Exigis LLC, a minority-owned company, is suing the city of Dallas in federal court for violating its own policy about awarding points for involving minority-owned businesses seeking city contracts, reports The Dallas Morning News.

The issue is whether businesses like Exigis, which lost out to a white-owned company, should get credit just for being owned by minorities and women.

“The Exigis lawsuit could settle the differences of opinion as to whether it’s legal for local governments to consider race in awarding contracts,” The News report says.

Read the article.

The Government Affairs Practice Group at Gardere Wynne Sewell LLP has once again topped the Texas Lawyer Lobbying Scorecard after representing more clients and reporting more compensation than any other firm in the state during the 84th Texas Legislature.

To compile its lobbying scorecard, the newspaper’s editors reviewed the legislative results for 12 of the state’s busiest law firm lobby shops.

During the regular session, which began on Jan. 13 and ended on June 1, Gardere’s lobbying group represented a total of 90 clients. This is an increase from the 60 clients the firm represented during the 2013 session and almost double the number of clients represented by any other firm, the firm said in a release.

Read the whole story.

Just because your company does not contract directly with the government does not necessarily mean you are not subject to the many requirements associated with government contractors, warns Foley & Lardner in a new article.

“Those who provide goods and services to OEMs, or other customers who sell to the government, may also be subject to those requirements,” the article says.

“Many government contractors incorporate by reference Federal Acquisition Regulation (“FAR”) clauses, FAR agency supplemental clauses, or other federal government contracting laws and regulations into agreements with subcontractors and materials supplier.”

Read the article.

The U.S. Department of Labor has issued proposed guidance and the Federal Acquisition Regulatory Council has issued proposed regulations requiring government contractors and subcontractors to report regularly on workplace law violations found by administrative agencies, the courts, and arbitrators, reports Jackson Walker in a new paper.

The regulations are part of the implementation of President Barack Obama’s “Fair Pay and Safe Workplaces” Executive Order (E.O. 13673), often called the “Blacklisting” or “Bad Actors” executive order.

“The government would take an employer’s record of violations into account when deciding whether to award future contracts, cancel existing contracts, and potentially demand remedial action to address a pattern of violations,” the authors write in the article posted on Lexology.

Read the paper.

by Sean Cronin, ProcessUnity

Regulatory bodies including the Office of the Comptroller of the Currency (OCC) have made clear that when a bank outsources functions to third parties, the bank is still responsible for managing risks associated with those functions. But what if the third party then outsources certain functions to yet another company? Is the bank now expected to manage risks associated with that company, which is now a fourth party vendor to the bank?

In a word, yes, and it so happens bank regulators make the same argument. “A bank’s use of third parties does not diminish the responsibility of its board of directors and senior management to ensure that the activity is performed in a safe and sound manner and in compliance with applicable laws,” says OCC Bulletin 2013-29, issued on Oct. 30, 2013. As one of the factors contributing to the number and complexity of bank relationships with third parties, the same document cites “contracting with third parties that subcontract activities to other foreign and domestic providers.” One of the OCC’s concerns is that banks enter into contracts “without assessing the adequacy of a third party’s risk management practices.”

Banks would do well to share those concerns and for the most part, they do. But the issue is a thorny one because it is indeed a complex task for banks to continually manage risk for all those third- and fourth-party vendors.

The operative word there is “continually,” because risk management is an ongoing process. Any company performs due diligence before contracting with a third-party service provider. But the key to effective risk management is ongoing follow-up, to ensure the controls that were in place when the relationship began remain in place over time, and change as necessary to manage new risks.

This level of risk mitigation requires a repeatable program that includes periodic inspection. “You don’t get what you expect, you get what you inspect,” as the saying goes.

At a minimum, inspection begins by identifying all fourth-party providers that are servicing your bank. You need to understand the type of information and services being outsourced, and what controls are in place to protect the bank’s interests.

The idea is to gain an understanding of the total risk across both third and fourth parties and what contingency plans are in place should an event occur. It makes sense to be proactive in this effort because banks will increasingly be under pressure from regulators and their own boards to prove a program is in place for managing both third- and fourth-party providers.

Such a program involves assessments that take a sampling of the controls that should be in place and asks vendors questions to ensure they are indeed in place and functioning as intended. But as banks continue to outsource more and more functions to cloud providers and others, the inspection process can become unwieldy at best and, at worst, untrustworthy.

