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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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

Is Change Around the Corner? One Proposal to Forge Sweeping Changes to Defense Contracting

FAR Reform Now Underway

Deregulating Federal Procurement: Implications of Three Recent Executive Actions

Kickstarting AI in the Federal Government: OMB’s Policy to Implement Executive Order 14179

Bid Protest Spotlight: Instructions, Price Evaluation, Standing

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On September 11, 2020, the Office of Federal Contract Compliance Programs (OFCCP) released <a rel="noopener noreferrer" target="_blank" href="https://www.dol.gov/agencies/ofccp/foia/library#Q1">a list of nearly 900 federal supply and service contractors and subcontractors</a> that it will be sending Corporate Scheduling Announcement Letters (CSALs) to for potential audits of over 2,200 contractor establishments. For the first time, the CSAL list includes audits focusing on contractors’ promotion practices and accommodations of individuals with disabilities. The list reveals that OFCCP will be sending CSALs for various types of compliance reviews, including:<ul><li>402 Establishment Compliance Reviews;</li><li>31 FAAP Reviews;</li><li>67 Corporate Management Compliance Evaluations;</li><li>500 Compliance Checks;</li><li>500 Accommodation Focused Reviews;</li><li>500 Promotion Focused Reviews; and</li><li>250 Section 503 Focused Reviews.</li></ul>Read more on our <a rel="noopener noreferrer" target="_blank" href="https://elc.mofo.com/topics/ofcccp-issues-new-advance-audit-notices.html">Employment Law Commentary blog</a> about proactive steps to take if your company is on the CSAL list.

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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 Issues New List of Advance Audit Notices

Ready, Set, Certify: OFCCP Releases Mandatory Annual AAP Certifications

On September 11, 2020, the Office of Federal Contract Compliance Programs (OFCCP) released a list of nearly 900 federal supply and service contractors and subco

OFCCP Issues New List of Advance Audit Notices

On August 3, 2020, President Trump signed an Executive Order aimed at limiting the use of foreign workers on federal contracts and subcontracts. The issuance of the Executive Order comes on the heels of the Tennessee Valley Authority, a federally owned utility, announcing plans to outsource 20% of its technology jobs overseas.The Executive Order has two main components:<ul><li>Executive Agency Review of Contractor Hiring Practices: The Executive Order instructs the heads of executive agencies to assess whether government contractors and subcontractors used temporary foreign labor for contracts performed in the United States or moved the performance of contracts to foreign countries in fiscal years 2018 and 2019. As part of this assessment, the Executive Order requires heads of executive agencies to evaluate any negative impacts on U.S. workers, the economy, or national security caused by federal contractors using temporary foreign labor on their contracts or offshoring work. The heads of the executive agencies must submit a report to the Office of Management and Budget within 120 days of the Executive Order summarizing the results of their review and, “if necessary,” recommending actions to address the use of foreign labor.</li><li>Protect U.S. Workers: The Executive Order directs the Secretaries of Labor and Homeland Security to take action, “as appropriate and consistent with applicable law,” to protect U.S. workers from any adverse effects on their wages and working conditions caused by U.S. companies employing H-1B visa holders, including ensuring that employers of H-1B visa holders adhere to the requirements of section 212(n)(1) of the Immigration and Nationality Act (<a href="https://uscode.house.gov/view.xhtml?req=(title:8%20section:1182">8 U.S.C. 1182(n)(1)</a>). It is unclear what specific actions, if any, these agencies may take in response to this Executive Order. Given that contractors must submit certified materials to the U.S. Department of Labor assessing these types of impacts before they receive authorization to hire H-1B visa workers, it is possible that these agencies may increase their investigations of contractors’ certified materials to determine if they are compliant or still remain viable.</li></ul>While the Executive Order has no immediate impacts on contractors’ use of foreign workers on federal contracts, contractors should keep an eye on this development and review their practices and usage of foreign workers. With the current high unemployment rate due to COVID-19, the rationales contractors may have used to support their engagement of H-1B visa holders may no longer be applicable. In addition, contractors that tend to rely on H-1B visa workers, such as companies in the technology industry, should consider how this Executive Order may impact their ability to staff and perform their federal contracts. The implementation of the order could also affect awards of federal contracts and subcontracts to contractors that rely heavily on foreign workers.The upcoming election could also impact the outcome of the Executive Order. If President Trump is reelected, the government will likely take further actions to limit the use of foreign labor on federal contracts. If there is a change in administration, however, this Executive Order, along with many of the other executive orders aimed at limiting the use of foreign labor, could be rescinded.

