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Nichols Liu Lands Choctaw Global’s CEO and Chief Legal Officer

Washington (December 4, 2023)Sarah Curtis, the former Chief Executive and Legal Officer of Choctaw Global, a tribally-owned family of companies, has joined Nichols Liu as a Partner. 

Sarah worked as a government contracts attorney at Holland & Knight and Patton Boggs before leaving to gain in-house experience.  She also served as the Vice-President of Legal and Compliance at Choctaw Global as well General Counsel for Olgoonik Corporation, the Alaska Native Corporation for the village of Wainwright, Alaska.   


“Sarah brings a wealth of practical knowledge and skills from her in-house positions that will immediately add value for our clients.  Her unique, extensive experience with Alaska Native and tribally-owned companies fits well with the firm’s capabilities in M&A and strategic growth,” says Robert Nichols, Chair of the firm.  


Sarah’s practice will include advising companies on all aspects of government contracting compliance, corporate governance, mergers and acquisitions, and strategy.  She has experience advising companies and individuals on matters involving the Small Business Administration’s 8(a) and other business development programs and issues focused on Alaska Native and tribally-owned companies. 


“I’m excited to be returning to Washington D.C., to join the incredible professionals at Nichols Liu and be a part of its growth as it continues serve the government contractor community,” said Ms. Curtis. 


Preparing for the Government Shutdown

By Robert | (202) 846-9801

As the government faces yet another shutdown, we want to provide a quick primer on steps to take to prepare.

Why Is the Government About to Shutdown?

The U.S. Constitution and the Anti-Deficiency Act (31 U.S.C. § 1341) prohibit the government from spending money that has not been appropriated by Congress. Congress enacted the most recent appropriations bill in December 2022. That bill funded the government through the next fiscal year. The fiscal year ends on September 30, 2023.

Congress cannot agree on funding levels for the 2024 appropriations bill. Often, when Congress can’t agree on appropriations, they pass a continuing resolution to temporarily funds the government at the previous year’s levels. If Congress doesn’t enact an appropriations bill or a continuing resolution by September 30th, most government operations will cease.

What Happens When the Government Shuts down?

During a government shutdown, agencies suspend all non-essential discretionary functions. Each agency develops its own shutdown plan. These plans delineate which essential services will continue. Generally, services related to public safety—e.g., law enforcement, medical care, border protection—are deemed essential. Federal employees handling essential functions will continue to work. Non-essential employees, however, will stay home.

Absent a stop work order from the contracting officer, federal contractors must continue performance during a shutdown. Performance issues, however, will be inevitable. For starters, payment will likely be delayed. Agencies can’t make payments without appropriated funds. In fact, the federal employees who process payments for any given agency could be furloughed.

In addition to payment delays, contractors should expect performance disruptions. Many federal facilities will close, so contractors won’t have access to the worksite. Also, contractors will not receive approvals for deliverables or timely directions from the agency during a shutdown, which will cause delays.

Moreover during a shutdown, all, procurement activities cease. Agencies will not issue solicitations or award new contracts. You’ll need to sit tight if you’re waiting to hear back on a proposal. Additionally, existing contracts will be in limbo. Agencies will not modify contracts or exercise options during a shutdown.

What Should Contractors Do to Prepare for a Shutdown?

  • Review Agency Shutdown Plans – Several agencies have enacted plans that set forth how the agency will operate during a shutdown. The Office of Management and Budget collects them here. Review these plans for agency-specific guidance on contracts.
  • Communicate with the Contracting Officer – Reach out to your contracting officers to ask for instructions. Work with them to create a shutdown action plan. An action plan approved by the contracting officer will prevent future headaches.
  • Stop Work Only if Necessary – The general rule is, unless the contracting officer directs you to stop work, you must continue—even if payment is delayed. If you find that stopping work is necessary due to government orders or otherwise, contact us to make plans for a claim.
  • Create Contingency Plans – If a shutdown occurs, you may need to reassign employees and resources. Create plans internally and with subcontractors and suppliers to make this as seamless as possible.
  • Prepare Employees – Communicate with employees about the possibility of paid leave or furloughs. Review and be sure to comply with federal and state employment laws. For instance, the federal Worker Adjustment and Retraining Notification (WARN Act) requires employers to provide 60 days’ written notice in advance of a mass layoff. There is an exception under the WARN Act for “unforeseeable business circumstances.” But it’s not clear a government shutdown qualifies as an unforeseen circumstance.
  • Prepare for Claims – Delays in payments or impacted performance may entitle you to an equitable adjustment or give rise to a claim against the government. Track and document the cause of every delay and all increased costs. Losses caused by a shutdown are likely reimbursable. Recovery of these funds will be easier with detailed, well-organized records.

