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False Claims Act

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The civil False Claims Act (FCA) prohibits entities from fraudulently inducing the Government to contract, take or refrain from taking action, or make payment.  Under the FCA, contractors that falsely certify their compliance with contract specifications can be assessed a civil penalty for each false claim in addition to treble damages.  In USA v. Honeywell International Inc., the Court of Appeals for the District of Columbia Circuit was asked to determine the appropriate measure of damages arising from allegedly false claims made about the ballistic performance of Z Shield material made from Zylon fiber purchased from third parties and sold by Honeywell to Armor Holdings for the production of bullet proof vests, which were then sold to the federal Government and federally-funded state and local government entities. In the case, the Government sought approximately $35 million in damages for the full amount paid for the vests, trebled.  During the proceedings, the Government recovered $36 million in settlements with Armor Holdings and the Zylon providers for their role in the manufacturing and supply of the vests. Honeywell, which had not settled, moved for summary judgment to apply a pro tanto approach to the calculation of damages that would be owed in light of these settlements. Specifically, Honeywell argued that since the Government only sought $35 million in damages, its recovery of $36 million in settlements should preclude the Government from recovering any damages from Honeywell even if the facts alleged in the case were true.  The Government sought to recover a proportionate share of damages from Honeywell under its proposed offset standard, which would allow for the Government to recover more than the $35 million sought in the case.
Continue Reading DC Circuit Sets FCA Offset Standard to Limit What the Government Can Recover in USA v. Honeywell International Inc.

In the wake of increasing cybersecurity threats and incidents, the U.S. Department of Defense (DoD) amended its Federal Acquisition Regulation Supplement (DFARS) in 2015 to issue the 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting clause (DFARS clause).  The DFARS clause, which is included in all DoD solicitations and contracts, including those for acquisitions of commercial items, requires that the contractor must “provide adequate security on all covered contractor information systems.” Covered contractor information systems are those that are “owned, or operated by or for, a contractor and that processes, stores, or transmits covered defense information.” The DFARS clause also requires that a contractor discovering a cyber incident that “affects a covered contractor information system or the covered defense information residing therein, or affects the contractor’s ability to perform the requirements of the contract that are designated as operationally critical support and identified in the contract,” must conduct a review and “rapidly report” the cyber incident to the DoD Cyber Crime Center (DC3).  A “cyber incident” is defined as “actions taken through the use of computer networks that result in a compromise or an actual or potentially adverse effect on an information system and/or the information residing therein.”  The current version of the clause goes on to define “compromise,” “covered defense information,” and more.  Thus, a reportable event only arises when a number of elements are present.  There still remain questions about the timing and scope of reporting under the clause.  Recognizing this, even when there are not mandatory reporting requirements, DoD has established a voluntary public-private Defense Industrial Base (DIB) Cybersecurity program that allows for the sharing of information on cyber threats and more.
Continue Reading A Sea Change in Handling of Government Contractor Cyber Incident Reporting?

If you were somehow still wondering whether small businesses really need to be concerned about the affiliation rules in the Small Business Administration (SBA) regulations, the answer is a resounding “Yes.” Furthermore, running afoul of those rules can easily lead to liability under the False Claims Act (FCA), as most recently demonstrated by an Oklahoma…

I. Introduction

The Paycheck Protection Program (PPP) was enacted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. Unfortunately, the path to providing PPP loan relief has not been smooth. Instead, it has been paved with uncertainty. While the CARES Act laid out specific requirements for PPP…

On April 6, 2020 the Small Business Administration, in conjunction with the Department of Treasury, issued additional set of Frequently Asked Questions (FAQs) to address questions regarding the Paycheck Protection Program (PPP). Among other things, these FAQs provide yet another “clarification” of the eligibility provisions under the SBA interim final regulation – some businesses with …