Morrison Foerster’s Government Contracts Insights provides our in-depth analysis of developments and trends impacting government contracting. Through Insights, our attorneys offer a real-time assessment of the statutory, regulatory, legal, and business-related developments and trends that are shaping the industry. We also examine a full array of non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Morrison Foerster’s nationally recognized Government Contracts and Public Procurement practice represents the world’s leading companies in the aerospace and defense, intelligence, cybersecurity, information technology, financial and professional services, education, healthcare, infrastructure, and logistics support sectors. We are enlisted to address our clients’ most complex and important legal issues. Our work includes contract and subcontract negotiation and other transactional matters, business and regulatory compliance counseling, internal investigations, bid protests, and a wide array of enforcement and litigation matters. Our clients range from Fortune 50 companies to small and medium-sized companies just entering the public sector. We advise both U.S. and non-U.S. companies involved in municipal, state, federal, and non-U.S. procurement matters.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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GAO Protest Timeline

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Govcon GAO Post Award Protest Timeline Article

Contract Disputes Act Claim Timeline

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The Bayh-Dole Act

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Anatomy of a Protest

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Tina is Co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmaceutical companies, with a focus on general contract counseling and compliance, particularly concerning intellectual property, and cybersecurity matters and federal grant funding.Tina counsels contractors on compliance with federal, state and local acquisition and ethics regulations and with the evolving myriad of requirements pertaining to data security and cybersecurity. She has been involved with numerous internal investigations and compliance reviews, and with mandatory and voluntary disclosures to agencies, and litigation of False Claims Act matters.Tina routinely advises clients concerning:<ul><li>Prime-subcontractor relationships</li><li>Sources of supply and country of origin requirements</li><li>Price reductions and price reporting issues</li><li>Organizational conflicts of interest</li><li>Safeguarding of intellectual property and other proprietary interests</li><li>Licensing and data rights issues</li><li>Handling of classified materials and controlled unclassified information</li><li>Agency suspension and debarment proceedings</li></ul>She also assists clients with due diligence and other activities related to the acquisition of government contracting concerns, and with the drafting and negotiation of teaming agreements, subcontracts, licensing agreements, and cooperative research and development agreements. She also assists clients applying for federal grants (including SBIR and STTR agreements), and those who seek to obtain other transactional authority agreements, as well as those competing for state and local government work.Tina’s litigation experience includes government contracts claims litigation in federal courts and before boards of contract appeals, bid protests before the Government Accountability Office and the Court of Federal Claims, and complex disputes in federal courts, including civil fraud and False Claims Act litigation and reverse Freedom of Information Act litigation.Prior to joining Morrison Foerster, Tina worked at another large national firm and as a trial attorney in the Office of the General Counsel of the Navy, Navy Litigation Office.<h4>Representative Experience</h4><ul><li>Negotiation of largest CHIPS Act federal funding agreement between multinational semiconductor corporation and U.S. Department of Commerce.</li><li>Negotiated prime contract and major subcontracts related to the Department of Energy’s next generation supercomputer program, including extensive IP rights negotiations and negotiation of associated patent rights waivers.</li><li>Negotiated series of other transaction authority agreements with DARPA and associated subcontracts with more than a dozen research universities on behalf of a firm biotech client, including complex IP rights allocations and material transfer agreements.</li><li>Assist clients with FedRAMP authorization process and with development of license agreements for software products sold to federal, state and local government agencies.</li><li>Cyber incident response counseling to some of the largest companies and organizations impacted by security incidents.</li><li>Advises clients on Bayh-Dole reporting of inventions and IP strategies for contracts and grants.</li><li>Conducts due diligence for major government contract mergers and acquisitions.</li></ul>

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Tina is co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She counsels a wide variety of government contractors on compliance with federal acquisition and ethics regulations. She drafts and negotiates contracts on their behalf and has been involved with numerous internal investigations and compliance reviews, and with bid protest, contract claims, and False Claims Act litigation. She also advises on M&A transactions involving government contractors.

