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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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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Our government contracts and procurement attorneys counsel businesses on legal and compliance issues encountered when doing business with government entities.

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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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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.

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James A. Tucker

Strengthening the American Drone Industrial Base

Bid Protest Spotlight: Jurisdiction, Price Range, Late-Is-Late

Trump Issues Executive Order on Cybersecurity Rolling Back Some Prior Policies and Introducing New Ones

GAO Reaffirms Agencies’ Discretion to Award Sole-Source SBIR Phase III Contracts (Even to a Successor-in-Interest)

Ongoing FAR Overhaul: Market Research and the New FAR Part 10

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On September 4, 2024, the U.S. Department of Defense (DoD) issued a <a href="https://www.federalregister.gov/documents/2024/09/04/2024-19457/transactions-other-than-contracts-grants-or-cooperative-agreements-for-prototype-projects" target="_blank">proposed rule</a> to update its longstanding but little-known regulations for prototype other transactions (OTs), including new sections that authorize follow-on production OTs. The changes would bring the regulations up to date with the current text of DoD’s statutory authority for prototype OT and follow-on production agreements. Much has changed since DoD’s OT regulations were last amended in 2004. In those years, the regulations have largely sat on the shelf (at <a href="https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-A/part-3" target="_blank">32 C.F.R. Part 3</a>), rarely used and collecting dust while Congress repeatedly updated and expanded DoD’s statutory authority. In practice, DoD Agreements Officers and others draw their authority and guidance directly from the statute itself (10 U.S.C. § 4022). We expect that to continue, and the proposed rule is unlikely to effect any substantive change to current law. Nevertheless, it provides a good reminder of where the requirements stand for DoD OTs in a few key respects.Nontraditional Defense ContractorsDoD’s prototype OT authority is limited to agreements that meet certain statutory criteria. According to DoD’s Federal Register notice, the most commonly used of these eligibility criteria – accounting for more than 90 percent of all prototype OT awards – is the significant participation of a “nontraditional defense contractor.”[1]So, who qualifies as “nontraditional”? A nontraditional defense contractor is an entity that has not performed a DoD contract or subcontract subject to Full Cost Accounting Standards (CAS) coverage in the year prior to a solicitation. This is intentionally broad, and, as noted by DoD in its <a href="https://www.acq.osd.mil/asda/dpc/cp/policy/docs/guidebook/TAB%20A1%20-%20DoD%20OT%20Guide%20JUL%202023_final.pdf">Other Transactions Guide</a>, it includes nearly all small business concerns and even many companies that work exclusively with DoD.[2] It also includes subsidiaries or affiliates of large traditional defense contractors, as long as the specific legal entity at issue is not subject to Full CAS coverage (and, for purposes of the eligibility criteria, will in fact be a significant participant in the prototype project).DoD’s OT regulations, as currently written, reiterate this by defining nontraditional defense contractor status to apply specifically at the “business unit” level, rather than at the “entity,” consistent with general rules for CAS applicability across different segments within an organization. DoD’s proposed rule would update the regulations to replace “business unit” with “entity” for consistency with the statute, but there is no indication the change is intended to substantively alter the availability of nontraditional status to separate legal entities within a larger corporate family of companies. The proposed rule also would remove the additional requirement that a “nontraditional defense contractor” not have performed any prototyping or research projects worth more than $500,000 in the past year. That additional requirement was previously removed from the statutory definition.Broad Definition of PrototypeThe proposed rule would implement the broad definition of “Prototype Project” used by DoD and authorized by Congress in recent years. This broad definition, which comes directly from the statute, says that a prototype project can be any combination of the following: <ul><li>A proof of concept, model, or process, including a business process.</li><li>Reverse engineering to address obsolescence.</li><li>A pilot or novel application of commercial technologies for defense purposes.</li><li>Agile development activity.</li><li>The creation, design, development, or demonstration of operational utility.</li></ul>Congress added this definition to the statutory authorization in the National Defense Authorization Act for Fiscal Year 2023.  Previously, the statute contained no definition, but the DoD claimed a broad interpretation of “prototype” that was very similar to the current statutory definition. Even before Congress enacted its definition into law, the Government Accountability Office upheld DoD’s broad interpretation of the term as reasonable in multiple challenges to its breadth. See ACI Techs., Inc., B-417011, Jan. 17, 2019, CPD ¶ 24; Oracle America, Inc., B-416061, May 31, 2018, CPD ¶ 180.Follow-On ProductionThe proposed rule also would add regulations for follow-on production OT awards. By law, DoD may award an OT or contract for follow-on production efforts on a sole-source basis if the initial prototype OT was awarded using competitive procedures and has been successfully completed. Notably, any agency may award a follow-on production OT or contract following successful completion; it does does not have to be the same agency that awarded the initial prototype OT, as we discussed <a href="/topics/dod-issues-updated-other-transactions-ot-guide" target="_self">previously</a>.  