Government Contracts May 28, 2026

Canadian Steel Companies and Owner to Pay $19M to Settle False Claims Act Allegations Relating to Evaded Customs Duties

By Patrick Rowan, Alex J. Brackett, John Padgett, Edwin O. Childs, Brett Barnett, Michael J. Podberesky, Abram J. Pafford, Jack White, Jason M. Vespoli, Sophie Marsh and John Sullivan

On May 20, 2026, the U.S. Department of Justice (DOJ) announced a settlement under the False Claims Act (FCA) with two Canada-based steel companies, Farjess Inc. and Royal Canadian Steel Inc., and their part-owner and president, Feroz Jessani, pursuant to which the companies and Jessani agreed to pay $19 million to resolve allegations that they knowingly and improperly misrepresented the country of origin and failed to pay duties owed on flat-rolled steel manufactured in Europe and Asia. The settlement underscores the government’s continued and aggressive use of the FCA to pursue Trump Administration policy priorities, including the active implementation of tariffs and customs duties, and reinforces the importance of accurate country-of-origin declarations when importing foreign materials and products.

Background: Import Duties and Country-of-Origin Requirements

To enter goods into the United States, an importer must declare, among other things, the country of origin and value of the goods, whether the goods are subject to duties, and the amount of duties owed. U.S. Customs and Border Protection (CBP) collects applicable duties based on these declarations. Import duties serve an important role in protecting national interests and American industry, as Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division emphasized in the announcement: “The Department of Justice will zealously pursue anyone who fraudulently evades the duties owed on steel products imported into this country.”

Alleged Duty-Related Misrepresentations

The settlement resolves allegations that, from May 2019 through January 2025, Farjess, Royal Canadian Stee, and Jessani avoided duties owed to the United States by knowingly misrepresenting the country of origin of certain flat-rolled steel as Canada or the United States, when the true country of origin was China, Indonesia, Italy, Turkey, or Vietnam. By misrepresenting the country of origin, the defendants allegedly evaded antidumping and countervailing duties, as well as Section 232 duties, that applied to steel products from those countries.

Whistleblower Origins and the Qui Tam Provisions of the FCA

The settlement resolves a civil lawsuit filed by Shamsh Dhala, a broker who worked with Farjess Inc., in behalf of the United States under the whistleblower provision of the FCA. The qui tam provisions allow private parties to file suit on behalf of the United States in connection with the submission of false claims and share in a portion of the government’s recovery. The initial qui tam claim was filed in the Eastern District of Michigan. See United States ex rel. Dhala v. Royal Canadian Steel Inc. et al., No. 2:23-cv-12097 (E.D. Mich.). As part of the resolution, Mr. Dhala will receive approximately $3,610,000 of the settlement proceeds, as well as legal fees.

DOJ described the settlement as “record-setting” and continues to encourage whistleblowers to alert the government to credible allegations of fraud, including under both the qui tam provisions of the FCA and the DOJ’s Corporate Whistleblower Program. Consistent with DOJ’s practice, the settlement agreement provides that the claims resolved by the settlement constituted only allegations, with no determination of liability.

Practical Implications for Importers, Federal Contractors, and Compliance Officers

This settlement carries several important implications for companies engaged in importing goods into the United States.

First, DOJ’s continued application of the FCA in connection with customs-related fraud signals that the government views the knowing submission of false country-of-origin declarations as a viable FCA theory of liability. Companies that import steel or other goods subject to antidumping, countervailing, or Section 232 duties should pay particular attention to the accuracy of their customs entries.

Second, the size of this settlement — $19 million — and DOJ’s description of it as “record-setting” indicate an escalation in enforcement intensity in this area. When viewed alongside the recent $549.5 million settlement with Perfectus Aluminum Inc. (and related companies) for similar customs-related allegations, DOJ is confirming that customs fraud enforcement through the FCA is a significant enforcement and policy priority.

Third, the whistleblower’s share of the recovery (approximately $3.61 million, or roughly 19% of the settlement) serves as a powerful reminder that employees, and agents, including brokers, logistics professionals, and other industry insiders, have been encouraged to disclose information about potential customs fraud. Companies should appreciate that employees, contractors, and business partners have financial incentives to file qui tam actions when they observe potentially fraudulent import practices.