Tina D. Reynolds

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters. He has represented both protesters and awardees in scores of protests before the Government Accountability Office, the Court of Federal Claims, and procuring agencies, in acquisitions ranging from small business procurements to multibillion-dollar contracts of global significance. His representative protest matters span the aerospace sector, the Intelligence Community, base operations and logistics, healthcare, nuclear and environmental work, and information technology and software acquisitions. His protests have included both classified and unclassified programs. In addition to prevailing in published decisions, Jim has also secured favorable corrective action on behalf of clients in a wide variety of protests that were resolved without a published decision.Jim’s work also focuses on disputes over cost allowability and compliance with the Cost Accounting Standards, and he has appeared before the Armed Services and Civilian Boards of Contract Appeals, in size and status protests before Small Business Administration (SBA) area offices, and appeals before the SBA Office of Hearings and Appeals. Jim regularly counsels clients on contract interpretation, organizational conflicts of interest, and small business compliance.Jim graduated with high honors from the George Washington University Law School, where he focused his studies on federal procurement law, was a member of the Law Review, and interned with the General Services Administration’s suspension and debarment office. Jim also holds a degree in theology magna cum laude from the Pontifical Gregorian University in Rome and a bachelor’s degree in classical languages and literature summa cum laude from the University of Kentucky, where he graduated Phi Beta Kappa.

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Of Counsel

Jim maintains an active practice in bid protests before the Government Accountability Office and contracting agencies and counsels clients in contract disputes and compliance obligations.

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office. Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters.

James Tucker

<div style="margin-bottom: 15px;" class="videoWrapper"><iframe class="sticky-video" title="Meet Alex Ward, Government Contracts Practice Co-Chair" src="https://www.youtube-nocookie.com/embed/TkliwdSlTaQ?rel=0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen="1" title="iframe"></iframe></div>J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. His practice covers a full range of government contracts matters, including investigations, bid protests, claims, general litigation, corporate transactions, and counseling. Alex strives in all matters is to provide his clients the highest level of efficient and effective representation.Alex represents contractors in internal and external investigations, disclosures to the government, and qui tam litigation, with great success in reducing or eliminating his clients’ exposure through active engagement with the government. His work in this area includes obtaining numerous declinations and dismissals of False Claims Act cases in their earliest stages, sparing his clients the cost, risk, and exposure of litigation.He has also served as lead counsel in dozens of bid protests involving military and civilian agency procurements of a wide range of products and services, including all manner of pre- and post-award protests in the GAO, the U.S. Court of Federal Claims, and state tribunals, as well as appeals to the U.S. Court of Appeals for the Federal Circuit and size protest appeals before the SBA’s Office of Hearings and Appeals.Alex handles all aspects of the claims process, from the initial assessment and drafting of requests for equitable adjustment through litigation in the Boards of Contract Appeals and the Court of Federal Claims. Alex’s practice also covers the full gamut of other controversies confronting government contractors, including prime-sub, teaming partner, employer-employee, competitor, and indemnification disputes. His litigation work also includes a wide variety of pro bono engagements, in which he has represented both individual and institutional clients in matters ranging from immigration and criminal defense to sustainable procurement and protection of the environment.Prior to joining the firm, Alex served in the U.S. Army as a commissioned officer and an Assistant to the General Counsel of the Army responsible for civil works and international matters, and as a clerk for judges on the U.S. Courts of Appeals for the Armed Forces and the D.C. Circuit. He is a member of the Boards of the Morrison & Foerster Foundation and the Chesapeake Bay Foundation and of Law360’s Government Contracts Editorial Board.

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Alex is co-chair of Morrison Foerster’s Government Contracts and Public Procurement practice. His practice covers a full range of government contracts matters, including bid protests, claims, investigations, corporate transactions, and counseling.

