Georgia Tech Procurement Assistance Center

False Claims Act case based on DoD’s cybersecurity regulations survives motion to dismiss

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In the summer of 2015, we cautioned that the Department of Defense’s (DoD’s) new cybersecurity regulations could be used offensively to support False Claims Act (FCA) cases and bid protests.  Four years later, those premonitions have unfortunately come true.  Recently, a federal court refused to dismiss a relator’s implied certification FCA case in which he alleged that his employer “misrepresented … to the government the extent to which it had equipment required by the regulations, instituted required security controls, and possessed necessary firewalls” in violation of DoD’s cybersecurity regulations.  United States ex rel. Markus v. Aerojet Rocketdyne Holdings, Inc., No. 2:15-cv-2245, 2019 WL 2024595, *3 (E.D. Cal. May 8, 2019).

By way of background, the False Claims Act imposes civil and potentially criminal liability on anyone who knowingly presents a false or fraudulent claim for payment to the federal Government, or knowingly makes, uses or causes to be made or used, a false record or statement material to a false or fraudulent claim.  31 U.S.C. § 3729(a)(1)(A) & (B).  The FCA permits a private person, known as a relator, to bring a qui tam civil lawsuit in the name of Government against anyone who violates the Act.  Civil remedies can include up to three times the actual damages suffered by the Government as a result of the false claim along with a civil penalty between $5,000 and $10,000 for each violation.  The relator receives a share of any proceeds from the action—generally 15 to 25 percent if the Government intervenes, and 25 to 30 percent if it does not, plus attorneys’ fees and costs.  The FCA also has a lengthy statute of limitations of either six years from when the fraud is committed or three years after the Government knows or should know about the material facts giving rise to the claim, whichever is later, as long as the action is filed within ten years of the alleged fraud.  31 U.S.C. § 3731(b); Cochise Consultancy, Inc. v. United States ex rel. Hunt, 587 U.S. __ (May 13, 2019) (noting “if the Government discovers the fraud on the day it occurred, it would have 6 years to bring suit, but if a relator instead discovers the fraud on the day it occurred and the Government does not discover it, the relator could have as many as 10 years to bring suit”).

Read more at:  Privacy and Data Security Insight

Defense contracting fraud remains ongoing issue

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In April Oben Cabalceta pleaded guilty to defrauding the U.S. Department of Defense (DoD) out of $1.8 million by providing the wrong or incorrect military equipment parts.  The New Jersey resident also admitted to illegally accessing sensitive, technical information despite not even being an American citizen.

Cabalceta, who is a native and citizen of the Republic of Costa Rica and was not lawfully in the United States, pleaded guilty to one count of wire fraud and one count of conspiracy for violating the Arms Control Act.

Continue reading at:  Clearance Jobs

People are key to securing the defense-industrial supply chain

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Infiltrating the defense supply chain is one of the most insidious means by which attackers can compromise our nation’s communications and weapons systems.  Successfully targeting a single component of the defense industrial base can cause a ripple effect that can significantly impact everything from data centers to war fighters in theater.

The Department of Defense’s new “Deliver Uncompromised” security initiative is designed to tackle this problem at its root cause: third-party suppliers.  In essence, the DoD is requiring its suppliers to bake security into their applications from the beginning of the production process.  A “good enough” approach that just clears the bar for minimal security criteria is no longer good enough.  Security must be ingrained in the very fabric of the entire production process.

Continue reading at:  Fifth Domain

Key lawmakers introduce bill to reauthorize and improve DoD mentor-protégé program

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A bipartisan pair of senators have introduced a bill to make it easier for small businesses to do business with the Pentagon, through larger defense firms.

Sens. Martin Heinrich, D-N.M., and Joni Ernst, R-Iowa, on Monday, May 6th announced the Defense Small Business Advancement Act, which is meant to reauthorize and improve the Department of Defense Mentor-Protégé Program.  One of several such programs the federal government offers, the Defense Department’s program was established in 1991, then repeatedly expanded and renewed until the administration and Congress allowed it to expire last year.

“Small businesses often struggle to overcome the hurdles of bureaucracy and fail to break through the existing network of suppliers to the Department of Defense, which is the single largest department in the federal government,” Heinrich, ranking member of the Senate Armed Services Subcommittee on Strategic Forces, said in a statement.

Continue reading at: Defense News

DoD proposes new rule on performance-based contract payments

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According to a report by the Federal News Network, the Department of Defense (“DoD”) is proposing a new rule which would change how it pays some defense contractors.  DoD is looking to require, whenever practicable, that fixed price contracts be paid out through performance-based contractual payments.  Performance-based payments are a method of contract financing where payments are made on the basis of the contractor’s achievement of objective, quantifiably measurable events, results, or accomplishments that are defined and valued in the contract prior to performance.  Some within the government consider it a preferred method of contracting and claim that it reduces the government’s oversight and compliance costs.  It also may have benefits for contractors, as it should help cash flow, reduce the cost of oversight and compliance, and allow the contractor to focus on technical and schedule progress.  Comments on the proposed rule are due by July 1.

