Weekly Update for Government Contractors and Commercial Businesses – October 13, 2022

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LITIGATION & DISPUTE RESOLUTION

PilieroMazza Litigator Matt Feinberg Earns $3.5 Million Verdict in Jury Trial Alleging Misappropriation of Company Profits, 10.11.22, Matt Feinberg
On September 29, 2022, after four days of trial proceedings, the U.S. District Court for the District of South Carolina entered a judgment on a jury verdict totaling $3,496,995 on behalf of PilieroMazza’s client, a government contractor providing construction management services for federal customers. Led by trial counsel Matt Feinberg, the jury verdict was the culmination of four years of complex, painstaking work by attorneys in the Firm’s Litigation & Dispute Resolution, Labor & Employment, and Government Contracts practice groups. Commenting on the verdict, Matt stated: “It was a long road, but the jury provided some long-overdue justice to our client. Any PilieroMazza client facing litigation puts a great deal of trust and faith in our team and the civil justice system itself. We’re pleased to deliver a positive jury verdict and won’t stop fighting for our client until every penny is collected.” Read more here.

Disloyal Employees: Disgorgement Offers Employers Some Reprieve, 10.11.22, Matt Feinberg
In many states, employees owe a duty of loyalty to their employer as long as they remain on the employer’s payroll. In other words, employees must generally act in the best interests of their employer—and not solely for their own self-interest—throughout the course of their employment. This is particularly the case for employees serving in management- or supervisory-level roles or where the employee has access to the employer’s confidential information, trade secrets, or “secret sauce.” But what can an employer do when an employee does not meet this obligation? What remedy does an employer have when an employee is disloyal? In some state and federal courts, employers can rely on the rarely invoked remedy of disgorgement to claw back the compensation an employee received while they were disloyal to the employer or the financial gains the employee received as a result of their breach of that duty of loyalty. Read more here.

Former Contractor Pleads Guilty to Bid Rigging and Bribery
A former construction contractor, William Opp, pleaded guilty to participating in a bid-rigging and bribery scheme involving California Department of Transportation improvement and repair contracts. Opp is scheduled to be sentenced on January 30, 2023, by U.S. District Judge Kimberly Mueller for the Eastern District of California. For the bid-rigging conspiracy, Opp faces a maximum statutory penalty of ten years of incarceration and a fine up to $1 million or twice the gross pecuniary loss resulting from the offense. For bribery concerning programs receiving federal funds, Opp faces a maximum statutory penalty of ten years of incarceration and a fine up to $250,000 or twice the gross pecuniary loss resulting from the offense. Read more here.

Upcoming Litigation & Dispute Resolution Presentations

WEBINAR: Small Government Contractors and the FCA: Is More Enforcement on the Horizon? November 8, Jackie Unger and Matt Feinberg. Read more here.

LABOR & EMPLOYMENT

Federal Contractor Minimum Wage Rate to Increase on January 1, 2023
The Department of Labor (DOL) announced that, beginning January 1, 2023, the applicable minimum wage rate for workers performing work on or in connection with federal contracts covered by Executive Order 14026, Increasing the Minimum Wage for Federal Contractors, will increase to $16.20 per hour. The required minimum cash wage for tipped employees performing work on or in connection with covered contracts will increase to $13.75 per hour. As part of its update, DOL has released an updated version of its Executive Order 14026 poster, which some employers are required to display where employees can easily see it. Read more here.

Ohio Contractor Continues to Defy Federal Fall Protection Safety Rules, Cited for Egregious Willful Violations, Faces $1M in Fines After Workplace Inspection
A Millersburg, Ohio, contractor with a long history of disregarding workplace safety standards now faces more than $1 million in penalties after an inspection by the Department of Labor’s Occupational Safety and Health Administration found their employees working at dangerous heights without fall protection, this time at a West Virginia work site. Read more here.

Upcoming Labor & Employment Presentations

WEBINAR: Employing Federal Contractors: An Overview of Labor and Employment Requirements for Government Contractors, October 14, Sarah Nash. Read more here.

BUSINESS & TRANSACTIONS

FinCEN Issues Final Rule on Beneficial Ownership Reports Under CTA: Businesses Must Begin Preparations to Disclose Beneficial Ownership Information
In December 2021, the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department issued a preliminary draft of regulations that would implement the beneficial ownership reporting requirements of the Corporate Transparency Act (CTA). On September 30, 2022, FinCEN issued a final rule, indicating that the new reporting requirements would take effect on January 1, 2024. The CTA requires most companies doing business in the U.S. to file a beneficial ownership report with FinCEN that discloses specific items of personally identifiable information with respect to each beneficial owner of the company. Read more here.

