In late January, the FAR Council issued its long-awaited final rule amending the FAR to strengthen the U.S. Government’s policy against human trafficking. As discussed below, the amendments may have far-reaching compliance implications for government contractors. Continue Reading
The Federal False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq., has unique procedural aspects that come into play when a private whistleblower (the “relator”) seeks to sue on behalf of the Government. One of these, the so-called “first-to-file” bar, applies when two “related” whistleblower actions are filed: “When a person brings an [FCA action], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). The circuits are split as to whether the bar applies only while the first-filed action is “pending,” or applies even if the first-filed action has been dismissed. For example, the Fourth Circuit held “that once a case is no longer pending the first-to-file bar does not stop a relator from filing a related case.” U.S. ex rel. Carter v. Kellogg Brown & Root Servs., Inc., 710 F.3d 171, 181, 183 (4th Cir. 2013), cert. granted, 134 S. Ct. 2899, 189 L. Ed. 2d 853 (2014). On the other hand, the D.C. Circuit expressly disagreed with Carter, rejecting the concept that the first-to-file bar is a “temporal limit” to related suits, and concluding that related actions are barred “regardless of the posture of the first-filed action.” U.S. ex rel. Shea v. Cellco P’ship, 748 F.3d 338, 343-44 (D.C. Cir. 2014), reh’g denied en banc (July 16, 2014). In finding that the statutory reference to “pending action” means the first-filed action, the D.C. Circuit noted that its interpretation “better suits” the policy of the bar—to prohibit subsequent private actions once the Government is on notice of the fraud. The Supreme Court’s July 1, 2014 grant of certiorari to review the Fourth Circuit’s decision in Carter should resolve the circuit split. Continue Reading
Under the “implied certification” theory of liability, a government contractor can violate the False Claims Act (“FCA”) by submitting a mere invoice for payment. The theory is that the invoice’s submission impliedly certifies compliance with contract conditions. If a contractor is not complying with material contract requirements and — despite the contractor’s noncompliance — submits an invoice for payment, then the Government or a relator might argue that the contractor has violated the FCA. Continue Reading
Two recent developments have the potential to change the landscape for contractors providing services to the Government. Government contractors and subcontractors are required to comply with a host of regulations governing their hiring practices and the wages they pay and benefits they provide to certain categories of employees. A recent Executive Order and court decision, however, have the potential to alter these requirements drastically.
On January 7, 2015, the U.S. Department of Defense (“DoD” or “the Department”) released an update for DoD Instruction 5000.02, on the “Operation of the Defense Acquisition Service.” The new Instruction is designed to assist acquisition personnel in tailoring the acquisition process to the specific item or system being purchased and to further the Department’s Better Buying Power initiative, launched in 2010. The Instruction focuses largely on the acquisition of DoD-specific software and weapons systems.
In early December 2014, the United States Court of Appeals for the First Circuit reaffirmed that circuit’s broad interpretation of the False Claims Act’s “first-to-file” bar, 31 U.S.C. § 3730(b)(5), in United States ex rel. Ven-a-Care of the Fla. Keys v. Baxter Healthcare Corp., 772 F.3d 932 (1st Cir. 2014). The first-to-file bar, as we have discussed in previous posts, prohibits a second relator from going forward with a False Claims Act (“FCA”) case that is similar to an earlier relator’s case.
On November 20, 2014, the District Court for the District of Columbia once again ordered Kellogg, Brown and Root (“KBR”) to produce all documents prepared as part of an internal investigation. The District Court’s decision comes after the D.C. Circuit, in an opinion that was welcome news for in-house counsel, found that the documents prepared during an internal investigation were protected by the attorney-client privilege since one of the “significant purposes” of the communications was to obtain or provide legal advice. On remand, the District Court nonetheless ordered KBR to produce the documents because it found that, under the doctrine of implied waiver, KBR waived the privilege by placing in dispute what otherwise would have been privileged matters when it represented to the Court that the internal investigation resulted in no evidence of fraud.
On January 15, 2015, the Department of Treasury’s Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations to implement changes in U.S. policy toward Cuba announced by President Obama on December 17, 2014.
Sheppard Mullin’s Government Contracts, Investigations & International Trade Group Wishes You And Yours The Happiest Of Holidays In 2014 And Much Success In 2015.
Most companies are worried about external threats – things that are coming at their people, their group, their company, their government, all from an outside actor. Like government’s with an eye on counter-intelligence, however, savvy businesses also realize that their employees can also pose a very real, internal threat. While an insider breach is not necessarily a common event, when it does happen, it tends to happen on a large scale. Last year, the FBI reported that when a malicious insider breach surfaced, it cost industry $412,000 per incident, on average. Over ten years, the average loss per industry is $15 million. And, unless you’ve been hiding under a rock, you know that the Government is not immune to insider breaches and the reputational impact to federal contractors resulting therefrom. Exacerbating, or perhaps facilitating, this threat is the manner in which companies (and governments) store, transfer, and maintain vital company records and data. With the right password and a $16 thumb drive, an intern can steal the corporate keys to the kingdom, and still be home in time for lunch. Simply put, all employers face the risk of insider threats which are more perilous than ever in the computer age. Recognizing that internal threats are real, the issue, then, is how to stop these threats from manifesting. Learning from recent high-profile mistakes, the Government is trying to make sure its contractors stay ahead of the risk of an internal breach.