qui tam | The Contracting Education Academy

January 8, 2021 By cs

Judge rules that lying about 8(a) eligibility violates False Claims Act

Another court has joined the growing chorus of judges who are singing the same tune on set-aside fraud: when a government contractor lies about its eligibility for a set-aside contract, it violates the False Claims Act, and can be sued by either the Department of Justice or a whistleblower.

The new case is United States ex rel. Montes v. Main Building Maintenance Inc., and the decision was issued on December 22, 2020, by Judge Jason Pulliam of the Western District of Texas.

This is a qui tam case brought under the False Claims Act by a whistleblower, or “relator” as it’s called under that statute. The relator alleges that two parents, Robert and Elvira Ximenes, created a company, JXM, to bid on government contracts reserved (or, in technical terms, “set aside”) for contractors that qualified for the so-called “8(a) Business Development program” for small businesses that are owned by “socially and economically disadvantaged people or entities.”

To qualify for such set-aside contracts, the business must first be “certified” as eligible by the Small Business Administration (SBA). And to be eligible for such certification, the business must make a series of representation to SBA about who both owns the business, and who controls the business.

Keep reading this article at: https://www.natlawreview.com/article/federal-judge-texas-rules-lying-about-eligibility-8a-business-development-program

December 18, 2020 By cs

Court of Appeals issues important decision on application of False Claims Act to set-aside contracts

On December 3, 2020, the United States Court of Appeals for the Second Circuit issued its decision in United States v. Strock, a ruling that will significantly strengthen the hand of the government, and of qui tam whistleblowers, in False Claims Act cases against companies awarded government set-aside contracts but do not meet the requirements of the particular set-aside.

The contracts at issue in Strock were set aside for service-disabled, veteran-owned small businesses (SDVOSBs).

Still, the Court’s reasoning also applies to other types of set-aside contracts, such as small business, women-owned small business, or HUBZone set-asides. This decision should hearten whistleblowers who have information about fraud in government contracting set-aside programs.

The Facts Of United States v. Strock

The government sued Strock Contracting, its owner Lee Strock, and one of Strock’s employees. The government alleged that Strock set up a new company called Veteran Enterprises Company (VECO) to bid on SDVOSB-reserved contracts from the Army, Air Force, and Veterans Administration. Strock, however, was not a disabled veteran. Instead, he recruited another individual, a disabled veteran named Terry Anderson.

Keep reading this article at: https://www.natlawreview.com/article/court-appeals-issues-important-decision-application-false-claims-act-to-set-aside

Read the full decision in this case at: https://www.ca2.uscourts.gov/decisions/isysquery/36dc4bcd-69b0-4890-b0e2-56e98757e39f/3/doc/19-4331_opn.pdf#xml=https://www.ca2.uscourts.gov/decisions/isysquery/36dc4bcd-69b0-4890-b0e2-56e98757e39f/3/hilite/

February 11, 2019 By AMK

Proposed FAR amendment makes whistleblower protections permanent

The Federal Acquisition Regulation (FAR) is being amended to make permanent a “pilot program” of whistleblower protections established in 2013.

When announcing this move, the government affirmed its commitment to enhanced whistleblower protection for government contractor employees and clarified existing rules.

Whistleblower protections for contractor employees were first added to the FAR as part of reforms mandated by the Federal Acquisition Streamlining Act of 1994. These provisions remained unchanged until September 2013, when an interim rule implemented a four-year pilot program to enhance these protections under contracts with civilian agencies (while temporarily suspending the original provisions). The proposed rule implements Congressional direction to make the pilot program permanent. DoD, NASA, and the Coast Guard have their own whistleblower protection system codified in 10 U.S.C. 2409.

Under the pilot program, now being made permanent, a contractor or subcontractor employee who believes he or she was discharged, demoted, or discriminated against for making a covered disclosure may file a complaint with the agency’s Inspector General within three years of the alleged reprisal. The initial whistleblower protection regulations had encompassed only disclosures to a Member of Congress, an authorized agency official, or the Department of Justice of information “relating to a substantial violation of law related to a contract.”

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=775878

August 3, 2018 By AMK

3M to pay $9.1 million, resolving allegations it sold DLA defective hearing protection devices

The Department of Justice has announced that the 3M Company (3M), headquartered in St. Paul, Minnesota, has agreed to pay $9.1 million to resolve allegations that it knowingly sold the dual-ended Combat Arms Earplugs, Version 2 (CAEv2) to the United States military without disclosing defects that hampered the effectiveness of the hearing protection device.

“The Department of Justice is committed to protecting the men and women serving in the United States military from defective products and fraudulent conduct,” said Acting Assistant Attorney General Chad A. Readler of the Department’s Civil Division. “Government contractors who seek to profit at the expense of our military will face appropriate consequences.”

“Through rigorous enforcement of the False Claims Act, we protect taxpayer dollars from waste, fraud, and abuse,” said U. S. Attorney Sherri Lydon for the District of South Carolina. “And in this case in particular, we are proud to defend the integrity of our military programs and ensure that our men and women in uniform are adequately protected as they serve our country.”