In fact, multiple DoD agencies may each award their own production OTs or contracts as follow-ons to a successfully completed prototype OT that a single agency had awarded and managed.To proceed from a prototype to follow-on production OT, the government must make a written determination that the prototype OT was “successfully completed.” According to DoD guidance, “successful completion” means that the prototype project “(1) met the key technical goals of a project; (2) satisfied success metrics incorporated into the Prototype OT; or (3) accomplished a particularly favorable or unexpected result that justifies the transition to production.” Any success metrics incorporated into a prototype OT may be objective or subjective, and success can be determined before the prototype project has ended, to facilitate the transition to a follow-on production OT.DoD’s Other Transactions Guide advises agreements officers to plan for the follow-on production OT as much as possible in the original prototype OT award. That planning should include a strategy “to obtain necessary IP deliverables (e.g., technical data or computer software), or associated license rights.” Pricing for the follow-on production OT should also be set at the time that the prototype OT is awarded, if the price can be forecast that far in advance.OTs Are ContractsDoD’s proposed rule would affirm that although OTs are not “procurement contracts” (or grants or cooperative agreements) and thus not subject to the laws specific to those legal instruments, they are most certainly “legally binding instruments that include the elements of: offer; acceptance; consideration; authority; a legal purpose; a meeting of the minds; and are approved by an Agreements Officer who has authority to bind the Government.”  They are, in other words, contracts – contracts that may be enforced, against the Government or the OT Performer in a court of law (namely, the U.S. Court of Federal Claims), even if not subject to the Contract Disputes Act. That never should have been in doubt, but it was a common misconception. A Few Closing ThoughtsDoD’s proposed rule is yet another signal that DoD’s prototype OTs have matured from pilot program to permanent authority. They are now a fixture of the government contracts industry and, according to the Federal Register notice announcing the proposed rule, “a significant asset in the DoD toolbox for acquisition of items to support the DoD mission.” DoD continues to tout publicly its “flexibility in negotiation of terms” and “less Government oversight” associated with OTs, which it hopes will encourage participation by businesses that are otherwise “unwilling to forfeit intellectual property rights or adhere to some of the procurement regulations.” In practice, however, this flexibility is all too often leveraged by agreements officers to benefit the Government at the OT performer’s expense, especially with respect to intellectual property rights. The FAR and DFARS and their underlying statutes are the products of many decades of legislation and notice-and-comment rulemaking attempting to balance the Government’s interests with those of a captive industry. As a result, they include significant protections for contractor rights, such as a right to own their inventions or a right to keep their privately developed trade secrets out of the hands of their competitors. Yet there are OTs and OT solicitations now that demand performers give up those rights as a condition of participating in the same kinds of major weapons acquisitions that historically have formed the companies’ lifeblood. Such abuses of the Government’s bargaining position would be unheard of – and legally actionable – in a procurement contract, but OTs often evade such oversight.  When considering its proposed rule, DoD appears to have weighed other alternatives, such deleting its OT regulations altogether or expanding them to include “best practices for DoD practitioners.” It decided against the former because deletion of regulatory coverage for such an important acquisition tool “would be inconsistent with DoD’s policy to support innovation through acquisition policy.” It dismissed the latter as adequately addressed by DoD’s existing Other Transactions Guide. Whether to expect more OT regulations in the future, in furtherance of “innovation through acquisition policy,” is yet to be seen. The flexibility and speed of OTs, when used correctly, present an opportunity to meet critical defense needs in ways that would otherwise be difficult or impossible. However, the flexibility can introduce new risks to the contracting process, so it remains vital for contractors to review terms with counsel before entering agreements.Ethan Sterenfeld, a Law Clerk in our Washington, D.C., office, contributed to the writing of this article.[1] Note that to meet this requirement, a nontraditional defense contractor is not required to be the OT awardee but rather must simply be “participating to a significant extent,” a phrase that has been broadly interpreted and defined by DoD in its internal OT guidance. DoD estimates that the majority of the dollars obligated for such agreements actually went to nontraditional defense contractors, but acknowledges limitations in its access to reliable data. [2] As DoD observes in the Federal Register: “This definition permits a large number of entities, including nearly all small business concerns, to be considered [nontraditional defense contractors] to help drive innovation.”

