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The Biden Administration is imminently expected to release an executive order that will require government contractors to notify the government in the event of a cybersecurity breach. Despite the relatively steady rise in cyberattacks and breaches over the years, and the enactment of consumer data breach disclosure laws in all 50 states, there is currently no standardized reporting requirement for government contractors. However, the Biden administration has promised executive action on the issue, largely in response to a cyberattack by a suspected nation-state against multiple software companies, including the SolarWinds software company.

Last week the Army awarded Microsoft the Integrated Visual Augmentation System (IVAS) contract, a potentially $21 billion undertaking by the Army to develop next-generation night vision and “situational awareness capabilities” in a Heads Up Display. Unlike Microsoft’s last multi-billion dollar contract award, the Joint Enterprise Defense Infrastructure (JEDI), which is still pending before the Court of Federal Claims more than a year after Amazon filed its bid protest challenging the award in November 2019, IVAS is unlikely to experience the same fate. Why? Because IVAS was awarded under the Army’s Other Transaction authority (OTA) and is not subject to the same FAR rules as the JEDI contract.

Contributed by Husch Blackwell Partner Bert Wolf, Esq.

Government contractors are relieved that they won’t immediately face having 3% of their invoices withheld as an advance against future tax liability. The IRS’s final rule implementing the 3% withholding tax won’t go into effect until 2013.  Absent a material modification, contracts executed by December 31, 2012 will be exempt from the withholding tax entirely, at least until January 1, 2014. But that isn’t the end of the story. Here is a bit of the background on the source of the 3% withholding tax, why it has been delayed, and some thoughts on why it’s not a great solution to the problem at hand.