On January 14, 2021, the Department of Justice released its updated statistics for False Claims Act (FCA) recoveries in FY 2020. The Civil Division reported that it recovered $2.2 billion in settlements and judgments in the previous fiscal year—down nearly $900 million from FY 2019, and off nearly two-thirds from the government’s high-watermark collections of $6.1 billion in FY 2014. Although $2.2 billion in net FCA recoveries represents DOJ’s lowest FCA haul in a decade, it is still a remarkable figure considering court closures and pandemic-slowed dockets across the country over the past eleven months.

Continue Reading 2020 False Claims Act Recoveries Were Down by One-Third in 2020. . . and That’s Bad News for Federal Contractors

Cough…cough…ahem…cough… Any contractor who has had the misfortune of dealing with the Defense Contract Audit Agency (DCAA) likely knows all too well that the agency is the Will Rogers of costs – it never met a cost it didn’t question.  Indeed, DCAA auditors typically question costs with reckless abandon and based often on a patent misreading of applicable regulations.  The net effect, of course, is that contractors have to expend significant time and money trying to explain to boards and courts why DCAA’s auditors are…uh…incorrect as a matter of fact and law.  A recent Memorandum for Regional Directors (MRD) provides some transparency into why this sort of thing happens with unfortunate regularity. Issued on May 14, 2019, the MRD (No. 19-PAC-002(R)), corrects…er…“revises” internal guidance issued in 2014 and 2015 relating to the identification of expressly unallowable costs.  The newly issued memo sets out DCAA’s current stance on identifying expressly unallowable costs under the cost principles codified at Federal Acquisition Regulation (FAR) Part 31 and Defense Federal Acquisition Regulation Supplement (DFARS) Part 231.  This MRD – like all MRDs – is intended to be used as a tool by well-meaning (but often overzealous) auditors when reviewing a contractor’s compliance with federal cost principles.  Contractors should, thus, pay careful attention to this MRD in order to be prepared for questions that may arise during DCAA-led frolics and detours.

Continue Reading Let Me Clear My Throat: DCAA Course Corrects on “Expressly Unallowable” Costs