Beltway Buzz, March 14, 2025
Government Shutdown Threat Recedes. Earlier today, the U.S. Senate voted 62–38 to advance a continuing resolution to maintain government funding through September 30, 2025. After House Republicans passed their version of the bill and left town for a weeklong recess, Democrats in the Senate were left with a tough choice: vote to approve a bill that they did not like but keep the government open, or vote “no” and shut down the federal government. Enough Democrats appear to have chosen the former option, which will put the funding issue to bed until at least this summer. The political fallout, however, will be felt immediately and will likely continue to impact legislative debates for the remainder of the 119th Congress.
DOL Personnel Update. Leadership ranks at the U.S. Department of Labor (DOL) are starting to be filled out, as there was significant news this week on the DOL personnel front:
Nominees Confirmed. On March 10, 2025, the U.S. Senate confirmed Lori Chavez-DeRemer as secretary of labor by a vote of 67 to 32. Two days later, Keith Sonderling, nominated to be Chavez-DeRemer’s deputy at the DOL, was confirmed by a vote of 53 to 46. With the top two political officials in place at the DOL, this clears the decks for the Senate to begin considering the nominations of individuals to lead the Occupational Safety and Health Administration (OSHA), the Employee Benefits Security Administration (EBSA), and the Employment Training Administration (ETA). President Donald Trump has not yet announced a nominee to lead the Wage and Hour Division at the DOL.
New OLMS Director. Late last week, President Trump appointed Elisabeth Messenger as director of the DOL’s Office of Labor-Management Standards (OLMS). Most recently, Messenger was CEO of an organization that advises public sector employees about their rights concerning union membership. Not surprisingly, during the Biden administration the OLMS did not focus on labor union activity, but instead advanced a unique interpretation of persuader reporting to target employers. The Buzz is optimistic that under Messenger’s leadership, the OLMS will return to its core mission of promoting labor union democracy and financial integrity.
Employment Policy Vet Tapped to Lead Pension Agency. President Trump nominated Janet Dhillon, former chair of the U.S. Equal Employment Opportunity Commission (EEOC), to lead the Pension Benefit Guaranty Corporation (PBGC). Pursuant to the American Rescue Plan Act of 2021, the PBGC was provided $74 to $91 billion to deliver to critical and declining multiemployer pension plans. Some Republicans have criticized the program for making overpayments to these plans.
POTUS Sends USCIS Nominee to Senate. This week, President Trump nominated Joseph Edlow to be director of U.S. Citizenship and Immigration Services (USCIS). During President Trump’s first term, Edlow served in several positions at USCIS, including as acting director from February 2020 to January 2021. If confirmed, Edlow will play a significant role in advancing employment-based immigration policy for the Trump administration.
Bipartisan Child Labor Bill Introduced. Senators Josh Hawley (R-MO) and Cory Booker (D-NJ) have reintroduced an updated version of their child labor bill, “Preventing Child Labor Exploitation in Federal Contracting Act.’’ If enacted, the bill would:
require federal contractors and subcontractors to represent whether “within the preceding 3-year period, any final administrative merits determination, arbitral award or decision, or civil judgment” has been issued against the employer relating to child labor violations;
prohibit federal government agencies from entering into contracts with entities that make such disclosures but fail to implement corrective measures as negotiated with the secretary of labor;
increase penalties from $11,000 to $100,000 for each employee who was the subject of a child labor violation and from $50,000 to $500,000 for each violation that causes the death or serious injury of any employee under the age of eighteen years; and
subject an entity that knowingly fails to report or certify to suspension, debarment, and False Claims Act proceedings.
A previous version of the bill passed out of the U.S. Senate Homeland Security and Governmental Affairs Committee in the 118th Congress, but was never voted on by the full Senate. While the bipartisan nature of the bill helps its chances to advance, the Buzz wonders if a federal contractor reporting scheme that is borrowed directly from President Barack Obama’s “Fair Pay and Safe Workplaces” executive order will turn off many Republican legislators.
Federal Mediator No Longer Facilitating Union Card Check. According to media reports, the Federal Mediation and Conciliation Service (FMCS) will no longer help employers and unions facilitate unionization via card check (as opposed to secret ballot). The about face rescinds an agency policy that was adopted during the Biden administration “to promote the development of sound and stable labor management relationships.”
Twice Is Nice in the Motor City. On March 14, 1904, the U.S. House of Representatives voted for the first time to reauthorize the printing of a Congressional Gold Medal that had been previously awarded. Traditionally awarded to members of the armed services, in the mid-1800s the U.S. Congress began expanding the scope of award recipients to include “individuals recognized for nonmilitary heroic activities or their work in specific fields.” Once such recipient was John Horn Jr., of Detroit, Michigan, who in 1874 was awarded the Congressional Gold Medal “in recognition and in commemoration of his heroic and humane exploits in rescuing men, women, and children from drowning in the Detroit River.” From his family’s restaurant located on the dock at the end of Woodward Avenue, Horn rescued more than one hundred individuals who found themselves in the river “either by falling in while going upon or coming off ferry-boats, while intoxicated, or by falling into the river soberly but accidentally.” Unfortunately, the medal was stolen from Horn in 1901, and an act of Congress was necessary to reprint a new one. When he died in 1920, Horn was credited with saving 135 people from drowning.
Nevada Government Contract Protests: Considerations for Bidders
Nevada governments award major contracts worth potentially billions of dollars. Successful and unsuccessful bidders should know their options under Nevada law, as a contract award is often just the beginning. Bidders should know how to (1) defend a successful government bid and (2) protest an unsuccessful bid. Both are important.