If you have questions about the possible shutdown or need assistance creating a shutdown action plan, Nichols Liu can help. Please contact the author of this article or the Nichols Liu attorney with whom you regularly work.

Federal Contractors Banned from Using TikTok

By Lynne Halbrooks and Madison Plummer

The Interim Rule: On June 2, 2023, the FAR Council issued an interim rule that prohibits having or using TikTok and other covered applications by ByteDance Ltd. on federal contractor devices.[i]  This interim rule follows in the wake of the government-wide initiative that bans TikTok on all federal government devices implemented earlier this year due to rising national security concerns and geopolitical tensions between the United States and China.  The interim rule amends FAR Part 4, adding new subpart FAR 4.22, “Prohibition on a ByteDance Covered Application,” with a corresponding contract clause at FAR 52.204-27 (the “FAR clause”).

Immediate Implementation: The interim rule is effective immediately. Contracting Officers must include the FAR clause in all solicitations and new awards, including orders, modifications, options, or contract extensions, issued on or after June 2, 2023.  Federal contractors should expect amendments to solicitations issued prior to June 2, 2023, no later than July 3, 2023.

Application of the Interim Rule: The FAR clause applies to “the social networking service TikTok or any successor application or service developed or provided by ByteDance Limited or an entity owned by ByteDance Limited.”[ii]  Like other prohibitions on covered technology, the FAR clause imposes a broad prohibition on the presence or use of the covered application:

The Contractor is prohibited from having or using a covered application on any information technology owned or managed by the Government, or on any information technology used or provided by the Contractor under this contract, including equipment provided by the Contractor’s employees however, this prohibition does not apply if the Contracting Officer provides written notification to the Contractor that an exception has been granted in accordance with OMB Memorandum M-23-13.

The ban applies to all devices used in the performance of a federal contract, regardless of whether they are owned by the government, the contractor, or the contractor’s employees. The ban includes federal contractor employees’ devices used as part of an employer’s bring your own device (“BYOD”) program, but it does not include (1) personally-owned devices that are not used in the performance of the federal contract or (2) equipment that is incidental to a contract.

A few other notes:

  • The interim rule applies to acquisitions at or below the Simplified Acquisition Threshold (“SAT”) and acquisitions for commercial products and services, including Commercially Available Off-the-Shelf (“COTS”) items.
  • The FAR clause does not exclude imbedded information technology (e.g., HVAC systems); this differs from the standard definition of “information technology” in FAR 2.101.[iii]
  • And again, like other prohibitions surrounding technology, this FAR clause flows down to all subcontracts.

The government does not expect this rule to have a “significant economic impact on business” because the rule is less complex than other prohibitions on technology (e.g., FAR 52.204-25). The government believes that contractors already should have policies and procedures in place that block nefarious technology and that define appropriate technology use for employees. Public comments are being accepted on the interim rule until August 1, 2023.

What’s Next? Although the proposed rule does not include any reporting or record keeping requirements, federal contractors should work incorporate the interim rule into their compliance framework as soon as possible. Steps might include drafting or amending policies to ban the presence and use of TikTok on laptops and cell phones used by employees and subcontractors during contract performance or having your IT staff block employees’ access to the website and installation of the application. Contractors who have a BYOD policy could require certifications from employees and subcontractors that no personal or employee-provided devices use TikTok and verify implementation through endpoint management. Contractors are urged to implement appropriate steps immediately.

As the federal government continues to expand the breadth and depth of prohibited technology used in connection with its information systems, the government contracts industry should consider the possibility that these bans may expand to any system that stores federal information. For example, law firms and accounting firms may become subject to the same prohibition when handling government information provided by their federal contractor-clients in a subpoena response, bid protest, or other litigation.

