Government contractors were affected by many policy changes in 2021. A vaccine mandate that applies to nearly every federal contractor employee across the country, and a planned False Claims Act crackdown on cybersecurity, are among the most impactful changes. Here is a look at five areas of government contracting policy that agencies have changed or scrutinized in the latter half of 2021.
- Broad Vaccine Mandates
Since this blog was originally written, the vaccine mandate, as it applied to federal contractors, was struck down.
President Biden introduced a set of vaccine mandates in September to thwart the pandemic’s recent surge, including one directly applicable to federal contractors. The mandate was intentionally sweeping as it applied to virtually all companies with federal contracts and “contract-like instruments.”
“Never in my career have I had a policy decision from the White House immediately affect so many different clients,” said Aron Beezley, an attorney whose practice revolves around government contracts. “Many companies that did not think of themselves as government contractors in the last few months found out that, in fact, they do hold government contracts.”
The mandate also applied broadly to those contractors’ employees, including not only those working directly on federal contracts but also to those who work “in connection with” a contract, such as staff. Additionally, it applied to anyone working at any worksite, even if they work entirely within a company’s commercial operation, where another person who works on a federal contract is likely to be present at some time during the performance of the contract.
- DOJ Uses the False Claims Act to Crack Down on Lax Cybersecurity
After a series of high-profile cyberattacks, the Biden administration announced initiatives aimed at improving the cybersecurity of companies in the United States.
The U.S. Department of Justice released its Civil Cyber-Fraud Initiative in October 2021, saying it will pursue False Claims Act cases against federal contractors that put “U.S. information or systems at risk” through lax cybersecurity.
Companies have for too long “chosen silence under the mistaken belief that it is less risky to hide a breach than to bring it forward,” Deputy U.S. Attorney General Lisa Monaco said.
“The government has a very, very strong interest in trying to crack down on this,” said Gregg Sofer, a former U.S. Attorney for the Western District of Texas. “And although it can use its offensive capabilities to go after the bad actors, it also has to motivate everybody else to watch the backdoor to make sure that sensitive data isn’t stolen from right under their noses.”
“Cybersecurity is national security,” Sofer added. Federal agencies, especially the U.S. Department of Defense, with its pending Cybersecurity Maturity Model Certification program, have placed an increased priority on cybersecurity in recent years. The number of programs like this one is likely to increase sharply under the DOJ’s initiative.
Although federal contractors are already accustomed to jumping through hoops the government requires, “This is yet another layer, and it requires a different kind of expertise,” Sofer said.
“Even if you’re really good on fraud, even if you’re really good on due diligence — which is a big part of this — this requires a particular technical expertise,” he added.
- Other DOJ Initiatives That May Prompt False Claims Act Cases
In addition to the cybersecurity crackdown, the DOJ is focusing heavily on potential fraud by federal contractors. The agency has lauded the efforts of its Procurement Collusion Strike Force, established in November 2019 to address antitrust issues in the public procurement process.
While the strike force continues to focus on traditional antitrust issues like bid-rigging and price-fixing, it is also turning its attention to other “competition-corrupting crimes,” such as conspiracies by otherwise ineligible companies, to defraud contracting programs intended to be set aside for small businesses.
- New and Revived Employment Rules
The Biden Administration also sought to revive or expand upon a variety of Obama-era policies, including those that affect both employment and contracting policy.
Former President Barack Obama had implemented a $10.10 per hour minimum wage for contractors’ employees in 2014, which over time has grown to $10.95. President Joe Biden has pushed on the issue even further, leading to a November final rule issued by the U.S. Department of Labor.
This raises the minimum wage for employees of federal service and construction contractors to $15 per hour for contracts entered or extended through an option from January 30, 2022, onward, with inflation-based increases every two years. It also ends, by 2024, the separate tipped minimum wage for federal contract workers and the subminimum wage for contractors’ employees with disabilities.
- Other Administration Procurement Rules
The Biden administration has sought to use federal procurement as part of its efforts to promote a more equitable society. As a result, the White House, in December 2021, asked federal agencies to set “ambitious” small business spending goals to ensure that 11% of federal contract spending in fiscal year 2022 goes to small, disadvantaged businesses, or SDBs, up from the 9.8% average of the previous five years, and significantly higher than the statutory goal of 5%.
This would increase to 15% of federal contract dollars going to SDBs by 2025, with specific spending goals for certain socioeconomic categories of small businesses. “That is certainly welcome news for the small business contracting communities,” Bradley Arant’s Beezley said. “Certain federal agencies may not feel the same way.”
The White House has also pushed to use the government’s massive buying power to fight climate change and promote electric vehicles and other clean energy technologies, with Biden introducing a related executive order on December 8, 2021.