J. Alex Ward

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Morrison Foerster’s Government Contracts Insights blog provides an in-depth analysis of news, developments, and trends impacting government contracting and procurement. Through Insights, attorneys from our nationally recognized Government Contracts and Public Procurement practice will offer a real-time assessment of the statutory, regulatory, legal, and business-related developments that are shaping the industry. This blog will also examine a full array of U.S. and non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Read about our <a href="http://govcon.mofo.com/editors/">Authors</a>.Never miss a post. Subscribe to get real-time updates.

Brad is a partner in Morrison Foerster’s Litigation Department, Managing Partner of the Austin office, and Chair of the firm’s Israel practice. He is the former Co-Chair of the firm’s Global Litigation Practice and the Government Contracts + Public Procurement Practice.

Bradley Wine

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James A. Tucker

The Tortured Regulations Department: SBA’s New Rule and Its Effect on Investments

Bid Protest Spotlight: Standing, Relationships, Responsibility

House’s Passage of the SAMOSA Act Signals Policy Shift Towards Government-Wide Enterprise Software Licensing

New DFARS Regulation on Small Business Affiliate Past Performance

Bid Protest Spotlight: Unclear Criteria, Data Rights, Conflicts

In the last three weeks alone, OFCCP has issued two significant Directives and a notice of proposed rulemaking, signaling its intent to be far more aggressive and less transparent in compliance evaluations than under the Trump Administration.Read the full <a target="_blank" href="https://www.mofo.com/resources/insights/220405-ofccp-more-aggressive-less-transparent-audits.html">client alert</a>.

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Co-Chair, Global Employment and Labor Practice

Andrew co-chairs the firm’s Global Employment and Labor Group. He represents companies on a broad range of labor and employment litigation and counseling matters, successfully defending clients in number complex matters before federal and state courts and administrative agencies.

Andrew R. Turnbull

Andrew Turnbull represents companies on a broad range of labor and employment litigation and counseling matters. He has successfully defended clients in complex employment litigation before federal and state courts and administrative agencies. A primary focus of his practice involves helping companies navigate the unique employment issues that arise when doing business with the federal government, including advising on all aspects of OFCCP compliance, creating and implementing affirmative action plans, defending OFCCP audits and onsite investigations, conducting mock pay equity audits, drafting and developing business ethics policies and programs, and complying with the Service Contract Act, E-Verify, and the Drug Free Workplace Act.

Andrew Turnbull

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OFCCP Signals Return to More Aggressive and Less Transparent Audits

In the last three weeks alone, OFCCP has issued two significant Directives and a notice of proposed rulemaking, signaling its intent to be far more aggressive a