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

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

Locke Bell

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GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

DoD Dusts Off Other Transactions (OT) Regulations

Federal Procurement

The U.S. Department of Defense (DoD) issued a <a href="https://www.federalregister.gov/documents/2024/08/15/2024-18110/defense-federal-acquisition-regulation-supplement-assessing-contractor-implementation-of" target="_blank">final rule</a> bringing the Defense Federal Acquisition Regulation Supplement (DFARS) into alignment with changes to the Federal Acquisition Regulation (FAR) that reorganized Part 23 on Sustainable Procurement. The rule, issued on August 15, 2024, became effective immediately.  It makes no substantive changes and “does not alter policy or requirements stated in the DFARS.” Although the rule renames certain DFARS parts and subparts, and changes one DFARS clause number, its effect on contractors is likely slight. We previously <a href="https://govcon.mofo.com/topics/proposed-sustainable-procurement-rule-would-streamline-existing-environmental-regulations-and-clarify-far-part-23-" target="_blank">commented</a> in greater detail on the corresponding streamlining of the FAR.Following the reorganization of FAR Part 23, the rule renames Part 223 as “Environment, Sustainable Acquisition, and Material Safety.” It also adds subpart 223.1, Sustainable Products and Services, where it brings together the content from subparts 223.4 and 223.8. The rule moves the content on a Drug-Free Workplace from subpart 223.5 to Part 226 into a newly added subpart 226.5 of the same title. The contract clause at DFARS 252.223-7004, Drug-Free Work Force, is consequently moved to DFARS 252.226-7003, Drug-Free Work Force. The rule renames subpart 223.3 as “Hazardous Material Identification, Material Safety Data, and Notice of Radioactive Materials.”As the rule “only renames an existing DFARS part and existing subparts, and relocates DFARS subparts and paragraphs, to align the DFARS with changes made in the FAR,” the drafters determined the rule did not require public comment under 41 U.S.C. § 1707. The rule does make some “editorial changes” to the renumbered clause to conform with definition drafting conventions.  Although contractors who frequently reference the DFARS will find it helpful to note the reorganization and corresponding renumbering imposed by the rule, contractors can otherwise rest easy that the rule imposes no new requirements.

DoD Aligns with FAR on Sustainable Procurement

IAP Worldwide Servs., Inc.

Flight Support, Inc.

DynCorp Int’l LLC

Raytheon Co.

DynCorp International, LLC v. United States

URS Federal Servs., Inc.

DynCorp International, LLC

Planned Sys. Int’l, Inc.

Threat Mgmt. Group, LLC

Vencore Servs. & Solutions, Inc.

Jacobs Tech., Inc.

Cubic, Inc.

American Institutes for Research v. State of New Mexico

CACI-WGI, Inc.

Fluor Intercontinental, Inc. v. IAP Worldwide Servs., Inc.

IAP World Servs., Inc.

Size Appeal of IAP World Servs., Inc.

Al-Ghanim v. IAP Worldwide Servs., Inc.

O’Gara Training & Servs., LLC

IAP Worldwide Servs., Inc. v. Johnson Controls, Inc.

AAR Mobility Sys.

Matt Martin Real Estate Mgm’t, LLC v. United States

Pyramid Real Estate Servs., LLC v. United States

Harrington, Moran, Barksdale, Inc.

Homesource Real Estate Asset Servs., Inc. v. United States

Ocean Ships, Inc.

Keystone Sealift Servs., Inc.

ITT Corp., Sys. Div.

IAP Worldwide Servs., Inc. v. Fluor Intercontinental, Inc.

FedSys, Inc.

Academy Facilities Mgm’t v. United States

Academy Facilities Management -- Advisory Opinion

Evans Security Solutions, Inc.

Contingency Mgm’t Group, LLC and IAP Worldwide Servs., Inc.

Kellogg Brown & Root Services, Inc.

Liberty Power Corp.

J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. 

