Department of Labor Proposed Budget Seeks To Completely Dismantle OFCCP
According to the U.S. Department of Labor’s (DOL) fiscal year 2026 proposed budget, the Department is set to fully eliminate the Office of Federal Contract Compliance Programs (OFCCP) next fiscal year, which begins October 1, 2025. The budget proposal aligns with the current administration’s broader efforts to shut down the OFCCP and its authority to audit and investigate federal contractors for potential race and sex discrimination. Earlier this year, President Trump issued Executive Order (EO) 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which rescinded Executive Order 11246. Revoking this President Johnson-era order stripped most of the OFCCP’s authority, except where otherwise outlined in statute.
The budget proposal, released on May 30, 2025, states Executive Order 14173
permanently removes the primary basis for OFCCP’s enforcement authority and program work.
The budget proposes transferring OFCCP’s responsibilities under Section 503 of the Rehabilitation Act to the Equal Employment Opportunity Commission (EEOC). Additionally, the DOL’s Veterans’ Employment and Training Service would take over enforcement duties under the Vietnam Era Veterans’ Readjustment Assistance Acts (VEVRAA).
Congress has yet to approve the DOL’s proposed budget, and statutory amendments may be necessary to transfer authority from the OFCCP to other executive agencies.
We will continue to monitor the situation and provide updates as we learn of them.
Major Changes Ahead: New Jersey Eyes New Rules Clarifying Test for Worker Classification
New Jersey may adopt new worker-friendly regulations for determining whether a worker is an independent contractor or employee that could make it very difficult for businesses to demonstrate that workers are independent contractors and open the door to additional liability for misclassification.
Quick Hits
New Jersey will consider new regulations that could significantly limit the classification of workers as independent contractors by clarifying the state’s “ABC test” for determining employment status.
The proposed rules aim to define the control, independence, and business engagement of workers, raising concerns among business groups about increased liability for misclassification.
The proposed regulations will have a sixty-day public comment period, which began on May 5, 2025.
On April 28, 2025, the New Jersey Department of Labor and Workforce Development (NJDOL) unveiled a notice of proposal for new rules under N.J.A.C. 12:11 to clarify the application of the state’s “ABC test” for determining independent contractor status. The notice was formally published in the New Jersey Register on May 5, 2025, kicking off a sixty-day public comment period.
The NJDOL’s new proposed rules aim to codify the interpretation of the ABC test by the Supreme Court of New Jersey in multiple decisions concerning the test’s prongs. The three-prong test is used to determine if a worker is an employee or an independent contractor under various New Jersey laws, including the Unemployment Compensation Law, Temporary Disability Benefits Law, Wage and Hour Law, Wage Payment Law, and Earned Sick Leave Law.
While the rules are intended to provide clear guidance to employers, business groups have concerns that codifying these interpretations will make it very difficult for businesses to classify workers as independent contractors, even if such workers were previously classified as such.
In announcing the proposed regulations, New Jersey Labor Commissioner Robert Asaro-Angelo touted the regulations as a “critical step” in preventing the “illegal misclassification of employees.”
“Not only would these new rules protect workers’ rights, but they would also ensure that bona fide independent contractors understand what makes them independent contractors, rather than employees, so that they can continue to operate with autonomy,” Commissioner Asaro-Angelo said in a statement.
Proposed Changes
The ABC test uses three prongs: (A) the degree of control the hirer has over the worker; (B) the worker’s independence or degree to which work is performed outside of the usual course of business or outside the business’s location; and (C) the worker’s engagement in an independently established trade, occupation, profession, or business. The proposed regulations would clarify factors for interpreting each prong.
Prong A
The proposed rule would clarify that an employer must establish that it does not exercise control over a worker and does not retain the right to control the manner or means of the work. The rule includes a nonexhaustive list of nine factors to consider the degree of control, including whether:
the individual has set hours;
the putative employer controls the “details and means by which the services are performed by the individual”;
the services are provided personally;
the putative employer negotiates for the work of the individual;
the individual has a fixed rate of pay;
the individual bears any risk of loss;
the individual is required to be on call or available to perform services at times set by the putative employer;
the putative employer restricts the individual’s work for other parties; and
the putative employer provides training.
Finally, the proposal would confirm that when evaluating whether an employer has control over an individual, employers may not use the fact that they reserved the right to exercise control to comply with any other law or regulation as a reason to avoid classifying the individual as an employee. The reason for reserving the right to exercise control would be given the same weight as any other control the employer has reserved or exercised, and will be seen as proof of an employment relationship.
Prong B
The proposed rules would clarify that when evaluating whether a worker has performed work outside of regular business or outside the business’s physical location, a business’s “place of business” refers to where the business has a physical plant or conducts integral parts of its business, including potentially a customer’s residence. The NJDOL explained that “the residence or place of business of the putative employer’s customer” would be considered “among the putative employer’s places of business” when “(1) a service is performed by the worker at the residence or place of business of the putative employer’s customer; and (2) the service performed by the worker is an essential component of the putative employer’s business.”
Prong C
The proposed regulations include a nonexhaustive list of seven factors to determine independence, including the number of customers and volume of business from each customer, whether individuals set their rate of pay, duration strength, and the viability of business independent of the putative employer. The proposed regulations would clarify that receipt of unemployment benefits is irrelevant to Prong C analysis, and proof of license, business registration, or insurance information without more is also insufficient to show independence.
Next Steps
The proposal is the latest attempt in New Jersey to expand the independent contractor test since California established its ABC test in 2019. The prior proposals failed to gain traction. However, Governor Phil Murphy has successfully signed other bills strengthening laws against misclassification and has been making a push to broaden the scope of the ABC test for employees. New Jersey courts have similarly interpreted the ABC test to classify more workers as employees. It is anticipated that the proposed regulations will be finalized in some form.
Further, the proposed independent contractor regulations follow the NJDOL’s September 2024 finalization of regulations implementing New Jersey’s Temporary Workers Bill of Rights (TWBR) law, which enhanced protections for temporary workers and equalized their compensation with permanent employees.