OFCCP Signals Return to More Aggressive and Less Transparent Audits

Many government contractors, like other private enterprises, invest heavily in research and development (R&D) to improve the products and services they offer, in hopes of better meeting their customers’ needs.  When those R&D efforts are “independent” of any particular contract—hence “IR&D” or “IRAD”—the associated costs are properly allocated to the contractor’s indirect cost pools, rather than charged directly to any one customer.  This makes good sense, and is reflected in the Federal Acquisition Regulation (FAR) cost principles at 31.205-18, which provides that costs of performing basic or applied research, development, and systems and other concept formulation studies are generally allowable as IR&D so long as they are not “sponsored by a grant or required in the performance of a contract.” This regulatory guidance is vague, though, and years of debating what it really means for R&D efforts to be “required in the performance of a contract” ultimately led to the Federal Circuit’s landmark decision in ATK Thiokol, Inc. v. United States, 598 F.3d 1329 (Fed. Cir. 2010), in which the court held that such costs are properly charged as IR&D unless they are “specifically required” by a contract, rather than merely necessary for successful performance.For the first time, a federal court has applied this standard in the context of the False Claims Act (FCA). In an opinion published last week, United States ex rel. Steuert v. L3 Harris Technologies, No. 11-cv-3385 (D.N.J. Mar. 31, 2022), the U.S. District of New Jersey held that, to survive dismissal, a plaintiff alleging fraudulent mischarging of IR&D costs in violation of the FCA must plead sufficient facts, with sufficient particularity, to show the contractor knew or recklessly disregarded both (1) costs were being charged to IR&D and (2) those costs were for efforts specifically required by a contract. Because the qui tam relator-plaintiff in Steuert failed to “identify anyone at L3 who knew both that L3 was billing the Government for [R&D] work [as IR&D] and that billing the Government for [such] work was improper,” the court dismissed his claims.<a href="https://govcon.mofo.com/false-claims-act/false-claims-independent-research-development/#_ftn1">[1]</a>Fraud against the United States is a serious allegation. But one cannot defraud the government by honest accident, and not every cost accounting noncompliance is a false claim.  Instead, the FCA requires knowledge of a claim’s falsity, either through actual knowledge or by acting in deliberate ignorance or reckless disregard of the truth.  See 31 U.S.C. § 3729(b)(1). This often is referred to as the FCA’s “scienter” requirement.  As the court recognized in Steuert, showing a defendant “knew” that false claims were submitted to the government for purposes of scienter requires a plaintiff to establish the defendant knew the claims at issue were false.  And when it comes to claiming costs as IR&D, under ATK Thiokol, such claims “are not ‘false’ simply because [a specific customer] informally requested or benefitted from the work underlying the claims.”<a href="https://govcon.mofo.com/false-claims-act/false-claims-independent-research-development/#_ftn2">[2]</a>  Instead, scienter under the FCA “depends on whether [a defendant] actually knew that the work underlying its IR&D claims to the Government was ‘specifically required by’ [a particular contract], or recklessly disregarded the fact that bills to the Government were generated by work ‘specifically required by’ [that contract].”<a href="https://govcon.mofo.com/false-claims-act/false-claims-independent-research-development/#_ftn3">[3]</a>  Thus, to meet the heightened pleading standards for fraud allegations under Federal Rule of Civil Procedure 9(b), the government or a qui tam relator must plead particular facts sufficient to plausibly establish such knowledge.The district court’s opinion marks a significant positive development in the law for its affirmation of the principles in ATK Thiokol and their applicability under the FCA. IR&D should be encouraged, not deterred; it spreads costs equitably among customers (within and without the government) and creates incentives for private investment in government technology, reducing taxpayer burden for what are often high-risk projects. The FAR cost principles and the standard established by ATK Thiokol—and now also as applied under Steuert—foster this goal, even as government officials and the growing qui tam plaintiffs’ bar too often forget it.L3Harris is represented in the Steuert litigation by Morrison & Foerster LLP.<a href="https://govcon.mofo.com/false-claims-act/false-claims-independent-research-development/#_ftnref1">[1]</a> Slip op. at 13 (emphases in original).<a href="https://govcon.mofo.com/false-claims-act/false-claims-independent-research-development/#_ftnref2">[2]</a> Id. at 11.<a href="https://govcon.mofo.com/false-claims-act/false-claims-independent-research-development/#_ftnref3">[3]</a> Id.

False Claims in Independent Research and Development (IR&D): Federal District Court Adopts ATK Thiokol as the Knowledge Standard

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Locke Bell is a partner in the firm’s Government Contracts & Public Procurement practice.

Locke Bell

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False Claims in Independent Research and Development (IR&D): Federal District Court Adopts ATK Thiokol as the Knowledge Standard

False Claims Act Trends: Technical Data, Software And IP

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Many government contractors, like other private enterprises, invest heavily in research and development (R&D) to improve the products and services they offer, i

False Claims in Independent Research and Development (IR&D): Federal District Court Adopts ATK Thiokol as the Knowledge Standard

