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GovConectx Outreach Seminar:

Still Winter … Hot Topics in 2015 and Beyond

February 26, 2015Falls Church, VA

Susan Warshaw Ebner, Esq.sebner@fortneyscott.comFortney & Scott, LLC

1750 K St., NW, Washington, DC 20006www.fortneyscott.com

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This presentation is to provide general information and updates. These materials are not intended to provide legal advice.

Companies should consult with their in-house counsel or, as directed, with an experienced government contracts attorney for legal advice about whether, based on their specific facts and circumstances, their company complies with the applicable federal and state procurement laws and regulations.

Important Legal Notice

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• A Host of Laws, Executive Orders (“EOs”), Policies, Regulations Now and On the Horizon:• EOs and Presidential Policy Memoranda

(“PPMs”).• Past Performance.• Emerging Supply Chain Risk Issues.• Cybersecurity.• Business Systems Rule Matters.• Small Business.

• Some Recent Cases to Note.

Overview

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• Non-Retaliation.• EEO Extended.• Compensation Reporting.• Minimum Wage.• Fair Pay and Safe Workplaces. • FLSA Exemption. • Human Trafficking.• Green Initiatives. • Cybersecurity.

EOs and PPMs

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• EO 13665 Issued 8/8/14.• Prohibits Federal Contractors from:

• Engaging in discriminatory compensation practices.• Prohibiting (express or implied) employees from

discussing their compensation.• Employees may discuss their compensation

without fear of adverse action.• EXCEPT if employee’s essential job function

includes access to other employees compensation information.

• DOL NPRM issued 9/17/14.

EO: Non-Retaliation for Disclosing Compensation Information

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• PPM to Combat Compensation Discrimination, 4/8/14.

• Proposed DOL/OFCCP Rule, 8/8/14; Time for Comments Extended to 1/6/15; Rule Seeks:• To amend reporting obligations of Federal Contractors

and Subcontractors. • To require Kers to report summary information in EEO-

1 Supp.: Compensation paid to employees. By sex, race, ethnicity, specified job categories. Hours worked, number of employees, etc.

• Aim: Establish “objective industry standards”.

PPM: Contractor Required to Report Summary Employment Comp. Data

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• FAR Case 2013-015.• Based on NDAA FY 2013, Sec. 828.• FAR 3.908 and FAR 52.203-17:

Final Rule regarding pilot program for enhancement of contractor whistleblower protections

What “contracts” are covered? Any exceptions?

• Also, FAR Case 2013-017.• Final Rule regarding allowability of

legal costs for whistleblower proceedings.

Whistleblower Protection – Pilot

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• Presidential Policy Memo Issued 3/13/14.• FLSA Exemption:

• Service Contract Act (“SCA”), Davis-Bacon prevailing wage exemption, e.g., overtime for professional, administrative, executive “white collar” employees.

• Past few years: OFCCP SCA Audits re Exempt/Non-Exempt Employee Misclassifications.

• PPM Intent to “Modernize”. • What Might That Mean?

• DOL Planning to Issue New Rules … by Summer 2015.

PPM: FLSA “White Collar” Exemption

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• EO 13672 Issued 7/21/14.• Prohibits Federal Contractor discrimination

against any applicant or employee because of sexual orientation or gender identity.

• Requires Federal Contractor affirmative action to ensure against such discrimination.

• OFCCP Directive issued to “clarify” existing agency guidance.

• DOL Final Rule Issued 12/9/14.

EO: Further Implements EEO in Federal Government

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• E.O. 13658, 2/12/14:• Calls for $10.10 minimum wage for all Federal

Contractor/Sub Employees.• Intends to cover all procurements issued after

1/1/15.• Final DOL Rule, 10/14, 100+ Pages. • FAR Case 2015-003, Interim Rule,

12/14. • What is the impact to current proposals?• What requirements under existing

contracts? Subcontracts? Grants? Etc.?

EO: Federal Kers to Pay Min. Wage

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• EO 13673 Issued 7/31/14:• Requires prospective contractors (and subcontractors)

to disclose federal/state labor law violations from the past three years.

