PilieroMazza’s Weekly Update is an e-mail sent on Fridays that recaps legislative and regulatory issues affecting businesses of all sizes. When government agencies propose significant changes to existing regulations or Congress passes legislation of special interest to the small business community, we follow-up the Weekly Update with an analysis of the proposed change and the likely impact on small business.

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Weekly Update for Government Contractors and Commercial Businesses - July 23, 2019

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SMALL BUSINESS PROGRAMS & ADVISORY SERVICES

CLIENT ALERT: SBA to Increase Size Standards with Inflationary Adjustment, July 17, 2019, Megan Connor
On July 18, 2019, SBA issued an interim final rule increasing the receipts-based size standards for inflation. An unpublished version of the rule is available here. The change should be effective August 17, 2019, 30 days after the scheduled publication of the rulemaking. Comments to the rule are due September 16, 2019. For government contractors whose status changes in the System for Award Management ("SAM") from "other than small" to "small," as a result of the inflation adjustment, SBA advises that the business update their SAM profile and complete the "representations and certifications" section of SAM. Doing so will provide a more competitive environment for government contractors whose status changes to a "small business." [Read More] The text of SBA’s interim final rule can be found here. 84 Fed. Reg. No. 138, 34261

WEBINAR: SBA’s Mentor-Protégé Program: How 8(a) Firms Can Grow, Gain Experience, and Win Contracts, July 24, 2019, Speaker, Jon Williams. [Read More]

EVENT: Forming CTAs on GSA Schedules, September 4, 2019, Speaker, Katie Flood. [Read More]

EVENT: Mergers and Acquisitions, September 5, 2019, Speakers, Jon Williams and Kathryn Hickey. [Read More]

LABOR & EMPLOYMENT LAW

CLIENT ALERT: EEOC Announces New EEO-1 Pay Data Reporting Deadline, July 18, 2019, Sarah Nash
September 30, 2019 marks the newly announced deadline for employers who submit annual EEO-1 reports to report employee 2018 pay data to the Equal Employment Opportunity Commission (EEOC). The EEOC revealed the new deadline in a federal court submission last week. UPDATE: Since the original blog on this topic was published, the court issued an order confirming the September 30, 2019 deadline, and requiring the EEOC to collect a second year of data in addition to the 2018 pay information. The EEOC has also since announced its decision to collect 2017 pay data which will also be due this September. Employers (government contractors and commercial businesses) should work with an experienced labor and employment attorney to ensure they comply before the September 30, 2019 deadline. [Read More]

FALSE CLAIMS ACT / LITIGATION

Cybersecurity, Implied Certifications, and the False Claims Act, July 22, 2019, Isaias Alba
As I am sure many of you know and have read about already, the first False Claims Act ("FCA") case, US Ex rel. Markus v. AeroJet Rocketdyne Holdings, Inc., et al., No. 2:15-cv-2245, has been filed in the Eastern District of California by a disgruntled former Director of Cyber Security Compliance and Controls, and it survived a motion to dismiss in May of this year. When the existence of the AeroJet case is layered over the U.S. Supreme Court's findings in Universal Health Servs., Inc. v. US Ex rel. Escobar, 136 S.Ct. 1989 (2016), which confirmed FCA liability based upon implied certifications, a worrisome result can occur. Namely, can the disgruntled employees, aggrieved subcontractors, consultants who see an opening for a quick buck, spouses in the midst of a contentious divorce, or any other random individual with a basic knowledge of your IT systems file an FCA case against you claiming that you impliedly certified, by merely accepting a federal contract, that you were in full and unequivocal compliance with all NIST 800-171 standards and that you had all documentation required by DFARS 252.204-7012. The answer is absolutely "YES." Small to mid-sized government contractors should note that their lack of diligence can be used as evidence of recklessness which gives rise to FCA liability. [Read More]

PODCAST: PilieroMazza’s GovCon Live! presents “Ex Rel. Radio,” our multi-part series on the False Claims Act which will include commentary on potential pitfalls for your company, enforcement issues, and emerging trends. Please subscribe to one of our podcast accounts -- Apple Podcasts, Spotify, SoundCloud, Google Podcasts, TuneIn, or Stitcher -- to receive a notification when the first podcast in this series goes live on July 29, 2019, as well as find links to past podcasts.