The U.S. Department of Labor (DOL) issued a new independent contractor rule in 2024, which took effect in March 2024. The DOL rule adopted a more intensive totality of circumstances test to classify an independent contractor. However, the Trump administration has indicated that it may reconsider the 2024 rule and issue a new one.
Understanding the FAA’s ODRA Bid Protest Process: A Guide for Government Contractors
When it comes to federal procurements, the Federal Aviation Administration (FAA) operates a little differently than most other agencies. Unlike other federal agencies that follow the Federal Acquisition Regulation (FAR), the FAA is governed by its own Acquisition Management System (AMS), which includes unique procedures for handling bid protests. At the heart of this process is the FAA’s Office of Dispute Resolution for Acquisition (ODRA).
Whether you’re a contractor pursuing opportunities with the FAA or counsel advising one, understanding the ODRA bid protest process is essential.
What Is the FAA’s ODRA?
Established under the FAA’s Acquisition Management System, ODRA serves as the forum for resolving procurement disputes, including bid protests and contract disputes. ODRA is an independent tribunal within the FAA designed to provide a fair, transparent, and efficient dispute resolution process.
Jurisdiction and Scope
ODRA generally has exclusive jurisdiction over:
Pre-award protests challenging the terms of a solicitation;
Post-award protests involving contract awards; and
Disputes involving alleged violations of the AMS.
Importantly, ODRA generally does not follow the FAR.
Filing a Protest with ODRA
Who Can File
Any “interested party” — typically an actual or prospective bidder whose direct economic interest would be affected — may file a protest.
Time Limits
Solicitation protests must be filed before the closing date for receipt of proposals.
Award protests generally must be filed no later than seven business days after the date the protester knew or should have known of the grounds for protest — or, if the protester has requested a post-award debriefing, not later than five business days after the date on which the debriefing is held.
ODRA strictly enforces these deadlines, and late filings are typically dismissed.
The ODRA Protest Process: Key Steps
1. Filing the Protest
A protest is initiated by submitting a written complaint to ODRA and serving it on the FAA’s Office of the Chief Counsel and the contracting officer. The complaint should include:
A detailed statement of facts;
Legal grounds for the protest;
Copies of relevant documents; and
The relief sought.
2. Automatic Stay of Award or Performance
If a protest is timely filed, ODRA may impose a stay of contract award or performance, similar to the automatic stay under the Competition in Contracting Act (CICA), though it is discretionary under AMS.
3. Initial Status Conference
ODRA should quickly convene a status conference to establish a schedule, encourage alternative dispute resolution (ADR), and clarify procedural matters.
4. Alternative Dispute Resolution (ADR)
ADR is a hallmark of the ODRA process. ODRA typically encourages mediation, facilitated negotiations, or other ADR techniques. Many protests are resolved through ADR before reaching a formal adjudication.
5. Adjudicative Process
If ADR fails, ODRA generally proceeds to a formal adjudication, which may include:
Exchange of pleadings;
Discovery (limited and controlled);
Motion practice; and/or
Hearings (rare, but possible).
The process is more streamlined and less formal than litigation or GAO protest proceedings.
6. Decision
ODRA issues a written decision, typically within 65 business days of the protest filing (unless extended). The decision is final and binding within the FAA, but it may be “appealed” to the U.S. Court of Federal Claims in certain circumstances.
Strategic Considerations
Familiarity with AMS is key – Legal arguments generally should be tailored to the AMS.
Timeliness is critical – ODRA’s deadlines are short and strictly enforced.
Consider ADR early – ODRA favors collaborative resolution and provides resources to support it.
Limited discovery and briefing – Be prepared for a focused, document-driven process.
Conclusion
The FAA’s ODRA offers a unique, efficient, and contractor-accessible forum for resolving bid protests. While it diverges from traditional protest venues like GAO or the Court of Federal Claims, it can provide meaningful relief for aggrieved offerors — provided they understand and follow its rules. Contractors pursuing FAA opportunities should familiarize themselves with the ODRA process or consult counsel experienced in this specialized forum.
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The FMC Announces Investigation into Flags of Convenience and Unfavorable Conditions Created by Flagging Practices
The U.S. Federal Maritime Commission (“FMC”) announced on May 21, 2025 that it is initiating a non-adjudicatory investigation into whether the: 1) vessel flagging laws, regulations, and/or practices of certain foreign governments, including the so-called flags of convenience (“FOC” or “open registries”), or 2) competitive methods employed by owners, operators, agents, or masters of foreign-flag vessels, are creating unfavorable shipping conditions in the foreign trade of the United States (the “Notice”).
The investigation includes a 90-day public comment period, which ends on August 20, 2025.
FMC’s “Section 19” Trade Authority
Section 19 of the Merchant Marine Act of 1920, 46 U.S.C. § 42101 et seq., authorizes the FMC to evaluate conditions that affect shipping in the U.S. foreign trade and to issue regulations or take action to address such conditions. Potential remedies include port fees up to one million dollars, limits on voyages to and from U.S. ports or the amount or type of cargo carried, and other trade restrictions.
The FMC exercised this authority frequently in the 1980s and 90s (before the sell-off of the major U.S. liner operators to foreign buyers) to force market-opening concessions and eliminate discriminatory fees and trade barriers that impeded U.S. shipping companies’ competitiveness overseas. However, these powers have been left nearly dormant for the past two decades.
The current investigation does not target particular flag States or propose any remedial measures; rather, it is a non-adjudicatory investigation pursuant to 46 C.F.R. Part 502, Subpart R, which allows the FMC to request information, conduct hearings, issue subpoenas, conduct depositions, and issue reports, at its discretion.
Summary of Investigation
This investigation breaks new ground for the FMC, which traditionally has not had any role concerning vessel registries, marine safety, or the International Maritime Organization (“IMO”) conventions, which set the global framework for vessel regulation. In the Notice, the FMC expressed concern about the conditions created by the wide and uneven range of foreign vessel flagging laws, regulations, and practices. While the Notice indicated that many nations take “great care in creating standards for vessels flagged by their registries,” it also observed that other countries have engaged in a global “race to the bottom” by lowering standards and easing compliance requirements to gain potential competitive edge.
