Category: Government Contracts

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. §§ 8301–8305, (“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  The BAA superseded an 1875 statute that “related to preferential treatment of American material contracts for public improvements.”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

P3 Legislation in Florida – Public Private Partnerships

On September 24-25, Miami-Dade County held a P3 Institute entitled “The P3 Pipeline: A Forum for the Private Sector.” Among the topics discussed at the Institute was a measure currently before the Florida Legislature that, if enacted, will make the P3 procurement process easier for all parties involved.

Two bills, House Bill 97 and House Bill 95, have advanced to House committees and are moving through the legislative process. HB 97, known as “Public Records and Public Meetings,” is currently in the State Affairs Committee. HB 95, a companion bill known simply as “Public-Private Partnerships,” is in the Appropriations Committee. Approval by all required legislative committees is a necessary step before these bills can be introduced in the 2016 legislative session.

If it passes, HB 97 would exempt unsolicited P3 proposals by responsible public entities from public records and public meeting requirements for a specified time period. HB 95, a corollary bill, revises provisions regarding responsible public entities and unsolicited proposals for qualified projects. In doing so, HB 95 expands the list of entities authorized to conduct P3s to include state universities, special districts, school districts (rather than school boards), and institutions included in the state college system.

On a related note, the bills’ sponsor, Representative Greg Staube (R-Sarasota), has stated that several state legislators (without naming the legislators specifically) are discussing the possibility of a centralized state office that could offer Public Private Partnership procurement expertise to Florida counties. The office could be housed in an existing state agency, like the Department of Management Services or Enterprise Florida, to save money.

Article By Albert E. Dotson, Jr. & Leah Aaronson of Bilzin Sumberg Baena Price & Axelrod LLP

© 2015 Bilzin Sumberg Baena Price & Axelrod LLP

DoD Issues Targeted Class Deviation Updating Recently Adopted Cybersecurity DFARS Clauses

Last week, on October 8th, DoD issued a class deviation replacing DFARS 252.204-7012 and 252.204-2008 with revised clauses that give covered contractors up to nine (9) months (from the date of contract award or modification incorporating the new clause(s)) to satisfy the requirement for “multifactor authentication for local and network access” found in Section 3.5.3 of National Institute of Standards and Technology (NIST) Special Publication 800-171, “Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations.”

We previously reported on the August 26th Department of Defense (DoD) interim rule that greatly expanded the obligations imposed on defense contractors for safeguarding “covered defense information” and for reporting cybersecurity incidents involving unclassified information systems that house such information. The interim rule, which went into effect immediately, requires non-cloud contractors to comply with several new requirements, including those in DFARS 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting” and DFARS 252.204-7008, “Compliance with Safeguarding Covered Defense Information Controls.”  While the class deviation is a welcomed development for contractors that may struggle to implement the NIST SP 800-171 requirements for multifactor authentication, the deviation: (1) requires contractors to notify the government if they need more time to satisfy those requirements, and (2) does not alter any other aspect of the August 26th interim rule. 

DFARS 252.204-7012 requires prime contractors and their subcontractors to employ “adequate security” measures to protect “covered defense information.” Specifically, contractors must adhere to the security requirements in the version of NIST SP 800-171 that is in effect “at the time the solicitation is issued or as authorized by the Contracting Officer,” or employ alternative security measures approved in writing by an authorized representative of the DOD Chief Information Officer. Special Publication 800-171 describes fourteen families of basic security requirements. As described in section 2.2 of 800-171, each of these fourteen families has “derived security requirements,” which provide added detail of the security controls required to protect government data. These basic requirements are based on FIPS Publication 200, which “provides the high level and fundamental security requirements” for government information systems. The derived requirements are taken from the security controls contained in NIST Publication 800-53, “Security and Privacy Controls for Federal Information Systems and Organizations.” Among those derived requirements is one for “multifactor authentication for local and network access.”

