Amid the chaos of the past few weeks—sweeping executive orders, relentless cost-cutting, and an air of uncertainty that lingers like smoke after a fire—federal contractors have been left reeling, straining to hear what comes next through the deafening noise. In this storm, predicting the future is as futile as fortune-telling. And yet beneath the shouts of change and upheaval, one truth remains, a whisper through the screams—some things, especially those that serve the government’s interests, are not going anywhere.

Contractors must prepare for an onslaught of scrutiny, investigations, and legal battles as the government turns to one of its most ruthless cost-cutting and recoupment weapons—the False Claims Act (FCA). On February 20, 2025, speaking at the Federal Bar Association’s Qui Tam Section Conference, Deputy Assistant Attorney General Michael Granston reaffirmed the Department of Justice’s (DOJ) unwavering commitment to wielding the FCA, branding it as an essential tool to root out fraud, waste, and abuse. But make no mistake—this enforcement push may not be just about protecting taxpayer dollars; it also could be used as a strategic maneuver in the administration’s broader campaign to slash federal costs, and it may target contractors with little regard for intent or fairness. The message is clear; amid the upheaval, where policies shift with the wind and enforcement strikes with surgical precision, contractors must tune in to the warning that cuts through the noise. Compliance isn’t just advisable—it’s survival.

FCA Enforcement: A Permanent Fixture

Granston described FCA enforcement as a “permanent fixture” in the government’s efforts to combat fraud, emphasizing both the financial and nonmonetary harms that result from fraudulent schemes. He cited patient harm from illegal opioid prescriptions and defective equipment supplied under Department of Defense (DOD) procurement contracts as key examples of the widespread impact of fraud.

The DOJ reported that fraud is “on the upswing,” with fiscal year 2024 witnessing a record number of qui tam actions—nearly 1,000, marking a 37 percent increase from the previous year and a 60 percent rise since 2019. Government-initiated investigations also reached their second-highest level ever, nearly tripling compared to five years ago. This portends that FCA enforcement will remain a major priority for the DOJ in 2025.

Key Enforcement Priorities for 2025

Granston identified several priority areas for FCA enforcement in 2025 including:

Healthcare Fraud
The healthcare sector remains a focal point for FCA enforcement due to significant government spending on programs such as Medicare and Medicaid. Granston highlighted Medicare Part C and the Patient-Driven Payment Model, which governs reimbursements for skilled nursing facilities (SNFs) as particularly vulnerable to fraudulent schemes.

It’s no surprise that healthcare fraud remains a top priority. In FY 2024, the DOJ reported that a significant portion of the recoveries, more than $1.67 billion, involved the healthcare sector. Entities including managed care providers, hospitals, pharmacies, pharmaceutical companies, laboratories, and physicians were targeted. These cases often centered around alleged unnecessary medical procedures and purported overbilling of federal health programs.

Customs and Tariff Evasion
The DOJ is expanding its use of the FCA to target customs and tariff evasion, emphasizing the importance of protecting against fraudulent trade practices. Fraudulent misclassification of imported goods, undervaluation, and misrepresentation of country of origin are key areas of concern. The director of the Fraud Section, Jamie Ann Yavelberg, noted that tariff evasion will be a “key area” for enforcement moving forward.

Procurement Fraud
Government contractors, particularly those involved in defense and infrastructure projects, remain under scrutiny. The DOJ is actively investigating cases where contractors misrepresented compliance with the Trade Agreements Act and the Buy American Act and allegations of providing false cost and pricing data during contract negotiations with the DOD.

2024 FCA Enforcement Actions

In fiscal year 2024, the DOJ secured more than $2.9 billion in settlements and judgments under the FCA. In its January 15, 2025 press release, the DOJ reported a historic number of whistleblower, or qui tam, lawsuits, with 979 filed in fiscal year 2024—the most in a single year, but a “record” that seems to be broken with each new year. These actions led to 558 settlements and judgments, marking the second-highest annual total.
The press release went on to report the key areas of fraud the FCA was applied against.