The Notice asserted that FOCs “operate under lax regulatory oversight, leading to lower safety, environmental, and labor standards . . . and FOC vessels exploit lower operational costs through reduced taxes, cheaper labor, and irregular maintenance or safety measures.” But the FMC failed to recognize the quality chasm between industry-leading U.S.-managed international open registries, such as the Marshall Islands and Liberia, versus thinly staffed or sham registries serving non-compliant shadow fleet ships.
The FMC’s Notice discussed other unfavorable flagging practices, including “flag-hopping” or using false flags to avoid regulatory oversight; using fraudulent ship registrations without the knowledge or approval of the relevant maritime administration; and operating in the “shadow fleet,” i.e., outside the regular or official frameworks and often engaging in illegal or illicit activities such as smuggling, sanctions evasion, or the transportation of prohibited goods. The Notice recognized IMO’s policy recommendations and resolutions addressing such practices, but asserted that the IMO’s effort has not led to meaningful change or deterrence.
The FMC did not single-out any particular open registry, but it referenced certain recent incidents and inaccurately linked them to certain open registries as a basis for its action (e.g., the Singapore-flag DALI’s allision with the Francis Scott Key Bridge, the Malta-flag APL QINGDAO’s narrowly avoided allision with the Verrazzano Bridge, and the MS MELENIA, currently under the Djibouti flag, where crew were left stranded when the tanker was abandoned for the third time). The Notice offered these incidents as examples, yet failed to provide any analysis linking the performance of the flag State to the events at issue. In fact, the references to the DALI and APL QINGDAO were particularly questionable, as Malta, Marshall Islands, and Singapore are three of the top-performing registries according to the U.S. Coast Guard’s 2024 Annual Port State Control report.
According to the Notice, the FMC launched this investigation for the purpose of identifying “best practices” that contribute to responsible and safe vessel operations and to identify practices that allow or contribute to unsafe conditions that endanger or imperil the reliability and efficiency of ocean shipping.
It appears likely that the current investigation is driven, at least in part, by a growing FMC dialogue with U.S. trade sanctions enforcers in the U.S. Departments of Treasury and State regarding the rapid growth of the “dark fleet” or “shadow fleet,” and the role of flag States in allowing vessels to evade or flout U.S. trade sanctions. FMC Chairman Lou Sola raised this issue in an April 2025 speech, in which he announced: “I have tasked our staff with identifying options on how to address the role flags of convenience play in enabling avoidance of sanctions. Registries hosting outlaw vessels used by reprehensible regimes to facilitate their evasion of international regulations would certainly qualify as conduct warranting the Commission’s attention and action.”
The FMC therefore may be assessing how its unilateral powers (which often are used in tandem with diplomatic approaches by the U.S. Department of State and other agencies) might be used to increase the pressure on the most problematic flag States to adhere to international standards or withdraw from market.
Public Comments due August 20, 2025
Comments may be submitted by all members of the public (including ship owners, operators, and managers, flag States, shippers, carriers, governments, and non-governmental organizations), but the Notice said FMC is particularly interested in receiving input from individuals and organizations with expertise or experience in vessel operations, international trade, international law, and national security, including international standards-setting organizations (e.g., the IMO and International Transport Workers’ Federation), countries with large ship registries, and those with evidence of the burdens and risk created by irresponsible flagging practices. Specifically, the FMC is seeking comments on the following topics:
Specific examples of responsible flagging laws, regulations, practices, and proposals, including how they contribute or would contribute to the efficiency and reliability of the ocean shipping supply chain;
Specific examples of unfavorable flagging laws, regulations, and practices that endanger the efficiency and reliability of the ocean shipping supply chain;
Practices by owners or operators of vessels that undermine the efficiency and reliability of international ocean shipping;
The benefits to international ocean shipping of responsible vessel registration and flagging practices; and
The burdens on foreign nations and vessel operators or owners of irresponsible flagging practices.
Key Takeaways
At this time, the investigation is only informational—FMC has not proposed or threatened any penalties or restrictions. However, the FMC has the power to impose vessel fees similar to what the U.S. Trade Representative has done recently in connection with its Section 301 investigation of China’s targeting of the maritime, logistics, and shipbuilding sectors. See our previous alert. Thus, the information submitted during the investigation comment period likely will help shape the FMC’s next steps.
Interested parties should strongly consider submitting comments on the topics noted above, which are further described with added examples in the Notice.
A Legal Guide to the SBA’s Mentor-Protégé Program for Small Businesses
Small businesses are the backbone of the U.S. economy, and the federal government offers a range of programs to support their growth — particularly in the realm of government contracting. One of the most strategic tools available to small firms is the U.S. Small Business Administration’s (SBA) Mentor-Protégé Program (MPP). This program can provide powerful advantages, but it also comes with legal and regulatory complexities that businesses should fully understand before participating.
What is the SBA Mentor-Protégé Program?
The SBA’s Mentor-Protégé Program is designed to help eligible small businesses gain capacity and win government contracts by partnering with more experienced companies. Under this initiative, a small business (the protégé) enters into a formal agreement with a larger or more experienced business (the mentor). The mentor offers guidance and resources, which may include management assistance, financial support, contracting experience, and even bonding.
Most notably, the program enables the mentor and protégé to form a joint venture that can compete for set-aside contracts that would otherwise be limited to small businesses — potentially creating powerful teaming arrangements with a competitive edge.
Key Benefits
Access to Contracts – Joint ventures can pursue small business set-aside contracts even if the mentor is a large business.
Business Development – Protégés gain valuable mentorship in navigating the federal marketplace.
Resources – Mentors may provide financial assistance, equipment, facilities, and personnel.
Reputation and Relationships – Protégés can leverage the mentor’s past performance and relationships to build credibility.
Eligibility Requirements
To qualify as a protégé, a business must:
Be a small business under its primary NAICS code.
Be organized for profit.
Have limited experience in government contracting or need business development assistance.
Mentors, on the other hand, must:
Be for-profit businesses.
Demonstrate the ability to assist protégés.
Have favorable financial health and no recent negative performance history with the federal government.
Both mentors and protégés must apply and receive SBA approval before entering into a formal agreement and forming a joint venture.