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Associate

Tori Dalcourt Angle is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.
Tori advises clients on various government contract matters, including both pre

Victoria Dalcourt Angle

Victoria Angle

Executive Order Seeks to Limit the Use of Foreign Workers on Federal Contracts

On August 3, 2020, President Trump signed an Executive Order aimed at limiting the use of foreign workers on federal contracts and subcontracts. The issuance of

Executive Order Seeks to Limit the Use of Foreign Workers on Federal Contracts

As the number of reported cases of COVID-19 continues to increase dramatically, several states, including California, Connecticut, Illinois, Massachusetts, Maryland, New York, New Jersey, Ohio, and Louisiana, have issued public health orders requiring over one-fourth of Americans to stay at home.  More states are likely to follow.  While these orders generally require non-essential businesses, such as bars and restaurants, to close their doors, many other businesses, including those deemed essential and critical infrastructure, are exempt from these public orders.  Moreover, companies providing medical and other supplies under a “rated order” to the government may be required to continue operations under the Defense Production Act (DPA).  Although telework may be an option for some employers who can remain open, remote work is not possible for workers at many of these companies.Read more on <a rel="noopener noreferrer" target="_blank" href="https://elc.mofo.com/topics/considerations-for-requiring-employees-to-work-in-light-of-covid-19.html">MoFo’s Employment Commentary Blog</a>.

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Practical Considerations for Requiring Employees to Report to Work in Light of COVID-19 Stay-At-Home Orders

Updated Coronavirus (COVID-19) Guidelines For Employers

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As the number of reported cases of COVID-19 continues to increase dramatically, several states, including California, Connecticut, Illinois, Massachusetts, Mary

Practical Considerations for Requiring Employees to Report to Work in Light of COVID-19 Stay-At-Home Orders

On March 17, 2020, the Office of Federal Contract Compliance Programs (“OFCCP” or the “Agency”) issued a <a href="https://www.dol.gov/sites/dolgov/files/OFCCP/National-Interest-Exemption-Memo-Coronavirus-Relief-Efforts.pdf">National Interest Exemption memorandum</a> providing a limited, three-month exemption to new supply and service and construction contracts entered into specifically to provide Coronavirus relief.  The exemption waives some of the affirmative action requirements typically included in government contracts.The exemption, which will be in effect from March 17, 2020, to June 17, 2020, suspends certain obligations in FAR 52.222-26, Equal Opportunity, FAR 52.222-35, Equal Opportunity for Veterans, and FAR 52.222-36, Equal Opportunity for Workers with Disabilities, including requirements related to:<ul><li>Creating affirmative action plans and outreach and recruitment efforts;</li><li>Posting various notices required by EEO laws;</li><li>Including the EEO statement in job postings;</li><li>Providing notices to union reps; and</li><li>Filing EEO-1 reports for contractors with less than 100 employees.</li></ul>The exemption, however, does not apply to non-discrimination and non-retaliation obligations under OFCCP’s laws, including taking adverse action against employees or applicants because they inquire about, discuss, or disclose their compensation.<a name="_ftnref1" href="#_ftn1">[1]</a>This narrow exemption only applies to new federal contracts entered into specifically to provide Coronavirus relief.  As OFCCP’s FAQs explain, “[c]ontractors that hold contracts unrelated to coronavirus relief, and thus were already required to comply with the affirmative action requirements of laws enforced by OFCCP, must continue to do so.”  This exemption, however, may entice companies who currently do not have covered contracts to bid on short-term relief contracts without having to comply with some of the more significant affirmative action obligations.<a name="_ftn1" href="#_ftnref1">[1]</a> The laws that OFCCP administers prohibits discrimination based on race, color, religion, sex, sexual orientation, gender identity, national origin, disability, and protected veteran status.