If you need assistance complying with the new interim rule, have questions, or would like assistance submitting comments to the interim rule, Nichols Liu can help. Please contact the authors of this article or the Nichols Liu attorney with whom you regularly work.

[i] Federal Acquisition Regulation: Prohibition on a ByteDance Covered Application, 88 Fed. Reg. 36430 (June 2, 2023) (to be codified at 48 C.F.R. part 31),

[ii] FAR 52.204-27(a).

[iii] Id.

Supreme Court Clarifies Subjective Meaning of “Knowingly” Under the False Claims Act

By Andy Liu, Robert Rhoad, Michael Bhargava, Haaleh Katouzian

On June 1, 2023, the Supreme Court issued a major, but narrow, victory for plaintiffs in False Claims Act cases.  It held that defendants can be held liable when they subjectively know that they submit false claims to the government, even if they can later identify an “objectively reasonable” justification for their actions.

The False Claims Act creates liability for those that knowingly submit false or fraudulent claims for payment to the federal government, and it allows private citizens, i.e., “relators,” to initiate “qui tam” suits on behalf of the government and to share in any proceeds recovered through the action.  Here, the question before the Supreme Court was how to interpret the word “knowingly,” which has divided lower courts.  The disagreement stemmed around whether “knowingly” should be interpreted as a subjective or objective standard.

In the two cases before the Court—United States ex rel. Proctor v. Safeway, Inc. and United States ex rel. Schutte v. SuperValu Inc.—relators separately sued retail drug pharmacy chains operated by SuperValu and Safeway, alleging that they knowingly overcharged Medicare and Medicaid when seeking reimbursement for prescription drugs.  Pharmacies are permitted by regulation to charge the government their “usual and customary” drug prices. SuperValu and Safeway interpreted the vague phrase to mean their standard retail price for drugs, even though the large majority of certain drugs were sold at steep discounts.  Relators sued on the theory that the pharmacies were knowingly overcharging the government at the retail price, which violated regulations because the discounted price was the “usual and customary” price.  To meet the “knowingly” requirement, relators presented evidence showing that 1) the pharmacies had been informed as early as 2006 that they were overcharging for the drugs, and 2) that the pharmacies tried to conceal their approach so as not to raise concerns.

Both the district court and the Seventh Circuit held that the SuperValu and Safeway submitted false claims to the government because, when seeking reimbursement, they should have done so based on their discounted prices.  Those courts nevertheless granted summary judgment to the pharmacies, holding that even though they both knew that their requests for payment were fraudulent, the phrase “usual and customary” could have been interpreted by an “objectively reasonable” person as permitting the submission of the higher retail prices.  In doing so, the Seventh Circuit adopted an objective standard for interpreting the False Claims Act scienter requirement, unlike the subjective standard adopted by other courts that looked only at what the defendants actually believed.

Last Thursday, the unanimous Supreme Court opinion overturned the Seventh Circuit decisions.  It held that the appeals court erred in adopting the objective standard from the Supreme Court’s prior decision in Safeco Insurance Co. of America v. Burr, 551 U. S. 47 (2007), because that case involved a different statute and a different scienter standard (“willfully,” not “knowingly”).  The Court noted that the False Claims Act and its roots in common-law fraud standards create liability when a defendant has actual knowledge of the falsity, acts in deliberate ignorance of the falsity, or acts in reckless disregard of the falsity.  All of these require an analysis of the defendant’s subjective intent, the Court held.  As the Court explained, the False Claims Act and the common law “point to what the defendant thought when submitting the false claim—not what the defendant may have thought after submitting it . . . . As such, the focus is not, as respondents would have it, on post hoc interpretations that might have rendered their claims accurate.  It is instead on what the defendant knew when presenting the claim.”