To ease the burden, banks need to automate the process of conducting assessments and analyzing results. The program should be set up to follow risk tolerance guidelines and measurements that are well-defined and defensible to senior management and regulators.  It should produce documentation that helps illustrate where you may need to take steps to further reduce risk, such as diversifying to reduce exposure. In general, it should provide plenty of data elements and analytics to improve decision-making.

Besides the main benefit such an automated program provides – reducing your level of risk – this kind of proactive, self-policing program also gives banks a leg up in its meetings with regulators. It’s like taking a test where you know the questions ahead of time and can prepare your answers. The regulators will be asking you the same questions you’ve been asking your third- and fourth-party providers because you’ve, in effect, been regulating them all along.

Automating your vendor risk management program also ensures risk assessments don’t fall through the cracks because of overloaded internal auditors. What’s more, it eliminates the appearance of subjectivity in vendor classifications and ensures the process is repeatable. Automation also brings a new level of intelligence, because an automated system can find trends and the proverbial needle in a haystack that may help you prevent a serious breach.

Being proactive and finding those needles will help any bank prove it’s doing an effective job at regulating all of its service providers, both third and fourth party, all the while reducing its risk of exposure.

Moving to the Cloud: Why now? 

For law firms and financial institutions, questions linger about the transition to cloud-based technology: is it safe? How does it benefit the existing infrastructure? Will new IT personnel need to be hired in order to manage it?

The simple answer is that cloud-based solutions are designed to be easier to deploy and more affordable to manage than comparative on-premise solutions. There is minimal set-up involved in building a cloud database, and it’s managed by the vendor – not the IT department. Therefore, banks  and law firms don’t need to invest in new IT staff to deploy a cloud-based solution, and as needs change, new applications can be deployed as required.

The less time that financial and legal organizations have to spend relying on manual tasks to control risk enables them to better allocate resources to focus on high-risk management activities. Cloud-based solutions augment that approach by simplifying the deployment process and shifting the maintenance onus to the vendor – typically with lower costs and infinite scalability.

The government’s right to terminate a contract for default carries the underlying principle that a default termination is a drastic sanction that should be imposed or sustained only for good grounds and solid evidence, writes Watson & Associates of Colorado and Washington, D.C.

When appealing the contracting officer’s decision, contractors should make sure that they have sound documentation of communications that could work in their favor on appeal.

“Also included in the limitations on the government to terminate a contract for default, case law requires that that the government bear the burden of proof as to whether a termination for default was justified,” the article continues.

Read the article.

An Ashland, Ky., hospital has agreed to pay $40.9 million to the federal government to settle claims that it made millions of dollars by falsely billing Medicaid and Medicare for unnecessary heart procedures, reports The Courier-Journal of Louisville.

The government’s lawsuit claimed King’s Daughters Medical Center “knew, deliberately ignored or recklessly disregarded the fact” that its cardiologists were inserting stents and performing catheritzations on patients who didn’t need them.

According to the paper’s report, “Hans Poppe, who represents the patients in the private suits against King’s Daughters — as well as most of about 400 who have sued the London hospital — said the settlement may be the largest ever in the U.S. involving unnecessary heart procedures. He said it bolsters the credibility of the claims made by his clients against King’s Daughters.”

Read the story.

A federal appeals court has thrown out a lower court’s $40 million verdict in a case that pitted Hi-Tech Pharmaceuticals of Norcross, Ga., against the Federal Trade Commission over advertising for weight-loss supplements.

The 11th circuit ruled that the federal judge didn’t let Hi-Tech present the evidence they had to support their weight loss claims, including “several expert declaration that the representations were substantiated by ‘competent and reliable scientific evidence,'” according to the Eleventh Circuit.

In a release, Hi-Tech said the lower-court judge ruled early on in the litigation that Hi-Tech did not have double-blind, placebo trials to substantiate its advertising claims like “metabolic aid or thermogenic” and — only a Pharmaceutical Phase 1 clinical trial would do — which is estimated at more than $200 million for a weight loss product.

“This is a clean slate for the company,” said Atlanta King & Spalding attorney Merritt E. McAlister, who argued the case for Hi-Tech.

Read the release.

The Coats Rose Affordable Housing Group served as counsel to the Housing Authority of the City of El Paso for the closing on the redevelopment of 13 properties totaling 1,590 units which were converted from public housing to project based Section 8 under HUD’s Rental Assistance Demonstration Program, the firm reports in a release.