OFCCP Issues National Interest Exemption for New Coronavirus Relief Contracts

On March 17, 2020, the Office of Federal Contract Compliance Programs (“OFCCP” or the “Agency”) issued a National Interest Exemption memorandum providing a limi

OFCCP Issues National Interest Exemption for New Coronavirus Relief Contracts

On March 11, 2020, the World Health Organization officially declared the worldwide outbreak of the novel coronavirus, COVID-19, a pandemic. As the ripple effects from COVID-19 continue to grow, employers are increasingly facing difficult questions about how to address temporary workplace closures as well as possible furloughs and reductions in force due to the looming economic impact of the spreading pandemic. When addressing these challenging issues, employers must be mindful not to inadvertently create wage and hour liabilities, fail to provide legally required notices to employees, or unilaterally change working conditions for unionized workers without bargaining with their union reps.Read more on our <a rel="noopener noreferrer" target="_blank" href="https://elc.mofo.com/topics/Coronavirus_COVID-19_for_Employers_Leaves_Furloughs_and_the_WARN_Act.html">Employment Law Commentary blog</a>.

Coronavirus (COVID-19) for Employers: Leaves, Furloughs, and the Warn Act

On March 11, 2020, the World Health Organization officially declared the worldwide outbreak of the novel coronavirus, COVID-19, a pandemic. As the ripple effect

Coronavirus (COVID-19) for Employers: Leaves, Furloughs, and the Warn Act

As the novel coronavirus, COVID-19, invades more and more of everyday life, the chance it will affect government contracts and government contractors becomes more and more likely. These effects might include workforce reductions from those out sick, travel restrictions, base closures, or telework.  Indeed, as reported earlier this week in <a rel="noopener noreferrer" target="_blank" href="https://www.nationaldefensemagazine.org/articles/2020/3/2/coronavirus-threatens-defense-supply-chain">National Defense magazine</a>, Representative Mac Thornberry recently predicted COVID-19 would threaten the defense supply chain as a result of the quarantine efforts and work stoppages in China.  Whether such supply chain issues come from components manufactured in China, South Korea, Europe, or the United States, the effects are likely to be felt all the same.What, then, must government contractors know?Excusable Delays and Schedule ExtensionsContractors should keep in mind the various excusable delay provisions contained in the FAR.  For example, FAR 52.249-14, which covers excusable delays for cost reimbursement contracts, states that a Contractor shall not be in default as a result of “causes beyond the control and without the fault or negligence of the Contractor.”  Listed among the examples of such causes is “epidemics” as well as “quarantine restrictions.” FAR 52.249-14(a)(5) & (6).  This protection also extends to failures on the part of subcontractors so long as the cause of the failure is beyond the control of both the Contractor and subcontractor and the Contractor did not fail with an order by the Contracting Officer to purchase the effected supplies or services from another source.  FAR 52.249-14(b).  Any excusable delay should result in an amendment to the schedule to take into account the delay; if it does not, the Contractor may be able to recover its increased costs of performing to the original schedule by submitting a constructive acceleration claim.For fixed price contracts, the FAR likewise provides that excusable delays prohibit the government from terminating the contract for default.  For example, under FAR 52.249-8(c) and (d), if the cause of the failure to perform is beyond the control and without the fault of the Contractor or a subcontractor (including, again, for epidemics and quarantine restrictions), the Contractor cannot be liable for any excess costs.  Moreover, subsection (g) of this clause explains that in the event of an excusable delay, any termination that is issued will be converted to a termination for convenience.  Given the worldwide spread of COVID-19, of course, Contracting Officers will likely be more amenable to adjusting the contract schedule rather than attempting to start anew with a different contractor.Contractors would be well-advised to keep in close communication with their contracting officers about any potential threats to their workforce or their supply chains as a result of COVID-19 to ensure that issues such as schedule adjustments can be negotiated early in the process, rather than waiting until there is a failure to perform.Price Adjustments for Stop Work or Government-Created DelayNotably, although the excusable delay provisions allow for a schedule adjustment, they do not provide for an adjustment to price (except, as noted, in the case of a constructive acceleration, where no schedule adjustment is provided).  Where contractors may be able to seek a price adjustment would be in the context of a government-issued stop work order or as a result of a government-caused delay.  For example, if base closures or travel restrictions result in a stop work order from the government, contractors may be able to seek an equitable remedy under the FAR’s stop work order provision.  FAR 52.242-15.  If the government creates delay through a base closure or travel restriction and does not issue a stop work order, the contractor may be entitled to a schedule adjustment for its excusable delay, as described above, or potentially a price adjustment for constructive acceleration if no schedule relief is provided.  The same would be true if, for example, government personnel becoming sick delays inspection or testing.  And although government-caused delays unavoidably stemming from COVID-19 do not, without a refusal to provide schedule relief, by themselves entitle a contractor to a price adjustment, if those delays become unreasonable in length, the contractor may seek compensation under the FAR’s Government Delay of Work clause.  FAR 52.242-17.Under these circumstances, contractors should carefully track any additional costs or any delays caused by the government delay or stop work order and be prepared to provide these to the Contracting Officer as part of a future request for equitable adjustment.Prioritization of DoD NeedsFinally, Contractors should keep in mind the potential use for rated orders under the Defense Priorities and Allocation System (“DPAS”).  The DPAS is a system of rating and assigning precedence to orders in tiers to ensure the Department of Defense’s most critical needs are prioritized as necessary to meet required delivery dates.  See 15 C.F.R. § 700.3; FAR 52.211-15. If a contractor that has both commercial and government contracts is performing DPAS-rated orders, the government could ask the contractor to fill the government’s orders first, potentially affecting the contractor’s ability to fulfill its commercial contracts. The government may also allow contractors a right to claim priority for materials or components that may be in short supply as a result of downstream supply chain issues.ConclusionWe likely have only seen the beginning of COVID-19’s effects on the global economy generally and U.S. government contracting specifically.  As in all cases, emergency situations in particular, the best course of action is to keep calm, ensure your program and contracts personnel communicate frequently and comprehensively with their counterparts in the government, and know your rights (and obligations) when it comes to delays, adjustments to contract price or schedule, and defense-related priorities.