Because the Supreme Court’s decision was narrow and only resolved the broad issue of objective versus subjective intent, lower courts will be left to puzzle through how to implement the Court’s new direction.  This includes some language that may prove favorable to defendants.  For example, the Court explained that the “reckless disregard” standard—the lowest level of scienter required to establish liability under the False Claims Act—“captures defendants who are conscious of a substantial and unjustifiable risk that their claims are false, but submit the claims anyway.”  Because this is a new formulation of the reckless disregard standard, and because this standard is commonly asserted by plaintiffs as it is the easiest to prove, this will almost certainly spawn future litigation battles over what constitutes a “substantial and unjustifiable risk.”

Are Early Protest Dismissals Still Possible? Options After the Federal Circuit’s CACI Decision

by Robert Nichols, Michael Bhargava, Sam Van Kopp

For years, government agencies have sought early dismissal of bid protests at the Court of Federal Claims on jurisdictional grounds, arguing that the protestor was ineligible for award and therefore lacked standing.  But the Federal Circuit Court of Appeals just made that more difficult for the government by holding that these arguments are not jurisdictional and must be heard at the merits stage.  This holding may draw out bid protests even when protestors appear ineligible for award.  But there may also be another way for the government to get such protests dismissed on standing grounds early in the protest process.

The case at issue, CACI, Inc.-Federal v. United States, involved a procurement for a device to encrypt battlefield information.  During the proposal stage, CACI disclosed to the Army the existence of a potential organizational conflict of interest (“OCI”) because one of its former employees prepared a document used in the solicitation.  The Army did not consider this to be an OCI, but nevertheless rejected CACI’s proposal on technical grounds, and CACI protested at the Court of Federal Claims.  In response to the protest, the Army changed its tune and asserted that CACI, in fact, did have a conflict of interest, and it moved to dismiss the protest because CACI was not an “interested party” that would have been eligible for the award.  The court refused to consider the Army’s convenient argument, but after conducting its own assessment de novo, it agreed to dismiss the complaint for lack of subject matter jurisdiction based on the lack of standing.

The Federal Circuit reversed the trial court’s decision—and decades of precedent along with it.  The appeals court first noted that the relevant standing criteria were established in the Tucker Act, 28 U.S.C. § 1491(b)(1), rather in the “cases and controversies” provision in Article III of the Constitution.  The court then looked to the Supreme Court’s decision in Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014), which held that so-called “statutory standing” (as opposed to “constitutional standing”) is not a jurisdictional issue, but a merits issue that requires courts to determine whether a cause of action encompasses a particular claim.  This holding overturns decades of Federal Circuit precedent holding that standing in bid protests was a jurisdictional issue.

The upshot of this decision is that the issue of prejudice––including whether the protestor may have a conflict of interest that makes it ineligible for award––is no longer necessarily a ground for early dismissal in bid protests.  Instead, it may be considered alongside the merits of the appeal.  CACI may give protestors that might otherwise face an early dismissal an opportunity to develop their claims for consideration on the merits.  And if the issue of prejudice is a factual question (such as OCI) that “has not been addressed in the first instance by the contracting officer, a remand is necessary for the contracting officer to address the issue of prejudice.”  Id. at *6.

While some commentators view this as the end of early-stage dismissals, we believe there is another possibility:  the government may make the same standing argument by filing early summary judgment motions under Rule 56.  The court may agree to prioritize this issue and avoid the need for the government to produce agency reports or adjudicate the remaining merits through a motion for judgment on the administrative record under Rule 52.1.  To win on Rule 56 summary judgment, the government would have a higher burden of proof, needing to show that there is no genuine dispute of facts as to whether the protestor is eligible for award.  But where the facts are not in dispute and the Government can meet this burden, early dismissal may be possible and appropriate, notwithstanding the CACI decision.

On FedNewsNetworks with Tom Temin, Alan Chvotkin discusses significant government contract matters

On February 23, 2023

Nichols Liu partner Alan Chvotkin joined FedNewsNetworks’ Tom Temin for discussion of two significant government contract matters. The first addressed the January 2023 Defense Department policy initiative to expand opportunities for small business. The second covered the December 2022 enactment of legislation governing organizational conflicts of interest in federal procurements. Listen to the full interview





The Debt Ceiling: Three Immediate Actions for Government Contractors

By Alan Chvotkin

In a periodic political standoff, the House of Representatives, the Senate and the President are in a debate about how to handle the rapidly approaching date when the U.S. Government will no longer have the ability to pay all of the debts previously incurred by the United States; it thus risks default on some or all of those prior debts because it could only make payments from cash it has on hand on any specific day. For federal contractors, this is a significant business risk with only limited actions that can be taken to reduce exposure.

