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

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

Tina D. Reynolds

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

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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.

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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

Telesto: Another Call For Clarity In Other Transactions Protest Jurisdiction

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)

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Earlier this month, the Federal Acquisition Regulatory Council (FAR Council) issued an <a href="https://www.federalregister.gov/documents/2024/05/03/2024-08735/federal-acquisition-regulation-prohibition-on-certain-semiconductor-products-and-services" target="_blank">advanced notice of proposed rulemaking (ANPR)</a> to implement parts of Section 5949 of the National Defense Authorization Act (NDAA) for Fiscal Year 2023 designed to impose new restrictions on the sale and use of certain semiconductor technology. Once the relevant Federal Acquisition Regulation (FAR) clause is finalized, it will prohibit government contractors from selling to the U.S. government products and services that incorporate semiconductors produced, designed, or provided by specified Chinese companies and other companies that the U.S. Government considers to be national security threats. Read the full <a href="https://www.mofo.com/resources/insights/240516-key-takeaways-from-the-federal-governments-proposed-rule-banning" target="_blank">client alert</a>.

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

Tina Reynolds

Earlier this month, the Federal Acquisition Regulatory Council (FAR Council) issued an advanced notice of proposed rulemaking (ANPR) to implement parts of Section 5949 of the National Defense Authorization Act (NDAA) for Fiscal Year 2023 designed to impose new restrictions on the sale and use of certain semiconductor technology.

Key Takeaways from the Federal Government’s Proposed Rule Banning Certain Chinese-Origin Semiconductor Technology

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.

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GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

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

This week, U.S. Senator Mark Warner (D-VA), chair of the Senate Intelligence Committee, and a broad group of bipartisan co-sponsors, introduced legislation that would require government agencies, contractors, and operators of critical infrastructure to report cyber incidents to the U.S. Cybersecurity and Infrastructure Security Agency (CISA) within 24 hours. The bill is a response to incidents like the SolarWinds and Colonial Pipeline hacks, which have put a fresh spotlight on the national security implications of cyber incidents and the need for greater information sharing. It expands on efforts by the Biden administration, such as the Executive Order on Improving the Nation’s Cybersecurity, to implement more expansive cyber breach notification requirements for entities that do business with the federal government. The bill, known as the Cyber Incident Notification Act of 2021, which has been previewed in the press for some time, has broad bipartisan and industry support and a strong chance of being enacted by Congress.Read the <a rel="noopener" target="_blank" href="https://www.mofo.com/resources/insights/210723-mandatory-cyber-breach-notification-bill.html">full client alert</a>.

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U.S. Congress Introduces Bill that Would Require Mandatory 24 Hour Cyber Breach Notification for Government Agencies, Contractors, and Operators of Critical Infrastructure

U.S. Congress Introduces Bill that Would Require Mandatory 24 Hour Cyber Breach Notification for Government Agencies, Contractors, and Operators of Critical Infrastructure

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This week, U.S. Senator Mark Warner (D-VA), chair of the Senate Intelligence Committee, and a broad group of bipartisan co-sponsors, introduced legislation that