Background on Nevada Government Contracts
State and local governments regularly award contracts to businesses. These contracts span from the ordinary and mundane, like office supplies, to contracts running entire government programs. For major contracts, Nevada governments must follow stringent legal requirements, and they must often request proposals to fulfill these contracts. These contracts can get quite large, and in some cases, may be worth billions of dollars. Given these stakes, Nevada governments must follow state and local purchasing rules. These rules ensure, in a perfect world, that the most qualified contractor wins this government work. These procedures also help limit graft in the purchasing process. Nevada law fixes both state purchasing rules, in NRS 333, and local government purchasing rules, in NRS 332.
Governments sometimes fall short when awarding contracts. When they do, Nevada law allows businesses who do not win, i.e., disappointed, or unsuccessful bidders, to “protest” a recommended contract award. An unsuccessful bidder must generally follow certain requirements, including deadlines and bonds.
Generally speaking, the grounds to protest are limited and focused on purchasing procedures. This process may be a multi-step process, depending on how far an unsuccessful bidder wants to push a protest. Proceedings would take place administratively, and possibly in court. Throughout this process, the successful bidder may ordinarily participate, too.
Considerations for Nevada Government Contractors
With major contracts, businesses should have a plan to either (1) protest an award or (2) defend a successful award. Going into any bid process, businesses should think about these matters and consider contacting specialized counsel, as there are detailed procedural requirements in both NRS 333 and NRS 233B to consider.
MS-ISAC Loses Funding and Cooperative Agreement with CIS
The Cybersecurity and Infrastructure Security Agency (CISA) confirmed on Tuesday, March 11, 2025, that the Multi-State Information Sharing and Analysis Center (MS-ISAC) will lose its federal funding and cooperative agreement with the Center for Internet Security. MS-ISAC’s mission “is to improve the overall cybersecurity posture of U.S. State, Local, Tribal, and Territorial (SLTT) government organizations through coordination, collaboration, cooperation, and increased communication.”
According to its website, MS-ISAC is a cybersecurity partner for 17,000 State, Local, Tribal, and Territorial (SLTT) government organizations, and offers its “members incident response and remediation support through our team of security experts” and develops “tactical, strategic, and operational intelligence, and advisories that offer actionable information for improving cyber maturity.” The services also include a Security Operations Center, webinars addressing recent threats, evaluations of cybersecurity maturity, advisories and notifications, and weekly top malicious domain reports.
All of these services assist governmental organizations that do not have adequate resources to respond to cybersecurity threats. Information sharing has been essential to prevent government entities from becoming victims. State and local governments have relied on this information sharing for resilience. Dismantling MS-ISAC will make it harder for governmental entities to obtain timely information about cybersecurity threats for preparedness. It is an organized place for governmental entities to share information about cyber threats and attacks and to learn from others’ experiences.
According to CISA, the dismantling of MS-ISAC will save $10 million. State representatives rely on the information shared by MS-ISAC. It may save the federal government minimal dollars, but when state and local governments are adversely affected and become victims of cyberattacks, this savings will be dwarfed by the amount spent on future attacks without MS-ISAC’s assistance. Responding to state and local government cyberattacks still expends taxpayer dollars. This shift is an unhelpful one that will leave state and local governments in the dark and at increased risk. This is a short-sighted strategy by the administration.
60-Second Sustains: TISTA Science and Technology Corporation
Protest of: TISTA Science and Technology CorporationB-422891.2; .3; .4
TISTA challenged the issuance of a task order by the National Institutes of Health to Tantus Technologies, alleging the agency engaged in unequal treatment of the offerors.
The Agency assessed a strength to the awardee for proposing to maintain a “warm bench” of candidates to meet potential surge staffing needs. On the other hand, it assessed a weakness to TISTA for proposing to maintain bench strength with a pool of pre-vetted candidates.
The Agency argued there was a distinction in the proposals in that the awardee’s “warm bench” was made up exclusively of existing employees, while TISTA’s would need to hire surge candidates.
The Government Accountability Office (“GAO”) rejected the Agency’s argument, finding that both quotations provided for surge staffing with a mix of existing and yet-to-be-hired employees, and sustained the protester’s allegation of disparate treatment.
GAO similarly found unequal treatment in the Agency’s decision to assign a strength to the awardee for its use of a “master schedule,” when it did not assign a strength to the protester for proposing use of a “master tracker.”
Five Practical Tips for Government Contractors Navigating the Executive Order Chaos
Federal government contractors are living in a climate of uncertainty. Executive orders affecting government contracts are being issued at a rapid pace. The executive orders tend to be broad and high-level with regulatory guidance to follow. This is not abnormal. However, the sheer number of executive orders and the magnitude of the regulatory changes they seek to impose is a new phenomenon. Contractors are left to determine what they should be doing, if anything, and when. Set forth below are practical suggestions for contractors to consider during this unsettling time.[1]
Communicate with your Contracting Officer
During the chaos, it is important to communicate with your contracting officer. Only contracting officers are authorized to modify contracts. Do not blindly accept direction from contract specialists or others who purport to be speaking on behalf of the government. Direction received from anyone other than a contracting officer should be immediately relayed to your contracting officer with a request for clarification or guidance.
Also, be prepared for unclear responses from your contracting officer. Like you, contracting officers also are living through this chaos. They may not have received clear direction to pass on to contractors. Aim to keep your communications with your contracting officer respectful.
Executive Orders are not Contract Modifications
Remember that executive orders are not contract modifications. Contractors should not change their contract performance or their compliance with, for example, socioeconomic programs unless or until a contract modification signed by a contracting officer. This may be difficult for contractors when they think they can see the writing on the wall. But regulatory and policy changes can occur and, thus, even well-intentioned contractors might make changes they did not need to make or that are different from what is required from a formal contract modification.