Legal Considerations
While the benefits are significant, participating in the MPP involves strict regulatory compliance:
Written Agreement – The mentor-protégé relationship must be governed by an SBA-approved written agreement detailing the nature and extent of the assistance.
Annual Reporting – Protégés must report progress annually to the SBA to ensure the relationship remains beneficial.
Joint Venture Structure – If pursuing contracts together, the joint venture must be a separate legal entity with its own DUNS number and SAM registration. It must also comply with specific SBA regulations under 13 C.F.R. § 125.8.
Failure to adhere to SBA rules can result in penalties, including suspension from the program and potential contract losses.
Best Practices for Legal Compliance
Seek Counsel Early – Work with an attorney experienced in government contracting to draft and review mentor-protégé agreements and joint venture documents.
Document Assistance Clearly – Maintain records of the mentor’s contributions and the protégé’s progress to support annual reporting and any audits.
Stay Current with SBA Rules – Regulations governing the MPP have evolved in recent years, including the consolidation of the 8(a) and All Small Mentor-Protégé Programs. Make sure your agreements reflect the most current legal standards.
Plan Needs for Mentor-Protégé Relationships in Advance -A protégé may have two mentors at the same time, as long as those relationships do not conflict or compete with one another. However, a protégé may have no more than two mentors over the life of the business.
Track Timelines of Relationships – A Mentor-Protégé Agreement may last up to six years from the date of SBA approval. If the initial agreement is for fewer than six years, it may be extended by mutual agreement and notification to SBA prior to expiration.
Conclusion
The SBA Mentor-Protégé Program can be a game-changer for small businesses seeking to grow through federal contracting. However, success depends on a clear understanding of the legal framework, strategic partner selection, and careful compliance. Businesses considering participation should engage knowledgeable counsel to navigate the process and unlock the full potential of the program.
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Florida’s CHOICE Act Offers Employers Unprecedented Tools for Non-Compete + Garden Leave Agreements
Takeaways
The Florida Legislature’s recently passed CHOICE Act allows covered non-compete and garden leave agreements to extend for up to four years — double the current amount of enforcement time.
The Act makes it significantly easier for employers to obtain an injunction and enforce covered agreements.
Employers looking to take advantage of the Act will need to comply with its technical requirements.
Article
The Florida Legislature passed the Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act on April 24, introducing the most sweeping changes to Florida’s restrictive covenant framework in years and offering employers unprecedented tools to protect their valuable business interests. If enacted, the Act will take effect on July 1, 2025.
Who Does the CHOICE Act Cover?
The CHOICE Act applies to covered employees or independent contractors earning more than twice the annual mean wage in the Florida county where either (i) the covered employer’s principal place of business is located or (ii) where the covered individual resides if the covered employer’s business is located outside of Florida. Therefore, depending upon the Florida county, the compensation threshold could range anywhere from $80,000 to nearly $150,000. Notably, the Act expressly excludes licensed healthcare practitioners as defined in Section 456.001, Florida Statutes, from its scope. But the Act does not prohibit enforcement of — or otherwise render unenforceable — restrictive covenants with healthcare practitioners under existing Florida restrictive covenant law, subject to the exclusions of Section 542.336, Florida Statutes, which prohibits restrictions between physicians who practice a medical specialty and an entity that employs or contracts with all physicians who practice that same specialty within the same Florida county.
Covered Non-Compete Agreements
Under the CHOICE Act, non-compete agreements with covered employees or contractors can extend up to four years post-employment. In contrast, under Florida’s current non-compete statute, employee-based non-competes lasting longer than two years are presumed to be unreasonable and unenforceable. To be enforceable under the CHOICE Act, covered non-compete agreements must:
Be in writing and advise the worker of their right to consult legal counsel, providing at least seven days for review before execution.
Include a written acknowledgment from the worker confirming receipt of confidential information or substantial client relationships during employment.
Specify the non-compete period will be reduced day-for-day by any nonworking portion of a concurrent garden leave period, if applicable.
Covered Garden Leave Agreements
The CHOICE Act also codifies enforcement of certain garden leave arrangements, allowing employers to require covered employees or contractors to provide advance notice — up to four years—before employment or contract termination. During this notice period, employees remain on the employer’s payroll at their base salary and benefits but are not entitled to any discretionary compensation. During the first 90 days of the garden leave period, an employer may require the worker to continue working. But a worker may engage in nonwork activities at any time thereafter.
To be enforceable under the Act, a covered garden leave agreement must:
Be in writing and advise the worker of their right to consult legal counsel, providing at least seven days for review before execution.
Include a written acknowledgment from the worker confirming receipt of confidential information or substantial client relationships during employment.
Not obligate the worker, after the first 90 days of the notice period, to provide any further services to the employer and allow the worker to engage in nonwork activities. (The worker may also work during the remainder of the notice period for another employer so long as the covered employer has provided permission to the worker.)
How Are Covered Agreements Enforced?
The CHOICE Act provides robust remedies for employers seeking to enforce covered agreements. For covered entities, the Act requires strict enforcement and makes it significantly easier for employers to obtain injunctions. Upon application, courts are required to issue preliminary injunctions to enforce a covered agreement unless the employee or contractor can demonstrate, by clear and convincing evidence, the agreement is unenforceable or unnecessary to prevent unfair competition. Further, if an employee or contractor engages in “gross misconduct,” an enforcing employer may reduce the salary or benefits provided to the employee or “take other appropriate action” without such activity constituting a breach of the covered agreement. An employer who prevails in its enforcement action is entitled to recover its monetary damages and attorney’s fees.
What Should Employers Do Now?
The CHOICE Act represents a significant development in Florida’s restrictive covenant law, offering employers enhanced mechanisms to safeguard their business interests through enforceable non-compete and garden leave agreements. Employers seeking to avail themselves of the new Act should take immediate steps to review and modify existing agreements or, if appropriate, draft new agreements.