Section 818 of the National Defense Authorization Act for Fiscal Year 2018 (FY 2018 NDAA) ushered in enhanced post-award debriefing requirements for covered Department of Defense (DOD) procurements. DOD formally implemented part of those requirements in 2018 in <a rel="noopener noreferrer" target="_blank" href="https://www.acq.osd.mil/dpap/policy/policyvault/USA000563-18-DPAP.pdf">Class Deviation 2018-O0011</a>, which required DOD agencies to give debriefed offerors two business days in which to pose written questions on the debriefing, and required agencies to respond to those questions within five further business days. Under the statute and the class deviation, if an offeror submits timely post-debriefing questions, the protest clock does not begin to run until the agency has responded to those questions. We’ve discussed those timelines here before.On May 20, 2021, <a rel="noopener noreferrer" target="_blank" href="https://www.govinfo.gov/content/pkg/FR-2021-05-20/pdf/2021-10581.pdf">DOD published a proposed rule</a> to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to enshrine the changes already contained in the existing class deviation and to implement the remaining enhanced debriefing rights set forth in the FY 2018 NDAA. The statute anticipated that these regulations would have been implemented within six months of enactment of the statute – but better late than never. Because many DOD agencies have proactively been doing these things already, many DOD offerors will notice few, if any, practical changes once the new rule is finalized.Key features of the proposed rule are:<ul><li>Codification of the current class deviation’s post-debriefing question-and-answer period, with a clear explanation of the timelines that apply for purposes of protests and stays of contract performance.</li><li> A new regulation and solicitation provision clarifying that, when timely requested, a written or oral debriefing is required for all DOD contracts, including commercial-item (and commercial-off-the-shelf item) acquisitions, valued at $10 million or more.</li><li>A new clause for multiple-award contracts, guaranteeing contract holders the same enhanced debriefing rights for task order competitions where the task order is valued at $10 million or more.</li><li>For contracts valued at more than $100 million, the debriefing information must include the disclosure of an appropriately redacted written source selection decision document.</li><li>For offerors that are small businesses or nontraditional defense contractors, the contracting officer must provide the redacted source selection decision document, upon request, even in procurements valued at between $10 million and $100 million. As proposed, this requirement appears to apply only when the contract itself is awarded to another small business or nontraditional defense contractor.</li></ul>These changes all derive from the FY 2018 NDAA, and many DOD agencies are already doing these things. It bears repeating that agencies are free to, and some already do, provide even more robust debriefings than these regulations and the NDAA would require. Other best practices include providing an appropriately redacted source selection decision document even in acquisitions below the $100 million threshold, providing offerors with copies of the evaluation reports for their own proposals, and holding the debriefing open for questions and answers in some acquisitions valued at less than $10 million, as well as in pre-award debriefings. And, although these regulations will apply only to DOD, civilian agencies are free to adopt them as well, either on a one-off basis, through internal policy, or by amendment of their own FAR supplements. It remains to be seen whether Congress or the FAR Councils eventually roll out these DOD requirements to agencies governmentwide.As <a rel="noopener noreferrer" target="_blank" href="https://business.defense.gov/Portals/57/OFPP%20Myth-busting%203%20-%20Further%20Improving%20Industry%20Communication%20with%20Effe.._.pdf?ver=2017-12-05-152530-177&timestamp=1512506152466">the Office for Federal Procurement Policy has emphasized,</a> and as experience bears out, greater transparency promotes better acquisitions. It also reduces the risk of an unsuccessful offeror filing an unnecessary protest because the agency has deprived it of any basis for concluding that a procurement was fair. More transparent debriefings also help agencies catch and correct procurement errors before a protest has to be filed. All of this contributes to a more efficient and equitable public procurement process.Comments on the proposed rule are due by July 19, 2021.

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

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DOD Proposes Enhanced Debriefing Regulations

DOD Proposes Enhanced Debriefing Regulations

Section 818 of the National Defense Authorization Act for Fiscal Year 2018 (FY 2018 NDAA) ushered in enhanced post-award debriefing requirements for covered Dep

