The False Claims Act was enacted in 1863 by Congress and President Abraham Lincoln in response to widespread corruption and fraud by defense contractors during the Civil War. At the time of enactment, the FCA, then known as the "Lincoln Law," made it illegal to present false statements or claims to the United States government for payment to which the claimant is not entitled.
Today, the FCA continues to be an invaluable tool in combating government contractor fraud. The United States government commits billions of dollars of its discretional spending budget to defense contractors. In 2010 alone, Lockheed Martin - which recently agreed to pay $2 million to resolve bid-rigging allegations - earned over $16.7 billion in revenue from government contracts.
Procurement fraud is not limited to large defense contractors. The United States contracts with third parties in a number of areas, including historical and environmental preservation. For example, Katherine Knapp brought a qui tam lawsuit under the False Claims Act against Calibre Systems, Inc., a government contractor providing environmental and archaeological services at the Ft. Irwin National Training Center.
Knapp is a former employee of Calibre Systems and worked at the Ft. Irwin site as an Analyst member of the Environmental Program Management Directorate. She alleged FCA claims under the false certification and worthless services theories of liability.
Specifically, she alleged that the contract required Calibre Systems to adhere to regulations set forth in Section 106 of the National Historic Preservation Act of 1996, 16 U.S.C. ยง 470f. Section 106 required Calibre Systems to have a valid Programmatic Agreement ("PA") to conduct excavations at Ft. Irwin. Knapp alleged that Calibre Systems did not secure a valid PA for certain excavations because it was trying to complete jobs in a timely manner to secure future business from the government. She also alleged that Calibre Systems's failure to secure a valid PA as required under Section 106 - an express requirement of the contract - was material because failing to do so would have had influenced (or was capable of influencing) the government's decision to pay it.
Calibre Systems moved to dismiss Knapp's complaint, and on October 17, 2011, a federal court judge in the Central District of California denied the motion. Her FCA claims will now go forward. To read the Court's Order, click here.
If you have information regarding fraud in the procurement or performance of a government contract, contact Andrew M. Beato, an experienced whistleblower attorney with the law firm of Stein, Mitchell & Muse, LLP in Washington, D.C.