Continue Contract Performance
Along the same lines, contractors need to continue contract performance in accordance with the four corners of the contract unless or until a contract is modified. Failure to do so could be considered breach of contract. With the plethora of contract terminations being reported, contractors should not put themselves in the crosshairs by failing to comply with the terms and conditions of their contract, thereby giving the government a basis to terminate for default. And remember, if you believe the government has breached or improperly changed a contract, a contractor is required to continue performance and seek relief in accordance with the FAR Disputes clause.
Communicate with your Subcontractors
Just as a prime contractor craves concrete guidance from a contracting officer regarding what to do, subcontractors also need guidance and oftentimes more so, because they are unable to communicate directly with the government. Thus, a good practice for prime contractors is to pass along any guidance received from a contracting officer to its subcontractors. Prime contractors also should remind their subcontractors about their obligations to continue contract performance.
Prepare to Defend Your Contract
Contractors also should be prepared to explain the importance of their contracts to the government. To be proactive, contractors should draft narratives explaining the importance of their work and how their performance exceeds contract requirements. Contracts that are considered to “add value” are less likely to be found on the so-called “chopping block.” If appropriate, a contractor should consider including recommendations, for example, regarding how its work can be performed more effectively or efficiently.
We hope this practical advice will help you navigate the government contracting chaos until the dust settles.
[1] See our previous related blog posts: Understanding President Trump’s Executive Orders on DEI: Implications for Federal Contractors; What Contractors Facing Terminations, Stop-Work Orders, and Suspension of Work Orders Directed by the Trump Administration Need to Know; Fixed Price Contracts: Government Contractors Beware; What GSA Contractors Need to Know About the New FAR Deviation for Revoked Executive Order 11246, Equal Employment Opportunity; Preliminary Injunction Granted Related to DEI-Related Executive Orders—Takeaways for Government Contractors; President Trump Signs New Executive Order: “Implementing the President’s ‘Department of Government Efficiency’ Cost Efficiency Initiative”—What Federal Contractors Need to Know.
USTR Seeks Public Comment on Proposed Action in Section 301 Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors
The Office of the United States Trade Representative (“USTR”) announced its proposed actions under Section 301 of the Trade Act of 1974 (“Section 301”), in connection with its Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance (the “Proposed Action”) on February 21, 2025.
In short, the Proposed Action includes a variety of recommended remedies, including (1) imposing significant port fees on Chinese vessel operators and other operators of Chinese-built vessels, and operators with orders for new vessels being built in Chinese yards, and (2) implementing requirements for mandatory use of U.S.-flag and U.S.-built vessels to carry fixed percentages (increased annually) of U.S. exports.
At this time, the Proposed Action is not final and USTR is seeking public comment by March 24, 2025, as discussed further below. Given the role that ocean transportation plays in the economy, the Proposed Action would have far-reaching effects to the extent it is adopted. Accordingly, vessel owners and operators and other interested parties in the industry should consider commenting on the Proposed Action and/or appearing at the upcoming hearing with respect to how the Proposed Action may affect them and their industry. In addition, at a minimum, shipowners, operators, charterers, and shippers should start considering their operations, contracts, and how the Proposed Action may affect them.
It is worth noting that in the days since USTR released its Proposed Action, the Trump administration has taken several significant steps focused on promotion of the U.S. shipbuilding and maritime industry, including measures drawing revenue from the proposed Section 301 fees:
Creation of a Shipbuilding Office: President Trump announced plans to establish a new office of shipbuilding within the White House. The Office of Maritime and National Capacity is organized within the National Security Council and aims to revitalize domestic ship production.
Tax Incentives: The administration plans to offer special tax incentives to encourage investment in both military and commercial shipbuilding.
Executive Order Under Consideration: An executive order (“EO”) is under consideration that includes measures to support U.S. shipbuilders. A draft order, which has been circulated in recent days throughout the maritime industry, reportedly includes a directive that USTR impose, through the ongoing 301 investigation, tonnage-based fees on Chinese-built and Chinese-flagged ships (or vessels in fleets that contain such ships) entering the United States. However, at this point, the EO is still in draft form and has not been signed or released to the public.
Background
Section 301 authorizes USTR to investigate foreign trade practices and impose measures on foreign countries found to violate U.S. trade agreements or engage in acts that are “unjustifiable,” “unreasonable,” or “discriminatory” in ways that burden U.S. commerce. USTR’s powers under Section 301 are quite broad.
In March 12, 2024, five major U.S. labor unions filed a Section 301 petition regarding alleged acts, policies, and practices of China to dominate the maritime, logistics, and shipbuilding sector. The petition was accepted, and on April 17, 2024, USTR initiated an investigation. Following its investigation, on January 16, 2025, in the last days of the Biden Administration, USTR published its report and determined that China’s practices were “actionable”.[1]
In connection therewith, USTR published the Proposed Action and is now seeking public comments from interested parties. Comments must be submitted via USTR’s online portal (https://comments.ustr.gov/s/) no later than March 24, 2025. USTR has also scheduled a public hearing on the proposed actions on March 24, 2025, in the main hearing room of the U.S. International Trade Commission located at 500 E Street S.W., Washington, D.C. 20436. Interested parties may request to appear at the hearing no later than March 10, 2025, and the request should include a summary of the proposed testimony and may be accompanied by a pre-hearing submission. Remarks at the hearing are limited to five minutes.
Proposed Action
The Proposed Action includes the following fees and service restrictions:
Fees
Chinese maritime transport operators will be charged a fee:
up to U.S. $1,000,000 per vessel entrance to a U.S. port; or
up to U.S. $1,000 per net ton of the vessel’s capacity per entrance to a U.S. port.