DoD contractors and subcontractors should be aware of what the class deviation does and does not change:

  1. Effective immediately, DoD contractors and subcontractors are required to comply with the clauses at DFARS 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting (DEVIATION 2016-O0001) (OCT 2015) and DFARS 252.204-7008, Compliance with Safeguarding Covered Defense Information Controls (DEVIATION 2016-O0001) (OCT 2015), in lieu of the clauses that were issued as part of the August 26th interim rule.
  2. Under the new clauses, DoD contractors (and subcontractors, through the prime contractor) may notify the contracting officer that they need up to 9 months (from the date of award or the date of a modification incorporating the new clauses) to comply with the requirements for “multifactor authentication for local and network access” in Section 3.5.3 of NIST SP 800-171.
  3. The revised clauses apply to all DoD contracts and subcontracts, including those for the acquisition of commercial items.
  4. The class deviation only impacts non-cloud contractor information systems that are not operated on behalf of the government (e.g., contractor internal systems).
  5. DoD contractors and subcontractors that cannot meet the specific requirements of NIST 800-171, including the requirements of Section 3.5.3, may still seek authorization from DoD to use “[a]lternative but equally effective security measures.”
  6. With the exception of the targeted changes to DFARS 252.204-7012 and DFARS 252.204-7008 (i.e., affording contractors up to 9 months to comply with Section 3.5.3 of NIST 800-171, provided they notify the contracting officer), all other requirements introduced by the August 26th interim rule remain in effect.
  7. Non-cloud contractor information systems that are operated on behalf of the government remain “subject to the security requirements specified [in their contracts].”
  8. The class deviation does not impact DoD cloud computing contracts, which remain subject to DFARS 252.239-7010, Cloud Computing Services.

Ensuring Compliance With the Revised DFARS Clauses and NIST SP 800-171 Section 3.5.3

During the solicitation phase of a procurement subject to the revised DFARS clauses, DoD contractors and subcontractors should engage technical experts to determine whether they would need additional time to satisfy the NIST requirements for multifactor authentication. If a contractor determines that additional time is needed, and is later awarded a contract subject to the new requirements, then the contractor should immediately notify the contracting officer in writing and should ensure that all subsequent communications with the government are adequately documented.

Upon providing such notice, contractors will have up to nine months (from the date of contract award or modification incorporating the revised clauses) to comply with Section 3.5.3 of NIST SP 800-171, which requires contractors to: “Use multifactor authentication for local and network access to privileged accounts and for network access to non-privileged accounts.” See NIST SP 800-171, Section 3.5.3 (emphasis added). Section 3.5.3 is a derived requirement of the basic security requirement in section 3.5 for identification and authentication. Section 3.5.3 of NIST SP 800-171 notes that:

  • “Multifactor authentication” requires two or more different factors to achieve authentication. Factors include: (i) something you know (e.g., password/PIN); (ii) something you have (e.g., cryptographic device, token); or (iii) something you are (e.g., biometric). The requirement for multifactor authentication does not require the use of a federal Personal Identification Verification (PIV) card or Department of Defense Common Access Card (CAC)-like solutions. Rather, “[a] variety of multifactor solutions (including those with replay resistance) using tokens and biometrics are commercially available. Such solutions may employ hard tokes (e.g., smartcards, key fobs, or dongles) or soft tokens to store user credentials. See id., n. 22.
  • “Local access” is any access to an information system by a user (or process acting on behalf of a user) communicating through a direct connection without the use of a network.

“Network access” is any access to an information system by a user (or a process acting on behalf of a user) communicating through a network (e.g., local area network, wide area network, Internet).