Earlier this month, the Federal Acquisition Regulatory Council (“FAR Council”) issued a <a href="https://www.federalregister.gov/documents/2022/03/07/2022-04173/federal-acquisition-regulation-amendments-to-the-far-buy-american-act-requirements">final rule</a> tightening the Buy American Act preference for domestic products and construction materials. The final rule makes only limited changes to the proposed rule we <a href="https://govcon.mofo.com/protests-litigation/proposed-rule-for-tightening-buy-american-act-restrictions/">previously commented</a> on. First, the effective date of the rule is pushed back to October 25, 2022, giving industry additional time to prepare for the more stringent requirements for future procurements. Second, when keeping up with changing domestic content thresholds is not feasible in a particular procurement, the final rule provides an alternative and less onerous domestic content test. Third, the FAR Council has postponed creation of a price preference for domestically made critical items or critical components until a definitive list of such items and components is established, and the Council similarly has delayed creation of new post-award reporting requirements.Here are the key takeaways from the final rule:<ul><li>Increase in the Domestic Content Threshold: The final rule initially increases the domestic content threshold to 60%, with additional increases to 65% in 2024, and 75% in 2029. The rule will not go into effect until October 25, 2022. Once in effect, the new threshold will apply to new procurements. The rule also allows agencies (in consultation with the Made in America Office) to use an alternative domestic content test, which applies the threshold in effect at award for the entire period of performance where complying with the changing thresholds during the life of a particular contract is not feasible.</li><li>Fallback Threshold: The final rule retains the proposed temporary allowance (or “fallback”) for continued use of the previous 55% domestic content threshold “in instances where an agency has determined that there are no end products or construction materials that meet the new domestic content threshold or such products are of unreasonable cost.” The fallback provisions will sunset in 2030.</li><li>Enhanced Price Preference for Critical Products and Critical Components: The final rule provides a framework for applying higher price preferences to end products and construction materials deemed critical or made of critical components. The FAR Council has delayed implementation of this new price preference until issuance of a definitive list of critical items and critical components in a future rulemaking.</li><li>Post-Award Reporting Requirements: The final rule removes the proposed rule’s post-award reporting requirements for contractors with respect to domestic content for critical items and critical components. The FAR Council deferred implementation of the reporting requirements until the definitive list of critical items and critical components is established.</li></ul>We will continue to monitor progress as the FAR Council establishes a definitive list of critical items and critical components and promulgates reporting requirements.

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Associate

Markus Speidel is an associate in Morrison & Foerster’s Government Contracts & Public Procurement group, in Washington, D.C. Markus assists clients across a wide range of contract matters, including contract claims and disputes, bid protests, compliance counseling, and investigations.

Markus Gerhard Speidel

Markus Speidel

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FAR Council Tightens Buy American Act Requirements

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

Earlier this month, the Federal Acquisition Regulatory Council (“FAR Council”) issued a final rule tightening the Buy American Act preference for domestic produ

