EPA Acts to Increase Supply of Clean Drinking Water in U.S. Virgin Islands

WASHINGTON (September 23, 2017) — The U.S. Environmental Protection Agency (EPA) today issued an order to the Federal Emergency Management Authority (FEMA) and the Department of Defense (DOD) that provides direction on supplying of clean drinking water in the U.S. Virgin Islands in response to impacts to the island’s drinking water system from Hurricane Maria and Hurricane Irma.

The order authorizes FEMA and DOD to install and operate temporary water treatment units that will provide a supply of clean drinking water. U.S. Virgin Islands public water systems are currently not in operational condition. The lack of clean alternative water supplies has created the potential for significant public health impacts. USVI public water systems have been significantly impacted by Hurricanes Maria and Irma and subsequent flooding, including by a loss of electrical power, and are not yet fully able to provide adequately treated water to meet the needs of those affected areas.

EPA is monitoring environmental and public health conditions across the U.S. Virgin Islands and Puerto Rico and is working closely with federal, territorial and local officials to ensure impacts from the hurricanes are addressed in order to protect public health.

Read this article on the EPA website here.

This post was written by the United States Environmental Protection Agency © Copyright 2017
For more Environmental & Energy Legal Analysis go to the National Law Review

A Change to the Suspending and Debarring Official (SDO) Position at NASA

On March 8, 2016, a final rule changed the position of the National Aeronautics and Space Administration’s (“NASA”) suspending and debarring official (“SDO”).  The SDO had been NASA’s Assistant Administrator for Procurement.  The final rule reassigns the position to NASA’s Deputy General Counsel.  Public comments were not accepted because NASA concluded that the change “affects only the internal operating procedures” of the agency.

Not mentioned in this action is Section 861(a) of the National Defense Authorization Act of 2013.  That law applies to the U.S. Department of Defense (“DoD”), the U.S. Department of State (“State”), and the U.S. Agency for International Development (“USAID”), not to NASA, but for those agencies it specifically prohibits the not-uncommon practice of having a procurement officer act as an SDO.  Last year, in International Relief and Development, Inc. et al. v. United States Agency for International Development et al., No. 15-CV-854 RCL (D.D.C.), a federal court concluded that such an arrangement at USAID likely violated Section 861(a).

Section 861(a) precipitated a necessary discussion on the independence and impartiality of SDOs.  It is not hard to imagine how an SDO who also serves as a procurement officer could be predisposed against a contractor.  But even if NASA’s change tacitly acknowledges this concern, it hardly resolves it.  Conditioned already to advocate for a particular client, agency counsel are sure to have predispositions, as well.

© 2016 Covington & Burling LLP

Wasn't That Supposed to be Made in the USA?

Made in the USA.jpgDespite the existence of long-standing U.S. laws strongly favoring the purchase of domestic products for use by governmental entities, in governmental programs and particularly the fulfillment of Department of Defense (“DoD”) contracts, a surprising number of companies still attempt to circumvent these laws.  They do so at their own peril.  Recognizing the harm likely to befall American workers as a result, an increasing number of employees and former employees have “blown the whistle” on these practices in recent years and teamed up with the U.S. Government to curtail this trend.

The Buy American Act, 41 U.S.C. §§ 83018305, (“BAA”) was enacted in 1933 under President Hoover as part of New Deal legislation intended to help struggling American depression era companies.  The BAA superseded an 1875 statute that “related to preferential treatment of American material contracts for public improvements.” (1933, Sect. 10).   The law carried with it a very simple idea: require the government to exercise a clear preference for US-made products in its purchases to bolster the American economy.

To this day, the BAA continues to require federal agencies to purchase “domestic end products” and use “domestic construction materials” in contracts exceeding certain dollar amounts performed in the United States. Unmanufactured end products or construction materials qualify as “domestic” if they are mined or produced in the United States. Manufactured products are treated as “domestic” if they are manufactured in the United States, and either (1) the cost of components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the items are commercially available off-the-shelf items.