J. Ward

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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

DoD Aligns with FAR on Sustainable Procurement

The U.S. Department of Defense (DoD) issued a final rule bringing the Defense Federal Acquisition Regulation Supplement (DFARS) into alignment with changes to the Federal Acquisition Regulation (FAR) that reorganized Part 23 on Sustainable Procurement.

The Procurement Integrity Act (“PIA”), codified at 41 U.S.C. § 2101–2107, is intended to prevent unethical and improper competitive practices from influencing federal procurements. To achieve this end, the PIA prohibits knowingly disclosing, or knowingly obtaining, source selection information or contractor bid or proposal information (collectively, “Protected Information”) before the award of a federal agency procurement contract to which such information relates.<div data-reactroot=""><a class="align-none rich-text-embed-image-wrapper" href="https://media2.mofo.com/v3/images/blt5775cc69c999c255/bltf0d756b5a5b9b082/669597b31e4e7e4c8fb66ed2/240715-procurement-integrity-act.jpg?format=auto&amp;quality=60" rel="noopener noreferrer" target="_blank"><img width="449" height="581" class="rich-text-embed-image" alt="Procurement Integrity Act infographic" src="https://media2.mofo.com/v3/images/blt5775cc69c999c255/bltf0d756b5a5b9b082/669597b31e4e7e4c8fb66ed2/240715-procurement-integrity-act.jpg?format=auto&amp;quality=60"/></a></div>

Sandeep Nandivada is a partner in the Litigation Department of Morrison Foerster’s Washington, D.C. office.

Sandeep N. Nandivada

Sandeep Nandivada

The Procurement Integrity Act (“PIA”), codified at 41 U.S.C. § 2101–2107, is intended to prevent unethical and improper competitive practices from influencing federal procurements.