Takeaways and Recommended Action Items

In light of this settlement and the broader enforcement environment, companies that import goods into the United States — or that rely on imported materials in connection with federal contracts or federally funded projects — should consider the following steps:

Companies should consider conducting an internal review of customs compliance programs, with particular attention to country-of-origin determinations and processes used to verify the accuracy of information submitted to CBP. In many cases, this review may need to extend to third-party customs brokers and other intermediaries involved in the import process.
Companies should ensure that their compliance programs include adequate training for employees and agents responsible for preparing and reviewing customs declarations. Personnel should understand that the submission of false information to CBP can give rise to potential criminal, civil, and administrative liability for both the company and individuals participating in such conduct.
Companies should evaluate whether their supply chain documentation is sufficient to support country-of-origin determinations made in connection with customs entries. Given the allegations in this case — which involved steel manufactured in multiple countries but declared as originating in Canada or the United States — companies should maintain robust records tracing the provenance of imported goods.
Companies should also review their whistleblower and internal reporting mechanisms to ensure that employees and business partners have accessible channels to report potential compliance concerns. DOJ’s continued encouragement of qui tam filings and the Corporate Whistleblower Program suggests that early identification and self-disclosure of potential issues may be preferable to waiting for a whistleblower to act.

Finally, in light of the current tariff environment, companies should monitor evolving duty requirements and ensure that their compliance programs are updated to reflect changes in applicable tariff rates and trade policies. The period covered by the alleged scheme in this case — May 2019 through January 2025 — spans multiple administrations and several shifts in trade policy, underscoring the need for ongoing vigilance.

Government Contracts May 27, 2026

DoW Proposed Rule Would Impose New FOCI Disclosure and Risk Mitigation Requirements on Thousands of Defense Contractors

By Edwin O. Childs, Patrick Rowan, Abram J. Pafford, Jack White, Jason M. Vespoli, John Sullivan and Sophie Marsh

On May 7, 2026, the Department of War (DoW) published a proposed rule that would dramatically expand the population of defense contractors that are required to disclose beneficial ownership and foreign ownership, control, or influence (FOCI) information to the Defense Counterintelligence and Security Agency (DCSA) and to mitigate identified FOCI risks. At present, DCSA addresses FOCI only when a contractor requires access to classified information in the performance of a classified contract. The proposed rule, which amends the Defense Federal Acquisition Regulation Supplement (DFARS), would require reporting and mitigation of FOCI for DoW contractors and subcontractors that seek to perform on unclassified non-commercial contracts, as well as certain unclassified commercial contracts. The proposed rule would apply to DoW contracts and subcontracts valued in excess of $5 million and implements provisions of the National Defense Authorization Acts (NDAAs) for Fiscal Years 2020 and 2021 and DoD Instruction 5205.87.

The comment period closes on July 6, 2026. If finalized, DoW estimates that, when offerors and subcontractors are taken into account, the rule would impact over 37,000 entities, of which approximately 57% are small businesses. This alert summarizes the key provisions of the proposed rule, analyzes the practical implications for federal contractors and subcontractors, and outlines recommended steps for compliance.

Government Contracts May 18, 2026

New Executive Order Mandates Shift to Fixed-Price Contracting, Requires Review of Largest Cost-Reimbursement Contracts

By Edwin O. Childs, Jason M. Vespoli, Abram J. Pafford, Jack White, John Sullivan and Sophie Marsh

On April 30, 2026, President Trump signed an Executive Order titled “Promoting Efficiency, Accountability, and Performance in Federal Contracting” (the “Order”), directing executive branch agencies to default to fixed-price contracts and contracts that tie contractor profit to performance-based metrics in federal procurement. The Order also requires agencies to review and, to the maximum extent practicable, modify, restructure, or renegotiate their largest non-fixed-price contracts. For context, a companion White House Fact Sheet states that in Fiscal Year 2024, approximately $120 billion was obligated on cost-reimbursement consulting contracts, underscoring the scale of the shift the Order contemplates.