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

Locke Bell

Coronavirus (COVID-19) Update: Keep Calm, Wash Your Hands, and Know Your Rights

As the novel coronavirus, COVID-19, invades more and more of everyday life, the chance it will affect government contracts and government contractors becomes mo

Coronavirus (COVID-19) Update: Keep Calm, Wash Your Hands, and Know Your Rights

On October 31, 2019, the Trump Administration revoked <a href="https://www.govinfo.gov/content/pkg/DCPD-200900039/pdf/DCPD-200900039.pdf">Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts</a> (“EO 13495”), removing the requirement for federal service contractors to offer employment to employees of predecessor contractors.Issued by President Obama on January 30, 2009, EO 13495 required federal contractors awarded contracts covered by the McNamara-O’Hara Service Contract Act (“SCA”) to offer employees working under predecessor contracts “a right of first refusal of employment,” with some limited exceptions.  EO 13495 only applied to successor contracts where the work would be performed at the same location on the same contract.  Successor contractors were generally restricted from hiring new employees to work on a recently awarded service contract until provided job offers to qualified employees of the predecessor contractor and kept those open for at least ten days.  EO 13495 also required contractors to provide employees with a workplace notice informing them o their rights or with notices delivered to the employees individually.Although many anticipated that EO 13495 would be promptly rescinded after President Trump was elected, it surprisingly took three years for the Trump administration to rescind it. The new order requires the government to promptly remove all “orders, rules, regulations, guidelines, programs, or policies implementing or enforcing Executive Order 13495,” and it halts all existing investigations or compliance actions based on EO 13495.Practical ImplicationsThe revocation of EO 13495 is a welcome development for federal service contractors as it gives them more flexibility to select employees to work on their service contracts.  In practice, even before EO 13495, successor service contractors usually hired many, if not all, predecessor employees because it allowed for a smoother transition and retained experienced workers with prior training and familiarity with government personnel, facilities, and contract requirements.Many contractors, however, found EO 13495 unnecessarily burdensome because it tied their hands in hiring predecessor employees, and often pressured contractors to offer jobs to employees who were largely unqualified or may have been partially responsible for the predecessor losing the contract.   With the removal of EO 13495, contractors once again have the option to choose which predecessor employees to retain.  It also frees contractors from having to post or provide notices required by the order.Predecessor contractors also now have more ability to enforce noncompetition agreements for employees seeking to go to successors who are competitors, assuming they still are valid under applicable law.  In some instances, employees moving to successor contractors used EO 13495 to argue that noncompetition agreements were unenforceable since it contravened the public policy under EO 13495.This change also reduces the risk of having to accept a predecessor’s collective bargain agreement.   Because EO 13495 required successors to offer jobs to predecessor employees, it made it easier for unions representing predecessor employees to contend that the successor was automatically bound by the collective bargaining contracts as perfectly clear successors under labor law.