Exemptions and exceptions to the applicability of the BAA exist. For example, the BAA does not apply if the purchasing agency determines “it to be inconsistent with the public interest, or the cost to be unreasonable.” Furthermore, the U.S. Trade Agreements Act of 1979 authorizes the President to waive any procurement law or regulation that accords foreign products less favorable treatment than that given to domestic products in foreign lands.  Additionally, purchases from Canada and Mexico are exempt from BAA prohibitions under the North American Free Trade Agreement. Other treaties and agreements also limit the BAA.  Despite these, the BAA continues to cast a wide liability net for those that seek to willfully or knowingly circumvent it.

Similar to the BAA, the Berry Amendment was passed in 1941 to promote the U.S. economy through the preferential purchase of certain U.S. goods. The Amendment was eventually codified as 10 U.S.C. 2533a in 2002.  The law prohibits the Department of Defense (“DoD”) from utilizing any funding available to or appropriated by the DoD for the purchase of the following end product items from “non-qualifying countries” unless these items are wholly of U.S. origin: food; clothing; tents, tarpaulins, or covers; cotton and other natural fiber products; woven silk or woven silk blends; spun silk yarn for cartridge cloth; synthetic fabric or coated synthetic fabric (including all textile fibers and yarns that are for use in such fabrics); canvas products, or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or any item of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials; and hand or measuring tools. Noticeably absent from the definition of “qualifying country” are China, Japan, Thailand and Korea- among others.

Congress revised the Berry Amendment for fiscal years 2007 and 2008 with National Defense Authorization Act. The revised statute, 10 U.S.C. 2533b, declares that the DoD is prohibited from acquiring specialty metals or component parts for the use in the construction of aircraft, missile and space systems, ships, tank and automotive items, weapon systems, or ammunition unless the DoD itself acquires those materials directly.  In other words, contractors engaged in the production of these items must use American made specialty metals or require that the DoD obtain these materials and component parts for use in any such fabrication and manufacturing.

Despite the existence numerous limitations with the Buy American Act, Berry Amendment and Trade Agreements Act, as discussed above, the United States Government and private citizen plaintiffs (known as Relators) have recently collaborated in bringing numerous False Claims qui tam actions against companies seeking to profit at the expense of the American Taxpayers. In the majority of these cases, contractors attempted to pass off foreign goods as made in the U.S.A.  Examples of these include: MedTronic (relabeled Chinese devices allegations – $4.4 million settlement); ECL Solutions (conceal country of origin-$1.066 million civil forfeiture); Invacare (wrongfully certified as American Made- $2.6 Million settlement); Staples (foreign made goods- $7.4 million settlement), Office Depot (foreign made goods – $4.75 million settlement) and Office Max (sale of goods not permitted by Trade Agreements Act results in $9.72 million settlement).

According to Justice Department statistics released last week, whistleblowers filed 638 False Claims Act lawsuits in FY2015. Because these cases remain under seal sometimes for years, we do not know how many involved violations of BAA or related laws. We are aware from conversations with the Justice Department of an uptick in these claims, however.

Whistleblowers who bring claims under the False Claims Act can earn up to 30% of whatever the government collects from the wrongdoer. To qualify, one must have original knowledge or information about the fraud. Successful whistleblowers are usually current or former employees but anyone with inside information can file.

Article By Brian Mahany of Mahany Law

© Copyright 2015 Mahany Law

Wasn’t That Supposed to be Made in the USA?

Made in the USA.jpgDespite the existence of long-standing U.S. laws strongly favoring the purchase of domestic products for use by governmental entities, in governmental programs and particularly the fulfillment of Department of Defense (“DoD”) contracts, a surprising number of companies still attempt to circumvent these laws.  They do so at their own peril.  Recognizing the harm likely to befall American workers as a result, an increasing number of employees and former employees have “blown the whistle” on these practices in recent years and teamed up with the U.S. Government to curtail this trend.

The Buy American Act, 41 U.S.C. §§ 83018305, (“BAA”) was enacted in 1933 under President Hoover as part of New Deal legislation intended to help struggling American depression era companies.  The BAA superseded an 1875 statute that “related to preferential treatment of American material contracts for public improvements.” (1933, Sect. 10).   The law carried with it a very simple idea: require the government to exercise a clear preference for US-made products in its purchases to bolster the American economy.

