Sidley has decades of extensive experience in defending claims under federal and state False Claims Acts relating to government contracting. Although other industries now attract significant attention from prosecutors and prospective qui tam relators, prosecuting alleged FCA violations in the government contracting industry remains at the heart of federal and state anti-fraud efforts, and defending against such claims remains a core component of our practice.
Congress enacted the False Claims Act over 150 years ago to combat fraud in the defense contracting industry. Today, combating defense contracting fraud remains a priority of the federal government, and examples of FCA actions against military suppliers abound. Yet, these are just the tip of the iceberg. Federal and state FCA actions have also been brought against government contractors in the telecommunications, information technology, and international trade sectors.
Our experience runs the gamut. Across this wide range of different types of government contracts, we have dealt with FCA claims about, for example, alleged fraud involving contract pricing, costs, manufacturing practices, and contractual compliance.
Our lawyers have a detailed familiarity with the full range of issues that arise under FCA investigations and litigation in the government contracting industry, from jurisdictional and procedural issues to substantive questions such as falsity, causation, and materiality. We have used these skills to resolve FCA investigations through declinations of intervention or favorable negotiated resolutions. We have also used these skills to successfully defend government contracting clients through all phases of the litigation process in trial and appellate courts. We also regularly work with government contracting clients to develop or enhance FCA compliance programs.
Much of our government contracts FCA work is non-public or purposefully kept out of the spotlight. However, the following list provides representative examples of the types of government-contracting FCA matters we have handled for our clients:
- Represented major federal defense contractors in a host of federal qui tam actions and FCA investigations alleging or relating to purported fraud regarding:
- Quality assurance and manufacturing issues concerning sophisticated military hardware, such as weapons system components and flight-critical aircraft hardware;
- Compliance with specifications concerning sophisticated military hardware;
- Testing and inspection of sophisticated military hardware;
- Pre-award disclosure of cost information;
- Implementation of most-favored-customer clauses;
- Labor rates and work measurement standards; and
- Grant-matching funds compliance.
- Represented a number of significant government suppliers in investigations related to cost and pricing issues.
- Represented a telecommunications provider in a case alleging false claims on a fund to provide access for hearing impaired persons.
- Representing a number of major international corporations in qui tam actions alleging non-compliance with the Trade Agreements Act of 1979, which is incorporated into many federal contracts.
- Represented major corporations in connection with voluntary disclosures concerning various issues relating to federal procurements.
- Represented a major defense contractor in a FCA case involving allegations of fraud related to a weather satellite program. Following the government’s declination, the court dismissed the case with prejudice based on the public disclosure bar.
- Represented a professional services firm, KPMG, in a qui tam action alleging that several government contractors presented claims for payment for travel expenses, which did not reflect volume-based vendor commissions, rebates and incentive payments.
- Defending a government contractor in a Department of Justice investigation stemming from a qui tam case alleging that a GSA schedule contractor intentionally violated the price reductions clause.
- Representing a government subcontractor in an investigation involving sales to NASA.
- Advised major corporations on issues regarding GSA Schedule contracts, including the price reductions clause.
In FCA actions that have made it to court, moreover, Sidley has routinely had success in obtaining favorable outcomes. The following reported decisions are representative examples:
- United States ex rel. Mateski v. Raytheon, 2013 WL 692798 (C.D. Cal. Feb. 26, 2013) (dismissing qui tam relator’s allegations of fraud related to a weather satellite program as prohibited by the FCA’s public disclosure bar).
- United States ex rel. Prather v. AT&T, 996 F. Supp.2d 861 (N.D. Cal. 2013) (dismissing all of qui tam relator’s allegations of fraud relating to purported overcharges for the provisioning of Title III wiretaps as prohibited by the FCA’s public disclosure bar).