On 29 April 2021, there was a significant development in the evolving European national security landscape, when the National Security and Investment Act (the “Act”) was granted Royal Assent and passed into law in the United Kingdom.Originally published in November 2020, the Act represents one of the biggest shake-ups of the UK’s investment screening regime in 20 years, enhancing the UK government’s powers to investigate and intervene in foreign direct investment, including through a new mandatory filing regime for transactions in “key sectors.” While aligning the UK’s approach to foreign investment screening more closely with its partners in the United States and the European Union, the Act also reflects a broader trend toward protection of the UK’s national security, and is likely to be followed by reforms to the Official Secrets Acts and the introduction of a UK version of the U.S. Foreign Agents Registration Act (FARA) in the coming months.The Act made it through parliament largely unscathed, with the most significant change being raising the control threshold in relation to notifiable acquisitions under the mandatory regime to more than 25% of the shares or voting rights in a relevant entity. While this should result in fewer transactions being caught by the mandatory regime, a filing may still be triggered where an investor is able to secure or prevent the passage of any class of resolution governing the affairs of a relevant entity, and the UK government will still be able to “call-in” transactions for review where “material influence” is acquired.The new regime that sits behind the Act has not yet commenced, and is not expected to do so until late 2021. This gap period is the result of the need for additional guidance on the regime and its scope, as well as secondary legislation to address more practical aspects relating to its operation. Commentators and advisers will be on the lookout for developments in the coming months, including any further changes to the definitions of the key sectors (the UK government published its consultation response in early March 2021 <a href="https://www.gov.uk/government/consultations/national-security-and-investment-mandatory-notification-sectors" target="_blank" rel="noopener">National security and investment: mandatory notification sectors – GOV.UK (www.gov.uk)</a>), and the final statement of policy intent which is designed to provide guidance regarding the new “call-in” power that impacts transactions falling outside the scope of the mandatory regime.While we wait for the new regime to commence, investors should be mindful that it will have retrospective effect, with the UK government having the ability to use the “call-in” power in respect of transactions closing on or after 12 November 2020.For further information, please refer to our <a href="https://www.mofo.com/resources/insights/201116-foreign-direct-investment.html">original Client Alert of November 2020</a>.

SoftBank

Uber

Arm Holdings plc

Axalta Coating Systems

Vonage Holdings

Infobip

Verdane

Ally Bridge Group

SoundCloud

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Stuart Alford is a partner based in the Corporate Group. Stuart’s practice focuses on mergers and acquisitions, private equity investments, joint ventures, reorganizations and general corporate advisory matters. 











Stuart Alford

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National Security and Investment Act Receives Royal Assent

National Security and Investment Act Receives Royal Assent

On 29 April 2021, there was a significant development in the evolving European national security landscape, when the National Security and Investment Act (the “

After much anticipation and hints, the U.S. Government announced a series of measures to respond to recent Russian actions against the United States, including the SolarWinds intrusion campaign. The measures underscore that companies are not in a position and should not be left to defend against nation state actors on their own, and that the U.S. Government will take steps to impose consequences and change the norms to make clear that widespread and costly intrusions on private companies are unacceptable. The initial actions taken by the U.S. Government include:<ul><li>imposing new sanctions against Russian entities,</li><li>attributing the SolarWinds compromise to the Russian Foreign Intelligence Service (SVR), and</li><li>issuing a pair of interagency reports that provide detailed technical information about the tools and methods Russian hackers used to exploit victim networks.</li></ul>Read our <a rel="noopener" target="_blank" href="https://www.mofo.com/resources/insights/210419-us-government-responds-solarwinds-hack.html">client alert.</a>

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Few lawyers in the world have Miriam’s breadth and understanding of privacy and data security laws, obligations, and practices.

Few lawyers in the world have Miriam Wugmeister’s breadth and understanding of privacy and data security laws, obligations, and practices. 

Miriam H. Wugmeister | Privacy and Data Security Lawyer

Few lawyers in the world have Miriam Wugmeister's breadth and understanding of privacy and data security laws, obligations, and practices. In the words of her clients, she is “extremely practical and phenomenally smart. Just about one of the best privacy advisers there is” (Chambers USA). Co-chair of Morrison & Foerster’s market-leading Global Privacy and Data Security Group and ranked among the top in the profession by all major directories, Ms. Wugmeister is regularly called upon by some of the world’s largest and most complex multinational organizations to confront their most difficult U.S. and international privacy challenges. “Tremendous at helping you come up with practical solutions to real problems” (Chambers USA), she develops cutting-edge solutions for clients that marry legal compliance with business realities.