FAR Council Tightens Buy American Act Requirements

Earlier this month, the U.S. Department of Defense (DOD) issued a <a href="https://www.govinfo.gov/content/pkg/FR-2022-03-18/pdf/2022-05531.pdf">final rule</a> to add the 2018 National Defense Authorization Act’s enhanced post-award debriefing rights to the Defense Federal Acquisition Regulation Supplement (DFARS). The rule took effect immediately on March 18, 2022, and formalizes procedures DOD has largely been following for the past several years. The new regulation supersedes <a href="https://www.acq.osd.mil/dpap/policy/policyvault/USA000563-18-DPAP.pdf">Class Deviation 2018-O0011</a>, which previously addressed a subset of the statutory enhanced debriefing rights. Most defense contractors will notice no difference between life under the old class deviation and life under the new DFARS provisions.Here are the key takeaways:<ul><li>The heart of the final rule is the statutory requirement (also present in the class deviation) to provide offerors in covered DOD procurements two business days following a required post-award debriefing in which to submit written post-debriefing questions to the procuring agency. The offeror’s protest clock does not begin to run until after the agency has provided written responses to the offeror’s timely submitted written questions. In accordance with the Federal Circuit’s precedent in Nika Technologies Inc. v. United States, protest timelines are not extended if the offeror does not submit timely post-debriefing questions.</li><li>The final rule further clarifies that both successful and unsuccessful offerors are entitled to the enhanced post-award debriefing in covered procurements.</li><li>The enhanced debriefing rights apply both to contract awards and to task and delivery order awards under Indefinite Delivery, Indefinite Quantity contracts, as long as the award is worth $10 million or more.</li><li>As required by the underlying statute, all debriefed offerors in procurements valued in excess of $100 million are automatically entitled to receive at least a copy of “the agency’s written source selection decision document, redacted to protect the confidential and proprietary information of other offerors for the contract award.” In addition, in procurements valued between $10 million and $100 million, debriefed offerors that are small businesses or nontraditional defense contractors are entitled to receive at least the redacted source selection decision document, if they request it. Agencies are free to provide additional, properly redacted evaluation and source selection documents to debriefed offerors of any size or status.</li></ul>A few caveats:<ul><li>As is always the case, an offeror is not entitled to a debriefing of any sort if it does not timely request one.</li><li>The new rule and the enhanced debriefing process are mandatory only for DOD agencies. Civilian agencies, however, are free to adopt these procedures.</li><li>The enhanced debriefing rights apply only to post-award debriefings. Agencies, however, are free to adopt modified versions of these procedures for pre-award debriefings.</li><li>The final rule does not apply to procurements where debriefings are not required (such as Federal Supply Schedule order competitions under FAR Part 8, or situations where an offeror has missed the deadline to request a required debriefing). But, here too, agencies are free to adopt these procedures for use in non-required “debriefings.” Offerors should keep in mind, though, that an agency’s voluntary use of the same or similar procedures in a non-required debriefing generally will not entitle the offeror to extended protest deadlines.</li></ul>

Jim Tucker is of counsel in Morrison & Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.
Jim’s practice runs the gamut of litiga

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DOD Adds Enhanced Post-Award Debriefing to the DFARS

DOD Proposes Enhanced Debriefing Regulations

Earlier this month, the U.S. Department of Defense (DOD) issued a final rule to add the 2018 National Defense Authorization Act’s enhanced post-award debriefing

DOD Adds Enhanced Post-Award Debriefing to the DFARS

February 2022 Bid Protest Roundup: Key Personnel Changes, Agency Computer Glitches, and Ambiguous Solicitations

This month’s roundup considers three recent protests: (1) an important decision by the Court of Federal Claims rejecting controversial precedents of the U.S. Go

February 2022 Bid Protest Roundup: Key Personnel Changes, Agency Computer Glitches, and Ambiguous Solicitations

As the Russian invasion of Ukraine becomes a protracted campaign, and as the United States and other countries impose sanctions and other penalties on Russia in response, the possibility of Russian cyberattacks directed at the West (or that spill from Ukraine) looms large. In a series of recent alerts the Cybersecurity & Infrastructure Security Agency (CISA) of the U.S. Department of Homeland Security, together with other agencies, have warned of a general uptick in the possibility of destructive malware attacks, ransomware, and other malicious cyber activity being fueled by the conflict in Ukraine, including specific risks directed at companies that contract with the U.S. defense and intelligence communities and operators of critical infrastructure. The alerts serve as a reminder for companies of the importance of strong cyber defense and detection tools and the need for regular review of cybersecurity incident response plans in order to be in the best position to detect and respond to state-sponsored attacks. Should companies find themselves the target of an attack, Morrison & Foerster is well-positioned to assist with investigation and response, and outreach to law enforcement, relevant government agencies, customers, and other contacts as appropriate.Read our <a rel="noopener" target="_blank" href="https://www.mofo.com/resources/insights/220227-private-sector-alert-russian-cyber-attacks.html">full client alert</a>.