In a Long-Anticipated Move, the Trump Administration Revokes Executive Order 13495, Giving Service Contractors More Flexibility when Hiring Predecessor Contractor Employees

On October 31, 2019, the Trump Administration revoked Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts (“EO 13495”), removing

In a Long-Anticipated Move, the Trump Administration Revokes Executive Order 13495, Giving Service Contractors More Flexibility when Hiring Predecessor Contractor Employees

On March 25, 2019, the Office of Federal Contract Compliance Programs (OFCCP) <a href="https://www.dol.gov/ofccp/scheduling/index.html">published the list of contractors</a> that are scheduled to receive Corporate Scheduling Announcement Letters (CSALs).  CSALs are courtesy letters OFCCP sends to contractors to alert them that one or more of their establishments will likely be scheduled for an OFCCP audit in the coming months.  The list published by OFCCP informs contractors of the facilities to be reviewed, as well as the type of review.  Of the 3,500 establishments listed (about 1,200 unique companies), 2,345 Contractors were selected for an establishment review, 500 contractors for a compliance check, another 500 contractors for a 503 review, 83 contractors for a Corporate Management Compliance Evaluation (CMCE) review, and 72 contractors for a Functional Affirmative Action Program (FAAP) review.  Contractors not identified on the list can still be selected for an audit.CSALs give contractors a good opportunity to review their practices and prepare for an audit. We previously discussed some proactive steps contractors can take if they receive a CSAL.

OFCCP Announces FY2019 Audits

On March 25, 2019, the Office of Federal Contract Compliance Programs (OFCCP) published the list of contractors that are scheduled to receive Corporate Scheduli

