Legislative and Regulatory Developments

25927634816_d55644f384_kNearly 100 days into the new presidency, all eyes are on which of his campaign promises President Trump will implement next.  One such promise put into motion is the President’s estimated $1 trillion infrastructure plan.  Touted during his campaign as a means to stimulate job growth, the President’s plan may come with more federal deregulation than the construction and government contracting industries anticipated, including possible repeal or suspension of the Davis Bacon Act (DBA).

Introduced in the midst of the Great Depression, Congress enacted the DBA as a means to prevent failing wages.  Eighty years later, the DBA has become synonymous with federal contracting.  Also known as the federal prevailing wage statue, the DBA requires payment of prevailing wages on federally funded or assisted construction projects for contracts in excess of $2,000.  Critics of the DBA argue that the prevailing rates artificially and unreasonably increase project costs, and that the U.S. Department of Labor is unable to develop an efficient process for determining market-rate wages.  Proponents – particularly labor unions – argue the DBA prevents a “race to the bottom,” increasing productivity and improving local economies. Continue Reading President Trump’s Comments Stir Rumors of Possible Repeal or Suspension of the Davis Bacon Act

Last month, we wrote about the House passing a resolution (H.J. Res. 37) pursuant to the Congressional Review Act to repeal the Fair Pay and Safe Workplaces rule (commonly known as the contractor “Blacklisting” rule). At the time we predicted the resolution would also pass the Senate and be signed by President Trump. On March 6, 2017, the Senate passed the joint resolution, and joint resolution was signed by President Trump yesterday, permanently nullifying the Blacklisting rule before it ever took effect. Continue Reading President Trump Signs H.J. Res. 37 Canceling the Fair Pay and Safe Workplaces (“Blacklisting”) Rule

logo-titleBack in October 2016, we wrote about the Fair Pay and Safe Workplaces rule (commonly known as the contractor “Blacklisting” rule) and how its implementation had been temporarily halted by a federal court in Texas.  The Blacklisting rule would have allowed agencies to essentially debar contractors on a contract-by-contract basis if a contractor had a labor law violation on its record.  Many in the contracting community lobbied hard against this rule, arguing (among other things) that the Blacklisting rule would put contractors at risk of inconsistent disqualification from procurements without the same due process rights that go along with agency suspension and debarment programs.  Well, it now looks like Congress has decided to step in and flex a rarely used law to get rid of the Blacklisting rule for good.

Today, by a vote of 236-187, the House of Representatives passed a disapproval resolution pursuant to the Congressional Review Act to repeal the Blacklisting rule.   Continue Reading House Votes to Repeal the Fair Pay and Safe Workplaces (“Blacklisting”) Rule

Trump_signing_order_January_27President Trump’s Executive Orders have been front page news for the past week, many of which have been quite controversial. Yesterday the President issued another Executive Order that, although unlikely to garner major media buzz, may be the most impactful yet for government contractors. The Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs, which some have referred to as the “Two-for-One” Order, is aimed at reducing the number of regulations across the federal government. The gist of the Order is that for every one new regulation that an executive branch agency proposes, it must repeal two existing regulations. In addition, the agency’s estimated cost of any new regulations must be offset by reductions in cost by repeal of existing regulations.

The Order makes exceptions for regulations pertaining to the “military, national security, or foreign affairs function of the United States,” “regulations related to agency organization, management, or personnel,” and any other category of regulations exempted by the Director of the Office of Management and Budget (“OMB”).

The problem with this Order is that its terms are vague, and the person charged with providing additional guidance on the Order has yet to be confirmed by the Senate. Continue Reading Trump’s Executive Order on Reducing Regulations Leaves Questions Unanswered

16064489288_1323da98f9_k (1)Two pieces of federal legislation that  recently became law will have a major impact on government contractors seeking to protest Department of Defense (DoD) and Civilian Agencies task order awards.  Some changes are for the worse, others are for the better.  However, the best news for contractors is probably that some of the changes that were proposed did not make it into the final legislation.