Department of Justice (DOJ) – DOJ reported that ITT has agreed to pay the United States $11 million to settle False Claims Act allegations that it supplied electrical connectors to the military that had not been properly tested. The settlement resolves allegations that from September 2008 to March 21, 2017, ITT did not conduct the required periodic testing on six models of electrical connectors.

GOVERNMENT CONTRACTS LAW

How Government Contractors Can Take Advantage of CPARS Trends to Win (and Maintain) Federal Contracts, July 19, 2019, Samuel Finnerty
On July 18, 2019, the Professional Services Council hosted an important event covering Contractor Performance Assessment Reporting System ("CPARS") trends, their impact on contractor past performance ratings, and the consequence they have on winning federal contracts. As one of the speakers at this event, PilieroMazza's Samuel Finnerty offered recommendations on what government contractors can do now to proactively engage and manage their CPARS ratings and position themselves for future growth. [Read More]

The Pentagon – According to Nextgov, the Pentagon released its 5-year digital modernization strategy. The document will offer insight on how the Pentagon plans to prioritize its roughly $46 billion annual IT budget over the next five years. Cloud adoption, artificial intelligence, and cybersecurity will all factor in heavily to the department’s technological future, according to the strategy. Nextgov’s article discussing the modernization strategy can be viewed here.

The White House – Law360 reported that President Donald Trump signed an Executive Order aimed at boosting the government’s purchases of U.S.-made products, marking the President’s latest effort to advance his “Buy American” initiative. The Executive Order calls on agencies to buy 95% of the iron and steel used in government projects from domestic companies, marking a lofty leap from the current 50% threshold. In addition, for non-steel and iron products, the order moves the needle from 50% to 55%, with the possibility of it eventually rising as high as 75%.

ANNOUNCEMENT: PilieroMazza Welcomes Lauren Brier to Government Contracts Group, July 15, 2019, [Read More]

CYBERSECURITY & DATA PRIVACY

Department of Defense Sets Course on Cybersecurity Evaluation and Enforcement, July 17, 2019, David Shafer
On a limited budget, government contractors need to be compliant with a litany of statutes, regulations, and industry standards in order to remain competitive in the marketplace. This has become particularly true in the cybersecurity context. With no overarching federal law for cybersecurity standards or privacy protection (though the U.S. Senate is in the process of discussing a bipartisan privacy bill as they have done, unsuccessfully, in prior legislative sessions), rulemaking authorities have taken it upon themselves to create industry regulations governing cybersecurity and data privacy. Some of them most applicable to government contractors, but by no means exclusive, are those regulations found in the Federal Acquisition Regulation (“FAR”) and Defense Federal Acquisition Regulation (“DFARS”). In this labyrinth of cybersecurity requirements, the Department of Defense (“DoD”) often takes the lead in promulgating guidance, so it is beneficial to look to DoD and the defense industrial base for the future of cybersecurity. This future may come with DoD’s upcoming Cybersecurity Maturity Model Certification, which could fundamentally alter DoD government contract awards and maintenance. [Read More]

BUSINESS & CORPORATE LAW

Trends in Mergers and Acquisitions, July 22, 2019, Francis Massaro
"What's market?" is an important question for the buyer and seller to ask in a merger and acquisition (M&A). Along with counsel from a skilled M&A attorney, having a basic understanding of what terms are typical in the current M&A market will help businesses that are in the market to buy or sell a business (1) better analyze the reasonableness of specific terms offered by the other side and, if an offered term is not typical, have the necessary insight to (2) counter with better terms or to (3) take a more aggressive stance on another term. Businesses whose management teams are equipped with a basic understanding of M&A deal terms can easily work with M&A counsel to more effectively and efficiently identify deal terms and strategies that are ideal for their business needs. [Read More]

