contractors are compliant with tax laws. This verification will be conducted by the contracting officer, who will have access to IRS tax records of the contractors. Contractors and prospective bidders should consider whether they have outstanding tax liabilities or are engaged in a dispute with the IRS prior to submitting a bid.

On November 24, 2017, the General Services Administration (GSA) issued a Request for Public Comments regarding compliance with Executive Order 13126, Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor. This Executive Order requires government contractors to certify to the contracting officer that the contractor has made a good faith effort to determine whether such child labor was used in the performance of the contract and that the contractor is unaware of any such child labor. The GSA has requested comments on the effectiveness of the information collection requirements described under FAR 52.212-3 paragraph (i) and 52.222-18. Interested contractors should submit comments on or before the January 23, 2018 deadline.

On November 13, 2017, the Small Business Administration (SBA) issued its final rule revising regulations related to the Small Business Investment Company (SBIC) licensing and examination fees. The regulations will gradually increase licensing fees over a four-year period. By 2021, the SBA expects final licensing fees to equal $35,000, maximum examination fees for non-leveraged SBICs to equal $30,000, and maximum examination fees for leveraged SBICs to equal $44,000. SBICs should be aware that the rule and the first initial increase take effect December 13, 2017.

Agency Reports

On November 13, 2017, the Government Accountability Office issued its Bid Protest Annual Report to Congress for Fiscal Year 2017. Of particular interest, the report included the most prevalent grounds for sustaining protests, specifically: (1) unreasonable technical evaluation; (2) unreasonable past performance evaluation; (3) unreasonable cost or price evaluation; (4) inadequate documentation of the record; and (5) flawed selection decision.

The Defense Contract Audit Agency (DCAA), which conducts government audits related to contractors, was itself audited by the Department of Defense's Office of Inspector General. The DCAA received a "pass with deficiencies," and the report identified 25 deficiencies in its audit and made several recommendations for improvements. Contractors may find the deficiencies of interest.