Federal Circuit Finds ASBCA had Jurisdiction over a Government Affirmative Defense of Fraud—Which the Court Also Characterized as a Defense of Prior Material Breach—and Affirmed the Board’s Grant of Summary Judgment to the Government Based on that Defense

The Federal Circuit recently affirmed the ASBCA’s grant of summary judgment to the Government based on the Government’s affirmative defense that the court described both as a defense of fraud and a defense of prior material breach. In a case called Laguna Constr. Co. v. Carter, the court initially determined that the ASBCA had jurisdiction over the Government’s affirmative defense. It then affirmed the ASBCA’s grant of summary judgment to the Government because the contractor committed the first material breach. Along the way, the court rejected several arguments advanced by the contractor. Continue Reading

Federal Circuit Emphasizes the Need to File a Pre-Award Protest When Faced with Patently Defective Solicitation Language

The Federal Circuit recently issued a decision in Copenhagen Arctic A/S v. United States that underscores the importance of promptly pursuing bid protests regarding patent defects in a solicitation’s language—including questions and answers incorporated into the solicitation. Continue Reading

Supreme Court Rejects the Government’s Expansive Interpretation of “Official Act” for Honest Services Fraud and Bribery Allegations

On June 27, 2016, in McDonnell v. United States, the Supreme Court resolved a case of substantial interest to businesses that interact regularly with government officials with respect to grants, contracts, regulations and numerous other matters. The Court vacated the conviction of the former governor of Virginia, Bob McDonnell, because it was based on an improperly expansive interpretation of “official act” as used in the federal bribery statute. The Court’s opinion rejects the Department of Justice’s expansive interpretation of the relevant statutes and holds that a government official’s “setting up a meeting, calling another public official, or hosting an event does not, standing alone, qualify as an ‘official act’”—and, thus, is not sufficient to support a conviction. Instead, an honest services fraud allegation must involve:

  • Ÿ “a decision or action on a ‘question, matter, cause, suit, proceeding or controversy’”
  • Ÿ “a formal exercise of governmental power that is similar in nature to a lawsuit before a court, a determination before an agency, or a hearing before a committee”
  • Ÿ “something specific and focused that is ‘pending’ or ‘may by law be brought’ before a public official”
  • Ÿ a “public official [who] make[s] a decision or take[s] an action on that ‘question, matter, cause, suit, proceeding or controversy,’  or agree[s] to do so.”

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DoD Advisory Committee Seeks Comments on Broad Range of Issues Concerning Rights in Technical Data

On June 21, 2016, DoD published a notice in the Federal Register indicating that an advisory committee is seeking information to facilitate its review of 10 U.S.C. §§ 2320 and 2321 regarding rights in technical data and the validation of proprietary data restrictions. This is an excellent opportunity for contractors, Government contracts counsel, and others to provide input into rules that play an important role in DoD procurements involving rights in technical data. The notice requires submission of written comments in the very near future—on or before July 21, 2016. The Panel must submit its final report and recommendations to the Secretary of Defense no later than September 30, 2016. Continue Reading

Recent Federal Circuit Decision Clarifies When a CDA Claim for Payment of Money Accrues

The Federal Circuit recently clarified when a CDA claim for payment of money accrues for purposes of determining whether the CDA’s 6-year statute of limitations has run. In Kellogg Brown & Root Servs., Inc. v. Murphy, KBR filed the claim with the Army on May 2, 2012 for work done by its subcontractor in Iraq; thus, the critical date of accrual for limitations purposes was May 2, 2006. The ASBCA dismissed the claim, holding that the claim had accrued prior to May 2, 2006 and, thus, the limitations period had run prior to the filing of the claim. The Federal Circuit reversed and remanded for determination of the merits of the claim. Continue Reading

Supreme Court Upholds Implied Certification Theory of Falsity for FCA Claims

Today, in Universal Health Services v United States ex rel. Escobar, the Supreme Court resolved a circuit split on a question of great importance for government contractors: whether a claim presented to the United States for payment can be false or fraudulent for purposes of the False Claims Act (“FCA”) under the so-called “implied certification” theory. The Court answered in the affirmative, unanimously holding that “the implied false certification theory can, at least in some circumstances, provide a basis for liability.” The Court sought to allay any “concerns about fair notice and open-ended liability” by emphasizing the strict application of the FCA’s materiality and scienter requirements, clarifying the meaning of these requirements, and rejecting the Government and Second Circuit’s interpretation of implied certification as “extraordinarily expansive.” It remains to be seen whether the Court’s descriptions of the manner in which the FCA’s materiality and scienter requirements should be “rigorous[ly]” applied will provide meaningful protections to government contractors, including healthcare and other companies participating in various government programs, that face potential FCA liability based on implied certification theories of liability. Continue Reading

Second Circuit Adds to Case Law Addressing Whether a Relator’s Release of FCA Claims is Enforceable

The Second Circuit recently added to case law addressing the issue of whether a relator’s release of False Claims Act (FCA) claims prior to the relator’s qui tam action is enforceable. United States ex rel. Ladas v. Exelis, Inc. The circuit reversed the district court’s holding that the release was enforceable, disagreeing with the court’s conclusion that the Government had sufficient knowledge of the allegations of fraud prior to the release. The circuit, however, affirmed the Court’s dismissal of the amended complaint because the plaintiff did not plead fraud with sufficient particularity, and the district court did not abuse its discretion in denying leave to amend. Continue Reading

Supreme Court To Consider Implications of Seal Violation in FCA Lawsuits

On May 31, 2016, the Supreme Court granted certiorari in State Farm Fire & Casualty Co. v. United States ex rel. Rigsby, No. 15-513. At issue is an important question for the government contract community: “What standard governs the decision whether to dismiss a relator’s claim for violation of the FCA’s seal requirement, 31 U.S.C. § 3730(b)(2)?” Continue Reading

DoD’s Public Meeting Concerning a Proposed Rulemaking Related to Independent Research & Development Revealed Numerous Issues and Concerns

DoD IR&D ANPRIn the February 8, 2016 Federal Register, DoD published an Advanced Notice of Proposed Rulemaking (“ANPR”) indicating that DoD is considering a proposed approach requiring offerors to describe in detail the nature and value of prospective independent research & development (“IR&D”) projects on which the offeror would rely to perform the resultant contract; DoD would then evaluate proposals in a manner that would take into account that reliance by adjusting the total evaluated price to the Government, for evaluation purposes, to include the value of related future IR&D projects. DoD held a public meeting on March 3, 2016 to discuss the ANPR, and several attendees raised numerous issues and concerns with the ANPR. Comments on the ANPR are due April 8, 2016. This article summarizes some of the more important issues and concerns expressed.

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Two Recent Circuit Court Decisions Address the FCA’s Public Disclosure Bar

The civil False Claims Act’s (FCA) public disclosure bar prohibits FCA suits based on allegations that have been disclosed publicly through certain enumerated sources, unless the relator meets the FCA’s definition of “original source.” Congress amended the bar in 2010, including replacing the phrase “no court shall have jurisdiction” with the phrase “[t]he court shall dismiss.”

Two recent Circuit Court decisions, issued within days of each other, have focused and elaborated on the public disclosure bar. Continue Reading

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