Another FCA Cybersecurity Settlement Reinforces the Enforcement Trend
A recent United States Department of Justice (DOJ) announcement highlights the fact that the government’s emphasis on cybersecurity enforcement under the False Claims Act (FCA) is not slowing down. According to the press release, four companies — RTX Corporation (RTX), Raytheon Company (Raytheon), Nightwing Group LLC, and Nightwing Intelligence Solutions LLC (collectively, Nightwing) — agreed to pay US$8.4 million to settle an FCA matter arising from a qui tam relator’s suit alleging that Raytheon and its former subsidiary failed to comply with cybersecurity requirements in federal contracts.
The Raytheon Settlement
Raytheon’s former director of engineering, Branson Kenneth Fowler, Sr., filed the qui tam suit in August 2021. Federal defense contractors and subcontractors like Raytheon are required to implement certain cybersecurity controls outlined in the National Institute of Standards and Technology Special Publication 800-171 (NIST SP 800-171). But, according to this lawsuit, Raytheon allegedly failed to meet these requirements in connection with its work on federal contracts. The allegations centered on Raytheon’s internal network system, referred to as “DarkWeb.” Raytheon allegedly (a) used DarkWeb to store, transmit, and develop protected information in connection with its work on certain defense contracts even though that system failed to comply with NIST SP 800-171’s cybersecurity requirements; and (b) failed to develop the requisite system security plan for this internal system.
Notably, Raytheon notified certain government contractors, in May 2020, that it believed its information system did not comply with federal cybersecurity regulations and subsequently deployed a replacement system, ceasing to use DarkWeb. But according to the settlement, Raytheon’s alleged failure to implement these mandated security requirements on DarkWeb rendered false all claims for federal contracting work performed on DarkWeb.
The defendants deny these allegations but agreed to pay US$8.4 million to resolve the allegations. As the qui tam relator, Mr. Fowler will receive over US$1.5 million in connection with the settlement.
Finally, the conduct giving rise to the qui tamsuit occurred between 2015 and 2021 — years before Nightwing purchased RTX’s cybersecurity business in 2024. This illustrates the significant risk of successor liability and underscores the importance of assessing a target’s cybersecurity compliance as part of due diligence.
Recommendations
Given those risks, defense contractors and other recipients of federal funds (including colleges and universities) should consider the following steps to enhance cybersecurity compliance and reduce FCA risk:
Catalogue and monitor compliance with all government-imposed cybersecurity standards. Ensure your organization has a comprehensive list of all cybersecurity requirements and covered systems in your organization. These requirements may come not only from prime government contracts but also subcontracts, grants, or other federal programs. This includes not only ongoing knowledge of the organization’s contracts but also continuously monitoring and assessing the organization’s cybersecurity program to identify and patch vulnerabilities and to assess compliance with those contractual cybersecurity standards. This assessment should also consider third-party relationships.
Develop and maintain a robust and effective compliance program that addresses cybersecurity issues. In many companies, the compliance program and information security functions are not well integrated. An effective compliance program will address cybersecurity concerns and encourage employees to report such concerns. When concerns are identified, it is critical to escalate and investigate them promptly.
Where non-compliance with cybersecurity standards is identified, organizations should evaluate potential next steps. This includes whether to disclose the matter to the government and cooperate with government investigators. Organizations should work with experienced counsel in this regard. Proactively mapping out a strategy for investigating and responding to potential non-compliance can instill discipline to the process and streamline the organization’s approach.
Implement robust diligence for compliance with cybersecurity requirements in mergers and acquisitions. As this settlement shows, liability arising from an acquired entity may be imposed on the acquiring entity in some instances. Due diligence processes should seek to identify cybersecurity requirements in contracts (whether contracts with the government or private actors) and obtain verification of compliance. If that level of due diligence is not possible before closing a deal, it is important to conduct that assessment soon after closing so that problems can be identified and remediated promptly.
Preliminary Injunction of Recent DoD + GSA Memo Means Federal Contractors Must Continue to Comply with Biden-Era Project Labor Agreement EO + FAR
Takeaways
The injunction vacates federal agencies’ memoranda exempting certain construction projects from mandatory PLA requirements.
Executive Order 14063 (EO) and related Federal Acquisition Regulations requiring PLAs on large-scale federal construction projects remain in effect.
Despite the injunction, the Trump Administration is likely to continue scaling back the use of PLAs on federally funded projects.
A D.C. federal judge granted the North America’s Building Trades Union and Construction Trades Council’s request to enjoin the recent memoranda exempting certain construction projects from Executive Order (EO) 14063. North America’s Building Trades Unions (NABTU) v. Department of Defense et al, No. 1:25-cv-01070 (DDC May 16, 2025).
Executive Order 14063 is a Biden-era rule requiring every federal contractor to enter into a Project Labor Agreement on federal construction projects over $35 million. The Federal Acquisition Regulatory Council implemented this rule in 2023 as a Federal Acquisition Regulation. In February 2025, the Department of Defense (DOD) and Federal General Services Administration (GSA) issued memoranda purportedly eliminating this requirement. The North America’s Building Trade Union’s filed suit seeking to enjoin the DOD and GSA memoranda.
The court held the two unions demonstrated a substantial likelihood of establishing that the memoranda are contrary to law and violate the Administrative Procedure Act in deviating from the EO requirements without “providing adequate justification or following the proper exception process.” The court further noted that agencies are bound by EOs until they are “rescinded or overridden through lawful procedures.” Accordingly, the DoD and GSA memoranda were vacated.
PLA Basics
A PLA is a pre-hire, collective bargaining agreement that contractors enter with one or more labor organizations establishing terms and conditions of employment for a specific construction project. The PLA can include dispute resolution procedures, wages, hours, working conditions and bans on work stoppages.
Under the EO, non-union contractors may bid for and work on covered federal PLA projects, but they must abide by the terms of the PLA (and the applicable terms of collective bargaining agreements referenced therein) for the duration of that project. For contractors already signatory to a union contract, the PLA is an additional layer to the existing union agreement. The non-union contractor need not sign on to union agreements for other work not covered by the PLA.
Executive Order 14063
Former President Joe Biden signed Executive Order 14063, Use of Project Labor Agreements for Federal Construction Projects, on Feb. 4, 2022. That order provided that, with certain exceptions, government contractors and subcontractors working on federal construction projects that meet the threshold of $35 million must “become a party to a project labor agreement [PLA] with one or more appropriate labor organizations.”