Chinese maritime transport operators with fleets comprised of Chinese-built vessels will be charged:
up to U.S. $1,500,000 per vessel entrance to a U.S. port;
fees based on the percentage of Chinese-built vessels in the operator’s fleet:
up to U.S. $1,000,000 per vessel entrance at a U.S. port if greater than 50 percent of the fleet;
up to U.S. $750,000 per vessel entrance at a U.S. port if between 25 percent and 50 percent of the fleet; or
up to U.S. $500,000 per vessel entrance at a U.S. port if between 0 percent and 25 percent of the fleet; or
an “additional” fee up to U.S. $1,000,000 per vessel entrance to a U.S. port if the number of Chinese-built vessels in the operators fleet is equal to or greater than 25 percent.
Maritime transport operators with prospective orders for Chinese vessels:
an “additional fee” based on the percentage of vessels ordered from Chinese shipyards:
up to U.S. $1,000,000 per vessel entrance at a U.S. port if greater than 50 percent of their vessel orders in Chinese shipyard or vessels expected to be delivered by Chinese shipyards over the next 24 months;
up to U.S. $750,000 per vessel entrance at a U.S. port if between 25 percent and 50 percent of their vessel orders in Chinese shipyard or vessels expected to be delivered by Chinese shipyards over the next 24 months; or
up to U.S. $500,000 per vessel entrance at a U.S. port if between 0 percent and 25 percent of their vessel orders in Chinese shipyard or vessels expected to be delivered by Chinese shipyards over the next 24 months; or
a fee up to U.S. $1,000,000 per vessel entrance at a U.S. port if 25 percent or more of the total number of vessels ordered by an operator, or expected to be delivered to the operator, are ordered or expected to the delivered by Chinese shipyards over the next 24 months.
The Proposed Action also includes a proposed “refund” for additional fees, on a calendar year basis, up to U.S. $1,000,000 per entry into a U.S. port of a U.S.-built vessel through which the operator is providing international maritime transport services. However, the Proposed Action does not include any further details as to the timing of refunds or the process to obtain a refund.
Service Restrictions
In addition to the above fees, the Proposed Action includes restrictions on services aimed at promoting the transport of U.S. goods on U.S. vessels. In that regard, the international maritime transport of all U.S. goods (e.g., capital goods, consumer goods, agricultural products, and chemical, petroleum, or gas products), must comply with the following schedule:
“As of” Effective Date
Effective Date of Action
Two Years Following Effective Date of Action
Three Years Following Effective Date of Action
Seven Years Following Effective Date of Action
Percentage of U.S. Products, Per Calendar Year, Exported by Vessel, Restricted to Export on U.S.-Flagged Vessels by U.S. Operators
At least 1 percent
At least 3 percent
At least 5 percent (at 3 percent of which must be U.S.-flagged, U.S.-built, by U.S. Operators)
At least 15 percent (at 5 percent of which must be U.S.-flagged, U.S.-built, by U.S. Operators)
The Proposed Action also includes a requirement that U.S. goods are to be exported on U.S.-flagged, U.S. built vessels, but may be approved for export on a non-U.S.-built vessel provided the operator providing international maritime transport services demonstrates that at least 20 percent of the U.S. products, per calendar year, that the operator will transport by vessel, will be transported on U.S.-flagged, U.S.-built ships.
Other Actions
In addition, the Proposed Action included a recommendation that relevant U.S. agencies take actions to reduce exposure to and risk from China’s promotion of the National Transportation and Logistics Public Information Platform (“LOGINK”) or other similar platforms, including investigating alleged anticompetitive practices from Chinese shipping companies, restricting LOGINK access to U.S. shipping data, or banning or continuing to ban terminals at U.S. ports and U.S. ports from using LOGINK software.
Key Takeaways
Open Issues: While the Proposed Action listed a number of proposed fees and restrictions, the descriptions are generally vague and include no regulatory details or necessary definitions for implementation. For effective implementation, many of the proposals will need to be fleshed out further before a final rule is adopted.
For example, many requirements are based on who the vessel “operator” is, but that term is not defined, and there is no standard definition of “vessel operator” in U.S. law; it can vary depending on the particular legal or regulatory requirements at issue. There is also no indication how affiliated companies would be treated in the fleet-wide analysis of the origin of vessels or newbuilds.
In addition, the Proposed Action sets maximum fees (“at a rate of up to $1,000,000 per entrance”) but does not include any analytical principles, policies, or procedures to determine how the U.S. government would set the actual fees for specific vessels (e.g., how will fees be adjusted based on vessel type, cargo type, trade, volume, export status, and/or other factors, etc.).
Status of the Proposed Action: The Proposed Action is only a set of proposals at this stage and the various fees and service restrictions are not yet final. At this time, it is unclear whether USTR will ultimately impose all, some, or any of the proposals included in the Proposed Action. However, given the lack of specificity and open issues, public comment and testimony at the public hearing by interest parties may help shape what form the final rules takes.
Timeline: The public hearing is scheduled for March 24, 2025, and the deadline for public comments also closes on March 24, 2025. Section 301 cases are supposed to be completed within one year, which would require the rule to be finalized by April 17, 2025, and then implemented 30 days after. However, the White House may extend that period up to 180 days.
Given the lack of specificity in the Proposed Action and the anticipated wide-ranging opposition from inside the United States (from importer, exporters, manufacturers, retailers, etc.) and also outside the United States (shipowners, shippers, associations, governments, etc.), it will be challenging for USTR to finish this process and publish a workable final regulation within the one-year timeframe. However, given the velocity of other recent administration trade actions, an implementation of some or all proposed measures in April cannot be ruled out.