GOVERNMENT CONTRACTS

DOD Releases New List of Section 889 Banned Entities, 10.11.22, Cy Alba
On October 5, 2022, the Department of Defense (DOD), in compliance with Section 889 of the National Defense Authorization Act for Fiscal Year 2019, released an updated list (Blacklist) of banned People’s Republic of China military companies. PilieroMazza recently wrote about Part B of Section 889 taking full effect for DOD contractors on October 1, 2022. Section 889 is a broad prohibition to the use of any covered Chinese technology posing a threat to U.S. cybersecurity and national security. Section 889 is comprised of two parts: Part A prohibits the government from procuring telecommunications equipment or services where a substantial or essential component of those goods or services are sourced from a blacklisted Chinese entity, and Part B prohibits agencies from contracting with firms that use prohibited equipment or services during business, even if that use is unrelated to the company’s federal contract. Contractors are encouraged to review the Blacklist regularly to avoid doing business with these companies and potentially losing contract awards and facing False Claims Act liability. Read more here.

SBIR/STTR Programs Renewed: Compliance Requirements for Small Business Contractors, 10.04.22, Cy Alba
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SSTR) Extension Act of 2022 was enacted into law on September 30. The Act reauthorizes the SBIR/STTR programs until 2025. The reauthorization is both crucial for current participants and aspiring small businesses wishing to conduct government-funded research and development. Small businesses currently participating, or considering submitting a proposal under either program, must be aware of the new program changes, their effective dates, and the potential consequences of noncompliance. PilieroMazza recaps and analyzes below compliance obligations for small business government contractors seeking to bid for and maintain contracts under SBIR/STTR programs. Read more here.

SBA Proposes Revisions to Bona Fide Place of Business Requirements for 8(a) Construction Contracts, 10.04.22, Meghan Leemon
The bona fide place of business requirement provides that, for 8(a) construction contracts, the contractor must have a bona fide place of business approved by the Small Business Administration (SBA) in the applicable geographical area. Since August 25, 2021, and as PilieroMazza reported, SBA placed a moratorium on the bona fide place of business requirements for 8(a) construction contracts. The moratorium was extended through September 30, 2023. This client alert reviews certain proposed changes that government contractors operating in the construction sector and participating in the 8(a) program should monitor to prepare their company and avoid costly missteps. Read more here.

The White House Raises Contract Spending Goals for Small, Disadvantaged Businesses
The White House issued new guidance for federal agencies to increase the share of government contracting dollars to small disadvantaged businesses in Fiscal Year 2023 as part of the Biden Administration’s effort to steer $100 billion in new contracting opportunities to minority-owned businesses over the next five years. Read more here.

TMF Announces Investments in Technology at OPM, HUD, and DOD
The Technology Modernization Fund (TMF) announced three new investments that will optimize user experience, ensure cybersecurity is consistent with federal standards, and reduce operating costs. The new TMF funding and support will:

• help the Office of Personnel Management (OPM) improve and simplify the OPM.gov website for the site’s 22 million unique annual visitors;
• modernize the Federal Housing Administration’s IT infrastructure, improving the experiences of more than 95,000 external users; and
• secure and monitor networks at depots, arsenals, and ammunition plants that support the U.S. Army.

Read more here.

Fiscal Year 2022 Reporting Period Extended for Contractor Service Contract Reporting in the System for Award Management
The Department of Defense published a memorandum that allows a one-time extension of the Fiscal Year 2022 Service Contract Reporting (SCR) submission date in the System for Award Management. For Fiscal Year 2022 data reporting, the annual SCR submission date of October 31, 2022, has been extended through January 31, 2023, to align with federal agencies’ open reporting period and provide additional time for vendors to comply with reporting requirements. Read more here.

GSA Seeks Industry Input on Clean Construction Materials
In support of the Biden-Harris Administration’s Federal Buy Clean Initiative to spur markets for low-carbon products made in America, the General Services Administration issued a request for information to learn more about the availability of domestically manufactured, locally sourced low-carbon construction materials. Read more here.