On December 22, 2023, President Biden signed the <a href="https://www.congress.gov/bill/118th-congress/house-bill/2670" target="_blank" dir="ltr">National Defense Authorization Act for Fiscal Year 2024</a> into law after bipartisan congressional majorities approved the bill earlier in the month. The annual bill authorizes appropriations and sets policy for the Department of Defense (“DoD”) and generally reflects the priorities of the House and Senate Armed Services Committees. Below, we review select provisions likely to be of greatest interest to government contractors. Many of these provisions will only take effect after the government promulgates implementing regulations, following notice-and-comment procedures.Noteworthy ProvisionsContract Administration<ul><li>Expansion of Multiyear Contracts. A need for industrial base stability can now justify multiyear procurement contracts. Previously, multiyear contracts were only permissible if the DoD determined they would bring “significant savings” to the total price that the government would pay over the course of the contract. In expanding the availability of multiyear contracts, Congress determined that reliance on cost savings only was too restrictive and that promoting defense industrial base stability was sufficient justification for longer contracts. (Section 820)</li><li>Extension of Inflation Relief. The DoD will have more time to write inflation adjustments into fixed-price contracts as the NDAA extends an inflation relief program first enacted in the Fiscal Year 2023 NDAA by a year, until December 31, 2024. The program allows DoD contracting officers to make price adjustments to contracts as compensation for high inflation, even for fixed-price contracts that do not otherwise provide for economic price adjustment. (Section 824)</li><li>Waiver of Procurement Rules for Replenishment of Stockpiles. Emergency acquisition authorities can now be invoked to replace military supplies that have been provided to allies. This provision expands upon emergency acquisition authorities at 10 U.S.C. §  3601, which allow the military to waive certain procurement rules, including competition requirements, in emergency situations. The provision was designed to accelerate the pace at which the United States can refill its stockpiles of weapons and other equipment that have been sent to Ukraine. (Section 831)</li><li>Earned Value Management System Exemption. DoD contracts and subcontracts for purchase of software will be exempt from Earned Value Management System requirements. The DoD has 180 days from the NDAA’s enactment to update the Defense Federal Acquisition Regulation Supplement (DFARS) to implement this provision. (Section 827)</li></ul>Contracting Innovation<ul><li>Increasing Use of Commercial Products and Services. As part of its continued efforts to simplify the process for DoD acquisition of commercial goods and services, Congress has directed the Under Secretary of Defense for Acquisition and Sustainment to prepare a report about the feasibility of several measures that would reduce administrative barriers to procuring commercial goods and services. The first measure would “establish a default determination” that products and services the military buys are commercial. Another measure would direct more acquisitions under FAR Part 12, which contains specialized procedures for commercial purchases. (Section 875)</li><li>Supply Chain Scrutiny. The supply chains of five weapons platforms will receive greater scrutiny under a DoD pilot program. The pilot program should “identify critical suppliers” and “potential risks to and vulnerabilities of” those suppliers. The program could also be used to develop strategies to expand production of each platform’s components. New technologies, such as artificial intelligence and machine learning, could aid in the identification and analysis of supply chain vulnerabilities. (Section 856)</li><li>DoD to Obtain Enhanced Data Rights. Congress wants the DoD to experiment with innovative intellectual property strategies to acquire more data rights in information technology products. The suggested new strategies include holding intellectual property data in an escrow account or the innovative use of royalties and licenses. Each military department must select one acquisition program for the new strategies, and an additional program will come from one of the DoD agencies or field activities. DoD components have until May 1, 2024, to designate the data rights pilot programs. (Section 808)</li><li>New Technology Acquisition Model. The DoD will run a pilot program to buy “technology-supported” capabilities on an “anything-as-a-service” model. This acquisition model should “provide users on-demand access, quickly add newly released capabilities, and bill based on actual usage at fixed price units.” The pilot program should only include capabilities for which there is a measurable outcome that can be compared to results using more traditional acquisition methods. Contracts could be signed quickly under this pilot program: the provision directs the military to enter into a contract or agreement within 100 days of providing public notice for each capability that it seeks to buy. (Section 809)</li></ul>Small Businesses<ul><li>Affiliate Past Performance May Be Considered. Contracting officers may now consider the past performance of a small business’s affiliated companies as the past performance of the small business in proposal evaluation. The DFARS must be amended by July 1, 2024, to implement the provision. (Section 865)</li><li>New SDVOSB Certification Requirement. Contractors and subcontractors will no longer be able to self-certify their status as service-disabled veteran-owned small businesses (SDVOSB). This provision will take effect at the beginning of the first fiscal year after the Small Business Administration (SBA) promulgates regulations implementing an SBA certification process. Contractors that have previously self-certified as SDVOSBs will have one year after the NDAA’s enactment to file for certification with the SBA. If contractors file within that one-year period, their self-certification will remain valid until the SBA rules on their certification applications. (Section 864)</li><li>Change to Federal SDVOSB Goals. The goal for SDVOSB contracting has been increased to five percent across the whole federal government, up from three percent. The government-wide goal had stood at three percent of the total value of prime and subcontract awards for more than two decades. (Section 863)</li></ul>Antitrust<ul><li>Expanded Role for DoD in Antitrust Reviews. The DoD could take on a greater role in antitrust enforcement for the defense industry going forward. The NDAA requires companies to notify the DoD of certain defense-related transactions, specifically mergers and acquisitions that must be reported to the Department of Justice and Federal Trade Commission under section 7A of the Clayton Act. Notably, an earlier Senate draft also would have required notice to DoD of other types of investments and joint ventures involving major defense contractors, not just mergers and acquisitions, but this provision was not included in the final bill. (Section 857)</li></ul>Greenhouse Gas Reporting<ul dir="ltr"><li dir="ltr">Delay and Elimination of Reporting Requirements. The DoD may not require nontraditional defense contractors to report greenhouse gas emissions at all and may not compel other contractors to submit greenhouse gas reports for at least a year, starting with the enactment of the NDAA. The provision includes exceptions, so certain contractors might be forced to disclose emissions to verify other reports or disclosures. (Section 318)</li></ul>Sanctions and Other Foreign Country-Related Restrictions<ul><li>No Contracts to Russian Energy Partners. DoD cannot award contracts to companies that partner with Russian state-owned oil or gas companies or any other company that extracts oil or gas in Russia. The provision includes humanitarian aid exceptions. It will expire at the end of 2029 without congressional renewal. (Section 804)</li><li>No Consulting Advice to Russia or China. Consulting firms cannot work for the DoD if they also work with Chinese or Russian government clients or sanctioned companies in those countries, unless they receive a waiver and implement a mitigation plan. (Section 812)</li></ul>Noteworthy Omission<ul dir="ltr"><li dir="ltr">Bid Protest Fee Shifting Provision Fails Again. The NDAA did not include a provision, which had passed the House, that would have created a “loser pays pilot program” for bid protests at the Government Accountability Office. Under the draft provision, contractors with more than $250 million in annual revenues that lost a bid protest at the GAO would have been required to reimburse the DoD for the cost of fighting the protest. A nearly identical provision passed into law in the Fiscal Year 2018 NDAA but was repealed before taking effect.</li></ul>Ethan Sterenfeld, a Law Clerk, contributed to the writing of this post.