Read the new rule at the Federal Register.

DoD could award more contracts to companies with disabled workforce

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The Defense Department may soon have an additional way to award contracts to companies that employ people with severe disabilities, breathing life back into a project Congress set up 15 years ago but that’s languished ever since.

A proposed rule, published April 1, amends the Defense Federal Acquisition Regulation Supplement by implementing a demonstration project giving Defense agencies more incentive to purchase contracts directly from eligible firms employing those with severe disabilities.  It gives contractors with a disabled workforce a boost when competing for certain awards.

Most DoD contracts with entities that employ large numbers of disabled Americans are currently handled through a procurement list maintained by the AbilityOne program.  But under the proposed rule, DoD would be able to award contracts to companies — both nonprofit and for-profit — that do not qualify to sell through AbilityOne, as long as the contractors can meet other criteria.

  • Individuals suffering from severe disability must make up at least 33 percent of a contractor’s workforce over a 12-month period from the time the award period begins.
  • The entity cannot pay those with disabilities less than minimum wage.
  • The organization must also provide those individuals with health insurance and a retirement plan comparable to those provided by other contractors.

“Contracts awarded to eligible contractors under this demonstration project may be counted toward DoD’s small disadvantaged business goal,” the proposal said.

Continue reading this article at: Federal News Network

U.S. Government issues definition of “recruitment fees” in FAR anti-trafficking regulations

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The Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”) recently issued a final rule amending the Federal Acquisition Regulation (“FAR”) to clarify the FAR’s prohibition on assessing employees with recruitment fees in connection with federal contracts.  The rule provides a final definition of “recruitment fees” and clarifies the FAR’s broad prohibition on federal contractors or subcontractors assessing employees or potential employees with any such fees.  The final rule brings long-awaited clarity to the scope of the prohibition on recruitment fees, as the term has not previously been defined in anti-trafficking regulations.

Keep reading this article at: Arnold & Porter website

Weak links in the defense supply chain

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Industry experts told Congress recently that poor awareness of federal cybersecurity contracting standards and a lack of visibility by contractors into their own supply chains are at the heart of problems that have led to widespread targeting and theft of U.S. economic and national security secrets by nation state hackers.

According to a survey of small and medium-sized defense contractors conducted by the National Defense Industrial Association, less than 60 percent of respondents said they read the Defense Federal Acquisition Regulation Supplement that lays out minimum security standards for contractor information systems, while nearly half of those who did said they found it hard to understand.

About 45 percent of respondents hadn’t read National Institute for Standards and Technology guidelines for protecting controlled unclassified information.

Keep reading this article at: https://fcw.com/articles/2019/03/31/defense-supply-chain-weak-links.aspx

See GTPAC’s video, template and other resources designed to help contractors comply with the DoD/NIST cybersecurity rules at: http://gtpac.org/cybersecurity-training-video/

Holding government contractors responsible for cybersecurity is trickier than it sounds

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The federal government wants to hold defense contractors accountable for the cybersecurity of their supply chains but that’s no easy feat, experts said recently.

On March 26th, industry representatives told lawmakers on the Senate Armed Services Committee about attempting to tackle cyber threats as a federal contractor. Much of the hearing was focused on one specific issue: increasingly complex levels of supply chains make it difficult for prime contractor to ensure all subcontractors are upholding cybersecurity protections. And that ever-lengthening chain increases the possibility of compromised information or cyberattacks.

“I don’t know why we don’t hold the larger contractors who are responsible for the contract to make sure the subcontractors they are hiring have protections,” Sen. Joe Manchin, D-W.V., said. “Somebody has to be held accountable.”

Keep reading this article at: https://www.nextgov.com/cybersecurity/2019/03/holding-government-contractors-responsible-cybersecurity-trickier-it-sounds/155862/

Defense dominates experiment in streamlined bidding for innovation

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Streamlined solicitations for innovative commercial products and services, known as commercial solutions openings are beginning to take off in the Defense Department. Even the General Services Administration’s CSO service, which is open to all agencies for a fee, so far has been dominated by Defense users.

CSOs aren’t as well known or broadly used as their procurement-innovation cousin, other transaction authority, which gives agencies the ability to strike contracts outside the Federal Acquisition Regulation for research, prototypes and production to obtain technology from nontraditional defense contractors. Eleven agencies including Defense have OT authority.

GSA’s CSO holds the potential to bring civilian agencies, most of which don’t have OT authority, the ability to reach out to and select suppliers unencumbered by the Federal Acquisition Regulation. So far, civilian agencies haven’t been biting, but Pentagon organizations are, even though they have their own CSO provider.

The very first GSA CSO customer was none other than the Defense Innovation Unit, a once-experimental buying organization that invented CSOs. Originally designed to lure emerging companies to work for the Pentagon by easing the pain of federal procurement processes, the Defense Innovation Unit Experimental, or DIUx, lost the X last summer, when it was designated a permanent outpost for testing defense buying boundaries.

Keep reading this article at: https://www.govexec.com/excellence/management-matters/2019/03/defense-dominates-experiment-streamlined-bidding-innovation/155373/

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