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When Abraham Lincoln signed the False Claims Act (FCA) into law in 1863, it was a legislative reaction to a series of sensational congressional investigations into war profiteers’ sale of phony provisions and useless equipment to the U.S. government during the Civil War. Contractors who agreed to provide 100-pound bags of flour filled many of the bags with sand. Munitions suppliers demanded full payment (at exorbitant, wartime prices) for rusted, nonfunctioning weapons gleaned from scrap heaps. It was not a leap to find claims that sand was flour, or that a rusted flintlock was an Army rifle, were objectively false; these were not just breaches of contract, but out-and-out frauds. Congress stepped in to stop this “plundering of the public treasury,” and the FCA imposed penalties on those who sought to defraud the U.S. government and its taxpayers.

Continue Reading Honest Abe Would Demand “Objective Falsity” for FCA Liability. Will the Supreme Court?

The Prospect of False Claims Act’s Treble Damages Requires Meticulous Recordkeeping Under the CARES Act

On April 10, 2020, the Government Accountability Office (GAO) announced its effort to root out fraud associated with the billions of dollars in payments promised under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Congressional watchdog is encouraging individuals – private citizens, government workers, contractors, etc. – to anonymously and confidentially report any allegations of fraud, waste, abuse, and mismanagement through FraudNet (the GAO’s fraud-reporting website), via e-mail or by calling 1-800-424-5454 (the GAO’s automated phone answering system). The GAO, of course, is seeking as much detail as possible about any allegations so the reports can be handed off to its own investigative unit, appropriate inspector general offices, or to the ultimate enforcer – the Department of Justice.


Continue Reading Borrowers Beware: GAO Ramps Up Efforts to Root Out Fraud Among CARES Act Loan Recipients

On April 8, 2020, a final rule (the Rule) was issued amending the Defense Federal Acquisition Regulation Supplement (DFARS) and implementing Section 852 of the National Defense Authorization Act (NDAA) for FY 2019 to provide for accelerated payments to DoD’s small business prime contractors and subcontractors supporting DoD contracts. The Rule applies to contracts at or below the simplified acquisition threshold (SAT) – currently $250,000 for DoD contracts – and to contracts for the acquisition of commercial items including commercially available off-the-shelf (COTS) items. With an estimated 96% of DoD contracts valued at or under the SAT, the rule appears to reflect DoD’s recognition that it is in the best interests of the government and small business contractors alike to apply this Rule to contracts at or below the SAT and to accelerate payments to small business prime contractors and subcontractors.

Continue Reading DFARS Final Rule Establishes Goal of 15-Day Accelerated Payments for Small Business Contractors

This week, the State of Hawai`i instituted some of the most sweeping emergency orders in the country in the response to the COVID-19 pandemic. For tourists, tourism, federal employees, federal contractors, and the millions of island residents, this means a very different kind of stay while in paradise.

Continue Reading COVID-19 Response — Locked In Paradise — Hawai`i Issues Robust Stay-at-Home and Mandatory Quarantine Orders for Visitors and Residents

One of the bedrock principles of federal contracting is the demand for “full and open competition through the use of competitive procedures.”  In order to foster competition and reduce costs, the Competition in Contracting Act was passed into law in 1984 in an effort to enhance competition in procurements and thereby reduce costs, eliminate waste and abuse, and protect taxpayer dollars.  The effort to root out corruption and promote competition continues with the recent announcement by the Department of Justice (DOJ) of the newly formed Procurement Collusion Strike Force (“Strike Force”), with additional details and training materials—and an imposing antitrust violation complaint form—available on its recently launched website.

Continue Reading New DOJ Strike Force Targets Collusion in Federal Contract Awards

On August 6, 2014, plaintiff-relator Andrew Scollick filed a complaint in the United States District Court for the District of Columbia against eighteen defendants for multiple violations of the False Claims Act (“FCA”) in connection with an alleged scheme to submit bids and obtain millions of dollars in government construction contracts by fraudulently claiming or obtaining service-disabled veteran-owned small business (“SDVOSB”) status, HUBZone status, or Section 8(a) status, when the bidders did not qualify for the statuses claimed. United States ex. rel. Scollick v. Narula, et al., No. 14-cv-1339 (D.D.C.). Unique in this case were not the claims against the contractors, who were alleged to have falsely certified their status or ownership. Rather, what set this case apart was that Scollick also named as defendants the insurance broker who helped secure the bonding that the contractor defendants needed to bid and obtain the contracts, and the surety that issued bid and performance bonds to the contractor defendants. Scollick alleged that the bonding companies “knew or should have known” that the construction companies were shells acting as fronts for larger, non-veteran-owned entities violating the government’s contracting requirements—and thus the bonding companies should be held equally liable with the contractors for “indirect presentment” and “reverse false claims” under the FCA.

Continue Reading The Sword of Damocles Hangs Over Miller Act Sureties and Brokers: Scollick Case Stayed Sixty Days for Mediation, but Outcome Remains Uncertain

Section 8(a) of the Small Business Investment Act of 1958 authorizes the Small Business Administration (“SBA”) to enter into prime contracts with federal agencies and to subcontract the performance of the contract to qualified small businesses. As most are aware, the 8(a) program is designed to assist “socially and economically disadvantaged small business” concerns that are owned by one or more individuals who are from a socially and economically disadvantaged group and whose management and daily operations are controlled by such individuals. 15 U.S.C. § 637(a)(4)(A)-(B). Included in the definition of “socially and economically disadvantaged groups” are, among others, Indian tribes, Native Hawaiians, and Alaskan Natives, which allows each “maximum practical opportunities” to participate in the government contracting market. But in so doing, those companies must stomach the good with the bad, i.e., they must be prepared to (a) navigate the thicket of regulatory hurdles required to do business with the government and (b) combat potential allegations of fraud if there is a perception that one or more of those hurdles has not been cleared successfully.

Continue Reading Alutiiq False Claims Act Settlement Highlights Significant Government Contract Compliance Risks for Tribal, NHO, and ANC 8(a) Subsidiaries