To this day, the BAA continues to require federal agencies to purchase “domestic end products” and use “domestic construction materials” in contracts exceeding certain dollar amounts performed in the United States. Unmanufactured end products or construction materials qualify as “domestic” if they are mined or produced in the United States. Manufactured products are treated as “domestic” if they are manufactured in the United States, and either (1) the cost of components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the items are commercially available off-the-shelf items.

Exemptions and exceptions to the applicability of the BAA exist. For example, the BAA does not apply if the purchasing agency determines “it to be inconsistent with the public interest, or the cost to be unreasonable.” Furthermore, the U.S. Trade Agreements Act of 1979 authorizes the President to waive any procurement law or regulation that accords foreign products less favorable treatment than that given to domestic products in foreign lands.  Additionally, purchases from Canada and Mexico are exempt from BAA prohibitions under the North American Free Trade Agreement. Other treaties and agreements also limit the BAA.  Despite these, the BAA continues to cast a wide liability net for those that seek to willfully or knowingly circumvent it.

Similar to the BAA, the Berry Amendment was passed in 1941 to promote the U.S. economy through the preferential purchase of certain U.S. goods. The Amendment was eventually codified as 10 U.S.C. 2533a in 2002.  The law prohibits the Department of Defense (“DoD”) from utilizing any funding available to or appropriated by the DoD for the purchase of the following end product items from “non-qualifying countries” unless these items are wholly of U.S. origin: food; clothing; tents, tarpaulins, or covers; cotton and other natural fiber products; woven silk or woven silk blends; spun silk yarn for cartridge cloth; synthetic fabric or coated synthetic fabric (including all textile fibers and yarns that are for use in such fabrics); canvas products, or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or any item of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials; and hand or measuring tools. Noticeably absent from the definition of “qualifying country” are China, Japan, Thailand and Korea- among others.

Congress revised the Berry Amendment for fiscal years 2007 and 2008 with National Defense Authorization Act. The revised statute, 10 U.S.C. 2533b, declares that the DoD is prohibited from acquiring specialty metals or component parts for the use in the construction of aircraft, missile and space systems, ships, tank and automotive items, weapon systems, or ammunition unless the DoD itself acquires those materials directly.  In other words, contractors engaged in the production of these items must use American made specialty metals or require that the DoD obtain these materials and component parts for use in any such fabrication and manufacturing.

Despite the existence numerous limitations with the Buy American Act, Berry Amendment and Trade Agreements Act, as discussed above, the United States Government and private citizen plaintiffs (known as Relators) have recently collaborated in bringing numerous False Claims qui tam actions against companies seeking to profit at the expense of the American Taxpayers. In the majority of these cases, contractors attempted to pass off foreign goods as made in the U.S.A.  Examples of these include: MedTronic (relabeled Chinese devices allegations – $4.4 million settlement); ECL Solutions (conceal country of origin-$1.066 million civil forfeiture); Invacare (wrongfully certified as American Made- $2.6 Million settlement); Staples (foreign made goods- $7.4 million settlement), Office Depot (foreign made goods – $4.75 million settlement) and Office Max (sale of goods not permitted by Trade Agreements Act results in $9.72 million settlement).

According to Justice Department statistics released last week, whistleblowers filed 638 False Claims Act lawsuits in FY2015. Because these cases remain under seal sometimes for years, we do not know how many involved violations of BAA or related laws. We are aware from conversations with the Justice Department of an uptick in these claims, however.

Whistleblowers who bring claims under the False Claims Act can earn up to 30% of whatever the government collects from the wrongdoer. To qualify, one must have original knowledge or information about the fraud. Successful whistleblowers are usually current or former employees but anyone with inside information can file.