Article By Susan B. Cassidy, Alejandro L. Sarria, Patrick Stanton & Catlin M. Meade of Covington & Burling LLP
© 2015 Covington & Burling LLP

Making a Claim against a Payment Bond Posted by a General Contractor or Sub-Contractor

In construction projects that are performed either on behalf of a municipality or a state agency, a general contractor and potentially a sub-contractor are typically required to post payment and/or performance bonds with the county or municipality. A general contractor or sub-contractor is required to post a payment and/or performance bond, because this ensures that sub-contractors or suppliers are paid, and enables the Township or state agency to have the work completed should the contractor fail to do so in a timely fashion. As a supplier or sub-contractor on such a municipal or state project, it is important to know your rights with regard to making a claim against a payment bond.

The most important thing that any sub-contractor or supplier must do prior to providing materials or services for a public contract is to provide the proper notice as required by N.J.S.A. 2A.44-145. This strict notice requirement specifies that the sub-contractor or supplier notify the party who posted the payment bond for the project in writing via certified mail of their intent to provide materials or services for the project. This is a prerequisite to being able to make a claim against the bond, or to receive a payment for materials and services with regard to the project if they are not paid by the sub-contractor or general contractor. As such, it is very important that any sub-contractor or supplier provide the appropriate notice to the party that posted the bond prior to performing any work or providing any materials.

If proper notification has been sent and a sub-contractor or supplier did not receive payment for materials or services provided, they may make a claim against the bond posted by the general contractor or the sub-contractor. It is always suggested that a sub-contractor or supplier obtain a copy of the bond posted by the general contractor or sub-contractor before providing materials or services. This is to ensure that any claim against the bond is made in a timely manner and is not forfeited by failing to comply with the terms of the bond, which require that a claim be made within a certain specified period of time.

Assuming that you have complied with the time requirements of the bond, a sub-contractor or supplier would first send a Notice of Demand for Payment to the bonding company with a copy to the contractor who posted the bond. Typically, the bonding company will require the production of any and all documents which justify the payment sought by the claimant that was not tendered by the sub-contractor or general contractor. Upon receipt of this information, the bonding company will make a determination whether payment is due for the materials and services which were provided.

Article By Paul W. Norris of Stark & Stark

COPYRIGHT © 2015, STARK & STARK

Proposed Labor Violation Reporting Rules Target Government Contractors

Proposal makes agency allegations of employment law violations reportable events that could result in denial of federal contracts or termination of existing contracts.

Executive Order 13673 (the Order), signed by US President Barack Obama in July 2014, imposed three new requirements addressing the labor and employment practices of federal contractors and subcontractors: (1) an obligation to report employment law violations, which would be used by contracting officers to determine whether to award a new federal contract or terminate an existing contract; (2) a requirement to provide notices to workers about their Fair Labor Standards Act (FLSA) exemption or independent contractor status; and (3) a requirement that federal contractors agree that claims arising under Title VII or any tort related to or arising out of sexual assault or harassment by their employees and independent contractors will not be arbitrated without the voluntary postdispute consent of an employee or independent contractor, with certain limited exceptions.

E.O. 13673 directed the Federal Acquisition Regulatory Council (FAR Council)—which consists of the Administrator for Federal Procurement Policy, the Secretary of Defense, the Administrator of National Aeronautics and Space, and the Administrator of General Services—to publish implementing regulations through the Federal Acquisition Regulation (FAR) system. The Order also directed the Department of Labor (DOL) to publish guidelines that address transactions deemed to be reportable employment law violations, as well as how contracting officials should use such reported information to determine whether to award a federal contract (or terminate an existing contract). The Order, while effective upon issuance, expressly applies to all solicitations for contracts only as set forth in any final rule issued by the FAR Council.

On May 28, 2015, the FAR Council published a Notice of Proposed Rulemaking implementing E.O 13673.[1] On the same day, the DOL published proposed guidance.[2] The proposed rule and guidelines contain many potentially alarming provisions for employers seeking federal contracts, some of which appear to violate contractors’ due process and Fourth Amendment rights. If adopted, the proposals would impose administrative burdens on contractors, increase the complexity of obtaining and keeping federal contracts, and likely lead to an increase in bid protests and litigation.