The order explained that PLAs “avoid labor-related disruptions on projects by using dispute-resolution processes to resolve worksite disputes and by prohibiting work stoppages, including strikes and lockouts.”
On Dec. 22, 2023, the FAR Council, after issuing a proposed rule and receiving public comment, issued its final rule implementing the EO, with minimal changes to its proposed regulations.
Trump Administration Impact
The lawsuit highlights ongoing legal challenges over the Biden Administration’s mandatory PLA requirements. Recently, in MVL USA Inc. v. United States, several construction companies filed a lawsuit in the U.S. Court of Federal Claims challenging the legal authority of federal agencies to mandate PLAs under the EO. 174 Fed. Cl. 437 (Fed. Cl. 2025). The court found in favor of the construction companies, holding the PLA mandate, as applied in those cases, violated full and open competition under the Competition in Contracting Act because it excludes responsible offerors declining to enter PLAs, even when the data indicates an exception should be made. While the D.C. Circuit noted in NABTU v. DoD that the holding was limited to the specific procurements in that case, the case will likely serve as precedent when future bidding challenges arise.
Nonetheless, President Trump is expected to make efforts to revoke or scale back the mandate during his administration. On March 14, 2025, for example, he issued EO 14236 (Additional Rescissions of Harmful Executive Orders and Actions) which revoked Biden-era EO 14126 (Investing in America and Investing in American Workers) that encouraged federal agencies to prioritize projects involving PLAs, among other pro-labor agreements. EO 14236 does not impact the PLA mandate, but it does indicate the Trump Administration will, at the very least, minimize the use of PLAs going forward.
Although the district court decision is subject to appeal, the federal PLA mandate is still in effect. Construction employers should therefore anticipate that large-scale federal projects may require PLAs that comply with EO 14063’s requirements.
Tracking Lien Law Requirements: Alabama
This is the first in a series of blog posts discussing lien requirements in states where we most frequently litigate and states with unique lien requirements.
Alabama Lien Law Basics
Alabama’s statutory mechanic’s lien law can be found at Ala. Code §§ 35-11-210 et seq. These statutory lien requirements are strictly enforced. Some basic precepts of Alabama lien law include:
In Alabama, a mechanic’s lien claim can only arise out of a contract for performing work or furnishing materials for construction or repair of a building or improvement upon land. Clearing, grading, and excavation work, for example, constitute improvements to land. Additionally, architects or engineers who provide plans and supervise erection are also entitled to lien construction projects.
A general or original contractor has the right to lien the full amount of its contract with an owner (a full price lien).
Subcontractors, suppliers, and other materialmen not in privity with an owner typically are entitled to lien only on the unpaid balance due from the owner to the original contractor. But see § 35-11-210 (permitting full price lien rights for certain materialmen (not supplying labor or services) when notice provided to owner prior to furnishing materials)).
Upon request of an owner, an original contractor shall furnish a complete list of all materialmen, laborers, and employees who have furnished any material or are under contract to furnish material or labor for a project, along with the terms and prices thereof (Ala. Code § 35-11-219). If an original contractor fails to supply such information or fails to pay any materialman, subcontractor, or laborer, the contractor may forfeit its lien rights against the owner.
Notice of an intent to file an unpaid balance lien (Ala. Code § 35-11-218) must be given to the owner prior to filing or recording a lien. The notice must be in writing, state that a lien is claimed, set forth the amount due, set forth the work performed, and describe the entity or person who owes the money. Original contractors are not required to submit this notice.
A verified statement of lien must be filed with the probate court in the county or counties where the property for the project is situated (a) within six months after the last item of work has been performed or the last item of material has been furnished for original contractors, (b) within 30 days after the last item of work has been furnished for laborers, or (c) within four months for all other entities after the last item of work or material has been furnished. For (b) and (c), the verified statement of lien must follow the notice of intent required under Ala. Code § 35-11-218.
Following filing of a verified statement of lien, a party seeking to enforce its lien rights must file suit within six months after maturity of the entire indebtedness (usually the date when labor was last performed or materials were last furnished on a job).
To bond off a lien filed against your project, Alabama law requires the bond to cover the amount of the lien, plus interest on that amount at 8% for three years and $100 for court costs (Ala. Code § 35-11-233). If you are seeking to bond off a lien prior to an enforcement action being filed, a trip to the local probate court may be required.
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Contract Adjustment In The Event Of Inflation And Crises: When The World Is Upside Down, What Are The Implications For Ongoing Agreements?
The economic environment has changed dramatically in recent years. COVID-19, the war in Ukraine, geopolitical conflicts, supply chain disruptions, skyrocketing prices for raw materials and energy, and natural disasters all highlight the fragility of international supply relationships. But what does this mean in concrete terms for companies and their contractual arrangements? What happens if a contracting party is suddenly no longer able to deliver or if the agreed prices are no longer sufficient for economic viability?
In this post, we explore the legal options available under German law to adjust contracts in response to changing circumstances.
Interference with the Basis of the Agreement: When the Foundation Shifts
Under German law, a contracting party may demand an adjustment to the agreement if the circumstances that formed the basis of the contract change significantly after its conclusion, and continued adherence to the contract would be unreasonable for that party (so-called “interference with the basis of the agreement”, according to Section 313 (1) of the BGB, the German Civil Code). If a contractual adjustment is impossible or unreasonable for one party, it may even request rescission of the agreement by withdrawal or termination, as codified in the BGB.
However, such an adjustment or rescission is generally excluded if the risk of the respective contractual interference is clearly allocated to one of the parties by law or contract. Adjustments due to supply shortages or price increases resulting from a crisis are only considered if they go beyond the scope of typical contractual risk. In other words, the interference must create a performance risk so exceptional that the parties did not assume it when entering into the agreement.
A fixed-price agreement is one example of contractual risk allocation. If the supplier’s material costs rise significantly, this typically falls within its risk sphere due to the fixed-price agreement. As a rule, the supplier cannot demand a price adjustment. For this reason, price adjustment clauses are frequently agreed upon in practice, as described in more detail below.