OFCCP Announces FY2019 Audits

Editor’s Note: What’s old seems to be new again. We wrote the below post 11 months ago. Though the date has now changed from January 19 to December 21, the information is pertinent once again for contractors wondering what to do in the event of a government shutdown affecting your customer agencies.As Congress and the Administration appear to be careening toward a potential government shutdown – whether on Friday January 19 or once another short-term continuing resolution expires – it is a good time for government contractors to review their contracts and the potential effect a shutdown might have.The Antideficiency Act mandates a partial government shutdown when Congress fails to appropriate annual funds.  In such situations, agencies with a funding gap will be required to shut down all but a narrowly defined set of essential services and operations.  The Act also prohibits the government in such situations from creating new obligations, such as awarding contracts, issuing task orders, exercising options, and making related payments in the absence of a sufficient appropriation legally available for that purpose. Additionally, the Act precludes many government employees from working during government shutdowns. However, there are exceptions for “essential” work and personnel.In the event of a shutdown, the likely impact on contractors will largely depend upon the length of the shutdown and the nature of a company’s contracts with the government. The least-impacted contracts are likely to be those that are fully funded, require minimal government supervision, and are unaffected by facility closures.  In contrast, the most-impacted contracts are likely to be incrementally funded contracts for nonessential services, particularly where potentially furloughed government personnel or access to closed government facilities are necessary for the contractor to perform.  A shutdown is also likely to affect the time of payment for work being performed on a contract as well as lead to potential contract schedule disruption and delays in procurement of new contracts.Right to Payment Under Existing ContractsOne of the first questions contractors may have is whether they will have a right to be paid for continued work under existing contracts.  This question largely depends on the type of contract and whether it has been fully funded.  All cost-reimbursable contracts should contain either a limitation of funds or limitation of costs clause.  These clauses are based on the basic assumption that the contractor should continue work that is adequately funded and should discontinue work that is not adequately funded.  If a contractor continues to work even though funding has not been added to the contract to cover such continued work, the contractor does so at its own risk, regardless of the reason for the lack of funding.  Even after a budget crisis is over, the Government is not required – morally, legally, or contractually – to add funds to the contract to retroactively cover work done in the absence of funding.On the other hand, the Government cannot require continued performance after funding limits have been reached.  While it may not be cost-effective – for the Government – for the contractor to stop work during a funding lapse, it is the only safe course for contractors.  These rules, covering funding lapses in individual contracts, apply with equal or greater force when the funding lapses are caused by government shutdowns.In contrast to cost-reimbursable contracts, fixed-price contracts normally are fully funded at the time of award.  That means that funding concerns should not interfere with payment.  According to DoD’s contingency plan for 2015, contractors “performing under a fully funded contract (or contract option) that was awarded prior to the expiration of appropriations may continue to provide contract services, whether in support of excepted activities or not.”  Memorandum from Deputy Secretary of Defense dated September 25, 2015, “Guidance for Continuation of Operations During a Lapse of Appropriations.”  However, no contract options can be exercised, and no orders can be issued, and funding increments cannot be added, unless the contract is to support an excepted activity, e.g.,  military operations; recruiting activities; command, control, communications, computer, intelligence, surveillance, and reconnaissance activities required to support national or military requirements necessary for national security; activities to carry out or enforce treaties; emergency repair and non-deferrable maintenance for utilities; control of hazardous materials; foreign humanitarian assistance; activities to protect military personnel or property; etc.  Although this 2015 guidance may not be applicable to a 2017 shutdown, a link to it (as well as many other sets of guidance from 2015) is currently posted on OMB’s website (<a href="https://www.whitehouse.gov/omb/information-for-agencies/Agency-Contingency-Plans" dirty="true">https://www.whitehouse.gov/omb/information-for-agencies/Agency-Contingency-Plans</a>).Effect on Time of PaymentEven where a contractor may have a right to get paid for continuing work for a shutdown, that right is only for the contractor to get paid eventually.  During and even immediately after the shutdown, the Government may not be able to make timely payments for work that is performed.  Contractors should therefore expect and prepare for delays in payment caused by a shutdown.  This is especially important given that payment delays do not ordinarily excuse performance.  Some businesses whose continued survival is dependent upon prompt payment may be entitled to use payment delays as excuses, but most companies will have to continue performance of funded operations even though they encounter payment delays.Schedule and Price Adjustments for DelaysShutdown-related government actions, or failures to act, that cause delays to contractor operations should give rise to a right to an equitable adjustment in the contract schedule.  While a shutdown is likely a sovereign act, as discussed below, that will provide a defense to a claim for money, not to a claim for additional time to perform or a challenge to a wrongful default termination.Even if funds are available to continue performance, lack of government personnel could impact performance.  For example, if government inspectors must approve first article testing before the contractor is authorized to start production, then the absence of government inspectors can effectively slow or stop performance.  Similarly, if the contractor is unable to proceed without government direction, and such direction is not forthcoming, the contractor may have to delay performance until it receives such direction.Contractors may be able to use advance planning to lessen the effects of a shutdown in such situations.  If the contractor can continue to perform without government supervision, on a contract that is fully funded, the contractor cannot use the shutdown as an excuse for non-performance.In contrast to the schedule adjustments, contractors may have a more difficult time claiming any price adjustments as a result of a shutdown because the shutdown is likely to be deemed a sovereign act.  