Miriam Wugmeister

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Brandon L. Van Grack co-chairs Morrison Foerster’s National Security and Crisis Management groups. 

Brandon Van Grack

Brandon Van Grack - National Security Lawyer

Brandon L. Van Grack

U.S. Government Responds to SolarWinds Hack, Seeks to Establish New Norms for Cyber Espionage

After much anticipation and hints, the U.S. Government announced a series of measures to respond to recent Russian actions against the United States, including 

U.S. Government Responds to SolarWinds Hack, Seeks to Establish New Norms for Cyber Espionage

Both houses of Congress now have voted to pass the National Defense Authorization Act (NDAA) for Fiscal Year 2021.  Although the threat of a presidential veto still hangs over the NDAA, we highlight below a few of the procurement-related provisions that likely will remain once the NDAA is enacted and will be of wide interest to federal contractors.  Note that many of these new statutory provisions will require implementation through notice-and-comment rulemaking before they are likely to have any practical effect on contractors.Our colleagues in MoFo’s National Security group have compiled <a href="https://www.mofo.com/resources/insights/201214-defense-bill-sanctions.html" target="_blank" rel="noopener noreferrer">their own summary</a>, which analyzes a host of sanctions and related measures, including sanctions targeting Turkey’s purchase of a Russian air defense missile system, Russian energy export pipelines, and Chinese Military Companies and other activities in the United States. We encourage you to read it, as well, and to engage with our National Security group should you have any follow up questions.And stay tuned for further summaries and alerts on other important topics in the NDAA, including cybersecurity.DATA RIGHTSSection 804 of the NDAA calls for incremental, seemingly modest changes that may have significant long-term effects.  Principally, Congress enhanced its support for the Modular Open Systems Approach (MOSA), a longstanding “plug-and-play” initiative within the Department of Defense (DOD) that seeks to break down weapons systems into modules that readily may be rearranged, interchanged, or replaced throughout a system’s lifecycle.  A key component of this modularity goal is ensuring that the Government has data rights sufficient to facilitate the rearrangement and replacement of parts.  To that end, Congress has in past NDAAs authorized DOD to assert government purpose rights in data related to interfaces between modules in major weapons systems, even if developed at private expense.  Section 804 extends these rights to interfaces in all “modular” weapons systems and directs DOD eventually to expand them to cover software-based non-weapon systems as well, including business systems and cybersecurity systems.Section 1833 reorganizes the primary DOD data rights statutes, currently at 10 U.S.C. §§ 2320 and 2321, into a series of new, substantively identical statutes at 10 U.S.C. §§ 3771-75, 3781-86, and 3791-94.  The Conference Report suggests this reorganization “sets the conditions for future reform,” but was undertaken “with a commitment to the principle that a restructuring not result in policy changes.”  Still, Congress’ proposed titles for some of the new statutes telegraph reforms on the way.  For example, one of the new statutes, 10 U.S.C. § 3792, is titled “Technical data rights: non-FAR agreements,” suggesting a data rights statute for other transactions (OTs) may be in our near future.CONTRACTOR BUSINESS SYSTEMSIt has been a decade since the 2011 NDAA called for a greater focus on the adequacy of defense contractors’ business systems, and nearly as long since DOD added the Business Systems regulations to the Defense Federal Acquisition Regulation Supplement (DFARS).  Subsequent NDAAs have tinkered with those requirements.  Section 806 of the 2021 NDAA returns to that theme, replacing the key term “significant deficiencies” with “material weaknesses.”  The statute defines “material weakness” as “a deficiency or combination of deficiencies in the internal control over information in contractor business systems, such that there is a reasonable possibility that a material misstatement of such information will not be prevented, or detected and corrected, on a timely basis.”  The statute also defines “reasonable possibility” as “probable” or “more than remote but less than likely.”The House Conference Report states that the changed terms and definitions will better align with generally-accepted auditing standards, eliminate “confusion about the seriousness of deficiencies identified in contractor business systems,” and provide for “a more nuanced approach to classifying contractor business system deficiencies according to their severity.”  