Watchdog Again Pushes GSA to End Contracting Pilot Program
The Office of Inspector General for the General Services Administration and the agency’s Federal Acquisition Service generally disagree about the success of the Multiple Award Schedule to guarantee agencies are receiving competitive contract prices. In particular, the watchdog recently published a report where it repeated a recommendation from last year that the agency cancel the Transaction Data Reporting pilot program, due to a lack of promised price guarantees. Read more here.

Streamlining and Updating the Department of Transportation Acquisition Regulation
The Department of Transportation (DOT) is amending its Transportation Acquisition Regulation. DOT’s changes seek to streamline the regulation; revise or remove policy that has been superseded by changes in the Federal Acquisition Regulation (FAR); remove procedural guidance that is internal to DOT and move it to the Transportation Acquisition Manual as appropriate; and incorporate new regulations or policies required to implement or supplement the FAR to execute DOT’s unique mission and responsibilities. The amendments will be effective November 7, 2022. Read more here.

U.S. Army Releases Its Climate Strategy Implementation Plan
The U.S. Army released its Climate Strategy Implementation Plan for responding to climate threats that affect installation and unit sustainability, readiness, and resilience. The Implementation Plan directs how the Army will maintain its strategic advantage through deliberate efforts to reduce future climate impacts and risks. Read more here.

Federal Agencies Pledge Support for Biden’s AI Framework
Leadership from various federal agencies discussed their individual plans to help enforce the Biden Administration’s blueprint for a national artificial intelligence framework following its formal release. The framework contributes to the Biden Administration’s goal of promoting responsible technological innovation in both the public and private sectors. Read more here.

Department of Energy Seeks to Maximize Defense Production Act Effectiveness
The Energy Department published a request for information to determine how it could best leverage the Defense Production Act authorities enacted by President Biden in June to accelerate the domestic manufacturing of clean energy. Read more here.

CISA, NSA, and FBI Release Advisory on PRC State-Sponsored Malicious Cyber Activity
The Cybersecurity and Infrastructure Security Agency, National Security Agency, and Federal Bureau of Investigation released a joint Cybersecurity Advisory (CSA) with details on the top vulnerabilities used and exploited since 2020 by the People’s Republic of China’s state-sponsored cyber actors to actively target U.S. and allied networks as well as software and hardware companies to steal intellectual property and develop access into sensitive networks. The CSA discusses vulnerable technologies and the most common vulnerabilities and exposures. It also provides recommended mitigation and detection methods. Read more here.

Air Force Publishes Solicitation for Enterprise Cyber Capabilities
The Air Force released the final solicitation for its Enterprise Cyber Capabilities (EC2) contract. The contract is a multiple-award indefinite delivery, indefinite quantity contract that is set to run for ten years with a ceiling of $5.3 billion. Although there will be no small business pools under EC2, it is considered a partial small business set aside because contracting officers will establish set asides at the task-order level. In a related statement posted to SAM.gov, the Air Force said that EC2’s goal is to allow “AMIC [Acquisition Management and Integration Center] customers to build, operate, support, defend, extend, and engage in cyberspace.” Specific services and products available under EC2 will include “command-and-control, planning and operations, vulnerability research, full-spectrum testing, software and tool development, modeling and simulation, and threat assessment.” Solicitation responses are due on or before October 26, 2022, with awards expected before the end of the year. Read more here.

Upcoming Government Contracts Presentations

WEBINAR: Claims & Disputes: The A-Z Guide, October 14, Kevin Barnett. Read more here.

WEBINAR: Employing Federal Contractors: An Overview of Labor and Employment Requirements for Government Contractors, October 14, Sarah Nash. Read more here.

WEBINAR: Cybersecurity Compliance: Changing Requirements for Evolving Threats, October 14, Jon Williams. Read more here.

WEBINAR: Update on DOT’s DBE Program for Construction Contractors, October 19, Jackie Unger. Read more here.

WEBINAR: DOD and GSA Inflation Update: Key Takeaways for Government Contractors, October 25, Kevin Barnett and Lauren Brier. Read more here.

WEBINAR: Small Government Contractors and the FCA: Is More Enforcement on the Horizon? November 8, Jackie Unger and Matt Feinberg. Read more here.

WEBINAR: 5 W’s of Bid Protests: The Who, What, When, Where, and Why, November 10, Katie Burrows and Eric Valle. Read more here.