An example of a statutory risk allocation is the risk of use, meaning the risk of not being able to use the received goods or services as intended. This risk is typically assigned to the recipient under reciprocal contracts. For instance, if a tool manufacturer takes out a loan to invest in its production capacity in anticipation of a rise in demand, the manufacturer cannot request a contract adjustment or termination of the loan agreement if demand for its tools later collapses and the loan, therefore, becomes economically pointless. In such cases, there is generally no room for an interference-based contract adjustment.
Furthermore, an interference is excluded if the contract already contains mechanisms for adjusting performance in cases of unforeseeable events (g., force majeure, hardship, or price adjustment clauses, as explained below). In these instances, there is usually little or no scope for adjusting the contract using the legal concept of interference with the basis of the transaction.
In practice, many adjustment attempts fail because the risk that has materialized was contractually or legally allocated from the outset. Without tailored contractual clauses – such as force majeure or price adjustment provisions – a party may be denied the right to amend or terminate the contract. This underscores the importance of such clauses at the time of contract formation.
Force Majeure Clauses: Contractual Protection Against the Unforeseeable
Force majeure clauses regulate what happens if an extraordinary event makes performance impossible or unreasonable. Although not specifically defined in German law, the concept is gaining importance due to the expansion of EU legislation and the increasing international nature of commercial contracts.
Force majeure clauses are designed to shield parties from liability when events occur that are unforeseeable and beyond their control. The burden must be so high that one party cannot reasonably be expected to bear it. Whether these requirements are met in individual cases depends on the nature and content of the contract.
Because there is no statutory definition of force majeure in German law, the parties must define it themselves and set out the legal consequences. The parties usually draw up a list of events that are expressly considered to be force majeure. The clause often provides that the affected party is released from liability or that deadlines are extended. To account for cases of prolonged force majeure, it may also be advisable to include a right to terminate the contract for cause.
A valid force majeure clause generally releases the affected party from the obligation to perform or allows the performance to be postponed without triggering damages, provided the party is not at fault and the event that prevents it from fulfilling its contractual obligation is outside its control. According to the German Federal Court of Justice, force majeure is ruled out if there is even slight negligence on the part of the affected party.
The clause should also clarify under what circumstances a party may invoke force majeure. This is especially important if the event only affects a supplier further down the supply chain (e.g., a production site destroyed by an earthquake) because the parties are then generally only indirectly affected by the supplier’s failure to deliver. In such cases, the party may be expected to source alternatives, even if costly or impractical.
Typical force majeure events include natural disasters, war, pandemics, strikes, and trade restrictions. The model clause for force majeure recommended by the International Chamber of Commerce – widely used in German practice – lists such examples and defines, for example, war and hostilities, starting with extensive military mobilization, as presumed events of force majeure. If the parties have included this clause in their agreement, the occurrence of a defined event generally constitutes a case of force majeure.
Similar provisions exist under international commercial law, particularly Article 79 of the United Nations Convention on Contracts for the International Sale of Goods. This article exempts a party from liability for non-performance if it proves that the failure was due to an impediment beyond its control, which could not reasonably have been foreseen or avoided.
Service and Price Adjustment Clauses: Built-in Flexibility
Because reliance on Section 313 of the BGB or force majeure clauses can be uncertain, many businesses include performance and price adjustment clauses in their contracts from the outset. These clauses allow parties to adapt to changes in raw material prices, inflation, or other factors. However, these clauses can be problematic and must strike a balance between predictability and flexibility.
When used in general terms and conditions, these clauses must be drafted with clarity and transparency, and they must align with the interests of the parties. German courts impose strict requirements:
Performance adjustment clauses are only permitted if they are reasonable for the counterparty, taking into account both parties’ interests. There must be a valid reason, and the adjustment must preserve the balance between performance and consideration.
Price adjustment clauses aim to maintain equivalence between performance and consideration during long-term relationships. These clauses must clearly specify the reason and scope of the price change and must not retroactively increase the user’s profit margin. The counterparty must be able to assess and verify the adjustment.
According to recent case law from the Federal Court of Justice, it is easier to justify price adjustment reservations, which allow the user to modify the price “at reasonable discretion” under certain conditions. It is sufficient to name the main cost drivers as change parameters in a comprehensible manner. A full breakdown of all cost components is not required.
Conclusion: Contracts Are Not A One-way Street – But Not A Wish List Either
Contracts cannot be changed easily. German law places great value on contractual certainty. Still, global economic volatility calls for updated legal tools.
The BGB’s doctrine of interference with the basis of the transaction offers relief when unforeseeable events significantly disturb the contract’s balance. Force majeure clauses provide clarity and prevent litigation. Price adjustment clauses and comparable contractual provisions create flexibility and reduce exposure on both sides.
Best Practices
Prepare for crises before they happen. In long-term contracts, include flexible mechanisms. Seek legal advice when circumstances change. And remember: Contracts should not just secure rights; they should enable fair solutions.
Because when the world is upside down, the goal remains: Getting through hard times together.
Observing Memorial Day With a Supportive Workplace for Veterans and Servicemembers
With Memorial Day occurring on May 26 this year, it is an opportune time for employers to assess whether their workplace culture is supportive of veterans and servicemembers, including whether they are in compliance with state and federal laws with respect to employees who are serving in the military.
Quick Hits
Memorial Day, celebrated on May 26, 2025, is a federal holiday. Many private businesses give workers paid time off.
Memorial Day was established to honor and remember men and women who died while serving in the military.
Employers can use many different approaches to help veterans and servicemembers feel included in the workplace.
Many private employers have employees who are in the National Guard, the Reserves, or previously served in the military. These individuals may bring unique skills to their civilian jobs, including mission focus, leadership, and attention to detail, honed through their military experience.
Sometimes employees must take leaves of absence when they are called to active duty. The Uniformed Services Employment and Reemployment Rights Act (USERRA) requires employers to guarantee job protections for up to five years for employees called to active duty with the U.S. Army, Navy, Marine Corps, Air Force, and Coast Guard Reserves; the Army National Guard and Air National Guard; and the Commissioned Corps of the Public Health Service. The five years is a cumulative total with one employer.