DOD will be required to update the DFARS to implement these statutory changes.SPACE SYSTEM ACQUISITIONSSection 807 is aimed at accelerating the acquisition process for space-related defense technology systems.  The statute directs the DOD to develop a “pathway” for space systems in DOD’s new Adaptive Acquisition Framework, with the goal of allowing the Government to “quickly and effectively acquire end-to-end space warfighting capabilities needed to address the requirements of the national defense strategy.”  This section calls on DOD to submit a proposed approach, which must also include details on budget line items and governance structures proposed for the U.S. Space Force.  It also authorizes the Secretary of the Air Force to designate a program executive officer as the milestone decision authority for major defense acquisition programs of the Space Force.COMMERCIAL ITEM CONTRACTINGCongress, DOD, and industry have been fighting for years over how to define “commercial items” for defense contracting purposes.  If a purchase is classified a commercial item, it is subject to substantially fewer regulations.  The House version of the NDAA originally contemplated a statutory presumption that any previous commercial product or service determination would apply to future procurements.  Section 816 of the final version of the NDAA lacks that presumption, but it does create a new requirement that contracting officers document commerciality determinations within 30 days after award, and it allows contracting officers to request support from public- and private-sector entities to support those determinations.  These provisions are intended to address the fact that “the Department has failed to fully comply with statutory requirements and internally manage commercial product and commercial service determinations to ensure consistency across the Department.”  Although Congress seems generally in favor of commercial item contracting, it is unclear whether this section will increase, reduce, or leave unchanged DOD’s commitment to the practice.OTHER TRANSACTIONSSection 833 requires DOD to publish and maintain on the System for Award Management (beta.SAM.gov) a list of all consortia DOD uses to announce OT opportunities and solicit OT proposals.  OTs in recent years comprise nearly $8 billion of DOD’s total spending, with an estimated 60 percent of that amount awarded through such consortia.  This provision adds welcome transparency, in contrast to the relatively limited information available to the public and industry today.SOFTWARE DEVELOPMENT AND ACQUISITIONOngoing concerns over ensuring security while encouraging innovation in the development and acquisition of software systems led to the inclusion of Section 835 in the 2021 NDAA.  This section aims to address concerns that software was potentially being developed or produced in adversary nations; that DOD has not yet complied with the 2018 NDAA’s requirements that it pilot the use of open source software where possible as a cost-saving mechanism; and that DOD does not have a uniform security-enhancing process for reviewing software code.  Again looking to DOD’s adaptive acquisition framework, the 2021 NDAA directs the Under Secretary of Defense for Acquisition and Sustainment to create a “software pathway” that will allow software to be delivered securely and in a timely manner.SUPPLY OF STRATEGIC AND CRITICAL MATERIALSThe recent heightened focus on domestic content preferences is reflected in numerous provisions of the 2021 NDAA, although Congress has chosen not to adopt some of the stricter domestic-preference measures that were under consideration.  Among these provisions, Section 848 sets out an order of preference for the acquisition of such materials, preferring sources within the United States first, then sources within the national technology and industrial base, then other sources as appropriate.  Section 851 directs DOD to issue a report to Congress on supply chain partnerships, vulnerabilities, and security measures related to the acquisition of rare earth minerals and metals.  Section 852 rejects an earlier proposal for strict domestic sourcing requirements for aluminum and instead calls on DOD to report to Congress on the viability of incentives to increase domestic aluminum production.Section 849 requires DOD to perform analyses of domestic or friendly-nation sourcing alternatives for strategic materials to minimize vulnerabilities and international reliance in supply chains for defense technologies, pharmaceuticals, and other key areas.  