EVENT: Mergers and Acquisitions, September 5, 2019, Speakers, Jon Williams and Kathryn Hickey. [Read More]

WEBINAR: No-Man's Land: The Quest to Find Success in Full and Open Competition, October 15, 2019, Speaker, Kathryn Hickey. [Read More]

Kathryn Hickey and David Shafer, PilieroMazza M&A Attorneys Represent Zentech Manufacturing, Inc. in Acquisition by Blackbern Partners
Kathryn Hickey and David Shafer led a team of PilieroMazza attorneys from a cross section of the firm's practice areas – including Business & Corporate Law, Government Contracts, and Labor & Employment – to represent client Zentech Manufacturing, Inc. (Zentech), a Baltimore, Maryland-based, high-reliability electronics contract manufacturer, in its recent acquisition by BlackBern Partners LLC, a New York City based private equity firm. The partnership created by the acquisition, which closed on May 10, 2019, will accelerate efforts to deliver leading electronics manufacturing services (EMS) to the defense, aerospace, medical and other high-reliability industries. [Read More]

Please visit this link for a list of upcoming Industry Days and RFP tools and resources.

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Weekly Update for Government Contractors and Commercial Businesses - July 16, 2019

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SMALL BUSINESS PROGRAMS & ADVISORY SERVICES

PilieroMazza Submits Comments in Response to RIN 3245-AG75, Proposed Rule on Women-Owned Small Business and Economically Disadvantage Women-Owned Small Business Certification
Authors, Pamela Mazza, Megan Connor, Katie Flood, Meghan Leemon, Patrick Burns, Francis Massaro, July 15, 2019 [Read More] Please also see PilieroMazza’s May 15, 2019 blog “SBA Proposes to Implement Certification Requirement for WOSB/EDWOSBs and Revise Economic Disadvantage Criteria for 8(a) Eligibility.”

Defense Information Systems Agency – According to Law360, DISA, under a $.7.5 billion IT contract, made awards to 23 small businesses. The $7.5 billion systems engineering and technology contract is intended to help DoD improve its information technology capabilities.

Small Business Administration – The SBA announced that non-profit organizations, state and local agencies, and institutions of higher learning are eligible to compete for funding of up to $150,000 to deliver entrepreneurship training to service-disabled veterans. Up to six awardees will use the $300,000 in total funding to participate in the Service-Disable Veteran Entrepreneurship Training Program with grants from SBA’s Office of Veterans Business Development. These funds will be used to cover the costs of educating service-disabled veterans planning to start a new business or expand and diversify existing small businesses. The submission deadline is Wednesday, July 24 at 11:59 PM EDT.

WEBINAR: Everything You Need to Know about SBA’s Manufacturer and Non-Manufacturer Rules, July 17, 2019, Speakers, Jonathan Williams and Timothy Valley. [Read More]

EVENT: Bid Protest Round-Up, September 4-5, 2019, Speaker, Jonathan Williams. [Read More]

EVENT: Forming CTAs on GSA Schedules, September 4-5, 2019, Speaker, Katie Flood. [Read More]

GOVERNMENT CONTRACTS LAW

Department of Defense, General Services Administration, and National Aeronautics and Space Administration – The DoD, GSA, and NASA issued a proposed rule updating and clarifying requirements for using the DD Form 254, Contract Security Classification Specification. 84 Fed. Reg. 134, 33201.

Department of Defense – According to Government Executive, a large corporate supplier for the Pentagon, TransDigm, is being investigated by the DoD’s Office of the Inspector General. Specifically, the OIG is investigating 113 of TransDigm’s DoD contracts from January 2015 to 2017 and whether the company overcharged the U.S. Government by $16.1 million. [Read More]

Congressional Research Service – The CRS released a report on the SBA’s HUBZone Program. The report examines arguments both for and against targeting assistance to geographic areas with specified characteristics as opposed to providing assistance to people or businesses with specified characteristics and assesses the arguments both for and against the continuation of the HUBZone program.

