Disaster Response News

In the wake of this particularly devastating hurricane and fire season, on September 22, 2017, the Deputy Attorney General issued a memorandum to all 94 U.S. Attorney's Offices (USAOs) providing guidance relating to the handling of disaster fraud matters. The memorandum noted that hundreds of complaints of disaster fraud have already been received by the National Center for Disaster Fraud (NCDF). The memorandum continued by explaining that disaster fraud "warrants a coordinated, nationwide response…to ensure that the U.S. Department of Justice (DOJ) effectively and quickly combats fraudulent conduct." While USAOs will continue to lead the prosecution of fraudulent activity, the DOJ is seeking their cooperation in coordinating with the NCDF. Certainly, this does not change any of the requirements of contractors responding to disaster recovery and rebuilding efforts, but serves as a stark reminder that contractors should be vigilant in their efforts to document and comply with applicable requirements.

On October 16, 2017, the U.S. Small Business Administration (SBA) announced the SBA's Express Bridge Loan Pilot Program (Express Bridge Pilot) and its impact on an SBA regulation relating to loan underwriting. The pilot will provide bridge loan financing to small businesses located in communities impacted by a presidentially declared disaster, while those small businesses apply for and await long-term financing. The SBA believes the modification of the lending criteria will minimize the burden on businesses applying for loans through the Express Bridge Pilot and increase SBA Express lenders' participation in the pilot.

Regulatory

The Section 809 Panel, established by the Secretary of Defense pursuant to Section 809 of the National Defense Authorization Act (NDAA) for Fiscal Year 2016 to streamline defense acquisition regulations, will be holding a stakeholder meeting on November 2, 2017 in Arlington, VA. Discussion topics will include Program Success, Budget Issues, Rapid Acquisition, and the Future Impact of Cloud Computing on Acquisition. Contractors interested in learning about these topics are able to attend this public meeting.

The Office of Inspector General (OIG) for the U.S. Department of Agriculture (USDA) published its review of USDA's Implementation of Suspension and Debarment Tools. The OIG found USDA had implemented many of the OIG's recommendations from the last audit in 2010, but five recommendations were not implemented. The OIG's audit found that 6 USDA agencies had not implemented suspension and debarment programs and that 12 of 17 agencies did not comply with one or more of the requirements for USDA's suspension and debarment program. Contractors that work with the USDA should expect future notices from USDA regarding its suspension and debarment programs.

Small Business Administration (SBA) Announcements

On October 1, 2017, the Employment and Training Administration announced the annual list of labor surplus areas (LSAs) for Fiscal Year 2018. Areas qualifying as LSAs had an unemployment rate of 6.1453 percent or higher. This list is effective through September 30, 2018. The LSA list is used by the Administrator for Federal Procurement Policy for identifying procurement set-asides, the General Service Administration Online Representations and Certifications Application system for determining if a business qualifies as an LSA concern, and the SBA for bid selections for small business awards in Historically Underutilized Business Zones (HUBZones). The announcement also included criteria and procedures that permit the regular classification criteria to be waived when an area experiences a significant increase in unemployment. Thus, if your area experiences a rapid rise in unemployment or some exceptional circumstance, your area may be eligible for LSA status and the accompanying benefits listed above. For example, after Hurricane Harvey hit, several counties in Texas were added to the LSA list.

The SBA has updated the North American Industry Classification System (NAICS) codes used in the Women Owned Small Business (WOSB) Federal Contract Program, effective for all solicitations issued on October 1, 2017 and onward. These changes included the merging of industry group and impacted 8 of the 2012 NAICS codes used under the WOSB Program. For example, the 2017 NAICS codes reduce the number of eligible 6-digit NAICS codes for WOSBs from 365 to 364. These changes may affect WOSB eligibility for set-aside contracts and orders moving forward.

National Defense Authorization Act for Fiscal Year 2018

The Senate's NDAA, S. 1519, includes Subtitle B, which covers amendments to general contracting authorities, procedures, and limitations. Of particular note, Section 821 would require protestors to pay to the U.S. Department of Defense (DoD) costs incurred for processing a protest if (1) all of the elements of the protest are denied by the GAO and (2) the protest is filed by a party with revenues in excess of $100,000,000 in the previous year. The House's NDAA, H.R. 2810, includes similar language. Contractors should be aware of these considerations for inclusion in the NDAA.

In April, when Venable last reported on this issue, the Fair Pay and Safe Workplaces rule, or "Blacklisting Rule," had been eliminated. But a version of the rule has returned in the Senate's NDAA under Section 830. The Senate version requires contracting officers to consider any "identified violations of the Occupational Safety and Health Act of 1970" in determining whether offerors are responsible. The Senate version goes on to say that, "as appropriate," the contracting officer shall refer violations to the DoD's suspension and debarment official. Contractors that considered the Blacklisting Rule to be a thing of the past will again want to be mindful of these and other developments that may trigger the applicability of some elements of the Rule.

Legislative

On October 11, 2017, the House of Representatives passed the FITARA Enhancement Act, H.R. 3243, a follow-on bill to the 2014 legislation directing agencies to consolidate data centers and imposing reporting requirements for public IT investments, by a vote of 418 to 0. The bill extended the sunset provision for the Data Center Optimization Initiative (DCCI) to October 1, 2020 and makes the IT Dashboard and PortfolioStat programs permanent.

On October 5, 2015, the Senate issued Report No. 115-165 recommending the passage of S. 906, the Reducing DHS Acquisition Cost Growth Act. The Report states that the Bill's purpose is "to provide for greater oversight of major acquisition programs within the U.S. Department of Homeland Security (DHS or the Department) that fail to meet cost, schedule, or performance requirements." The Bill reflects Congress's growing frustration with DHS's cost growth and may add pressure on contracting officers to increase scrutiny of ongoing contracts and procurements.

On October 16, 2017, Senator Risch (R-ID) introduced the SBIR and STTR Oversight and Pilot Program Extension Act of 2017, S. 1961. Cosponsored by Senator Shaheen (D-NH), S. 1961 would amend the Small Business Act to reauthorize the Small Business Innovation Research Program (SBIR) and Small Business Technology Transfer Program (STTR) until September 30, 2018. The bill was reported to the Committee on Small Business and Entrepreneurship, where Senator Risch is Chairman and Senator Shaheen is Ranking Member. Contractors that participate in agency SBIR and STTR initiatives will want to be aware of Congress's efforts to extend the program through the end of FY18.

Legal Developments

On October 11, 2017, consistent with Federal Circuit case law, the United States Court of Appeals for the Second Circuit held that the Contract Disputes Act (CDA) "applies to leaseholds created by contracts with executive agencies." In Cohen v. Postal Holdings LLC, Postal Holdings filed a third-party complaint against the U.S. Postal Service (USPS) regarding an indemnification claim against the USPS for real property leased to USPS. Postal Holdings argued that the Postal Reorganization Act of 1970 gave the district court jurisdiction over its third-party complaint against the USPS. Nonetheless, because the CDA grants exclusive jurisdiction over contract disputes with executive agencies of the federal government, such as the USPS, to the Court of Federal Claims, the complaint was dismissed.

On October 4, 2017, the Government Accountability Office issued a decision clarifying that an agency cannot waive an organizational conflict of interest (OCI) in circumstances involving the hiring of former government employees. Northrop Grumman Sys. Corp., B-412278.7, B-412278.8, Oct. 4, 2017, 2017 WL 4684777. Waivers do not apply because former government employee unequal access to information issues fall under FAR subpart 3.1, which—unlike FAR subpart 9.5—does not include a waiver provision.