• For procurements, periodically during the contract, and before any option exercise.

• Requires each agency to designate senior official as a Labor Compliance Advisor (“LCA”).

• Numerous questions and implementation issues.

• FAR Case 2014-025 (8/20/14)…moving…not so fast?

EO: Fair Pay and Safe Workplaces

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• EO 13627 and NDAA FY ‘13, Title XVII.• FAR 52.222-50.• Final Rules Now Issued:

• OFCCP.• FAR Case 2013-001, Ending Trafficking in Persons,

Effective 3/2/15.• DFARS Case 2013-DO07, Further Implementation of

Trafficking in Persons Policy, Effective 1/29/15.

Against Human Trafficking

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• Arise out of consolidated appropriation FY 2014, PL 113-76.

• FAR Case 2014-019 – Prohibition on Contracting with Corporations With Delinquent Taxes or a Felony Conviction.

• DFARS Deviations issued. • Blocked parties due to actions in Ukraine.• AND, still more…

Prohibitions on Contracting

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Prohibition on Contracting with Inverted Corporations

• FAR Case 2014-017 – Interim Rule.• What is an Inverted Domestic Corporation?• What entities are covered?• What is prohibited?

• Other Related Rules:• FAR Case 2015-006, Prohibition on Contracting with

Inverted Domestic Corporations, Notice and Representation, Proposed.

Replaces FAR Case 2014-019 due to FY ‘15 Appropriations Act Changes; covers reps for commercial item sales.

• DOD Class Deviations 2014 and 2015.

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• 5 CFR Part 1800, Proposed Revision of Regulations To Allow Federal Contractors, Subcontractors, and Grantees To File Whistleblower Disclosures with the U.S. Office of Special Counsel.• Issued for comment on 1/22/15.

• Potential issues:• Statutory authority of OIG.• Statutory authority of OSC.• “Prohibited Personnel Practice.”• Lack of anecdotal evidence of need to expand reporting.

OSC Proposed Rule

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• EO 13514 – Federal Leadership in Environmental, Energy, And Economic Performance (10/5/09).

• American Reinvestment and Recovery Act.• GSA Green Programs and DOE Projects• FAR Case 2010-001 Sustainable Acquisition. • At DOD: Secretary Hagel issues October 2014

DOD Report on Impact of Climate Change on Defense.

• President: Cites in State of the Union Address on 1/15, Calls for actions, vetoes Keystone Pipeline project.

Climate Change

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• Revisions to FAR Part 42.15.• Past performance under CPARS and CCASS.

• Why is it important? • Preparation of reviews.• Process for review and response.• Now only 14 days until draft report goes on

CPARS/PPIRS.• Seeking higher level review.

• Cases: • Jurisdiction to hear at ASBCA, COFC, and likely CBCA.• What can they address?

• More coming.

Past Performance Matters

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• SASC, HASC, GAO Investigations, Reports, Prosecutions.

• Increasing supply chain security problems. • Clear need to manage and protect the integrity

of the complete supply chain from:• Counterfeit electronic parts.• Nonconforming parts.• Cybersecurity risks.

• Potential threats to safety of public, defense personnel and systems.

• But…how to address and still get what is needed?

Supply Chain Risks

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• NDAAs, FY ‘12, ‘13, ’14, ’15.• Detection/Avoidance counterfeit electronic parts.• Implement IUID.• Threats to National Security Technology/Industrial Base.• Identification and replacement of obsolete parts.• Sourcing.

• Public Meetings and Rulemaking. • DPAP to issue DFARS/FAR triumvirate initially:

DFARS Case 2012-DO55 – Detection/Avoidance of Counterfeit Electronic Parts.

FAR Case 2013-002 – Expanded Reporting of Non-Conforming Items.

FAR Case 2012-032 – Mods Higher-Level Contract Quality Requirements.

