One of the most challenging years for federal contracting included numerous new laws and regulations. Also note that as this annual summary of key legislative and regulatory updates was prepared, the fiscal year 2022 National Defense Authorization Act was still pending before Congress and is not addressed in this summary. 

By the Government Contracts and Public Policy  & Regulatory Practice Groups at Dentons US LLP

KEY LEGISLATIVE UPDATES

Infrastructure Bill Passes in the Senate
With bipartisan support, the U.S, Sen-ate passed the Infrastructure Investment and Jobs Act (H.R. 3684) with a vote of 69-30 on August 10, 2021. This bill provides $1 trillion for modernization and improvement of the nation’s roads, bridges, airports and rail trans-portation and expansion of broadband internet access, among other projects. 

As of this writing, another vote  in the U.S. House of Representatives was required before the bill could be presented to the president. While the bill is expected to pass the House, majority leadership in the House has tied action on this bill to another $3.5 trillion social policy and climate bill. It is unclear when this other bill will be finalized or whether it will pass both chambers of Congress. A vote on the Infrastructure Investment and Jobs Act remains pending as of this writing. 

False Claims Amendments Act of 2021 Introduced 
In July 2021, Senator Chuck Grassley (R-IA), along with a bipartisan group of co-sponsors, introduced the False Claims Amendments Act of 2021 (S. 2428) to reform the False Claims Act (FCA) making it more difficult to defend against such suits. 

The most significant provision would require FCA defendants to “rebut” a showing that alleged misrepresentations were “material” by the high “clear and convincing evidence” standard.  The proposed legislation would also provide a mechanism by which the government can seek recovery of its expenses from parties for responding to burdensome discovery requests, amend provisions regarding the degree of deference courts should give the government in granting government motions to dismiss qui tam complaints and extend the whistleblower anti-retaliation protections to former employees, not just current employees. 

The bill would make these proposed changes apply retroactively to any pending litigation as well as any future litigation. 

President Signs American Rescue Plan Providing Economic Pandemic Relief 
President Biden signed the $1.9 trillion American Rescue Plan (P.L. 117-7) in March 2021. This law provides substantial economic relief in response to COVID-19 including $400 billion in direct relief in the form of stimulus checks to individuals and households, $350 billion in aid to state and local governments and $125 billion for vaccines, testing and public health. 

The law also extended Section 3610 of the CARES Act until September 30, 2021. Section 3610 allows federal agencies to reimburse contractors for the costs of keeping employees and subcontractors in a standby/ready state, if the employees/subcontractors cannot perform work as usual because an employee is sick, or a worksite is unavailable due to COVID-19. 

The law also provided $10 billion to support the enhanced use of the Defense Production Act of 1950 to obtain critical medical supplies and equipment related to combatting the pandemic and responding to other public health emergencies.

FY 2021 National Defense Authorization Act 
The National Defense Authorization Act (NDAA) for FY 2021 became law (Public Law 116-283) on January 1, 2021, marking the 60th consecutive year the NDAA has passed. 

President Trump vetoed the bill on December 23, 2020, as was widely expected. The president had long threatened to veto the bill if it did not include a repeal of Section 230 of the Communications Decency Act, which prevents social media websites from being held liable for users’ comments. On December 28, 2020, the House voted 322-87 to override the president’s veto. The Senate followed suit and voted 81-13 to override the veto on January 1, 2021. 

Several of the key provisions addressed among other things (i) Foreign Ownership, Control or Influence (Sections 803, 819), (ii) Business Systems and Cost and Pricing Data (Section 806), (iii) Space Acquisition (Section 807), (iv) Payment Provisions (Section 815, 891),(v) Commercial Items (Section 816), (vi) Safeguarding Intellectual Property, Technology and Other Data (Section 837), (vii) Domestic preference and sourcing requirements (Sections 844, 848), (viii) Small Business (Section 862, 863), (ix) Nondisclosure Agreements Related to Waste, Fraud and Abuse (Section 883) and (x) Bid Protests (Section 886).

KEY REGULATORY & EXECUTIVE UPDATES

President Issues Executive Order Requiring COVID Vaccination for Federal Employees
In September 2021, President Biden signed Executive Order (EO) 14043 requiring Coronavirus Disease 2019 Vaccination for Federal Employees. The EO provides that federal employees, including those working remotely, must be fully vaccinated, and show proof of vaccination, by November 22, 2021. Federal contractors will be subject to this mandate once the vaccine requirements are incorporated into their contracts. Certain legal exceptions exist including religion and disability. 

President Issues Executive Order on Increasing the Minimum Wage for Federal Contractors

 In April 2021, President Biden signed the Executive Order on Increasing the Minimum Wage for Federal Contractors to $15.00 per hour for those workers, including disabled workers, working on, or in connection with, a federal government contract effective January 30, 2022. 

The EO intends that the higher minimum wage will enhance worker productivity; generate higher-quality work by boosting workers’ health, morale, and effort; reduce absenteeism and turnover; and lower supervisory and training costs. The EO mandates that agencies shall work to ensure that all new contracts, and extension or renewal of existing contracts, with contractors and covered subcontractors will include clauses that workers be paid the new minimum wage.

The new minimum may increase annually as determined by the Secretary of Labor and the Consumer Price Index for Urban Wage Earners and Clerical Workers. This clause must also be flowed down to lower-tiered subcontractors.