CLAIMS AND APPEALS

U.S. Court of Appeals for the Federal Circuit – According to Law360, the Federal Circuit confirmed a $44 million award to a unit of Kellogg Brown & Root Services Inc., finding that the Armed Services Board of Contract Appeals correctly asserted its jurisdiction over KBR’s affirmative defense.

LABOR AND EMPLOYMENT

Equal Employment Opportunity Commission – According to Bloomberg Government, members of the House of Representatives asked the EEOC to submit a report to the House Appropriates Committee documenting and formal or informal quotas the EEOC has used for handing bias charges. The House’s request came after a union complained that the EEOC pressures its employees to quickly process cases without thoroughly examining certain claims.

Please visit this link for a list of upcoming Industry Days and RFP tools and resources.

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Weekly Update for Government Contractors and Commercial Businesses - July 8, 2019

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GOVERNMENT CONTRACTS LAW

Long-Awaited Proposed Rule for Lower-Tier Subcontracting Plan Credit Finally Arrives to the FAR, June 28, 2019, Kathryn Flood.
The FAR Council is beginning to catch up with the SBA’s allowance that prime contractors with small business subcontracting plans may take credit for lower-tier small business subcontracting—albeit, three years behind schedule. PilieroMazza attorneys will monitor and report on these developments, which could affect prime contractors and their subcontracting plan reporting, as well as their ability to win and maintain government contracts.  [Read More].  The text of the SBA’s proposed rule can be found here, and comments to the proposed rule are due August 26, 2019.  84 Fed. Reg. 123, 30071.

Department of Justice – The DOJ reported that Ronald A. Villanueva, a former member of the Virginia General Assembly, was sentenced to two and a half years in prison for his role in a conspiracy that resulted in the fraudulent award of over $80 million in government contracts.  

Government Accountability Office – The GAO issued a report advising the General Services Administration and the U.S. Army Corps of Engineers to begin collecting data on contract changes in order to streamline the process and reduce costs associated with construction delays.  The GAO published its report after it was asked to review factors that affect the time it takes to finalize contract changes and assess the extent that certain agencies monitor those time frames.

EVENT:  Navigating the FAR/DFARS:  The Most Confusing and Little Known Clauses, July 10, 2019, Speakers, Isaias Alba and Anthony Batt.  [More Info].

SMALL BUSINESS PROGRAMS & ADVISORY SERVICES

Congressional Research Service – The CRS issued a report reviewing small business contracting programs.  Though the programs generally have strong bipartisan support, such support does not mean that the programs do not face opposition or have issues.  Comprehensive studies examining the effect of small business contracting preferences on small business startups, growth, wealth generation, and industry competitiveness may prove useful for congressional oversight, but in the meantime, reports like the Small Business Goaling Report can help policymakers identify programs most in need of examination.

WEBINAR:  Everything You Need to Know about SBA’s Manufacturer and Non-Manufacturer Rules, July 17, 2019, Speakers, Jonathan Williams and Timothy Valley.  [More Info].

CYBERSECURITY & DATA PRIVACY

Impact of California Consumer Privacy Act on Government Contractors and Commercial Businesses, July 8, 2019, David T. Shafer and Jonathan Williams.
The California Consumer Privacy Act ("CCPA") will go into effect on January 1, 2020. Similar to the European Union's General Data Protection Regulation ("GDPR"), CCPA creates significant compliance challenges for government contractors and commercial businesses doing business in California, with several states following suit. Under CCPA, fines from the Attorney General for businesses that do not comply could be as high as $7,500 per violation, with CCPA also granting consumers the right to bring private action, exposing companies to actual and statutory damages.  [Read More]

LABOR & EMPLOYMENT LAW

U.S. Supreme Court – According to Law360, the U.S. Supreme Court agreed to weigh in on whether a federal worker has to show that a challenged action from an employer would not have occurred if it was not for the employee's age in order to successfully plead a claim under the Age Discrimination in Employment Act (“ADEA”).  The Supreme Court granted Noris Babb's petition for writ of certiorari in her suit alleging the Department of Veterans Affairs discriminated and retaliated against her because of her gender and age.  