As one Board explained in a shutdown-related case in 2000, the “governmental action’s impact upon specific public contracts is merely incidental to the accomplishment of a broader governmental objective.”  Raytheon STX, Corp. v. Department of Commerce, GSBCA No. 14296-COM, 00-1 BCA ¶ 30,632; see also A-1 Real Estate, Inc., 1997 HUD BCA LEXIS 7, (“the legislative branch’s failure to appropriate funds for certain Federal operations, thereby creating a government shutdown, falls within the ambit of a ‘sovereign act’ having manifest ‘public and general’ application.”).On exception may be if funds are made available to continue government operations at some level, then funding decisions by the agency (to fund some contracts but fail to fund others) may not constitute sovereign acts.  In some cases, contractors can recover where “the funding shortage and work shutdown at issue were not due to any sovereign act by Congress which had not delayed in appropriating funds when so requested by the agency, but rather to the agency’s own decisions in administering the contract.”  Cyrus Contr., Inc., 1998 IBCA LEXIS 9.In addition, if the Contracting Officer takes any contractual action to effectuate, rather than just to communicate, the shutdown, it may be possible to argue that there has been a contractual action or a waiver of sovereign immunity.  The Government can use any of its typical tools to control actions during a shutdown.  These include issuing change orders or terminations for convenience and can delay, suspend, or stop work on contracts.  All of these contractual actions, however, will give rise to the contractor’s right to obtain the remedies specified in the contract.   Thus, contracting officers were warned not to take contractual actions to effectuate the shutdown unless absolutely necessary.Finally, the contracts themselves may also contain provisions constituting an allocation of risk of non-performance, costs, or delays, and those risk-allocation provisions may not be deemed to except the risks of government shutdowns.  A careful review of a contractors major contracts may reveal risk-shifting provisions that could help identify future claims for increased costs.What Should Contractors Do?There are three steps that every government contractor should take to prepare for a possible government shutdown.1. Review Your ContractsFirst, review whether any clauses, special provisions, or other requirements in your contracts will apply during a funding gap or continuing resolution. This includes any obligations to continue working during the period based on the work being designated in the contract as essential to national security.Second, review contracts with an eye toward the amount and type of contract funding. Incrementally funded contracts should contain either the Limitation of Cost clause, FAR 52.232-20, or the Limitation of Funds Clause, FAR 52.232-22, while contracts contingent on future fiscal year funding should contain the Availability of Funds clause, FAR 52.232-18. Reviewing how contracts are funded can give contractors insight into what work is likely to continue, and what is likely to stop, which is valuable for planning purposes (see step two for developing a shutdown contingency plan).Third, check whether your contracts allocate shutdown-related risk to a particular party. Contracts may allocate risk of a shutdown to the government. If such contractual provisions can be identified in a contract, it is possible for contractors to recover the “out-of-pocket expenses” arising from the interruption of contract performance caused by a government shutdown.Fourth, check to see whether any of your contracts set to expire before or shortly after the end of the fiscal year contain an extension or option clause. In such cases, contractors should consider asking for an extension so that renewal does not come due when agency contracting staff are potentially furloughed.2. Develop a Shutdown Contingency PlanStart by reviewing agency shutdown contingency plan guidance.In the unlikely event of a shutdown, agencies will publish contingency plan guidance for the continuation of essential operations in the absence of available appropriations that will contain relevant information for contractors. To plan ahead, contractors can find contingency plan guidance published by agencies from previous years. Plans should address what contractors will do with employees working on contracts that are subject to stop-work orders. In 2013, some contractor employees were laid off, furloughed, or required to use leave or take paid or unpaid time off during the shutdown.  The ability of contract workers to be paid during the shutdown depended upon whether work was allowable based on the terms of the contract that they worked on and the availability of other assignments. Contractors should consider whether workers can be reassigned to other work, made to take vacation, or furloughed. Additionally, contractors should implement a system for notifying employees in the event of a shutdown. Plans should establish a system for documenting all expenses, actions, and communications. In the event of a shutdown, contractors should document all communications, particularly instructions or directions for performance and assurances of payment. As mentioned above, in the event of a government shutdown, it may be possible to recover any resulting “out-of-pocket expenses.” Contractors should carefully record all expenses, including the costs of winding down and resuming contract activities.Plans should address practicalities such as how to ensure access to government buildings if contracted work is deemed “essential.” If work is to continue during a shutdown, contractors should establish a plan in collaboration with government employees on site regarding how contract workers will have access to government facilities should a shutdown take place.3. Communicate with Your Contracting OfficerDuring the government shutdown in 2013, contract management officials who were furloughed could not communicate with contractors to respond to questions.  In anticipation of similar lapses in communication, contractors should reach out to contract officers now. Contractors can take this opportunity to verify important information such as:<ul dirty="true"><li dirty="true">The funding status of your contracts (if it is not clear from the contract documents)</li><li dirty="true">Which facilities will remain open in the event of a shutdown</li><li dirty="true">Whether equipment and/or personnel needed for performance will be available during a shutdown</li><li dirty="true">Whether a contract is subject to any exceptions</li><li dirty="true">What the agency’s plan is with respect to continuing performance in the event of a shutdown</li></ul>While contracting officers may not have the desired information readily available, reaching out to them now to establish a rapport may be beneficial, as you are more likely to be promptly informed of new information as it becomes available.

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Contractors Should Prepare for Potential Shutdown

Five Peculiarities of Protests of Federal Supply Schedule Orders

Editor’s Note: What’s old seems to be new again. We wrote the below post 11 months ago. Though the date has now changed from January 19 to December 21, the info

Contractors Should Prepare for Potential Shutdown