February Regulatory and Legislative Update

This edition of the “Government Contracts Regulatory and Legislative Update” offers a summary of and insight into the relevant industry developments that occurred during the month of February.

Executive Orders

President Biden Issues Executive Order to Strengthen America’s Supply Chains

On February 24, President Biden signed the Executive Order on America’s Supply Chains, to deliver on his campaign promise to strengthen critical supply chains and bolster domestic manufacturing capabilities. The Executive Order (EO) calls for a 100-day, whole-of-government assessment of four critical supply chains: semiconductors, large-capacity batteries, critical minerals and pharmaceuticals. In addition, it directs federal agencies to conduct broader, year-long reviews of six additional supply chains to include the defense industrial base; public health, information technology, communications technology, energy, transportation and agricultural commodities. These reviews require agencies to assess a number of vulnerabilities, including responsiveness to terrorist attacks and extreme weather, and then to develop and issue recommendations to mitigate those weaknesses. This EO is the latest of three focused on supply chain and changes to domestic sourcing requirements. Our team’s discussion of what this EO means for government contractors is available here.

COVID-19 Response

SBA Consolidates Paycheck Protection Program Rules

On February 5, the Small Business Administration (SBA) issued an interim final rule to consolidate prior rules related to Paycheck Protection Program (PPP) loan availability, review and forgiveness, and to incorporate changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act). As covered in-depth by our team here, the Economic Aid Act, enacted on December 27, 2020, reauthorized PPP lending through March 31, 2021, modified loan forgiveness provisions of the PPP, and allowed “second draw” PPP loans in certain instances, among other things.

This interim final rule went into effect on February 3, 2021. Comments on the interim final rule needed to be submitted by March 8, 2021. The final version of the new pandemic relief legislation will likely contain additional provisions modifying the PPP loan program.

SBA Promotes Equitable Access to Paycheck Protection Program Funds

On February 22, the Biden Administration announced several changes to the PPP to ensure equity among small business applicants. This included a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees that ran from February 24-March 9, 2021. SBA also announced that it will make the following changes:

• Allow sole proprietors, independent contractors and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants.
• Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal.
• Eliminate PPP access restrictions on small business owners who have struggled to make student loan payments by eliminating student loan debt delinquency as a disqualifier to participating in the PPP.
• Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.

HHS Extends PREP Act Liability Protections to Certain Federal Contractors Prescribing, Administering or Delivering COVID-19 Vaccines

The Biden Administration continued to take much-needed action throughout the month to address the COVID-19 pandemic. On February 16, the Acting Secretary of the Department of Health and Human Services issued the sixth amendment to the Declaration under the Public Readiness and Emergency Preparedness Act (PREP Act) to expand the list of “Qualified Persons” authorized to prescribe, dispense, and administer COVID-19 vaccines. Now, under section 247d-6d(i)(8)(B) of the PREP Act, federal employees, contractors, and volunteers “authorized by their Department or agency to prescribe, administer, deliver, distribute, or dispense the [COVID-19 vaccine] as any part of their duties or responsibilities” are considered “Qualified Persons” entitled to PREP Act liability protections. Liability protections for these individuals began on February 16 and will continue through October 1, 2024.

This move follows on the heels of a January 28, 2021, amendment to the Declaration that added certain licensed healthcare providers as well as certain physicians, registered nurses, and practical nurses whose licenses expired within the last five years as “Qualified Persons” for vaccine administration. Additional coverage of that amendment is available here.

Small Business Updates

SBA Amends Regulations to Define “Interested Party” for Certain Small Business Concerns

On February 23, the SBA amended 13 C.F.R. § 125.11 to re-add the definition of an “interested party,” as the term relates to ownership and control of Veteran-Owned (VO) and Service-Disabled Veteran-Owned (SDVO) Small Business Concerns (SBCs). The regulation now defines an “interested party” as “the contracting activity’s contracting officer, SBA, any concern that submits an offer for a specific sole source or set-aside SDVO contract or order (including Multiple Award Contracts), or any concern that submitted an offer in full and open competition and its opportunity for award will be affected by a reserve of an award given to a SDVO SBC.” The SBA had inadvertently removed this definition when amending the regulations pursuant to provisions of the National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017). This amendment went into immediate effect.

Grants Updates

OMB Issues Technical Corrections to Guidance for Grants and Agreements

On February 22, the Office of Management and Budget (OMB) issued technical amendments to its Guidance for Grants and Agreements, published August 13, 2020. The amendments revise the legal authority cited in a number of sections and add clarifying language throughout. In particular, 2 C.F.R. Part 200 is revised to add and revise the definitions of “federal awarding agency” and “oversight agency for audit,” and to clarify language in the following sections:

• 200.101, Program Applicability
• 200.102, Exceptions
• 200.318, General Procurement standards
• 200.332, Requirements for pass-through entities
• 200.416, Cost allocation plans and indirect cost proposals
• 200.509, Auditor selection
• 200.514, Scope of audit

These amendments went into immediate effect.

Miscellaneous Updates

FCC Determines Government Contractors Are “Persons” Subject to TCPA Restrictions

On February 12, the Federal Communications Commission (FCC) summarized an adjudicatory ruling finding that contractors making calls on behalf of the federal, state or local government are “persons” subject to restrictions in section 227(b)(1) of the Telephone Consumer Protection Act (TCPA). This is a reversal of the Commission’s 2016 Broadnet Declaratory Ruling, which held that federal contractors qualified for non-person status and thus were exempt from TCPA restrictions.

In general, the new ruling requires contractors to obtain a consumer’s express consent prior to making TCPA-covered calls, although there are certain exemptions from this requirement for “emergency purpose” and other calls. Federal contractors may avoid TCPA liability if they are not the “maker of the call,” meaning they did not “take the steps necessary to physically place [the] telephone call,” nor were they “so involved in the placing of a specific telephone call as to be directly liable for making it.” Furthermore, federal and state contractors may seek to invoke derivative immunity when making covered calls. This FCC ruling went into immediate effect.