Department of Labor – The DOL's Office of Federal Contract Compliance Programs (OFCCP) reached a settlement with Universal Protection Service LP—a federal contractor—to resolve allegations of pay discrimination at the company's Riverside, California, facility, which was formerly owned and operated by Allied Barton Security Services, which were discovered during a routine OFCCP compliance evaluation.

The DOL also issued three new opinion letters that address compliance issues related to the Fair Labor Standards Act (“FLSA”).  An opinion letter is an official, written opinion by the DOL’s Wage and Hour Division (“WHD”) on how a particular law applies in specific circumstances presented by the individual person or entity that requested the letter.  The opinion letters issued were

  • FLSA2019-7, addressing the calculation of overtime pay for nondiscretionary bonuses paid on a quarterly and annual basis;
  • FLSA2019-8, addressing the application of the highly compensated employee exemption to paralegals employed by a trade organization; and 
  • FLSA2019-9, addressing permissible rounding practices for calculating an employee’s hours worked.

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Weekly Update for Government Contractors and Commercial Businesses - July 1, 2019

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SMALL BUSINESS PROGRAMS & ADVISORY SERVICES

SBA Issues Proposed Rule Changing Receipts Calculation to 5 Years, Implementing Small Business Runway Extension Act, June 24, 2019, Megan Connor.
On June 24, 2019, the Small Business Administration (SBA) published its long-awaited proposed rule changing the period of measurement for a receipts-based size calculation from three years to five years. This change was prompted by the Small Business Runway Extension Act (the Runway Act), which became law on December 17, 2018. SBA was slow to implement this change because SBA believes that the Runway Act amended a section of the Small Business Act that does not apply to SBA. "Nevertheless," SBA says, "to promote consistency government-wide on small business size standards, SBA proposes to change its own size standards to provide for a 5-year averaging period for calculating annual average receipts for all receipts-based size standards." Smaller and larger small businesses industry wide could be impacted in terms of gaining access to government contracts. PilieroMazza will be submitting comments to the proposed rules on behalf of our small business clients before the August 23, 2019, deadline. [Read More]. The text of the SBA’s proposed rule can be found here, and comments to the proposed rule are due August 23, 2019. 84 Fed. Reg. 121, 29399.

WEBINAR: Everything You Need to Know about SBA’s Manufacturer and Non-Manufacturer Rules, July 17, 2019, Speakers, Jonathan Williams and Timothy Valley. [More Info].

LITIGATION

U.S. Supreme Court – The Supreme Court rendered its decision in Kisor v. Wilkie and upheld Auer v. Robbins or Bowles v. Seminole Rock & Sand Co.—two decisions that establish the deference given to administrative agencies’ reasonable readings of their own genuinely-ambiguous regulations.

GOVERNMENT CONTRACTS LAW

General Services Administration – The GSA issued a Request for Information (RFI) seeking industry comment on new large categories, subcategories, and Special Item Numbers (SINs) for the GSA’s forthcoming consolidated Multiple Award Schedules (MAS) solicitation. All comments related to the RFI must be submitted by July 12, 2019 at 11:59 p.m.

U.S. Supreme Court – The Supreme Court expanded the type of "confidential" private business information that is exempt from disclosure under the Freedom of Information Act (“FOIA”) by holding that information that is "customarily and actually treated as private by its owner and provided to the government" falls under the protection of FOIA's Exemption 4 for "confidential" private information. The Court abandoned an interpretation of Exemption 4 in which only information that could be shown to cause competitive harm is protected.

Federal Aviation Administration – According to Bloomberg Government, the FAA is planning a multiple award, indefinite delivery indefinite quantity contract for engineering services that could be worth $2.8 billion. Per Bloomberg Government, the FAA issued a source sought notice, is seeking comments from industry on the draft screening information request, and the System Engineering and Technical Innovative Solutions (SETIS) program would be open to large and small businesses. Responses to the notice are due July 11, 2019.