Article By Brian Mahany of Mahany Law

© Copyright 2015 Mahany Law

Department of Defense Moves Forward with Stricter Sourcing Requirements for Photovoltaic Devices

Earlier this week, the Department of Defense (“DoD”) issued a proposed rule to revise (and make stricter) the unique sourcing requirements applicable to certain photovoltaic devices that are used in the performance of DoD contracts.  Specifically, unless an exception under the Trade Agreements Act applies or a contractor secures a waiver based on public interest or unreasonable cost, the proposed rule would require photovoltaic devices provided under a covered contract to be both manufactured in the United States and made “substantially all” from components or materials that are also mined, produced, or manufactured in the United States.  DoD contracts covered by the proposed rule involve the provision of photovoltaic devices that are—within the United States—either (i) installed on DoD property or in a DoD facility or (ii) reserved for the DoD’s exclusive use for their full economic life.  Although the proposed rule does not apply to contracts under which the DoD directly acquires photovoltaic devices as end products, it does extend to energy savings performance contracts and power purchase agreements under which the DoD effectively acquires electricity produced by photovoltaic devices that are installed and managed by contractors.  As we have previously discussed, these contracts represent significant opportunities, especially given the DoD’s continued focus on securing sources of renewable energy.

The proposed rule implements new sourcing requirements set forth in the National Defense Authorization Act for Fiscal Year 2015, which overlap with existing requirements established in the National Defense Authorization Act for Fiscal Year 2011 that are contained largely in DFARS 252.225-7017.  Although the new requirements are largely consistent with existing requirements, which make the Buy American Act applicable to photovoltaic devices provided under similar contracts, the new requirements contain key differences that may complicate existing supply chains.  Importantly, the DoD has interpreted the new requirements to foreclose existing exceptions and waivers on which contractors may currently rely to provide photovoltaic devices that are manufactured outside the United States or made from foreign components.  In addition, whereas existing requirements apply only when both the DoD has reserved the exclusive use of a photovoltaic device and the device is to be installed on DoD property or in a DoD facility, the new requirements apply when either condition is satisfied.  As a result, a number of contracts will suddenly be subject to new sourcing requirements under the proposed rule, including contracts under which the DoD does not have an exclusive right to power generated from a photovoltaic device installed on DoD property or in a DoD facility, such as when a contractor is authorized to export power produced by such a device to a commercial grid, as well as contracts which have a term that is less than the full economic life of such a device.

The proposed rule mirrors existing requirements in that the primary effect of the current application of the Buy American Act to covered photovoltaic devices is to require contractors to ensure that the devices are manufactured in the United States.  Although existing requirements also technically require covered photovoltaic devices to be made “substantially all” from components or materials that are mined, produced, or manufactured in the United States, this requirement has been waived under existing regulations, as described below.  The proposed rule also mirrors existing requirements in that it recognizes a significant exception to contractors’ obligation to ensure that covered photovoltaic devices are manufactured in the United States by making the proposed rule’s application subject to the Trade Agreements Act, which provides an exemption from the Buy American Act’s requirements under contracts valued above certain dollar thresholds and requires contractors to provide photovoltaic devices that are “substantially transformed” in an authorized country, such as Canada, the United Kingdom, or Italy.  The application of the “substantial transformation” test under the Trade Agreements Act dramatically increases the number of available sources of supply as it focuses on the point at which a photovoltaic device is transformed into a new and difference article of commerce rather than the origin of its components or its final point of assembly.  Thus, under both the proposed rule and existing requirements, without considering other limitations on imports, a contractor could provide a photovoltaic device that is substantially transformed in an authorized country—such as the United Kingdom—from components manufactured in an otherwise unauthorized country—such as Malaysia.  DoD’s previous clarification that the relevant test focuses on the final place of substantial transformation remains unaffected by the proposed rule.

However, because the National Defense Authorization Act for Fiscal Year 2015 merely imposes key obligations from the Buy American Act and, unlike existing requirements, does not make the Buy American Act directly applicable to covered contracts, the proposed rule does not recognize other exceptions that currently apply to existing requirements.   In particular, the proposed rule does not recognize the waiver of the Buy American Act for components of commercially available off-the-shelf items, which the DoD has interpreted to apply to components of all photovoltaic devices covered by existing requirements.  Thus, in circumstances in which the Trade Agreements Act does not apply, contractors will be forced to trace the origin of the components of each photovoltaic device to ensure that “substantially all” of the components—which has been interpreted to mean more than fifty percent of component costs—have been manufactured in the United States.