This alert summarizes the key provisions of the Order, analyzes its practical implications for federal contractors and subcontractors, and outlines recommended steps for compliance.

Enforcement and Prosecution Policy and Trends May 15, 2026

Monitor Upcoming Negotiations of Education Department’s AIM Committee to Inform Public Comments on Accreditation Amendments

By TW Bruno, Hannah Gourdie and David Aladdin Mollenkamp

Stakeholders negotiating sweeping amendments to federal accreditation regulations proposed by the U.S. Department of Education (ED) will begin their final session to achieve consensus on May 18, 2026.

A week-long effort in April revealed deep divisions among negotiators on the Accreditation, Innovation, and Modernization (AIM) Committee of the ED. Debates broke out over the ED’s “material error” and “safety valve” provisions, First Amendment compliance and separate-and-independent requirements — so much so that negotiators expressed doubt that consensus on all issues will be reached in the final round starting Monday.

Whether negotiators reach consensus or not, a Notice of Proposed Rulemaking will follow, and affected parties should pay attention to the negotiating record to inform their comment strategy. Read on to learn more about the ED’s proposed amendments, the negotiators’ initial responses to the proposed amendments and the likely outcome of the final session.

Read on to learn more about the ED’s proposed amendments, the negotiators’ initial responses to the proposed amendments and the likely outcome of the final session.

Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims May 7, 2026

DOJ’s New West Coast Strike Force Puts Health Care Providers on Notice

By Justin Givens, Mindy Sauter and Rhea Shahane

On April 30, 2026, the Department of Justice’s (“DOJ”) National Fraud Enforcement Division (“Fraud Division”) announced the formation of the West Coast Health Care Fraud Strike Force, a multi-district enforcement initiative spanning Arizona, Nevada, and the Northern District of California. [1] Announced by Assistant Attorney General Colin McDonald, the new Strike Force signals a significant escalation of federal health care fraud enforcement in the broader West Coast region and warrants close attention from health care providers, technology companies, and other industry participants operating in the area.

Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Government Contracts April 22, 2026

FAR Council Issues Implementation Guidance for Executive Order 14398: New DEI Contract Clause Requirements for Federal Contractors

By Edwin O. Childs, Jason M. Vespoli, John Adams, John S. Moran, Jack White, Abram J. Pafford, Sarah Wake, Farnaz Farkish Thompson, Julia Coleman, Elissa Baur, William Doyle, Brett Barnett, John Sullivan and Sophie Marsh

On April 20, 2026, the Federal Acquisition Regulatory (FAR) Council issued agency implementation guidance for Executive Order (E.O.) 14398, “Addressing DEI Discrimination by Federal Contractors,” which President Trump signed on March 26, 2026. The guidance introduces a new contract clause — FAR 52.222-90 — and establishes tight deadlines for agencies to incorporate the clause into new and existing contracts. Federal contractors, subcontractors, and their compliance teams should take immediate steps to understand the scope of the new requirements and prepare for implementation. Contractors should take note that the implementation of this new clause may be affected by a suit filed in Maryland federal court seeking to block the executive order.

This alert summarizes the key provisions of E.O. 14398, the FAR Council’s implementing guidance, and the practical steps contractors should consider in response.

Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Government Contracts April 14, 2026

GSA AI Procurement Rules Would Introduce New Disclosure and Use-Rights Requirements for Federal Contractors

By Jason M. Vespoli, Edwin O. Childs, Andrew Konia, Abram J. Pafford, John Sullivan and Sophie Marsh

The General Services Administration (GSA) Federal Acquisition Service has released draft contract terms and conditions related to artificial intelligence (AI)-related procurements through a new proposed GSAR clause 552.239-7001, “Basic Safeguarding of Artificial Intelligence Systems (FEB 2026) (GSAR Deviation), that would impose material new requirements on contractors and service providers supplying artificial intelligence capabilities to the federal government. If adopted, the clause would be inserted into all solicitations and contracts for AI capabilities and would govern data rights, disclosure obligations, security protocols, and performance standards for AI systems used in federal operations. Federal contractors, technology vendors, and their in-house operations and counsel teams should closely review the proposed terms, as they represent one of the most comprehensive efforts to date to regulate the procurement and use of AI systems across the federal enterprise.