USERRA ensures that servicemembers can return to their civilian jobs with the same status, pay, and seniority they would have attained had they not been absent for military service. It is illegal for an employer to discriminate or retaliate against a worker for exercising their USERRA rights, including taking time off for military service.
State-level laws vary on the required leave, benefits, and reemployment rights for employees called to serve in the military. USERRA and the state-level laws establish the minimum standards for supporting military employees. However, many employers go above and beyond these requirements, offering additional benefits to support and retain their military employees. This may include enhanced leave policies, financial support during deployment, and dedicated programs to assist with reintegration into the civilian workforce upon return.
Offering flexibility and support for family members while employees are on deployment can alleviate stress and demonstrate the company’s commitment to its employees’ well-being. Additionally, providing comprehensive military leave support and benefits, such as salary continuation during military leave or differential pay, can make a significant difference in retaining these workers.
On January 21, 2025, the Trump administration issued an executive order to scrutinize diversity, equity, and inclusion (DEI) initiatives in the public and private sector, but the order explicitly says it does not apply to employment preferences for veterans.
Strategies for Supporting Servicemembers and Veterans
Employers may consider these strategies for creating a workplace culture that is supportive of servicemembers and veterans:
Ensuring compliance with USERRA and applicable state or local laws regarding leave, benefits, and reemployment rights for employees serving in the military.
Ensuring compliance with the Americans with Disabilities Act (ADA), including assessing whether the company is providing reasonable accommodations for employees who have service-related disabilities.
To foster a sense of community, forming an affinity group or resource group for veterans and servicemembers.
Facilitating mentoring between new employees and longstanding employees who share a history of military experience.
In recruiting efforts, reaching out to veterans’ groups and job fairs for veterans.
Contacting one of the U.S. Department of Labor’s (DOL) Regional Veterans’ Employment Coordinators for help with recruiting service members, veterans, and military spouses.
Reading the DOL’s employer guide for hiring veterans.
Using internal corporate communications, such as emails, newsletters, or social media, to acknowledge and celebrate Memorial Day and Veterans Day each year. Consider celebrating and highlighting the service of veterans in the workforce.
Permitting employees to request time off to attend Memorial Day and Veterans Day observances and to participate in veterans’ functions and family gatherings.
Hosting a voluntary webinar or educational program about the history of Memorial Day or the contributions of veterans and servicemembers at your organization.
Sending a card to employees who are members of Gold Star Families, which are families who have lost a family member in military service.
Reminding workers about the mental health services included in a health plan, employee assistance plan, or other employee benefits that may offer resources for common military service-related issues.
Court Affirms $1 Nominal Damage Award in Wind Farm Construction Dispute
Court Affirms $1 Nominal Damage Award in Wind Farm Construction Dispute
The general contractor on the 60-turbine wind farm project in Good Hope, Illinois, is entitled to collect a whopping $1 on its cost-to-complete claim against its terminated subcontractor. We previously reported on the court’s entry of summary judgment in favor of the general contractor, Black and Veatch Construction (BVCI), here and here. That order found that BVCI properly terminated its subcontractor, The Boldt Company, who was liable for damages in an amount to be determined by the jury. After the three-week jury trial, the jury awarded BVCI nominal damages in the amount of $1. Dissatisfied with the result, BVCI moved to set aside the verdict as against the weight of the evidence. U.S. District Judge Andrea Wood denied that motion in an opinion released last week. Her opinion provides insight into the jury’s decision to award nominal damages and offers valuable lessons for contractors seeking to recover cost-to-complete damages following termination of a subcontractor.
As a reminder, breach-of-contract damages generally seek to place an aggrieved party in the position they would have been in had the contract been performed. In cases where a subcontractor is terminated before completion due to defective performance, the general measure of damages is the difference between the reasonable cost to complete work and the subcontract price. Here, BVCI’s alleged cost to complete was $38.9 million compared to a subcontract price of just $15.4 million. With overhead and profit, BVCI’s total damage figure based on its costs to complete was $29.4 million.
The court’s recent opinion identifies a number of reasons why the jury could have reasonably concluded that BVCI failed to meet its burden of proving it was entitled to this amount. For example, BVCI’s alleged costs to complete totaling $39 million were based on two cost codes that were set up after Boldt’s termination. The jury heard evidence about numerous cost-coding errors that resulted in $17.7 million in project costs being transferred into a new cost code. The jury may also have questioned the reasonableness of BVCI’s costs to complete, which were over 2.5 times Boldt’s original subcontract price of $15.4 million. The biggest reason for that increase was BVCI’s decision to self-perform the turbine-erection work even though (1) it had never self-performed that kind of work before and (2) there were subcontractors available who could have done the work. The court reasoned that the jury could have reasonably refused to hold Boldt liable for BVCI’s costs of learning how to do the erection work “on the fly” instead of waiting for an experienced subcontractor to become available. The jury also heard evidence about BVCI’s inefficiencies in completing the work, including a retrospective “post-mortem” analysis by a BVCI employee that identified a number of issues with BVCI’s performance on the project.
The court summarized its view of the evidence and holding as follows:
In sum, BVCI went all in on a theory of damages that supported only a single number—approximately $38.9 million—as BVCI’s costs to complete Boldt’s scope of work. The jury was asked to calculate that figure by relying on numbers that BVCI assigned to Boldt based on subjective cost codes of questionable accuracy. As proof of the reasonableness of those costs, BVCI introduced the testimony of an expert who offered relatively threadbare opinions based on a process that he did not describe with any real specificity. Given the concerns surrounding both BVCI’s numbers and its expert’s review, it was rational for the jury to decide that either or both were untrustworthy. While absolute certainty of the amount of damages is not required, if the jury determined that it could not even reasonably approximate BVCI’s damages with the evidence provided, then it properly awarded nominal damages. Accordingly, the jury’s verdict that there was insufficient evidence for it to determine the fair and reasonable amount of BVCI’s damages was not against the manifest weight of the evidence.
The court went on to reject BVCI’s challenges to various evidentiary rulings and denied its motion for a new trial. A copy of the court’s opinion is located here.