False Claims Act Focus – December 2012

False Claims Act Focus – December 2012

Procurement Fraud

The Department of Justice (DOJ) stated in its December 4 press release that it also recovered $427 million under the False Claims Act (FCA) for goods and services purchased by the federal government, of which $73 million related to the wars in Iraq and Afghanistan . The largest of those procurement settlements was the $199.5 million settlement with Oracle Corp. and Oracle USA (collectively “Oracle”) in what DOJ characterized as the biggest FCA settlement ever under a General Services Administration (GSA) contract. That settlement, announced on October 6, 2012, resolved allegations that the contractor knowingly failed to meet its contractual obligations to provide GSA with current, accurate and complete information about its commercial sales practices; made false statements to GSA about its sales practices and discounts; and failed to comply with the price reduction clause of its GSA contract. These practices, the United States alleged, resulted in the country ultimately paying significantly more than it should have for Oracle products.

In another very recent case that the DOJ is less likely to tout publicly, however, it abruptly voluntarily withdrew from a case it was litigating actively against defense contractor KBR in federal district court in the District of Columbia. In the FCA suit filed by the government on April 1, 2010, DOJ initially sought $100 million in damages and penalties against KBR regarding billings for armed private security contractors under its logistics support contract with the Army, LOGCAP III. Earlier this year, the district court had dismissed KBR’s counterclaims against the United States and denied KBR’s motion to dismiss, endorsing the implied certification theory of claims submission advocated by the DOJ. Nevertheless, for reasons not announced publicly, DOJ voluntarily dismissed the case in November 2012.

For questions on this Recent Development, please contact Laura Laemmle-Weidenfeld.



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