More importantly, as the Trade Agreements Act will likely apply to the majority of covered contracts given the relatively high value of energy savings performance contracts and power purchase agreements, the proposed rule does not recognize general exceptions to the Buy American Act for (i) photovoltaic devices manufactured in other countries with which the United States has reciprocal defense procurement agreements, such as Turkey and Egypt, (ii) other foreign photovoltaic devices that are available at a cost that is less than the cost of domestic photovoltaic devices after a fifty percent adjustment to the foreign devices’ cost, and (iii) photovoltaic devices that are substantially transformed in the United States but potentially assembled in another country or made with foreign components in circumstances in which the Trade Agreements Act applies.  Although the proposed rule provides the DoD with authority to effectively implement these exceptions on a case-by-case basis, contractors will need to be cognizant of the circumstances in which a waiver can be requested and ensure that they actively pursue waivers when required.

The proposed rule will likely have a minimal impact on contractors that source photovoltaic devices through relatively uncomplicated supply chains that involve countries covered by the Trade Agreements Act.  However, contractors that have supply chains that source items from other countries or rely on existing exceptions to the Buy American Act should consider the impact of the proposed rule on their existing practices, especially considering complications that can arise in determining the origin of photovoltaic devices that include wafers, cells, and modules manufactured or assembled in different countries.

© 2015 Covington & Burling LLP

Department of Defense Contractors Agree to Pay the U.S. Government $5.5 Million for Allegedly Supplying the Military with Low-Grade Batteries for Humvee Gun Turrets Used in Iraq; Minnesota Whistleblower to Receive $990,000

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On September 16, 2014, the Department of Justice (DOJ) announced that Department of Defense (DOD) contractors, M.K. Battery, Inc. (M.K. Battery), East Penn Manufacturing Company (East Penn), NPC Robotics, Inc. (NPC), BAE Systems, Inc. (BAE) and BAE Systems Tactical Vehicle Systems LP (BAE) had agreed to a settlement of $5.5 million for allegedly violating the False Claims Act (FCA) by selling the U.S. Military substandard batteries for Humvee gun turrets used on military combat vehicles in Iraq. Minnesota whistleblower, David McIntosh, former employee of M.K. Battery, will receive $990,000 which represents his share of the settlement for reporting fraud against the government – in this case misrepresentation of a vital product supplied to the DOD.

A gun turret is a weapon mount that protects the crew or mechanism of a projectile-firing weapon and at the same time lets the weapon be aimed and fired in many directions. Sealed acid batteries are used as a backup to turn the turrets on the Humvees in the event that the engine gives out.  According to Mr. McIntosh, and unbeknownst to the Army, the manufacturing process of the batteries was allegedly changed from the original design presented to the DOD, consequently cutting the battery’s life span by as much as 50 percent and potentially putting U.S. Troops in harm’s way.  Mr. McIntosh, from Stacy, Minnesota, who at the time was employed by M.K. Battery as a regional sales representative, brought his concerns to top company officials at M.K. Battery.  However, in 2007 after numerous unsuccessful attempts to convince M.K. Battery that its decision to cut costs on these batteries could be hazardous to U.S. Troops, especially during combat, Mr. McIntosh alerted the DOD to this matter.  Three month later, M.K. Battery fired Mr. McIntosh.

Shortly thereafter, Mr. McIntosh and his attorneys filed the lawsuit under the whistleblowersprovisions of the False Claims Act, which is one of the most effective methods that the government has implemented for combating fraud. Under the FCA, any person, who knows of an individual or company that has defrauded the federal government, can file a “qui tam” lawsuit to recover damages on the government’s behalf.  Mr. McIntosh filed this particular lawsuit on behalf of himself and the Department of Defense. Additionally, a whistleblower who files a case against a company that has committed fraud against the government, may receive an award of up to 30 percent of the settlement. In this case, Mr. McIntosh’s share of $5.5 million is approximately 18 percent of the settlement.

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© 2014 by Tycko & Zavareei LLP