And, under Section 850, DOD must develop recommendations for further strengthening the manufacturing and defense industrial base and the resilience of supply chains.SMALL BUSINESS ITEMS OF NOTESection 862 of the NDAA transfers the responsibility for verifying Veteran Owned Small Business status and Service Disabled Veteran Owned Small Business (SDVOSB) status from the Department of Veterans Affairs to the Small Business Administration (SBA).  As part of this centralization and simplification, the NDAA also calls for phasing out the current system of SDVOSB self-certifications in favor of formal SDVOSB certifications to be accomplished by the SBA itself.  The process of rolling out regulations and implementing these changes may take upwards of two years to complete.Section 863 alters the timeframe for analyzing a company’s size status under employee-based size standards.  Rather than the average number of employees for the 12 months preceding self-certification of size, the new law will consider the average number of employees over the preceding 24 months.  SBA will have a year to implement this change in regulations.Section 868 further expands the existing statutory requirements for evaluating the past performance of small businesses and calls for new regulations.  The statute calls for agencies to allow a small business offeror to rely upon the past performance of joint ventures to which it belonged if the offeror has no relevant past performance of its own and informs the contracting officer of what the offeror’s duties and responsibilities were within the joint venture.  The statute also calls for regulations to allow a small business offeror to rely upon past performance it gained as a first-tier subcontractor and to require its prime contractor to provide it with its past performance record under that contract.  The SBA will have four months to promulgate implementing regulations.Section 869 directs the SBA to permit any company participating in the 8(a) program “on or before September 9, 2020” to extend its participation in the 8(a) program by an additional year, subject to new regulations that the SBA must issue within 15 days of enactment of the NDAA.BENEFICIAL OWNERSHIP DISCLOSURESConsistent with other sections of the NDAA that require disclosure of beneficial owners in other contexts, Section 885 will require prospective contractors and grantees to disclose beneficial ownership data for inclusion in the Federal Awardee Performance and Integrity Information System database (see FAR 9.104-6).  Beneficial ownership is to be determined in “a manner that is not less stringent than the manner set forth in 17 C.F.R. § 240.13d-3,”  which defines a beneficial owner as “any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (1) Voting power which includes the power to vote, or to direct the voting of, such security; and/or (2) Investment power which includes the power to dispose, or to direct the disposition of, such security.”BID PROTESTSThe 2018 NDAA contained an ambiguous and controversial requirement for DOD to implement a pilot program to determine the effectiveness of requiring some unsuccessful protesters to reimburse DOD for DOD’s cost to defend the protest.  Section 886 of the 2021 NDAA repeals that requirement as unlikely to be of any practical benefit.  The House Conference Report noted both the RAND report on bid protests (which we previously discussed), as well as Professor Christopher Yukins’ fine study on agency-level protests (<a href="https://www.acus.gov/sites/default/files/documents/ACUS%20Agency%20Bid%20Protest%20Report%20-%20FINAL.pdf">available here</a>), and called upon DOD to consider how to obtain the data that the RAND report found to be missing, and to consider Professor Yukins’s recommendations for improving the agency-level protest process.  DOD is to publish a responsive report by September 1, 2021.UNDEFINITIZED CONTRACT ACTION FINANCINGIn recognition of contracting challenges due to COVID-19, Section 891 permits DOD to waive some of the normal restrictions for progress payment financing (including temporarily increasing the permitted payment rate) under Undefinitized Contract Actions.  The NDAA conditions this waiver authority on meeting certain conditions regarding “receipt of progress payments under other contracts, the companies’ efforts to flow cash to subcontractors and suppliers, and other matters, as well as reporting on the use of the waivers and the flow of payments to subcontractors and suppliers.”  The Government Accountability Office will be required to report on the effectiveness of these and related measures by September 30, 2021.*Michaela Thornton contributed to this blog post. Michaela is a full-time law student at The George Washington University Law School and a Law Clerk with Morrison & Foerster’s government contracts practice group.