Contract Review: In the interim, vessel owner and operators and other actors in the industry should review their existing and prospective contracts and consider how the Proposed Action may affect them and whether they may have any applicable relief. For example:
Which party is responsible for port fees (typically the charterers) and are there any exceptions or restrictions that may be applicable;
Does the contract include tariff or sanction provisions that may be applicable; or
Would the Proposed Action constitute a force majeure event, a change in law, or a material adverse change such that certain rights such as suspension of performance, substitution of vessel, or termination may be applicable?
[1] The full 182-page report titled Section 301 Investigation: Report on China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance, may be found here: https://ustr.gov/sites/default/files/enforcement/301Investigations/USTRReportChinaTargetingMaritime.pdf
Proposed FAR CUI Rulemaking Nears Comment Deadline
Go-To Guide:
The comment period on the proposed FAR Controlled Unclassified Information (CUI) Rule closes Monday, March 17, 2025.
To date, filed comments demonstrate core concerns, including the difficulty of complying with the eight-hour incident reporting requirement for potential CUI incidents or mismarked CUI.
The FAR Council may issue the final rule later this year after adjudicating submitted comments and a 90-day Office of Information and Regulatory Affairs review period.
Once the rule is finalized, government contractors performing work for any government agency who receive CUI must implement the security controls in NIST SP 800-171.
Despite the potentially sweeping impact of the proposed FAR CUI Rule (Proposed Rule), less than 30 comments have been filed to date during the comment period, which ends March 17, 2025. The FAR Council will adjudicate each of these comments, and any additional ones submitted by the deadline, before issuing the final rule, which may be expedited given the relatively low number of submissions.
The long-awaited Proposed Rule, published on Jan. 15, 2025, would implement the final piece of the National Archives and Records Administration (NARA)’s Federal Controlled Unclassified Information (CUI) Program, which dates back to 2010.
As we previously covered in a January 2025 GT Alert, the Proposed Rule would standardize cybersecurity requirements for all federal contractors and subcontractors and implement NARA’s policies under 32 CFR part 2002. The Proposed Rule would also introduce new procedures, including reporting and compliance obligations, and define roles and responsibilities for both the government and contractors who handle CUI.
Commenters Express Common Concerns and Themes
Commenters expressed many of the same concerns, and the submitted comments correspond to common themes.
The Eight-Hour Incident Reporting Timeframe Is Unreasonable. A key requirement under the Proposed Rule is to report a suspected or confirmed CUI incident within eight hours of discovery. This obligation also flows down to subcontractors and requires them to notify the prime or next higher tier subcontractor within the same eight-hour timeframe. Many commenters appear concerned about the potential burden and cost impact of this requirement, especially for small businesses. Commenters seek to align the reporting timeframe with other existing federal frameworks, such as the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA), which calls for a 72-hour timeframe to report qualifying incidents to the Cybersecurity and Infrastructure Security Agency. Similarly, DFARS 252.204-7012 (Safeguarding Covered Defense Information and Cyber Incident Reporting) also requires defense contractors to “rapidly report” cyber incidents to the Department of Defense within 72 hours of discovery. Notably, the Proposed Rule does not attribute this eight-hour reporting requirement to defense contractors due to their existing obligations under DFARS 252.204-7012. Accordingly, maintaining the current expedited timeframe structure has potential to further complicate federal contractor and subcontractor obligations under the Proposed Rule, depending on which agency they are working with.
The Definition and Scope of “CUI incident” Require Clarification. Under the Proposed Rule, FAR 2.101 would be amended to add “CUI incident,” which shall be defined as “suspected or confirmed improper access, use, disclosure, modification, or destruction of CUI, in any form or medium.” In response, several commenters have noted that this term is poorly defined and overly broad. Core to these commenters’ concern is the related obligation for contractors to expeditiously report a suspected or confirmed CUI incident—a vaguely and broadly defined term would be potentially burdensome and drastically increase the number of reported events to the government. Given the breadth of the definition, the FAR Council’s estimate of 580 incident reports annually might be a significant underestimation.
Small Business Contractors Would Incur High Compliance Costs. The FAR Council estimates that non-defense contractors and subcontractors would incur labor, hardware, and software costs in order to comply with the Proposed Rule. For small businesses, the total initial year cost estimate is $175,700, with recurring annual costs expected to be $103,800. The Proposed Rule recognizes this impact and has engaged in a Regulatory Impact Analysis (RIA) that considers specific business concerns. In response, one commenter has detailed the potential outsized impact of the Proposed Rule on small businesses, which do not have dedicated compliance teams or the built-in expertise to continuously monitor their systems with in-house resources, structure incident reporting chains, or implement training programs. This commenter suggests that the FAR Council’s estimate for training costs is underestimated. Such comments align with the FAR Council’s express invitation for feedback from small entities on any RIA assumptions or other expected burdens that may help inform the final rule. However, to date, small business concerns and other interested parties have largely been absent from the public comment efforts. Such entities should consider submitting comments to provide additional detail around the anticipated costs and considerations the RIA may have missed.
Other Concerns Raised
Some commenters have requested further guidance on how to handle legacy records and information that might have been previously designated as For Official Use Only (FOUO), a designation that is no longer utilized, and how those records would be marked under the CUI framework. Other comments request more guidance on how CUI would be identified, especially for small business concerns. While these are important considerations, they are likely outside of the current rulemaking’s scope, which arises under Title 48 of the CFR (the acquisition regulation). The Proposed Rule implements NARA’s CUI Program, which is separately described under 32 CFR part 2002, and which codified a standardized approach to designating, handling, and safeguarding CUI.