The Federal Government has already hit the statutory $31.4 trillion debt ceiling. As a result, in January 2023, Treasury Secretary Yellin announced that Treasury started taking “extraordinary measures” to extend the time before the U.S. Government runs out of cash to make the payments as they become due. While this so-called “X” date was not expected to be reached before summer, updated February projections from the non-partisan Congressional Budget Office showed that the deficit gap – the difference between annual revenue and annual spending – increased significantly over the prior fiscal year, thus adding to the overall federal debt levels and likely shortening the time for reaching the “X” date.

For federal contractors, the debt ceiling presents a different set of challenges, and even fewer options, than a lapse in appropriations and any resulting government shutdown. Significantly, even with hitting the debt ceiling, the Federal Government remains open, will continue in operations, and can make new contract awards. Federal employees are not furloughed and contractor employees are not denied entry to government installations nor access to critical federal employees.

However, if the U.S. Government runs of out borrowing authority, government contractors risk not getting paid for work already performed. And one of the key tenants of federal contracting – that the U.S. Government always makes timely payment to contractors for work properly performed – is destroyed. As contractors know, federal bids are prohibited from including any contingencies for delayed payments and the cost principles prohibit charging the U.S. Government interest on borrowing to cover contracting work. In exchange, the federal “Prompt Payment Act” provides that the Federal Government will automatically pay interest on valid invoices that are not paid according to the terms of the contract and the government’s cash management practices. But recovering interest on amounts due for work already performed is a small consolation for not being paid the base amount.

What three actions should contractors take now?

First, check the status of all of your open accounts receivable from federal work. Stay on top of the contracting officers to be sure they acknowledge acceptance of the work. Stay on top of the payment offices to be sure they are processing your invoices. With the overwhelming number of payment invoices submitted and processed electronically, usually with no issues involved, you still want to be sure you are in the queue to be paid on time.

Second, be sure you are ready to immediately invoice for new work completed as soon as your contract allows. Don’t give the U.S. Government any greater grace period on payments due to you than they already get.

If you have non-segregable work that may not be able to be invoiced for some future period of time (typically after the completion of all work), check with your contracting officer to see if you can arrange for a partial earlier payment for work already completed. While this is not a common action for the government, program and contracting officers with long-term successful projects may be willing to take this action to ensure your continued cash flow.

Finally, now is a good time to have a discussion with your preferred financial institution. They are probably already aware of your invoicing and payment receipt record, and aware of your firm’s cash flow needs. Validating or increasing a stand-by line of credit, should it be needed, will minimize your short-term business risk if the political debate fails to achieve an acceptable and timely solution.

Nichols Liu attorneys have extensive experience in working with contractors on the policy and financial implications of payments, including under debt ceiling circumstances. Contact the author or any of the attorneys at Nichols Liu with whom you regularly work.

DoD Issues Long-Awaited Small Business Strategy 2023

By Alan Chvotkin and Sam Van Kopp

On January 26, 2023, the Department of Defense (DoD) published its long-awaited, 25-page, first strategy under Secretary Austin and new director of the Office of Small Business Programs, Farooq Mitha. The overall objective of the strategy is to enable the Department to “expand and strengthen its relationship with small business and better leverage their capabilities to help solve the Department’s and our nation’s most complex challenges.”[1] While DoD has again been the Executive Branch leader in dollars awarded to small businesses, there are mounting challenges in sustaining that momentum and achieving the strategy’s objectives.

The DoD 2023 strategy is built on three main objectives, all focused primarily on internal departmental functions:

  1. Implement a unified management approach for small business programs and activities;
  2. Ensure DoD’s activities align with national security priorities; and
  3. Strengthen the Department’s engagement and support of small business.

Each objective has three specific implementing objectives and a set of action plans to pursue those objectives. However, there is no timetable for initiating, let alone completing, any of these actions.