DoD Issues a Proposed Rule to Amend the DFARS to Enhance Post-award Debriefing Rights
The Department of Defense (DoD) issued a proposed rule in May  2021, to amend the DFARS to implement section 818 of the National Defense Authorization Act (NDAA) for FY 2018 (Pub. L. 115-91). The rule intends to enhance post-award debriefing rights for competitive negotiated contracts, task orders and delivery orders that exceed $10 million and to provide offerors the opportunity, upon receiving a post-award debriefing, to submit follow-up questions related to the debriefing and to receive agency responses. 

Specifically, DFARS 215.506 implements new requirements for contracting officers when providing post-award debriefings, stipulating the requirements for information to be provided to successful and unsuccessful offerors. DFARS 233.104(c)(1) notifies contracting officers of the new timeframes for suspension of performance or termination of a contract, task order or delivery order awarded, upon notification of a protest filed within the following time periods, whichever is later:

  • Within 10 days after the date of contract award or the issuance of a task or delivery order, where the value of the order exceeds $25 million.
  • Within five days after the date that is offered to an unsuccessful offeror for a debriefing that is requested, and when requested is required, and the unsuccessful offeror submits no additional questions related to the debriefing.
  • Within five days after the date that is offered to an unsuccessful offeror for a debriefing that is requested, and when requested is required, if the debriefing date offered is not accepted.
  • Within five days, commencing on the day the government delivers its written response to additional questions timely submitted by the unsuccessful offeror, when a requested and required debriefing is held on the date offered.

Executive Order on America’s Supply Chains 
In February 2021, President Biden signed Executive Order 14017, America’s Supply Chains, which is directed toward using the powers and resources of the government to support enhancing the resiliency of U.S. supply chains. 

The EO is intended to address and combat various threats to US supply chains that include “pandemics and other biological threats, cyberattacks, climate shocks and extreme weather events, terrorist attacks, geopolitical and economic competition, and other conditions [that] can reduce critical manufacturing capacity and the availability and integrity of critical goods, products, and services.” 

The EO directs a 100-day supply chain review to be coordinated by the Assistant to the President for National Security Affairs and the Assistant to the President for Economic Policy with heads of appropriate agencies to identify ways to secure U.S. supply chains against a wide range of risks and vulnerabilities. 

Specifically, the Secretary of Commerce is directed to submit a report identifying risks in the semiconductor manufacturing and advanced packaging supply chains and policy recommendations to address these risks. 

The Secretary of Energy is directed to submit a report identifying risks in the supply chain for high-capacity batteries, including electric vehicle batteries and policy recommendations to address these risks. 

The Secretary of Defense is directed to submit a report identifying risks in the supply chain for critical minerals and other identified strategic materials, including rare earth elements (as determined by the Secretary of Defense) and policy recommendations to address these risks. 

Finally, the Secretary of Health and Human Services is directed to submit a report identifying risks in the supply chain for pharmaceuticals and active pharmaceutical ingredients and policy recommendations to address these risks.

FAR Council Issues a Final Rule Increasing the Buy American Act Domestic Content Requirements and Price Preference for Domestic Products
The DoD, General Services Administration (GSA) and the National Aeronautics Space Administration (NASA), collectively known as the FAR Council, issued a final rule on January 19, 2021, amending the Federal Acquisition Regulation (FAR) to implement EO 13881, Maximizing Use of American-Made Goods, Products, and Materials (84 Fed. Reg. 34257, July 18, 2019). 

As relevant to this final rule, the Buy American Act and its implementing regulations require federal agencies to give preference to domestic end products during the procurement process. The final rule states that the cost of foreign iron and steel for iron and steel products must be less than 5% of the cost of all components in the products in order to meet the definition of “domestic end product” or “domestic construction material.” For all other types of non-iron and non-steel products, the domestic content of such products must exceed 55% of the cost of all components. 

The final rule also increases the price preference for offerors proposing to use domestic end products and domestic construction material from 6% to 20% for large businesses, and from 12% to 30% for small businesses. 

Finally, the rule revises relevant definitions including the terms “domestic construction material,” “domestic end product” and “predominantly of iron or steel or a combination of both”; adds the definition of “foreign iron and steel”; and clarifies that the domestic content test does not apply to commercially available off-the-shelf fasteners. 

DoD Issues a Final Rule on the Procurement of Covered Telecommunications Equipment and Services
The DoD issued a final rule on January 15, 2021, amending the DFARS to implement sections of the NDAA for fiscal years 2018 and 2019 regarding the procurement of covered telecommunications equipment or services. The final rule, which adopts the interim rule with changes, bars the use of certain telecommunications equipment or services from certain Chinese entities and from any other entities that the Secretary of Defense reasonably believes to be owned, controlled by or otherwise connected to the governments of the People’s Republic of China or the Russian Federation. The changes provide additional time to complete the reporting requirements required by the clause at DFARS 252.204-7018, Prohibition on the Acquisition of Covered Defense Tele-communications Equipment or Services. 

Specifically, the rule amends DFARS 252.204-7018 by extending: (1) the reporting timeframe for the discovery of covered defense telecommunications equipment or services from one day  to three days, and (2) the reporting timeframe to submit information about mitigation actions undertaken from 10 days to 30 days. CM

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