The project was closed as one 4 percent tax credit/bond transaction with $125,000,000 of tax exempt bonds and $80,000,000 of tax credit equity.

The release says this represents the largest single issuance of housing tax credits ever approved by the Texas Department Housing and Community Affairs and the largest RAD conversion closing to date in the country. The total development cost was approximately $250,000,000.

“This deal means more working El Paso families will have the opportunity to provide their children with a safe, stable environment,’ says Coats Rose Affordable Housing Director Barry Palmer. “We are proud to have worked with HACEP to make this possible and want to thank the staff at HUD and TDHCA who worked so hard to help expedite the necessary approvals. The Housing Authority of the City of El Paso is a national leader in this innovative program to bring substantial private capital to help develop affordable housing for those most in need”

Coats Rose attorneys Barry Palmer and Bill Walter have been at the forefront of the RAD program, having closed the first three RAD transactions in the State of Texas in 2014 and now following up with these 13 properties.

Gerry Cichon, Executive Director of HACEP stated, “We have been working on this transaction for over a year now. When HUD made this program available as a demonstration program in 2013 we recognized immediately that this is the future of public housing. This allows the Housing Authority to do renovations of over $65,000 a unit on these 13 properties. It results in a substantial investment in the El Paso community with the creation of countless construction jobs and vastly improved housing conditions for 1,590 families.”

Also playing key roles in the transaction were attorneys from Reno & Cavanaugh PLLC, Ballard Spahr LLP, Nixon Peabody LLP and Bracewell & Giuliani LLP.

The federal Housing Tax Credit Program is the state’s primary means of incentivizing the investment of private capital in the development of affordable rental housing. Developers and their investment partners use the credits to offset their federal tax liability on a dollar-for-dollar basis in exchange for the construction or rehabilitation of rental units offering a reduced rent over an extended period of time.

Coats Rose is a business transaction and litigation law firm based in Houston, Texas. For more than 25 years, Coats Rose attorneys have worked with clients in construction/surety law, real estate law, commercial litigation of all types, municipal law, public finance, affordable housing, insurance law, labor and employment law, and governmental relations. Coats Rose is comprised of over 90 attorneys, with offices in Houston, Austin, Dallas, San Antonio, and New Orleans.

The Bureau of Economic Analysis has been actively expanding the scope of its mandatory surveys of U.S. and foreign companies and investors to cover many industries and companies that may not have had to report previously, reports Skadden, Arps, Slate, Meagher & Flom.

These surveys often are announced with little fanfare, but they can involve significant time and expense for affected companies and may lead to substantial civil and criminal penalties for those who fail to comply.

“Given the penalties and reporting burdens involved, these BEA surveys should be on the radar of every general counsel,” the report says. “This article provides an outline of key points that general counsels should be aware of to protect their companies from liability and the steps companies can take to reduce or eliminate their compliance burden, including by engaging directly with BEA officials and advisory groups.

Read the article.

Two former employees of a helicopter company owned by a prominent Wall Street financier allege that she exploited a connection with an Army colonel to charge the U.S. government inflated prices for rotorcraft, according to an Associated Press report.

Whistleblowers filed documents in U.S. District Court in Alabama, alleging Lynn Tilton offered the officer, Norbert Vergez, a lucrative job long before he retired from military service as a way of inducing him to make contract decisions favorable to her company, MD Helicopters of Mesa, Arizona.

Attorneys for Tilton have disputed the allegations, calling them weak and implausible.

Read the story.

The United States Court of Appeals for the Federal Circuit recently issued an important decision that highlights a few important takeaways for all government contractors, reports The Federal Government Contracts & Procurement Blog.

The case is K-Con Building Systems, Inc. v. United States, Case No. 2014-5062.

Documents in the case indicate that K-Con Building Systems, Inc. (K-Con) entered into a contract to construct a building for the United States Coast Guard.  After a delay in contract completion, the federal government imposed liquidated damages (or LDs).  K-Con presented three discrete claims against the federal government in the Court of Federal Claims: (1) remission of LDs on the grounds that the LDs clause was unenforceable, (2) remission of LDs on the grounds that K-Con was entitled to a time extension, and (3) additional compensation for constructive changes.

Read the article.