“Today’s settlement will ensure that those who do business with the government know that their actions will not go unnoticed,” said Frank Robey, director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “Properly made safety equipment, for use by our Soldiers, is vital to our military’s readiness. Our agents will respond robustly to protect the safety of our military.”

“This settlement demonstrates the commitment of the Defense Criminal Investigative Service and our law enforcement partners to hold companies accountable for supplying substandard products, in particular products that could directly impact our service members’ health and welfare. DCIS protects the integrity of Defense Department programs by rooting out fraud, waste, and abuse that negatively affect the wellbeing of our troops,” said Special Agent in Charge Robert E. Craig, Jr., DCIS Mid-Atlantic Field Office.

The settlement announced today resolves allegations that 3M violated the False Claims Act by selling or causing to be sold defective earplugs to the Defense Logistics Agency. Specifically, the United States alleged that 3M, and its predecessor, Aearo Technologies, Inc., knew the CAEv2 was too short for proper insertion into users’ ears and that the earplugs could loosen imperceptibly and therefore did not perform well for certain individuals. The United States further alleged that 3M did not disclose this design defect to the military.

The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act. The act permits private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to share in any recovery. As part of today’s resolution, the whistleblower will receive $1,911,000.

The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the United States Attorney’s Office for the District of South Carolina, the Army Criminal Investigation Command, and the Defense Criminal Investigative Service.

The case is captioned United States ex rel. Moldex-Metric v. 3M Company, Case No. 3:16-cv-1533-MBS (D.S.C.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Source: https://www.justice.gov/opa/pr/3m-company-agrees-pay-91-million-resolve-allegations-it-supplied-united-states-defective-dual

June 15, 2018 By AMK

$20 million lawsuit settled alleging contractor falsely overcharged Navy for ship husbanding services

Inchcape Shipping Services Holdings Limited and certain of its subsidiaries (collectively, Inchcape) have agreed to pay $20,000,000 to resolve allegations that they violated the False Claims Act by knowingly overbilling the U.S. Navy under contracts for ship husbanding services, the Department of Justice has announced.

Inchcape is a marine services contractor headquartered in the United Kingdom.

Inchcape provided goods and services to Navy ships at ports in several regions throughout the world, including southwest Asia, Africa, Panama, North America, South America and Mexico. Inchcape provided ships with food and other subsistence items, waste removal, telephone services, ship-to-shore transportation, force protection services and local transportation. The lawsuit alleged that from 2005 to 2014, Inchcape knowingly overbilled the Navy for these services by submitting invoices that overstated the quantity of goods and services provided, billing at rates in excess of applicable contract rates, and double-billing for some goods and services.

“Federal contractors may only charge the government for costs allowed by their federal contracts,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division. “The Department of Justice will take action against contractors that knowingly submit inflated claims to the armed forces—or any other agency of the United States—as those inflated claims wrongfully divert taxpayer dollars.”

“We trust contractors supporting our warfighters to act with the utmost integrity and expect them to comply with their obligations to bill the government as called for by their contracts,” said U.S. Attorney for the District of Columbia Jessie K. Liu. “This settlement reflects our Office’s strong commitment to holding accountable those who violate these fundamental principles, no matter where they may be located.”

“This settlement demonstrates that the Department of the Navy will continue to hold contractors accountable for the agreements they make to supply our fleet,” said Secretary of the Navy Richard V. Spencer. “The Department expects strict adherence to higher standards within the Department and expects the same from its contractors.”

“Fraud is an abuse of the system that siphons resources away from the American warfighter,” said Jeremy Gauthier, Special Agent in Charge of the Naval Criminal Investigative Service’s Washington D.C. field office. “NCIS will continue to work with our law enforcement partners to hold responsible those who would put personal gain above corporate integrity.”

The lawsuit was brought under the qui tam, or whistleblower, provisions of the False Claims Act by three former employees of Inchcape, Noah Rudolph, Andrea Ford and Lawrence Cosgriff. Under the act, a private citizen may bring suit on behalf of the United States for false claims and share in any recovery. The government may intervene in the case, as it did here. The False Claims Act allows the government to recover treble damages and penalties from those who violate it. As part of today’s resolution, the whistleblowers will receive approximately $4.4 million.

The case was handled jointly by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the District of Columbia, with assistance from the Department of the Navy and the Naval Criminal Investigative Service.

The case is captioned United States ex rel. Rudolph v. Inchcape Shipping Services Holdings Limited, et al., No. 1:10-cv-01109 (D.D.C). The claims alleged in the case are allegations only, and there has been no determination of liability.

Source: https://www.justice.gov/usao-dc/pr/united-states-settles-lawsuit-alleging-contractor-falsely-overcharged-united-states-navy

Another court has joined the growing chorus of judges who are singing the same tune on set-aside fraud: when a government contractor lies about its eligibility for a set-aside contract, it violates the False Claims Act, and can be sued by either the Department of Justice or a whistleblower.

The Facts Of United States v. Strock

The Federal Acquisition Regulation (FAR) is being amended to make permanent a “pilot program” of whistleblower protections established in 2013.

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