Furthermore, the Secretary’s message embedded in the strategy, and the details in the plan, are subject to significant headwinds. As the strategy acknowledges, the number of small businesses participating in the defense industrial base has declined by over 40 percent in the past decade for reasons that are not completely understood.[2] Yet the dollars awarded to small businesses are increasing. As such, fewer small businesses are winning an increasing share of the Department’s small business awards.

Why the decline in small business participation?  In part, regulation.  At Nichols Liu, we have helped small business contractors navigate overlapping layers of regulatory compliance imposed by the Small Business Administration (SBA), the Federal Acquisition Regulatory Council through the Federal Acquisition Regulation (FAR), and DoD through the Defense Federal Acquisition Regulation Supplement (DFARS).  In addition, such rules are always in flux.  As the Secretary acknowledged, “regulations and business practices can be difficult to understand or otherwise create barriers or increase the cost of doing business with DoD.”[3]

In our experience, the Federal government’s complicated regulatory environment not only deters small business contractors in general, it specifically disincentivizes cutting-edge work.  About 49 percent of DoD’s contract awards in Fiscal Year 2021 were for products, 42 percent were for services, and only 9 percent for research and development. A large segment of the 49 percent that was awarded for “products” support the Department’s major weapons systems and related activities, with the top 5 major primes winning an increasing share of Department’s total contract dollars awarded.  Though Secretary Austin’s report lauds small business achievements in research and development, the cost of compliance limits the pool of qualified offerors and puts those who do perform at risk. The more innovative the contractor, the greater their need for legal counsel.

We will be carefully watching the Department’s implementation actions for this strategy. In addition, we have extensive experience in the small business policies, regulations, and the competitive landscape to help companies of all sizes engage with the Department on this strategy, navigate the Department’s competitive landscape, and stay in compliance with the ever-more complex acquisition regulations and requirements.

For more information, please contact the authors of this article or the Nichols Liu attorneys with whom you regularly work.


[1] DoD Small Business Strategy, available at, at 5.

[2] DoD Small Business Strategy, at 5 and Figure 1.

[3] DoD Small Business Strategy, at 5.

Nichols Liu Hires Laura Kennedy, a Former Chief Ethics and Compliance Officer at Honeywell, SAIC and Emergent BioSolutions, to Co-Chair Global Compliance and Risk Practice

Washington DC (January 25, 2023) – Nichols Liu has hired Laura Kennedy to co-chair its Global Compliance and risk practice. Laura joins the firm as a partner.

Laura spent the past 21 years as a corporate executive for leading government contractors—specifically, as the Chief Ethics and Compliance Officer at Honeywell, SAIC, and Emergent BioSolutions.  In those roles, Laura was responsible for corporate ethics, compliance, and risk management programs.

Laura is a thought leader in ethics and compliance.  She was a two-term Chair of the Defense Industry Initiative on Business Ethics and Conduct (DII) – a non-profit organization comprised of ethics and compliance professionals from 80 government contractors in the aerospace and defense industry.  As Chair, Laura led DII’s efforts to develop a compliance toolkit for its members.

Prior to moving in-house, Laura spent 21 years in private practice at global law firms Seyfarth Shaw, Holland & Knight, and Jenner & Block.

“Laura’s skills and experience will add a new dimension to our already strong bench and further solidify Nichols Liu as a full-service government contracts firm.  Her experience in enterprise risk management will enhance the firm’s capabilities and dovetail well with the firm’s other areas of expertise,” says Robert Nichols, Chair of the firm.

Laura will co-chair the firm’s Global Risk and Compliance practice with Lynne Halbrooks.  Lynne previously served as the Acting Inspector General at the U.S. Department of Defense Inspector General and as Chief Compliance Officer and Deputy General Counsel at Acuity International.

Together, Laura and Lynne will bring an insider’s perspective to serving government contractors, including expertise in legal regulatory compliance, enterprise risk management, investigations, mandatory disclosures, ethics, and Board of Director training and reporting.

“Laura’s unique combination of experience from private practice and corporate leadership positions offers our clients deep insights into how government contractors operate and the best practices for compliance and risk management,” says Halbrooks.