The proposals offer employers a 60-day period to submit comments in opposition to these provisions. We strongly encourage employers that have or may seek federal contracts to take advantage of this comment opportunity. If you are interested in sponsoring comments, please contact us in the near future; the period for filing comments only runs through July 27, 2015.

Proposed Implementation of the Employment Violation Reporting Obligations

E.O. 13673 requires employers who are prospective awardees of federal contracts to report certain labor law violations that occurred within the prior three years. Awardees of federal contracts must submit reports of labor law violations every six months during the performance of the contract. The reportable violations include “administrative merits determinations,” “arbitral awards or decisions,” and “civil judgments” involving claims or enforcement actions under many federal employment laws.[3]

The proposed guidelines define “administrative merits determinations” by reference to the specific types of determinations made by a federal enforcement agency, such as the Wage and Hour Division (WHD), Office of Federal Contract Compliance Programs (OFCCP), Occupational Safety and Health Administration (OSHA), Equal Employment Opportunity Commission (EEOC), and National Labor Relations Board (NLRB). Reportable determinations also include, broadly, complaints that a federal enforcement agency files and administrative orders issued through agency adjudication. However, complaints that private parties file with enforcement agencies or in court alleging employment law violations would not trigger a reporting obligation.

Under the proposed guidance, “administrative merits determinations are not limited to notices and findings issued following adversarial or adjudicative proceedings such as a hearing, nor are they limited to notices and findings that are final and unappealable.” Thus, contractors will be required to report mere agency allegations, such as OSHA citations, WHD investigation finding letters, OFCCP show cause notices, EEOC reasonable cause determinations, and NLRB complaints. These disclosures are required even if a contractor is challenging an allegation through formal proceedings. If, at the time of the required reporting, the enforcement agency allegation is withdrawn or reversed in its entirety through additional proceedings in the matter, then there is no reporting obligation.

The DOL will publish additional proposed guidelines that address administrative determinations that state enforcement agencies make under laws that DOL deems to be equivalent to the above-referenced federal laws.

The proposed DOL guidelines define “civil judgments” as any judgment or order entered by any federal or state court in which the court determined that an employer violated any provision of the above-referenced employment laws or enjoined the employer from committing a violation. Civil judgments include orders or judgments that are not final and are appealable, and the employer must report such judgments even if an appeal is pending. Consent judgments are subject to the reporting obligation if they contain a determination that an employment violation occurred or enjoin the employer from violating any provision of the employment laws. However, a private lawsuit that a court dismissed without a judgment would not be a reportable event.

The proposed DOL guidelines define “arbitral awards and decisions” as any award or order by an arbitrator or arbitral panel in which the arbitrator or panel determined that an employer violated any provision of the above-referenced employment laws or enjoined the employer from committing a violation. Arbitral awards include awards and orders that are not final and are appealable, and the employer must report such judgments even if an appeal is pending. Arbitral awards and orders must be reported even if they are subject to a confidentiality agreement.

Under the proposed DOL guidelines, the same alleged violation may trigger several successive reporting obligations. Each transaction must be reported even if the same alleged violation was the basis for a prior report. For example, where an initial agency allegation was reported, the same allegation must later be reported if it is sustained through an administrative order, and must be reported yet again if a federal court affirms it in a review action. However, if the initial reported transaction is reversed or vacated in its entirety through later proceedings, there is no obligation to continue to report the initial transaction in any future contract bid.

The proposed FAR regulations simply incorporate the DOL guidelines by reference and do not modify or expand on the definitions regarding reportable events.