Anti-Bribery and Corruption April 9, 2026

Old Wine, New Bottles? FinCEN Proposes to Codify AML/CFT Program Standards for Financial Institutions

By Elissa Baur, John Adams, Jeffrey M. Hanna, Jeffrey P. Ehrlich, Garen S. Marshall, Justin Givens and Lauren Mann

On April 7, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a Notice of Proposed Rulemaking (“NPRM”) that would formalize and, in certain respects, update the requirements for financial institutions’ anti-money laundering and countering the financing of terrorism (“AML/CFT”) programs under the Bank Secrecy Act (“BSA”). While FinCEN has characterized the proposed rule as the centerpiece of Treasury’s broader effort to modernize the U.S. AML/CFT regulatory and supervisory framework, many of its core elements reflect longstanding statutory requirements and supervisory expectations. The proposed rule fully supersedes a prior proposed rule FinCEN published on July 3, 2024, which the agency is withdrawing. Concurrently, the Office of the Comptroller of the Currency (“OCC”), the Federal Deposit Insurance Corporation (“FDIC”), and the National Credit Union Administration (“NCUA”) (collectively, the “Agencies”) issued their own joint NPRM proposing substantially aligned amendments to their respective AML/CFT program rules for banks they supervise. Public comments are due 60 days after publication in the Federal Register.

This alert summarizes the key provisions of both proposals, describes the proposed changes to bank supervision and enforcement, and identifies practical implications for financial institutions and compliance professionals. As discussed below, many of the proposed requirements may be familiar to institutions with mature, risk-based AML/CFT programs.

Fraud, Deception and False Claims April 6, 2026

Ninth Circuit Ruling in FCA Case Predicated on 340B Pricing Violations Has Significant Implications for Pharma Manufacturers

By Craig B. Bleifer, Michael J. Podberesky and Jessica L. Vaughn, Ph.D.

On March 17, 2026, the U.S. Court of Appeals for the Ninth Circuit issued a significant opinion in United States ex rel. Adventist Health System of West v. AbbVie Inc., reversing the district court’s dismissal of a qui tam complaint brought under the False Claims Act (FCA) against four major drug manufacturers. The Ninth Circuit held that the FCA provides an independent mechanism for relators to bring claims alleging fraudulent drug pricing in violation of the Public Health Service Act’s Section 340B Program, even though Section 340B does not provide a private right of action.

Read on to learn more about the ruling and its important implications for pharmaceutical manufacturers participating in the Section 340B Program.

Enforcement and Prosecution Policy and Trends April 3, 2026

SEC Enforcement Speaks in 2026: Enforcement Division Moves “Full Steam Ahead” with Focus on Quality over Quantity, Procedural Fairness, and Targeted Pursuit of Non-Fraud Violations

By E. Andrew Southerling, Gary Leung, David Aladdin Mollenkamp, James Hornsby and Louis D. Greenstein

SEC Acting Enforcement Director Sam Waldon declared recently that his division is moving “full steam ahead” against those who “lie, cheat, and steal” but also is focusing on quality over quantity. He rejected traditional metrics — case counts, penalty totals and aggregate dollar amounts — as effective measures of the SEC’s enforcement program.

At the 2026 SEC Speaks Conference held last month in Washington, D.C., Waldon and senior enforcement leaders emphasized the division’s commitment to transparency and procedural fairness, as embodied by recent revisions to its Enforcement Manual. The more prominent revisions are intended to foster robust two-way engagement with defense counsel during the Wells process and articulate clearer guideposts for the staff’s assessment of public company cooperation under the Seaboard factors and corporate penalties under the Commission’s 2006 Penalty Statement. Waldon also confirmed that the division will continue to bring non-fraud cases in the right circumstances — with a more thoughtful approach. He said his division aims to distinguish between an entity that makes “an honest mistake, recognizes the mistake, fixes the mistake, takes steps to remediate and improves internal controls” and one that “engages in multiple mistakes, doesn’t think it’s a mistake, covers up the mistake, [and] didn’t take steps to remediate.”

Read on to learn more about Waldon’s remarks and what companies should take away from them.

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