Counterfeit Parts

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• But, now there’s also:• DFARS 2011-DO39 – Safeguarding Unclassified

Controlled Technical Information, Final. • FAR Case 2012-024 – Commercial and Government

Entity Code.• DFARS Case 2012-DO42 – Business Systems

Compliance, Proposed.• DFARS Case 2013-DO50 – Supply Chain Risk, Interim. • DFARS Case 2014-DO13 – Update Commercial and

Government Entity (CAGE) Code Information.• DFARS Case 2014-DO05 – Detection/Avoidance of

Counterfeit Electronic Parts–Further Implementation.• And, still more…

Counterfeit Parts (cont’d)

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• DFARS 2012-DO55 - Final Rule on Prevention, Detection, Avoidance, Reporting, Correction of Suspect or Actual Counterfeit Electronic Parts In DoD Supply Chain: • Definitions. • Buy from OM, authorized reseller, trusted supplier.• Establish risk-based counterfeit electronic part

detection and avoidance system. • Include/Address 12 specified criteria.• Flowdown to all tiers of Subs/Suppliers.• Report to GIDEP.• Investigate and Remediate, but limited Safe Harbor.

• Significant concerns.

Counterfeit Electronic Parts

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• Interim Rule Implements NDAA FY’11, §806.• Exclude sources if fail meet qualification standard.• Exclude sources if fail achieve acceptable rating

regarding supply chain risks in procurement.• Withhold subcontractor consent.

• Pilot program until 9/30/18.• Definitions: Supply Chain Risk, NSS, IT.• Applies to all IT procurements, including <SAT,

CI, COTS, SB.• Where exclusion by head of agency, notice to

Congress, but … says no opportunity to protest/obtain Fed. Ct. review.

DFARS 2012-DO50, Supply Chain Risk

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• NDAA FY’12, §818.• Proposed rule.

• Not limited to DOD. • Covers primes and all subcontractor tiers with supplies,

even CI and small business. • Not limited to electronic parts.• Definitions:

Common Items. Counterfeit Item and Suspect Counterfeit Item. Design Activity. Quality Escape.

• Status? Regulations.gov says final coming in March 2015.

FAR 2013-002, Expanded Reporting of Nonconforming Items

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• DoD OIG: • Revised OIG site to require reporting of

counterfeit, suspect counterfeit and nonconforming items per far mandatory disclosure.

• Revised site to require reporting of substandard items, too.

• Other IGs.• DOJ.• IPR/IPEC – Operation Chain Reaction.• DFARS Case 2014-DO26 Warranty

Tracking of Serialized Items.

Other Activities

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• A variety of threats … events … makes big news.

• EO 13636 – Improving Critical Infrastructure Cybersecurity.

• PPD 21.• GSA and DHS JWG on Improving

Cybersecurity and Resilience through Acquisition.

• OFPP Request for Information Notice, 5/13/13.

Cybersecurity

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• NIST Release of Cybersecurity Framework.• Version 1.0.• Working set of industry standards and best practices to

help organize / manage cyber risks.• Collaboration of Government and industry to ensure

common language.• Includes:

Framework core. Framework profile. Framework implementation tiers.

• NIST Road Map.• Coordination of definitions for counterfeit,

cybersecurity, nonconforming, etc.

Cybersecurity (cont’d)

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• New Cybersecurity laws: • Federal Information Security Modernization

Act, P.L. 113-283.• Border Patrol Agent Pay Reform Act, P.L. 113-

277.• Cybersecurity Workforce Assessment Act, P.L.

113-246.• National Cybersecurity Protection Act, P.L.

113-282.• Cybersecurity Enhancement Act, P.L. 113-274.

• More proposed legislation pending, stay tuned.

New Laws … More On The Way

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• FAR Case 2014-021 – Contractor Access to Controlled Unclassified Information.

• FAR Case 2011-020 – Basic Safeguarding of Contractor Information Systems.

• DFARS Case 2013-DO18 – Network Penetration Reporting & Contracting for Cloud Services, Interim Rule 8/15/14; DOD 2015-DO011, Class Deviation.