“I chose Nichols Liu for my return to private practice for its culture, flexibility, and close group of top-flight government contracts practitioners.  The people here really enjoy working together,” says Laura.

New Law Requires FAR Changes on Organizational Conflicts of Interest (OCI)

By Alan Chvotkin on December 28, 2022.

One of the last legislative actions taken at the close of the 117th Congress was passage by the House of Representatives of the “Preventing Organizational Conflicts of Interest in Federal Acquisition Act” on December 14, 2022. The president signed that bill into law on December 27, 2022. Enactment marks the end of a journey that began in the United States Senate with the introduction of this legislation (S. 3905) in March by two Democratic and two Republican Senators who are members of the Homeland Security and Government Affairs Committee, and unanimous passage of an amended version of the bill by the United States Senate on August first.

Similar legislation was introduced in the House in April by Oversight and Reform Committee chair Maloney, following her release of an interim majority staff report that looked at issues related to potential conflicts of interest by McKinsey & Company concerning their work at the Food and Drug Administration while also working with certain opioid manufacturers. The House approved the Senate-passed bill on a largely party-line vote of 219-205.

I previously posted two blog posts on June 6, 2022 [Click Here] and on August 25, 2022 [Click Here] that traced the congressional actions relating to this bill and related legislation, as well as highlighting recent Government Accountability Office (GAO) bid protest decisions challenging awards based on allegations of improper conflicts of interest.

Under this new law, within 18 months after enactment, the Federal Acquisition Regulatory Council is directed to amend the Federal Acquisition Regulation (FAR) to:

  1. Provide and update definitions on specific types of organizational conflicts, including the three types of conflicts that have long been recognized by GAO bid protest decisions: (a) unequal access to information; (b) impaired objectivity; and (c) biased ground rules.
  2. Include examples of potential conflicts of interest based on contractors’ relationships with public, private, domestic and foreign entities.
  3. Provide solicitation provisions and contract clauses directing contractors to disclose potential organizations conflicts. The current FAR does not have a standard OCI solicitation or contract clause, although a few agencies, such as DoD, FDA and Department of Education, have agency supplemental acquisition regulations that impose varying degrees of disclosure responsibilities on bidders and contract awardees.
  4. Require agencies to establish and update their internal procedures to implement these changes.
  5. Allow contracting officers to consider professional standards to prevent organizational conflicts of interest affecting bidders and awarded contractors.

I don’t expect a proposed FAR rule to be issued until late summer or early fall 2023. I’ll use future editions of this column to keep you up to date. In the interim, federal contractors would be well advised to look at their company policies regarding all forms of personal and organizational conflicts of interest, and review actions they can take to minimize and mitigate any that arise.

With the close of the 117th Congress, a House bill (HR 8325) introduced by Oversight and Reform Committee chair Maloney relating to personal conflicts of interest failed to get traction. Like the OCI bill that was enacted into law, this proposed legislation directs the Federal Acquisition Regulatory Council to (1) expand the scope of rules to prevent personal conflicts of interest beyond the limited types of functions or services that are currently addressed in a specified part of the Federal Acquisition Regulation (FAR), and (2) revise the FAR to address the functions and services that give rise to heightened concerns for personal conflicts of interest. In addition, the bill prohibits contractors, contractor employees, and subcontractors and their employees from providing services supporting the regulatory, policymaking, or adjudicative functions of an agency while at the same time that contractor, employees, or subcontractor provides services to an entity regulated by, or having non-routine business before, the agency, except where there is a compelling reason, as documented in writing.

While the Committee favorably ordered the bill reported on July 20, 2022, it was never formally filed by the Committee and thus never considered by the House and will have to be reintroduced in the new Congress. There was no companion bill introduced in the Senate. But Mrs. Maloney was not reelected and she had no cosponsors of her bill as introduced, so a new sponsor of the bill will have to be found for the new Congress. I’ll be reporting on developments on this issue, too.

Nichols Liu has extensive expertise in this area and can help you attain your compliance goals through an assessment of your company’s organizational and personal conflicts of interest policies and related matters. Please contact the author of this article or the Nichols Liu attorneys with whom you regularly work.