Additionally, some comments seek an extension of the public comment period. Given that the comment period remained in effect during the new administration’s regulatory freeze pending review, it appears unlikely that a continuance will be granted, and the 60-day comment period may close as scheduled.
Interested contractors should submit their comments on the Proposed Rule by March 17, 2025. Given the relatively few comments received, the adjudication process may be quicker than originally anticipated. The FAR Council may issue the final rule in 2025, with standardized cybersecurity standards for all federal contractors and subcontractors going into effect and the clauses included in contracts by year end or early 2026.
European Union Adopts 16th Package of Sanctions Against Russia, Further Impacting the Aviation Industry
On 24 February 2025, the European Union adopted the 16th Russia sanctions package.
The new measures amending the framework Council Regulation (EU) 833/2014 are found and included in Council Regulation (EU) 2025/395. They target systemically important sectors of the Russian economy including energy, trade, transport, infrastructure and financial services. The new package also includes restrictions directly impacting the aviation industry, through the amendment to Article 3d, “the flight ban”, and the inclusion of Article 5ae, “a full transaction ban” on ports and airports in and surrounding Russia.Below you will find a very brief note on the beforementioned articles.
Amendment to Article 3d:
A notable new provision is the new Article 3d(1b) which provides for the possibility to list any third country airlines operating domestic flights within Russia or supplying, selling, transferring or exporting, directly or indirectly, aircraft or other aviation goods and technology to a Russian air carrier or for flights within Russia. If listed in Annex XLVI, these air carriers, as well as any entity owned or controlled by them, will not be allowed to land in, take off from or overfly EU territory.
Are there any exceptions?
The flight ban will not apply:
In the case of an emergency landing or an emerging overflight; or
If such landing, take-off or overflight is required for humanitarian purposes.
Inclusion of Article 5ae:
The new package includes a full transaction ban, with immediate effect, on Russian ports and airports, which are believed to have been used to transport combat-related goods and technology, or to circumvent the oil price cap by transporting Russian crude oil via ships in the shadow fleet. The restrictions are broadly drafted and will apply to any transactions with relevant ports and airports (as listed in Annex XLVII), even if there is no direct transaction with the port authorities themselves. That includes access to facilities of the listed ports, locks and airports, and the provision of any services to vessels or aircrafts.
Are there any exceptions?
The exceptions include transactions which are strictly necessary for:
Humanitarian purposes;
The operation of flights required for attending meetings with the objective of seeking a solution to Russia’s invasion of Ukraine or of promoting the policy objectives of the restrictive measures;
An emergency landing, take-off or overflight;
Travel for official purposes of members of diplomatic or consular missions of Member States or partner countries in Russia or of international organisations enjoying immunities in accordance with international law;
Travel, for personal reasons, of natural persons to and from Russia or of members of their immediate families travelling with them; and
The purchase, import or transport of pharmaceutical, medical, agricultural and food products whose import, purchase and transport is allowed under the EU sanctions regime.
Mass. Chapter 93A Claims Require Specific In-State Conduct
In order to state a viable Chapter 93A, § 11 claim, a plaintiff must make specific, factual allegations about the conduct that occurred primarily and substantially within the Commonwealth of Massachusetts, the U.S. District Court for the District of Massachusetts recently confirmed. In diversity action Crunchtime! Info. Sys., Inc. v. Frisch’s Rests., Inc., a restaurant software developer alleged breach of contract, breach of the implied covenant of good faith, and a Chapter 93A violation against a restaurant chain. Plaintiff, a Delaware corporation with a principal place of business in Massachusetts, provides software services to restaurants across the world. Defendant, an Ohio corporation with a principal place of business in Ohio, operates franchises primarily in the Midwest. Defendant moved to dismiss only the Chapter 93A violation for failure to state a claim.
Relevant here, the parties entered into an agreement where plaintiff agreed to provide software services to defendant’s restaurants in exchange for payment. The only allegations in the amended complaint that connected the conduct to Massachusetts was the existence of a principal place of business in the state and the fact that Massachusetts law governed the underlying contract. In assessing whether conduct occurs “primarily and substantially” within Massachusetts, the court must examine the context of the events that gave rise to the claim, and whether the center of gravity of those events occurred in Massachusetts. Because the amended complaint did not include any allegations elaborating on the specific facts that occurred in or related to Massachusetts, there was no basis to believe the conduct occurred primarily and substantially in the Commonwealth. Therefore, the claim was dismissed.
This case serves a reminder, especially for parties who do not normally practice in Massachusetts, to pay particular attention to the factual allegations related to the conduct giving rise to the claims and whether the center of gravity of that conduct occurred in Massachusetts.
Are You Really Covered as an Additional Insured?
For your next construction project in New York, securing commercial general liability coverage as an additional insured may not be as simple as it would appear. Recent court rulings have interpreted the terms of insurance policies, where additional insured parties are intended to be covered pursuant to a “blanket” endorsement (i.e., the additional insureds are not explicitly named in the body of the endorsement or the underlying insurance policy), to provide coverage only to those persons or entities that the named insured has agreed to add as additional insureds in writing.
As a result of the rulings described below, when drafting construction contracts, it is important to be unambiguously clear as to which parties are intended to be additional insureds under any insurance policies required to be obtained under such contracts. In order to protect against the risks of non-coverage highlighted below, any party entering into a construction contract or subcontract should take the following actions when additional insureds are added to an insurance policy pursuant to a “blanket” endorsement:
(i) require by direct written agreement between the applicable named insured and each proposed additional insured that such named insured must include such proposed additional insureds as additional insureds under its insurance policy, together with a contractual indemnity by the named insured in favor of such proposed additional insureds, or preferably (where feasible) (ii) require that any insurance policy required under such construction contract should expressly name each and every party that is intended to be included as an additional insured thereunder; and
review the underlying insurance policies (i.e., not just the applicable certificates of insurance, which are informational only and do not supersede or modify the actual policy terms) to confirm exactly what persons or entities are covered as additional insureds thereunder and to confirm whether coverage as an additional insured is primary or excess to other coverage available to such additional insured.