Healthcare Fraud

  • Medicare and Medicaid Fraud—The DOJ pursued entities that submitted false claims, engaged in billing for medically unnecessary services, or manipulated reimbursement models.
  • Kickback Schemes—Several pharmaceutical companies, hospitals, and pharmacies were implicated for allegedly paying illegal kickbacks to physicians or third-party organizations to boost drug prescriptions.
  • Opioid and Controlled Substance Fraud—Cases included improper marketing and prescription of opioids, endangering patient health, and violating federal regulations.
  • Managed Care (Medicare Advantage) Fraud—The DOJ targeted insurers and providers that allegedly exaggerated patient diagnoses to increase government reimbursements.
  • SNF Fraud—The DOJ scrutinized SNFs accused of falsifying patient care levels to obtain inflated Medicare payments.

Procurement Fraud and Defense Contracting Violations

  • Defective Equipment and False Certifications—Contractors supplying substandard or noncompliant equipment to the DOD were penalized.
  • Price Inflation and Overcharging—Companies faced allegations of submitting misleading cost data, leading to inflated government contracts.
  • Buy American Act and Trade Agreement Violations—The DOJ enforced FCA claims against companies that misrepresented the country of origin for products to avoid duties or to qualify for contracts.

Customs and Tariff Evasion
The DOJ pursued companies that engaged in fraudulent customs declarations, including:

  • Misclassification of Goods—Businesses misrepresented imported product categories to pay lower tariffs.
  • Undervaluation Schemes—Importers declared lower values for goods to reduce tax obligations.
  • Antidumping and Countervailing Duty Evasion—Several settlements involved companies falsely claiming that products originated in compliant countries, while concealing their actual manufacturing origin (e.g., China, India).

Cybersecurity and IT Contract Fraud

  • Noncompliance with Federal Cybersecurity Standards—Government contractors and grantees that failed to meet cybersecurity obligations faced enforcement actions.
  • False Certifications of Security Readiness—The DOJ cracked down on companies that knowingly misrepresented their compliance with federal cybersecurity protocols to win contracts.

COVID-19 Pandemic Relief Fraud

  • Misuse of Relief Funds—The DOJ prosecuted cases involving fraudulent claims for Paycheck Protection Program loans, Economic Injury Disaster Loans, and other pandemic relief programs.
  • Phantom Companies and Falsified Employee Data—Investigations uncovered entities that fabricated business records to claim pandemic assistance they were not entitled to.

Leveraging Data Analytics for Fraud Detection

As fraud schemes become more complex, the DOJ increasingly relies on data analytics to detect fraudulent activity. The Commercial Litigation Branch Civil Fraud Section now has an in-house data analytics team to identify fraud patterns. Federal agencies also have adopted similar analytical tools to enhance fraud detection.

Strengthening the Administrative False Claims Act

Granston highlighted the recent amendments to the Administrative False Claims Act allowing federal agencies to investigate and independently pursue false claims for up to $1 million per claim. This change empowers individual agencies and smaller contracting agencies to take a more active role in FCA enforcement without extensive DOJ involvement.

Implications for Contractors

As reflected in the past few weeks, aggressive contract actions have escalated, creating a volatile landscape for federal contractors. The DOJ’s renewed commitment to pursuing FCA violations may signal a persistent unsettled environment where enforcement is as much about cost-cutting and political optics as it is about combating actual wrongdoing. This is, largely, a short-term distinction without a difference – as FCA allegations alone carry significant investigative and defense costs. Executive actions, such as the ban on diversity, equality, inclusion, and accessibility programs, have further complicated compliance obligations, forcing contractors to adapt quickly to shifting policies or risk becoming investigation targets. Adding to this pressure, aggressive scrutiny of federal contracts, leading to mass workforce reductions and contract reevaluations under the guise of eliminating waste, may leave some in the procurement workforce readily unable to address contract questions and concerns.

The challenge, of course, is that these enforcement efforts, whether justifiable or not, bring substantial financial risks, including treble damages, civil fines, and prolonged legal battles that can ruin businesses regardless of the merits of the claims. Contractors must recognize that even unfounded allegations can lead to costly investigations, reputational damage, and operational upheaval. In an era where enforcement actions may be driven more by political expediency and budgetary concerns than by true fraud prevention, businesses must remain vigilant, ensuring their compliance programs are airtight, their documentation impeccable, and their risk mitigation strategies are more proactive than ever. Survival in this environment requires more than just adherence to regulations—it demands an unwavering commitment to preparedness.