2017 NDAA Divests GAO of Protest Jurisdiction Over of DoD Task Order Awards Between $10 Million and $25 Million

Signed into law Dec. 23, 2016, the 2017 National Defense Authorization Act (2017 NDAA) amends 10 U.S.C. § 2304c(e)(1)(B) by increasing the GAO’s jurisdictional threshold value for DoD task order protests from $10 million to $25 million.  Naturally, this large increase greatly impacts contractors on DoD acquisitions.  No legal remedy to protest DoD task orders less than $25 million will now exist, unless the protestor contends that the the order increases the scope, period, or maximum value of the contract under which the order is issued.  Since DoD lobbied for this large increase, contractors can expect DoD will aim to issue task orders under the new $25 million threshold knowing those task order awards will not be subject to a protest at GAO.

Civilian Task Order Act Restores GAO’s Protest Jurisdiction Over Protests of $10 Million+ Civilian Agency Task Order Awards

The Government Accountability Office (GAO) Civilian Task and Delivery Order Protest Authority Act of 2016 (Civilian Task Order Act), signed into law Dec. 14, 2016, restores GAO’s protest authority over civilian task orders valued at over $10 million.  The reinstatement of civilian task order protest jurisdiction at GAO is welcome news for disappointed offerors on civilian task order procurement, since they had no remedy during the prior three months to protest civilian agencies’ task order awards.

Bottom Line 

Although the increase in the DoD threshold to $25 million is unwelcome news, contractors can breathe a sigh of relief that other proposed protest reforms were not part of the final enacted 2017 NDAA.  Those proposed changes included an attempt to require contractors earning more than $100 million in annual revenue to reimburse GAO for costs incurred for processing an unsuccessful GAO bid protest and to make an incumbent contractor-protestor forfeit profits earned on a bridge contract or extension received during the resolution of an unsuccessful GAO bid protest, and to preclude contractors from filing a bid protest at the Court of Federal Claims after unsuccessfully pursuing a protest at GAO.  However, these proposed changes may not be dead forever.  The 2017 NDAA mandates that DoD contract with an independent research entity to carry out a comprehensive study on the prevalence and impact of bid protests on Department of Defense acquisitions, including protests filed with contracting agencies, the Government Accountability Office, and the Court of Federal Claims.  One of the focuses of the report is too analyze bid protests filed by incumbent contractors.  Contractors should keep an eye out for this report, as it could be used as ammunition to limit bid protests rights in the future.

Image courtesy of flickr (licensed) by Dean Hochman

4153762400_707fd468a0_oRecently, the U.S. Export-Import Bank (EXIM) issued a proposal that would align its size standards for determining whether a business qualifies as a “small business” with the Small Business Administration’s (SBA) current SBA Loan Program standards. Such a change would decrease inconsistencies among the entities, and potentially increase EXIM lending opportunities for small businesses that otherwise do not meet the SBA’s industry-based size standards as defined under the North American Industry Classification System (NAICS).

The EXIM Bank Charter requires the EXIM Bank to make at least 25 percent of its overall loan, guarantee, and insurance authority to supporting financing of exports by “small business concerns,” as defined by the Small Business Act, Section 3. Historically, the EXIM Bank relied on the SBA’s industry-based size standards to determine which participants in its programs may be considered small businesses. Continue Reading Export-Import Bank Proposes to Adopt Small Business Jobs Act Standard for Size Determination

16417608878_48077dbee1_kOn Nov. 22, 2016—just 10 days before the rule was scheduled to go into effect—U.S. District Judge Amos L. Mazzant entered a nationwide preliminary injunction preventing implementation of the Department of Labor’s (DOL) final rule increasing the minimum salary level required to qualify as exempt under the Fair Labor Standards Act (FLSA)’s overtime rules. Many in the construction sector may be breathing a collective sigh of relief as the so-called “White Collar Overtime Exemption” may have significantly impacted the industry. Continue Reading Federal Court Enters Nationwide Injunction Halting DOL Overtime Rule