• DFARS Case 2014-DO10 – Foreign Commercial Satellite Services, Interim Rule 2014.

• FAR Case 2013-020 – Information on Corporate Contractor Performance and Integrity, NPRM.

• FAR Case Pilot re Enhanced Whistleblower Protections, Final Rule 2014.

Cybersecurity and Other Regulations

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• Small Business Jobs Act, NDAA FY ‘13, and SBA Proposed Rules, 2/5/15: • Gov’t-Wide Small Business Mentor-Protégé Program:

8(a) BD Program (Make 8(a) and SB M-P Consistent). SBA Approval, Written M-P, differs from other agency. Timing regarding when can apply. Annual review. M-P Agreement limit to three-year duration.

• SDVO, HUBZone, WOSB, EDWOSB JV Programs: Registration and tracking of JV awards for transparency

and accountability to Government and public.

• Size classification rules. • OHA Rules of Procedure.

Small Business

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• Allowable Government Contractor compensation cost limits.

• Open source.• Cloud.• EULA.• FAR Retrospective (Aug 2014).

Other Notables

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• Fokker Services B.V. v. DOJ (DDC). • Export control violations.• Multi-Jurisdictional impacts. • Judicial review of deferred prosecution agreement. • Settlement to pay millions rejected by court. • Fokker Appeals to DC Circuit, 2/24/15.

• Kiewit-Turner, JV v. Veterans Administration• CBCA Decision issued 12/14. • VA did not comport with standards of good faith and

fair dealing. • CBCA finds material breach justifies stop work by K-T.

Recent Cases … Indicators to Note

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• We are in a real period of flux.• Internal and external forces are driving changes

within and without.• As a government contractor, subcontractor or

supplier, keep your eyes on:• The terms of your solicitation.• The provisions in your contract.• How you, your employees, your team, your subs

perform.• How the Government performs. • Emerging risks, industry standards and practices.

• Any problems may require reporting. • Eyes on the future, … more is coming!

Conclusion

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Questions?

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Susan Warshaw Ebner is a shareholder at Fortney & Scott, LLC. Her practice concentrates on advising and representing small, medium and large businesses, as well as non-profit and consortium clients on a broad spectrum of Federal, state and local government contracting matters, including bid protests, contract procurement and administration issues, claims, audits, investigations, compliance programs, and other matters. She has represented clients in a variety of courts and forums, including the U.S. Court of Federal Claims, U.S. Government Accountability Office, Boards of Contract Appeals, U.S. District and Appellate Courts, and state courts.

Previously, as a government attorney, Ms. Ebner advised and represented the Department of the Navy, the Department of Defense and the U.S. Office of Personnel Management in complex litigation before Federal District and Appellate courts, administrative boards and the U.S. Court of Federal Claims. She was also appointed as a Special Assistant United States Attorney for a case in the Northern District of Florida. In addition to her private practice experience, she was in-house senior counsel at Cincinnati Bell Incorporated and its spin-off, Convergys Corporation, and Chief Counsel at NCR Government Systems Corporation.

Ms. Ebner has authored numerous articles and advisories on government contracting and litigation topics and lectures frequently for professional groups and trade associations on issues arising in these areas.  She holds a Bachelor's degree in English, with a concentration in Law and Society, from Cornell University College of Arts and Sciences and a law degree from Cornell University Law School.

She is a member of the Bars of the District of Columbia and Commonwealth of Virginia, American Bar Association (ABA), Boards of Contract Appeals Bar Association, Inc. (BCABA), US Court of Federal Claims Bar Association. She is a Fellow of the ABA, a member of the ABA Public Contract Law Section (PCLS) Council, Co-Chair of the ABA PCLS Acquisition Reform and Emerging Issues Committee, and Chair of its Task Force on Counterfeit Parts. She is a Past President of the BCABA, a Past President of Women In Defense, and a Past Chair of the DC Bar Government Contracts and Litigation Section. She received the BCABA Life Service Award in 2010. She is Martindale-Hubbell AV Preeminent Peer Review Rated.

Susan Warshaw Ebner

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