LABOR & EMPLOYMENT LAW

Department of Labor – The DOL issued a notice of proposed rulemaking that, if finalized, would give States increased flexibility in their administration of Employment Service (ES) activities funded under the Wagner-Peyser Act. The changes would also give States the flexibility to staff employment and farmworker-outreach services in the most effective and efficient way, using a combination of State employees, local government employees, contracted services, and other staffing models in the way that makes the most sense for them. Comments are due July 24, 2019. 84 Fed. Reg. 121, 29433.

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Weekly Update for Government Contractors and Commercial Businesses - June 21, 2019

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SMALL BUSINESS PROGRAMS & ADVISORY SERVICES

Small Business Administration – The SBA issued a proposed rule amending and updating its regulations for the 7(a) Loan Program. The proposed rule will implement the Small Business 7(a) Lending Oversight Reform Act of 2018 and update the SBA’s regulations pertaining to supervision of all lenders participating in SBA’s business loan programs. Comments to the proposed rule are due August 20, 2019. 84 Fed. Reg. 120, 29092.

The SBA also published a notice detailing the availability of a survey pertaining to the SBA Microloan Program. The John S. McCain National Defense Authorization Act for Fiscal Year 2019 requires the SBA to conduct a study of microenterprise participation, so, to meet the requirement, the SBA created the survey, which is to be completed by SBA Microloan Intermediaries and entities that are eligible to become Intermediaries.

WEBINAR: Everything You Need to Know about SBA’s Manufacturer and Non-Manufacturer Rules, July 17, 2019, Speakers, Jonathan Williams and Timothy Valley. [More Info].

FALSE CLAIMS ACT

Department of Justice – The DOJ announced that International Business Machines Corporation (IBM) and Cúram Software agreed to pay $14.8 million to settle alleged violations of the False Claims Act arising from material misrepresentations to the State of Maryland during the Maryland Health Benefit Exchange contract award process for the development of Maryland’s Health Insurance Exchange website and IT platform.

Learn from Others' Mistakes and Avoid an FCA Claim, June 20, 2019, Michelle Litteken
The recent settlement reached by International Business Machines Corporation (IBM), Cúram Software Ltd. (Cúram), and the Department of Justice provides a useful lesson for government contractors—especially contractors in the healthcare industry. [Read More].

GOVERNMENT CONTRACTS LAW

Department of Defense – According to Law360, DoD contractors can claim the costs of bringing their cybersecurity programs in line with the DoD’s requirements. Law360 reported that Katie Arrington, the DoD Special Assistant for Cybersecurity who aids the Assistant Secretary of Defense for Acquisition, commented at the Professional Services Council’s Federal Acquisition Conference that costs associated with improving cybersecurity are reimbursable for defense contractors; she further stated that “[s]ecurity is an allowable cost.”

The DoD also published a notice in the Federal Register that the Military Surface Deployment and Distribution Command (SDDC) is conducting an Open Season, effective June 3, 2019 through February 29, 2020, which affects domestic motor Transportation Service Providers (TSPs) only. The SDDC’s Open Season is a chance for transportation professionals who would like to move military freight to start a working-relationship with the SDDC.

EVENT: WOSB Program Training, 2019 Women Impacting Public Policy (WIPP) Business Leadership Conference, June 24, 2019, Speaker, Megan Connor. [More Info].

LABOR & EMPLOYMENT LAW

National Labor Relations Board – According to Bloomberg Government, the NLRB ruled that employers can expel nonemployees who engage in union promotion in public areas of their facility, as long as the employer has a rule against soliciting, and the rule applies to everyone. In the specific case, the NLRB ruled that UPMC Presbyterian Shadyside Hospital in Pittsburgh was within its rights when it ejected SEIU Healthcare Pennsylvania organizers from its hospital cafeteria.

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