An EEOC internal memo states that the EEOC is interested in litigating charges regarding issues of “first impression” such as benefit coverage for same-sex couples and insurance benefits afforded to transgender individuals, according to an article published by Seyfarth Shaw.

While ERISA (and other current federal law) does not require benefit plans that provide benefits to opposite sex spouses to provide equivalent coverage to same-sex spouses, the EEOC clearly believes that such a right is found Title VII, write authors Sam Schwartz-Fenwick, Nick Clements and Ian H. Morrison.

“The EEOC will likely argue that failure to provide such coverage constitutes sex discrimination because entitlement to coverage turns on the sex of the employee’s spouse. Similarly, the EEOC appears willing to take an aggressive stance on transgender related benefits coverage,” they write.

Read the story.

The Consumer Financial Protection Bureau (CFPB) has announced an enforcement action against a nationwide debt collection operation and its chief executive officer for allegedly using deceptive threats of criminal prosecution and jail time in order to intimidate consumers into paying debts for bounced checks, reports the Consumer Financial Protection Bureau.

The company also misled consumers into believing that they must enroll in a costly financial education program to avoid criminal charges, according to the action.

“The proposed order, if approved by a federal district court, would put an end to the illegal activities, impose a civil money penalty of $50,000, and require new consumer disclosures and stronger oversight of the bounced check program,” the CFPB reports.

Read the story.

Not only does government contracting seem difficult with its myriad of rules and regulations, some people even hold the erroneous notion that the government gleefully pounces upon the innocent potential contractor in the event the tiniest regulation misstep is made, reports Federal Vesting Government Consultants in a white paper.

“This simply isn’t true,” the paper says. “The government not only actively seeks out small business participation when it buys products and services, but it also goes to great lengths and spends lots of money in outreach programs to find good, qualified small businesses to be its suppliers. For example, it will provide information that will help you bid with minimal risk. Just by asking, you can find out how much the government bought the last five to 10 times, who they bought from, and how much they paid. That information certainly wouldn’t be available from your commercial customers.”

The paper examines these procedures and rules:

• Government procedures
• Government laws and regulations
• How FASA effects you
• Chart of laws affecting government contracting
• FAR: Federal Acquisition Regulation

Read the white paper.

A free on-demand webinar from Thompson Coburn explains the background, the issues, and the rules that apply to licensing in the government arena.

Protecting one’s valuable intellectual property is critical to a contractor’s survival in the federal marketplace, and understanding the basics of licensing, as applied to both prime contractors and subcontractors, should play a major role in a contractor’s approach, the firm says on its website.

Presenters are Jeff Newman and Kevin Kercher.

Watch the on-demand webinar.

Watson & Associates LLC has posted a complimentary white paper analyzing considerations involved in the bid protest process.

The government does make mistakes in the bidding process, the firm says on its website. However, understanding protest procedure and legal standards could help you.

The firm advises keeping in mind that the bid protest regulations can be tricky, there is never too much information for you to make a decision, and always consider getting the help of counsel.

Download the white paper.

Law professors from across the country  – from Georgetown to the University of California  – say they have “serious reservations” about the new chemical reform bill introduced by Sens. Tom Udall (D-N.M.) and David Vitter (R-La.) , reports The Hill.

Days before the Senate Environment and Public Works Committee is expected to discuss the legislation, a group of 25 professors and public interest lawyers sent a letter to committee Chair Jim Inhofe (R-Okla.) and ranking member Sen. Barbara Boxer (D-Calif.)

The Hill reports that co-signers include Thomas Cluderay, general counsel for the Environmental Working Group (EWG), which has been one of the most vocal outliers of the Udall-Vitter bill.

Read the story.

Hogan Lovells has published a white paper discussing the aggregating sources for the purposes of Clean Air Act permitting in the oil and gas sector.

The clear judicial trend is to adopt physical adjacency as the aggregation test and to find that geographically dispersed upstream oil and gas wells, compressor stations, and other facilities are separate emissions sources, the paper’s authors conclude.  Nothing in PennFuture indicates that trend will change anytime soon.

