False Claims Act dispute resolution

Procurement fraud cases require legal counsel with government contracts expertise

FCA suits alleging noncompliance with federal procurement requirements regularly involve complex procurement laws, heavily regulated, agency-specific procurement environments, and contractual provisions that may or may not be included in the underlying contract documents. As a result, effective counsel for these cases must involve not only FCA generalists, but also attorneys with a deep background in government contracts.

FCA defendants in government contract cases are not just large aerospace and defense contractors—virtually all types of commercial companies have been and can be defendants in FCA procurement cases. The federal government is the largest single customer of goods and services in the world. Thus, companies that focus on commercial sales have been the targets of FCA suits, such as IT manufacturers, resellers, integrators, healthcare providers, food distributors, office supply outlets, service providers. Essentially, any company providing products or services to the government may well face an FCA lawsuit. FCA litigation is virtually a cost of doing business with the government.

Because the FCA requires that any damages be trebled—three times the amount of actual damages—FCA judgments and settlements can be significant. Recent FCA procurement case settlements range from $2.25 million up to $325 million. In addition to damages and penalties, there are other significant consequences to FCA liability, including suspension or debarment proceedings and mandated administrative compliance agreements. Thus, the legal counsel needed to address FCA suits dealing with procurement contracts usually does not end at the conclusion of the FCA litigation—counsel will be needed to address ongoing administrative consequences potentially well after the resolution of litigation.

There are also significant strategic considerations depending on the type of FCA case. While some FCA cases involve allegations of serious misconduct (what would traditionally be considered “fraud”), others involve fairly technical contractual noncompliance issues that, in the commercial world, would be handled as a breach of contract matters and would not be considered fraud. Because of the perceived ease in proving noncompliance, the Department of Justice and qui tam whistleblowers often pursue allegations of “technical” noncompliance issues rather than egregious complex fraud schemes.