In 2018, the New York Court of Appeals upended market norms in affirming a ruling limiting coverage for additional insureds to those in contractual privity. Gilbane Bldg. Co. v. St. Paul Fire & Marine Ins. Co., 31 N.Y.3d 131 (2018). In Gilbane, the court found that a project’s construction manager was not covered as an additional insured by the insurance purchased by the general contractor (GC Policy), because the GC Policy included a “blanket” additional insured endorsement and the construction manager did not have privity of contract with the general contractor, the named insured under the GC Policy. The court specifically and exclusively relied on the language of such “blanket” endorsement, which read “WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization with whom you have agreed to add as an additional insured by written contract … ” (with emphasis added). The court specified that the language “with whom” clearly required a written agreement between the named insured and any proposed additional insured, in which the named insured agreed to add such person or entity as an additional insured in order to effectuate coverage for the proposed additional insured.
This approach was reinforced in a recent decision in the New York Supreme Court, Appellate Division, Second Department, New York City Hous. Auth. v. Harleysville Worcester Ins. Co., 226 A.D.3d 804 (2024). In that case, an owner contracted with a general contractor who subsequently contracted with a subcontractor for construction work. The subcontractor obtained insurance coverage for the project and was later sued by its own employee in a lawsuit that also named as defendants the owner, general contractor and other parties whom the subcontractor had agreed to include in its insurance policy as additional insureds. The court determined that, apart from the general contractor, none of the other parties were entitled to coverage, relying on the language of the subcontractor’s insurance policy: “Who Is An Insured is amended to include as an insured any person or organization for whom you are performing operations only as specified under a written contract … that requires that such person or organization be added as an additional insured on your policy” (with emphasis added). The court interpreted this language as limiting coverage to those with whom the named insured (the subcontractor) had contracted directly to do work, thereby finding that the general contractor qualified as an additional insured under the terms of the policy, but that no other parties seeking additional insured status were covered.
The court also held that language in the subcontract between the general contractor and the subcontractor, incorporating the terms of the prime contract between the owner and the general contractor that required the general contractor to add the owner as an additional insured under the general contractor’s policy, was “insufficient to confer additional insured status on [the owner] with respect to the subcontractor’s policy.” Finally, after comparing the terms of the respective policies issued to the general contractor and the subcontractor, the court determined that the subcontractor’s policy was excess to the general contractor’s policy, so coverage for the general contractor — the one party the court determined was entitled to coverage under the subcontractor’s policy as an additional insured — would be triggered only if and when the liability limits of the general contractor’s own policy were exhausted. As a result, the general contractor would first have to pursue any applicable claim under its own insurance policy, and only after policy limits under its own policy were exhausted could the general contractor seek coverage as an additional insured under the subcontractor’s policy.
Nationwide Injunction Shuts Down Enforcement of Trump’s DEI Executive Orders
On February 21, 2025, a federal district court judge issued a nationwide preliminary injunction that blocks enforcement of three major provisions of President Trump’s Executive Orders related to Diversity, Equity and Inclusion (DEI) programs:
Executive Order 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing.”
Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”
(Each an EO and collectively referred to as the EOs.)
The National Association of Diversity Officers in Higher Education filed a lawsuit in the U.S. District of Maryland (Maryland District Court) challenging the constitutionality of these EOs, arguing they are vague under the Fifth Amendment and violate the First Amendment’s Free Speech Clause.
Below is a summary of the enjoined provisions.
Termination Provision: Requires Executive agencies to terminate “equity-related grants or contracts.”
Certification Provision: Requires federal contractors and grantees to certify they will not operate programs promoting DEI that violate Federal anti-discrimination laws.
Enforcement Provision: Directs The U.S. Attorney General to investigate and take actions (e.g., civil compliance investigations) against private sector entities continuing DEI practices.
While the injunction prevents the executive branch from enforcing these EOs, U.S. District Court Judge Adam Abelson allowed the U.S. Attorney General to continue its investigation for a report on ending illegal discrimination and preferences pursuant to EO 14173.
The Trump administration filed a motion with the Fourth Circuit Court to appeal the nationwide injunction. Depending on whether the Fourth Circuit upholds or reverses the injunction, the case may go to trial to determine if the Trump administration’s actions to ban DEI policies and practices are constitutional. Pending the appeal, the Trump administration requested a stay of the preliminary injunction which was denied by Judge Abelson. The Maryland District Court stressed the Trump administration was unable to demonstrate a strong likelihood of success on the merits. Additionally, the Court emphasized, “the chilling of the exercise of fundamental First Amendment rights weighs strongly in favor of the preliminary injunction and against a stay pending appeal.”1
On March 10, 2025, Judge Abelson issued further clarification regarding the scope of the preliminary injunction, stating that it applies to all federal agencies, departments and commissions, not just the named defendants. He explained that limiting the injunction to only the named parties would create an unfair situation where the termination status of a federal grant or the certification requirements for federal contractors would depend on which specific federal agency the grantee or contractor works with for current or future funding. This would result in inequitable treatment in an area that requires uniformity. Consequently, considering President Trump’s directives for all federal agencies, departments and commissions to adhere to the Termination and Certifications Provisions, the preliminary injunction will now encompass all federal agencies to prevent any inconsistent application.