“The U.S. Court of Appeals for the Sixth Circuit and the D.C. Circuit recently offered some regulatory relief to oil and gas operators under the Clean Air Act (CAA) with respect to aggregating sources for the purposes of CAA permitting,” they write. “On February 23, 2015, the District Court for the Middle District of Pennsylvania issued an opinion that, consistent with the Sixth Circuit and D.C. Circuit opinions, held certain oil and gas operations should not be aggregated, while indicating that the question of interrelatedness (a concept rejected by the Sixth Circuit) could be appropriate in determining the scope of a stationary source.”

Read the white paper.

The Department of Justice’s U.S. Trustee Program (USTP) has entered into a national settlement agreement with JPMorgan Chase Bank N.A. (Chase) requiring Chase to pay more than $50 million, including cash payments, mortgage loan credits and loan forgiveness, to over 25,000 homeowners who are or were in bankruptcy. Chase will also change internal operations and submit to oversight by an independent compliance reviewer.  The proposed settlement has been filed in the U.S. Bankruptcy Court for the Eastern District of Michigan, where it is subject to court approval.

In the proposed settlement, Chase acknowledges that it filed in bankruptcy courts around the country more than 50,000 payment change notices that were improperly signed, under penalty of perjury, by persons who had not reviewed the accuracy of the notices.  More than 25,000 notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filings.  The rest of the notices were signed by individuals employed by a third party vendor on matters unrelated to checking the accuracy of the filings.

Chase also acknowledges that it failed to file timely, accurate notices of mortgage payment changes and failed to provide timely, accurate escrow statements.

“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” said Acting Associate Attorney General Stuart F. Delery.  “Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”

“This settlement should signal once again to banks and mortgage servicers that they cannot continue to flout legal requirements, compromise the integrity of the bankruptcy system and abuse their customers in financial distress,” said Director Cliff White of the U.S. Trustee Program.  “It should be acknowledged that Chase responded to the U.S. Trustee’s court actions by conducting an internal investigation and taking steps to mitigate harm to homeowners.  But years after uncovering improper mortgage servicing practices and entering into court-ordered settlements to fix flawed systems, it is deeply disturbing that a major bank would still make improper court filings and fail to provide adequate and timely notices to homeowners about payments due.  Other servicers should take note that the U.S. Trustee Program will continue to police their practices and will work to ensure that those who do not comply with bankruptcy law protections for homeowners will pay a price, just as Chase has done in this matter.”

Payments, Credits and Contributions of More Than $50 Million:

In the proposed settlement, Chase agrees to provide payments, credits and contributions totaling more than $50 million:

• Chase will provide $22.4 million in credits and second lien forgiveness to about 400 homeowners who received inaccurate payment increase notices during their bankruptcy cases.
• Chase will pay $10.8 million to more than 12,000 homeowners in bankruptcy through credits or refunds for payment increases or decreases that were not timely filed in bankruptcy court and noticed to the homeowners.
• Chase will pay $4.8 million to more than 18,000 homeowners who did not receive accurate and timely escrow statements.  This includes credits for taxes and insurance owed by the homeowners and paid by Chase during periods covered by escrow statements that were not timely filed and transmitted to homeowners.
• Chase will pay $4.9 million, through payment of approximately $600 per loan, to more than 8,000 homeowners whose escrow payments Chase may have applied in a manner inconsistent with escrow statements it provided to the homeowners.
• Chase will contribute $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program.

Changes to Internal Operations: In the proposed settlement Chase also agrees to make necessary changes to its technology, policies, procedures, internal controls and other oversight systems to ensure that the problems identified in the settlement do not recur.

Oversight by Independent Reviewer: Amy Walsh, a partner with the law firm Morvillo LLP, has been selected to serve as independent reviewer to verify that Chase complies with the settlement order.  The independent reviewer will file public reports with the bankruptcy court.

No Effect on Additional Relief by Homeowners: This settlement does not affect the rights of any homeowners to seek any relief against Chase that they may deem appropriate.

Chase Contact Information: Homeowners with questions about the settlement may contact Chase at 866-451-2327.

The settlement is the culmination of actions taken by the U.S. Trustee Program in districts around the country concerning Chase’s improper practices in bankruptcy cases, including robo-signing.  Director White commended the U.S. Trustee Program team in the field and headquarters who expertly identified, investigated, litigated and settled this matter, including Deputy Director and General Counsel Ramona Elliott, National Creditor Enforcement Coordinator Gail Geiger and Trial Attorneys Diarmuid Gorham and Kelley Callard.

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.  The U.S. Trustee Program has 21 regions and 93 field office locations.