Tina is a partner in Morrison & Foerster’s Government Contracts practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmace

Tina Reynolds

Private Sector Directed to Be on Alert for Potential Russian Cyber Attacks

As the Russian invasion of Ukraine becomes a protracted campaign, and as the United States and other countries impose sanctions and other penalties on Russia in

Private Sector Directed to Be on Alert for Potential Russian Cyber Attacks

It has been more than two months since the U.S. District Court for the Southern District of Georgia <a href="https://govcon.mofo.com/labor-employment/georgia-court-issues-nationwide-injunction-of-executive-order-14042-2/">issued a nationwide preliminary injunction of Executive Order 14042</a>, the Biden Administration’s effort to impose a vaccine requirement on federal contractors. Since then, the district court has <a href="https://govcon.mofo.com/coronavirus/double-take-nationwide-preliminary-injunction-of-eo-14042/#_ftn1">clarified the scope of its injunction</a>, and a number of <a href="https://govcon.mofo.com/coronavirus/patchwork-preliminary-injunctions-interpreting-contractor-compliance-obligations-under-eo-14042/">other trial courts have weighed in</a>. But the fate of EO 14042 is still far from settled. The next major test will come in the U.S. Court of Appeals for the Eleventh Circuit, where the government has appealed the Georgia trial court’s order granting the preliminary injunction. Oral argument is not scheduled to take place until April, but now that the parties (and a few amici curiae) have had a chance to submit their appellate briefs, it’s worth taking a moment to examine the legal issues at play. A brief summary of each party’s arguments on appeal follows:The federal government identifies the following three issues for the Eleventh Circuit’s review: (1) whether EO 14042 is a lawful exercise of the President’s authority under the Federal Property and Administrative Services Act, or the Procurement Act; (2) whether the plaintiffs failed to establish the equitable requirements for preliminary injunctive relief; and (3) whether the scope of the preliminary injunction is overbroad.<ul><li>On the first question, the government argues that because the Procurement Act authorizes the President to “prescribe policies and directives” that he considers “necessary” to ensure “an economical and efficient system” for procurement, and COVID disrupts work by causing absences or spreading illness, EO 14042’s vaccine mandate serves the statute’s goals. The “major questions” doctrine—under which the trial court presumed that Congress would have specifically authorized a vaccine mandate if it had intended to provide such power via the Procurement Act—applies only when, unlike here, the Executive Branch exercises regulatory authority and when it is unclear whether the statute delegates power to the Executive Branch. Likewise, the Procurement Act’s economy-and-efficiency standard does not create non-delegation problems because that standard supplies an intelligible principle guiding the President’s actions. And federal contracting does not implicate federalism concerns at all.</li><li>As for the equities informing injunctive relief, the government argues that plaintiffs never established irreparable injury because compliance costs are insufficient to constitute irreparable harm, while enjoining the mandate would harm productivity in vital contracts such as those relating to national security and public health.</li><li>Finally, the government argues that the nationwide injunction is overbroad and should have been limited to parties to this suit under fundamental constitutional and remedial principles.</li></ul>In response, appellees state plaintiffs (Georgia, Alabama, West Virginia, Kansas, Idaho, South Carolina, Utah) and Associated Builders and Contractors, Inc. (Associated), defend the district court’s order in separate briefs.<ul><li>State plaintiffs argue that EO 14042 exceeded the President’s authority because the Procurement Act authorizes only modest control over the government’s internal operations, not extensive power to set health and safety measures at private companies. The government did not adequately explain its efficiency rationale, the states argue, and, in any event, the guidance and FAR deviation clause implementing the vaccine mandate violated procedural requirements by never going through notice-and-comment.</li><li>The equities also favored an injunction, the states say, because the EO forces them to choose between losing hundreds of millions of dollars in federal contracts or firing employees who cannot be replaced.</li><li>The injunction is proper in scope, the states argue, because only one plaintiff in a group needs to establish standing to seek relief, and all the states enter into contracts with the federal government.