Mechanics of the Contracting Process Under the Proposed FAR Rule

Prior to awarding a government contract, a contracting officer is required to make an affirmative responsibility determination that includes a determination that the apparent successful offeror or bidder has a satisfactory record of integrity and business ethics. The proposed rule requires that the contracting officer consider a prospective contractor’s labor violations in determining whether that contractor has a satisfactory record of integrity and business ethics. Under the proposed FAR rule, all employers bidding on a federal contract would initially provide a representation that there have been or have not been reportable employment law violations. Thereafter, once the contracting officer has initiated a responsibility determination for the prospective contractor, if the employer has indicated covered employment law violations, that employer would be required to enter detailed information describing the violations in the System for Award Management (SAM), including (1) the employment law that was allegedly violated; (2) the relevant matter or case number; (3) the date that the determination, judgment, award, or decision was rendered; and (4) the name of the court, arbitrator(s), or agency that rendered the decision. Further, the contracting officer would be required to solicit from the employer additional information that the prospective contractor views as necessary to establish affirmatively its responsibility, such as mitigating circumstances; remedial measures, including labor compliance agreements; and other steps taken to comply with labor laws.

The contracting officer would review the data provided, and, in consultation with agency Labor Contract Advisors, would determine whether the employer is a responsible source eligible to receive the federal contract. The proposals contemplate that most entities would not be deemed nonresponsible, but instead would be required to agree to a “labor compliance agreement” as a condition of award of the federal contract. The proposals provide little discussion or framework for labor compliance agreements, apparently vesting broad authority in enforcement agencies, the DOL, agency Labor Contract Advisors, and contracting officers to develop, negotiate, and monitor such agreements. Employers should pay particular attention to these proposals because they would place powers in the hands of federal regulators to extract extra-legal “remedial actions” by leveraging an award or continuation of federal contracts. The outlook for those prospective offerors found nonresponsible is equally grim; the likelihood of successfully challenging contracting officer responsibility determinations in the procurement process is very low given the high level of deference accorded such determinations by both the Government Accountability Office (GAO) and the Court of Federal Claims (COFC). Moreover, because the proposed regulation’s definition of “administrative merits determinations” effectively includes notices or findings that amount to little more than alleged violations, it is unclear whether GAO or the COFC could readily find a determination of nonresponsibility to be without a rational basis, even if that decision was predicated on alleged violations that, after contract award, may not be proven.

Post-Award Implications of Labor Violations

Employers awarded contracts would be required to enter current information regarding labor violations in SAM on a semi-annual basis. If, based on this information, the Labor Contract Advisor determines that further consideration or action is warranted… click to continue reading Proposed Labor Violation Reporting Rules Target Government Contractors

ARTICLE BY

William E. Doyle, Jr. & E. Ruscus of Morgan, Lewis & Bockius LLP
Copyright © 2015 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

The Supreme Court Closes the Books on Civil False Claims Act Cases and Takes Issue with the First to File Rule

In a unanimous decision, the Supreme Court in Kellogg Brown & Root v. United States ex rel. Carter reversed the Fourth Circuit in part and affirmed in part, holding that the Wartime Suspension of Limitations Act (WSLA) only applies to criminal offenses, and that the popular colloquialism known as the “first to file rule” only prohibits qui tam actions when a similar suit is currently pending. Based on the text of the legislation alone, these holdings are glaringly obvious, but somehow both of these decisions manage to upset generally accepted Government contracts assumptions.

In 2005, a whistleblower filed a qui tam action against Kellogg Brown & Root Services Inc. (KBR) and Halliburton Co. (subsidiaries and the relator’s former employers) alleging that they had submitted a false claim to the Government. The relator alleged that KBR billed the Department of Defense under a water purification services contract for services that were either not performed or not properly performed. Water purification service contracts in Iraq have been a popular area for litigation with the U.S. Army, partly because of the enormity of the operation and expense required to supply deployed soldiers with a steady supply of clean water in an arid environment.  Unique to this case, the allegation of fraud was brought as a qui tam action that allows the relator to recover up to 30% of the Government’s total recovery.