On December 22, 2023, President Biden signed the National Defense Authorization Act for Fiscal Year 2024 into law after bipartisan congressional majorities approved the bill earlier in the month. The annual bill authorizes appropriations and sets policy for the Department of Defense (“DoD”) and generally reflects the priorities of the House and Senate Armed Services Committees.

Notable Provisions of the FY 2024 National Defense Authorization Act

National Security

Small Business

The FAR Council’s Proposed Cybersecurity Overhaul: Lots of Questions, but Only Some Answers

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The FAR Council’s Proposed Cybersecurity Overhaul: Lots of Questions, but Only Some Answers

DOJ Cyber-Fraud Initiative Highlights Potential Civil Liability for Failing to Meet Federal Cybersecurity Requirements

In what can best be described as a tsunami of cybersecurity regulation, the Federal Acquisition Regulation (FAR) Council—consisting of the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)—issued two proposed rules on October 2, 2023.

Cybersecurity & Data Privacy

On May 19, 2023, the General Services Administration (GSA) issued Multiple Award Schedule (MAS) solicitation refresh 16, which introduced a formal offer process for joint ventures. To provide guidance on navigating those changes, GSA also issued a list of <a href="https://www.gsa.gov/system/files/Final%20JV%20Industry%20FAQs%20071923.pdf" target="_blank">Frequently Asked Questions (FAQ)</a> for joint ventures. The FAQ illuminates both positive and negative implications.The GoodStarting off with the good news: we now have official confirmation that joint ventures can hold a GSA MAS contract. Although this is old news to the many joint ventures that already hold GSA schedules, some in the industry were unaware it was possible for an unpopulated joint venture with little to no sales history to qualify for the schedule. This FAQ publicly confirms this avenue for growth.Unrelated to the GSA schedule itself, another positive found in this announcement is that GSA officially confirms that when a Mentor-Protégé Agreement (MPA) pursuant to the Small Business Administration (SBA) Mentor-Protégé Program ends, the same mentor and protégé can enter into a second MPA together. This is consistent with SBA’s brand-new regulations, which provide that a protégé may elect to renew its MPA with the same mentor, thereby reaching 12 years for the relationship, rather than six.The BadDespite this good news, GSA’s guidance is frustratingly impractical and will almost certainly be impossible to implement (wait for the revision). In the past, a joint venture would be awarded labor categories which could be utilized by any joint venture member to fulfill the required mentor-protégé workshare of 40% for the protégé (if applicable). Mid-contract, GSA has cast that fundamentally sound approach aside. In its place, GSA no longer permits joint venture partners to share labor categories. Instead, each member must propose and perform under their own separate (and not overlapping) labor categories. To make matters worse, GSA is requiring the joint venture partners to identify the source of labor for each partner for the life of contract. GSA will also require existing joint venture MAS contracts to conform their labor categories to this new convention. We hope joint venture members have their crystal balls ready, because not only does this require joint venture partners to predict well in advance how they are going to perform under all task orders in the future, but mentor-protégé joint ventures (MPJVs) or joint ventures where only one member has a given socio-economic status also have the added wrinkle of having to be able to do so with enough specificity to ensure they will be able to meet SBA’s performance of work requirements—years in advance! Although the GSA schedule is not a set-aside contract, orders thereunder may be, and according to GSA’s new solicitation refresh, joint venture partners must have been able to adequately predict which of the protégé’s labor categories might make up a minimum of 40 percent of a future set-aside task order’s statement of work.This change unnecessarily complicates proposal submissions and may even deter small business joint ventures from competing for set-aside task orders under GSA schedules. Worse still, there is no reason for this change. Current joint ventures’ holding schedules have been able to comply with both GSA and SBA rules without locking in labor categories for decades. Hopefully, GSA will promptly recognize the error of its ways and revert to its prior rule.Finally, GSA is now requiring all parties to a joint venture to submit a Commercial Sales Practice report. This may introduce an additional layer of risk joint venture parties may want to consider before competing for a GSA Schedule.Special thanks to Jennifer Aubel, senior manager of government contracting at Aprio, for contributing to this blog post.

GSA Issues Multiple Award Schedule Solicitation Refresh 16: What It Means for Joint Ventures, Good and Bad