</li><li>Associated, meanwhile, relies heavily on the <a href="https://www.mofo.com/resources/insights/220113-supreme-court-nixes-osha.html">U.S. Supreme Court’s decision halting the Occupational Safety and Health Administration’s vaccine-or-test mandate</a> in arguing that EO 14042 exceeded the President’s authority. Both cases implicate constitutional limitations on executive authority and the lack of a clear congressional mandate. Because the Supreme Court has already concluded that COVID is a universal problem, not a special workplace risk, Associated argues that the same considerations make the government unlikely to prevail on the merits here.</li><li>Equitable considerations also favor plaintiffs, Associated contends, because of the potential for disqualification from bidding and the incurrence of considerable administrative costs necessary for compliance, while Omicron variant COVID infections are in decline.</li><li>Like the states, Associated also argues that the universal scope of the injunction is appropriate because federal contracting occurs nationwide.</li></ul>In addition to the parties’ submissions, two amici curiae have also filed briefs, both in support of plaintiffs-appellees.<ul><li>The Chamber of Commerce brief focuses on statutory authority, arguing that the Procurement Act does not support the exercise of authority in EO 14042 for the same reasons discussed in appellant’s briefs. And like Associated, the Chamber draws a direct parallel to the Supreme Court’s treatment of the OSHA mandate.</li><li>In their brief, state amici (Florida, Alaska, Arkansas, Arizona, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, Oklahoma, South Dakota, Tennessee, and Texas) expand on the arguments that the government committed procedural errors in implementing EO 14042. In addition to the notice and comment point, state amici also contend that the government improperly allowed the Safer Federal Workforce Task Forceto set the terms of the mandate, and that the resulting policy was arbitrary and capricious in violation of the Administrative Procedure Act for failing to recognize countervailing policy arguments.</li></ul>The federal government addressed most of these various arguments in its reply brief.<ul><li>On statutory authority, the government replies that nothing in the Procurement Act’s text or case law interpreting it supports plaintiffs’ restrictive reading, and that there is no real difference between contracting requirements that directly enhance economy and efficiency and those that do so indirectly via health measures.</li><li>The government’s reply also responds, for the first time on appeal, to plaintiff states’ and amici states’ arguments that EO 14042 suffers from procedural defects. The district court never reached those issues, the government notes. But in any event, neither the Task Force Guidance nor the FAR Council memo are final agency action because they lack immediate legal force without further action. In addition, the OMB’s acting director’s separate determination was not subject to notice and comment requirements because she was exercising authority delegated directly by the President. And she complied with that statutory framework anyway by expressly waiving the notice and comment requirement in light of compelling circumstances.</li></ul>The Eleventh Circuit is set to hold oral argument on April 8 and could issue a decision any time after that. While this case is the first to reach full briefing in a court of appeals, other federal appellate courts—including the Fifth, Sixth, and Eighth Circuits—will soon be considering these issues, too. Of course, if the OSHA vaccine-or-test mandate is any indication, <a href="https://www.mofo.com/resources/insights/220113-supreme-court-nixes-osha.html">the Supreme Court may ultimately have the final word</a>. As always, we will continue to monitor and provide updates on these developments.

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Joe Palmore co-chairs Morrison Foerster’s Appellate and Supreme Court practice. Chambers USA describes him as “an outstanding oral advocate,” who is “calm, focused, effective and doesn’t back down,” and has “complete command of the facts.” Joe “writes great briefs” (Chambers USA), with one client recounting that “the Court mirrored the language he thoughtfully chose in its ultimate order” (Legal 500).

Joseph R. Palmore

Joseph R. Palmore is co-chair of the firm's Appellate and Supreme Court Practice Group and Managing Partner for the Washington, D.C. office. Before joining Morrison Foerster, Joe was an Assistant to the Solicitor General at the United States Department of Justice and the Deputy General Counsel of the Federal Communications Commission (FCC).