The statute of limitations for qui tam actions is within six years of a violation or within three years of the date by which the United States should have known about a violation, but under no circumstances can it be brought more than 10 years after the date of the violation. The Solicitor General argued that the Wartime Suspension of Limitations Act (WSLA) indefinitely suspends any statute of limitations for “any offense” involving fraud against the Government during “hostilities” and therefore also suspended the statute of limitations for qui tam actions. On its face, the WSLA appears broad enough to encompass both civil and criminal accusations of fraud, especially if the reader has an expansive view of the word “offense.” From a practical perspective, this has been very difficult for defense contractors to stomach. As a nation that has been in uninterrupted war for 14 years, Government contractors could be called to disprove an allegation in a qui tam suit stemming from events that transpired more than a decade ago. These liabilities remain on their books and can factor into insurance coverage for dealing with these types of claims. These risks and liabilities inherent in doing business with the Government are often passed on to the Government in the form of less competitive bid proposals and higher costs. Many Government contracts attorneys understood that the Government’s use of WSLA in civil cases was questionable as the WSLA statute is codified in Title 18 “Crimes and Criminal Procedure.” The Supreme Court focused on this location of the WSLA text and the definition in place at that time defining “offenses” as crimes. In the end, the Supreme Court reversed the Fourth Circuit on this point and held that the WSLA does not apply to civil actions involving fraud. While this would seem to be a straightforward result, as noted in the Solicitor General’s brief, “every court of appeals to consider the questions has held that the WSLA applies in civil fraud cases.” The list includes cases in the Ninth and Sixth Circuits as well as the former Court of Claims, so this decision while reasonably anticipated still constitutes considerable reversal.

The Supreme Court’s second holding in this case was similarly obvious from a textualist perspective, but it manages to awaken long dormant liabilities for those contractors that applauded the first part of the Supreme Court’s opinion. This case took an unusual route to get to the Supreme Court. It was filed four separate times after the each of the previous filings was dismissed because similar qui tam cases were pending in other jurisdictions. The False Claims Act, which provides the rules for filing a qui tam states that “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” This is popularly referred to as the “first to file rule.” Unfortunately, that shorthand is so prevalent within the industry that the term “first to file,” which does not appear in the text, took on a meaning of its own when combined with decisions on notice and original source requirements. It was generally accepted that Congress’s intent was to prohibit copycat filings where a business would have to deal with the same qui tam allegations of fraud over and over from different relators. It was thought that the public disclosure required in unsealing a qui tam action should prohibit a future relator from using some of that same information in his own qui tam suit filed immediately upon the dismissal of the first suit. The National Whistleblower Center argued in its brief that if the “first to file rule” precluded future filings on the same issue a “wholly uninformed whistleblower could file a vexatious, frivolous, overbroad, and all-encompassing lawsuit. The Government would be left uninformed of the fraud as it was prior to the filing of the suit, and other well-informed whistleblowers would have no incentive or ability to come forward.” The Supreme Court agreed that there was no support in the text of the statute to interpret “pending” as anything more than “not yet decided” and affirmed this portion of the Fourth Circuit’s judgment. This means that qui tam filers must merely wait until similar cases are dismissed before filing their claims.

This doesn’t mean that qui tam filers will simply be able to adopt the accusations and evidence from the previous case, but it remains to be seen what advantages this approach might have for secondary filers who have had the benefit of observing the first qui tam. There is another pending petition at the Supreme Court, Purdue Pharma v. United States ex rel. May, that provide additional clarity on “whether the False Claims Act’s pre-2010 ‘public-disclosure bar,’ 31 U.S.C. § 3730(e)(4) (2009), prohibits claims that are ‘substantially similar’ to prior public disclosures, or instead bars a claim only if the plaintiff’s knowledge ‘actually derives’ from prior disclosures.”

For now, Government contractors need to be aware that qui tam filings are not necessarily prohibited just because someone previously filed a qui tam on the same issue. Defense contractors who supported military efforts in Iraq or Afghanistan can rely on the normal statute of limitations for civil claims involving fraud, but need to be aware that criminal acts of fraud are still prosecutable years after the cessation of hostilities.