Since the Maryland lawsuit, additional complaints against the anti-DEI EOs have been filed in Illinois, California and Washington D.C., with similar legal arguments to the Maryland case. We will continue to monitor these lawsuits as they progress through the court system.
You can read more about the Maryland lawsuit and the implications of these EOs in our previous alert linked here.
[1] Nat’l Ass’n of Diversity Officers in Higher Educ. v. Trump, Memorandum Opinion and Order Denying Motion to Stay Injunction Pending Appeal, Case No. 25-cv-00333-ABA (Mar. 3, 2025), 6.
Fired by USAID, USDA or Other Federal Agencies?
If you are a federal government employee who has been fired at USAID, the USDA or other federal agencies do you know your rights to file legal challenges to your removal from federal service?
Should you file a lawsuit, an administrative complaint or a union grievance? What is the correct path? It depends.
The civil service laws and procedures applicable to challenge removal from federal service are complex and highly technical. Learn your rights and contact an experienced federal employee attorney and your union representative if you haven’t already done so.
If you want to file a complaint or appeal with the Merit Systems Protection Board (MSPB) there is an online portal (MSPB e-appeal web site) for filing complaints or appeals from removals from federal service. But know your rights and get help from an experienced lawyer or your union, before filing with MSPB. The system is filled with traps for the unwary.
For example, according to the MSPB website, in “most types of cases, an appeal must be filed within 30 calendar days of the effective date of the action, if any, or within 30 calendar days after the date of receipt of the agency’s decision, whichever is later.” According to news reports, most employees at USAID started receiving notices they were permanently terminated around February 21-23, 2025. That means the 30-day statute of limitations for filing an appeal or complaint with MSPB will expire soon.
The MSPB web complaint/appeal portal contains a description of the process, and it is available here.
Additionally, an MSPB “appeal must be in writing and contain all the information specified in the Board’s regulations,” according to the MSPB website. See 5 C.F.R. § 1201.24 (most appeals).
If you are a Veterans Administration employee special rules may apply. Appeals of removal, demotion, or suspension for more than 14 days based on performance or misconduct in the Department of Veterans Affairs under 38 U.S.C. § 714(c)(4)(B) “may only be made if such appeal is made not later than 10 business days after the date of such removal, demotion, or suspension.”
The MSPB will require you to provide all information required by its regulations to perfect an appeal. Documents required to be filed with most appeals are the notice of proposed action, the agency decision to take the action being appealed, and if available, the SF-50 or similar notice of personnel action. 5 C.F.R. § 1201.24(a)(7). After the MSPB appeal is filed, the agency must file all documents contained in the agency record of the action. The case will be assigned to an Administrative Judge and thereafter you will receive notices and scheduling orders that will require you to provide additional evidence and respond to the agency’s arguments and evidence. Having an experienced federal employee attorney is extremely helpful to navigate the MSPB’s administrative process.
There might be other routes to take, such as filing a union grievance or filing a Prohibited Personnel Practice (PPP) complaint with the Office of Special Counsel (OSC), or filing the PPP challenge directly with the MSPB. You should consult with your union or an experienced attorney to get advice on what is the best route for you.
If you are a civil servant with tenure (i.e., non-probationary employee) and were fired by email without receiving the normal notice of proposed removal and provided an opportunity to be heard before issuance of a final decision of removal, then you may be entitled to contest the removal on the grounds that it is a PPP.
Even if you were a probationary employee you may have rights to contest your removal because the agency may have failed to comply with the law when firing probationary employees. The MSPB granted the request of the OSC to stay the mass firings of probationary employees at some agencies, including 6,000 employees at USDA whose terminations were stayed on March 5, 2025.
Complicating matters is President Trump’s firing of OSC head Hampton Dellinger, who tried to keep his job but he lost a legal ruling at the U.S. Court of Appeals for the D.C. Circuit. Dellinger chose to withdraw his legal challenge after the D.C. Circuit ruled that the district court’s injunction to reinstate him as Special Counsel should be stayed, meaning that Trump could install his own choice for Special Counsel to lead OSC. Consequently, filing a PPP complaint with OSC after Dellinger’s firing may lead to nowhere except it might toll the time you need to file a complaint or appeal with the MSPB.
However, federal employment lawyers have filed a class action appeal with the MSPB seeking to protect the rights of thousands of probationary employees at several federal agencies.
The MSPB has posted lengthy webpages here and here describing what is a Prohibited Personnel Practice and the various ways a PPP challenge can be raised at MSPB or OSC. Read up because it’s a labyrinth of procedures.
What about filing a federal court lawsuit or constitutional claim? Well, there might be grounds in some instances to do that, particularly if you don’t have any appeal rights under the civil service laws, but if you are covered by the civil service laws a federal court might decide that it lacks jurisdiction to hear the challenge. The court could rule that you must exhaust administrative remedies under the civil service laws before going to court, or it might conclude that exclusive jurisdiction rests with the MSPB. There have been cases where the courts have held that you must raise and exhaust your constitutional claims with the MSPB before they can be heard in the federal courts.
If you are a civil servant who has MSPB appeal rights your best option may be to file there, either individually or as part of a group of similarly situated employees. But you should consult with a lawyer who is experienced in federal employment law or your union representative before taking action.
Depending upon your situation and the circumstances of your removal from the federal service, there likely are multiple federal employment law firms already preparing or filing class action type group appeals with the MSPB which might include your situation, and they are likely willing to offer consultation about your particular situation.
However, you should take action to protect your rights by seeking legal advice and not sleep on your rights. The 30-day statute of limitations to file with MSPB goes by fast. If you do not take timely action to protect your rights, you could be out of luck.