On October 21st the Department of Defense (DoD) proposed an amendment to the Defense Federal Acquisition Regulation Supplement (DFARS) intended to address “a more transparent means of documenting the impact of costs incurred during the undefinitized period of an undefinitized contract action on allowable profit.” (DFARS Case 2015–D024.)  In other words, when using its Weighted Guidelines, the DoD wants a further breakdown of completed and uncompleted work in order to refine the risk scores that will ultimately impact calculating fee percentage. The Weighted Guidelines are DOD’s structured profit approach for establishing the contracting officer’s negotiating position on profit. The proposed rule is intended to add transparency to the risk scores on contracts where undefinitized work has begun, however there is clearly potential for contracting officers to “disadvantage” the contractor’s potential fee for completing work before definitization. Continue Reading DoD’s Proposed Rule Change to Weighted Guidelines May Lead to Lower Fee Scores on Undefinitized Contracts

logo-titleStarting October 25th many new federal government contract solicitations were to contain the clauses required under the Fair Pay and Safe Workplaces Final Rule based on the Executive Order put in place by the Obama administration.  These clauses would impose significant new compliance and reporting obligations on federal contractors (and eventually on subcontractors). The stated goal is to ensure that companies contracting with the Federal Government understand and comply with labor laws.

However, contractors can breathe a bit easier (for now). On October 24th, the U.S. District Court for the Eastern District of Texas granted a preliminary injunction temporarily stopping the majority of the final rule from going in to effect. In accordance with the preliminary injunction, federal contractors will not be required, at this time, to report labor law violations with their bids and proposals on federal contract solicitations. The court also enjoined the government from enforcing the requirement regarding contractor arbitration agreements with employees covering disputes arising out of Title VII of the Civil Rights Act or from torts related to sexual assault or harassment. The court did not bar implementation of the paycheck transparency requirement scheduled to take effect on January 1, 2017.

The reporting requirements in the final rule have been described as having the potential of “blacklisting” companies from award of government contracts due to the many burdens imposed by compliance with the 14 applicable labor laws. These burdens are the reason for the pending litigation in Texas.  Since the final rule is now in litigation, government contractors may be able to put off preparations for compliance if the injunction remains in place, and therefore should closely monitor this case to see if the injunction is lifted while the litigation proceeds.  However, contractors should not assume that the this injunction will remain in place forever.  While this case is pending, it would be wise for contractors to proactively review labor law violations that have had in the past year in order to be prepared in the event the injunction is lifted.  Most importantly, contractors have to consider whether any violations are “willful,” “serious,” “pervasive” or “repeated.”  Contractors need to identify any such violations early so that they may provide evidence of mitigating factors and remedial actions the company has taken since the violation.

CV-22 Osprey | US Air ForceOn September 2, 2016, the Department of Defense (the “DoD”) issued a memorandum entitled “Guidance on Commercial Item Determinations and the Determination of Price Reasonableness for Commercial Items.”  This new guidance effectively rescinds prior guidance issued by the DoD in February 2015 regarding commercial item determinations, and to preview guidance required by Section 831 of the FY 2013 National Defense Authorization Act (“NDAA”).  The latest memorandum provides DoD’s guidance while awaiting the finalization of a proposed rule on commercial items (81 Federal Register 53101) implementing Sections 851-853 and 855-857 of FY 2016 NDAA and Section 831 of the FY 2013 NDAA.

DoD’s recently released guidance aims to highlight the underlying tenets of the FY 2016 NDAA legislation to improve the consistency and timeliness of commercial item determinations, and the price reasonableness determination for those items. Continue Reading Department of Defense Rescinds 2015 Commercial Items Guidance