ARTICLE BY Dana M. Collins of Odin, Feldman & Pittleman, P.C.
© 2015 Odin, Feldman & Pittleman, P.C.

The New OFCCP Sexual Orientation And Gender Identity Protections Are Now In Effect

Proskauer Rose LLP, Law Firm

Executive Order (“EO”) 11246, as amended by EO 13762, officially went into effect, representing the first time in the federal sector that sexual orientation and gender identity have been expressly protected. On July 21, 2014, President Obama issued EO 13762, which amended EO 11246 to prohibit federal contractors from discriminating against employees on the basis of sexual orientation or gender identity. These additional protections are being incorporated into the Federal Acquisition Regulations (“FAR”), which will become effective tomorrow, April 10, 2015.

In order to educate the public on these new protections, the Office of Federal Contractor Compliance Programs (“OFCCP”) is conducting a series of webinars regarding the new sexual orientation and gender identity protections. Thus far, the webinars have focused on the obligations of federal contractors and the procedures available to claimants for filing a complaint under the new protections. We have summarized below key points from the webinar:

To Whom Does This Apply?

These new protections apply to any federal contractor, subcontractor, or government funded construction contractor that enters into or renews a federal contract or contracts valued at $10,000 or more per year. These new protections only apply to contracts entered into or renewed on or after April 8, 2015. These protections do not apply to organizations receiving grants from the federal government.

Administrative Changes Required By Employers

Under the new protections, employers must update the EEO language on their job advertisements, their EEO policies, and their “EEO is the Law” poster. The poster need not be updated until the OFCCP releases a supplement. The OFCCP has not yet announced when this supplement will be released.

With respect to the EEO language, the OFCCP has said that employers can simply say “Equal Employment Opportunity” on their job postings. However, if the employer chooses to list out the protected groups, it must list “sexual orientation” and “gender identity.” The OFCCP does not endorse the use of the acronym “LGBT,” as this is not representative of the entire protected class.

Dual Filing With The EEOC

The OFCCP clarified that any complaints alleging sexual orientation or gender identity discrimination are considered “dual-filed” with the EEOC. This means that the OFCCP will stand in the shoes of the EEOC when investigating the Title VII component of the complaint. While Title VII does not overtly protect against gender identity and sexual orientation discrimination, the EEOC has taken the position that these classifications are protected under Title VII and will pursue cases on behalf of these individuals.

As a consequence of the dual-filing process, if the OFCCP does not find cause or does not dispose of a case within 180 days, an employee can request a Notice of Right to Sue from the OFCCP to bring a private cause of action against the employer. This is significant as EO 11246 does not provide for a private cause of action. The OFCCP clarified, however, that it does not intend to pursue the compensatory and punitive damages available under Title VII (which are not available under the EO).

Religious Affiliated Contractors

In one of the webinars, the OFCCP clarified that all federal contractors, including religiously affiliated federal contractors, are required to comply with the new protections. This means that even those contractors who have been granted certain religious exemptions under EO 11246 may not discriminate based upon sexual orientation or gender identity.

Restroom Access Policies

The OFCCP clarified how employers must approach restroom access under the new protections. OFCCP explained that employers must allow employees to use restrooms based upon their gender identity. This means that if an employee was identified as a male at birth, but identifies as a female, the employer must permit that employee to use the female restroom if the employee desires to do so.

Benefits

The new protections provide that the same benefits must be provided to same-sex spouses as non-same-sex spouses. However, employers are not required to provide the same benefits to couples in civil unions or domestic partnerships as long as the denial of benefits is not based on discrimination. Consequently, if a contractor provides heterosexual domestic partners with benefits, it must provide homosexual domestic partners with the same benefits.

ARTICLE BY

Connie N Bertram
Alex C Weinstein
Proskauer Rose LLP