Crowell & Moring’s “Fastest 5 Minutes” is a biweekly podcast that provides a brief summary of significant government contracts legal and regulatory developments that no government contracts lawyer or executive should be without. This latest edition is hosted by partner David Robbins and includes updates on GAO’s Whistleblower Protections Pilot Program, the latest from the House of Representatives, and a DOJ FCA matter.
On March 2, 2017, the U.S. Government Accountability Office (GAO) published a report highlighting necessary improvements to effectively implement the Whistleblower Protections Pilot Program (WPPP). The WPPP, introduced in the National Defense Authorization Act for Fiscal Year 2013, and made permanent by Congress in December 2016, expanded whistleblower rights against reprisal for employees of contractors, subcontractors, and grantees. That same year, the FAR was also amended to require contracting officials to include a contract clause requiring contractors to communicate to their employees their rights under the WPPP in contracts exceeding the simplified acquisition threshold and awarded after September 30, 2013. The WPPP also required agencies use best efforts to include the FAR clause in major contract modifications of existing contracts.
Crowell & Moring’s “Fastest 5 Minutes” is a biweekly podcast that provides a brief summary of significant government contracts legal and regulatory developments that no government contracts lawyer or executive should be without, with the latest edition hosted by partners David Robbins and Peter Eyre and including updates on DOJ Fraud Section guidance, GSA OIG’s report on 18F, and an interesting Fourth Circuit decision. Click on one of the options listed below to listen.
On February 8, 2017, the Department of Justice Fraud Section posted a new guidance document on its website entitled, “Evaluation of Corporate Compliance Programs” (“Compliance Guidance”). This Compliance Guidance, comprised of a number of topics and questions, comes a little over a year after the Fraud Section hired Hui Chen as its resident compliance expert. Tapping into her experience as both a prosecutor and a compliance professional at several large multinational companies, Ms. Chen has commented that an effective compliance program requires a whole-company commitment, and has emphasized the importance of leadership and key stakeholders in the compliance process. Her vision is evident in the Fraud Section’s recently released Compliance Guidance, which provides some insights into the mindset of prosecutors tasked with corporate investigations. The Compliance Guidance itself references two of the ten “Filip Factors,” an enumerated set of factors used by prosecutors in making charging decisions related to corporate entities. Although the Compliance Guidance cautions that the Fraud Section does not use a “rigid formula” to assess a company’s compliance program, the guidance provides a detailed list of compliance-focused sample topics and questions that the Fraud Section believes are relevant to its analysis.
On February 14, the Fourth Circuit issued an opinion in United States ex rel. Michaels v. Agape Senior Cmty. Inc. addressing only the first of the two issues that the district court had certified for interlocutory appeal: (1) whether the Department of Justice (DOJ) possesses an unreviewable veto authority over proposed settlements and (2) whether statistical sampling, the analysis of data from a subset of the population of interest in order to make projections across the population of claims at issue, is an appropriate methodology for establishing liability and damages in False Claims Act (FCA) cases.
In its decision, the Fourth Circuit became the third circuit to affirm that the DOJ has absolute, unreviewable authority to veto settlements in qui tam cases where it has declined to intervene. However, notwithstanding that the name of the defendant corporation is derived from the Greek word for love, the Fourth Circuit’s decision (on Valentine’s Day) not to opine on the statistical sampling issue showed no love for those that hoped that the court would bring needed clarity on the permissibility of statistical sampling in FCA cases. Instead, as the authors predicted in a recent Law360 article, the Fourth Circuit dismissed the interlocutory appeal as “improvidently granted” because the panel viewed statistical sampling as an evidentiary issue, rather than a pure question of law.
Crowell & Moring’s “Fastest 5 Minutes” is a biweekly podcast that provides a brief summary of significant government contracts legal and regulatory developments that no government contracts lawyer or executive should be without, with the latest edition hosted by partners David Robbins and Peter Eyre and including updates on DoD and NASA reports, the Anti-Kickback Act, and the government’s right to veto False Claims Act settlements. Click on one of the options listed below to listen.
In United States ex rel. Vavra v. Kellogg Brown & Root, Inc. (Feb. 3, 2017), the Fifth Circuit held that under Section 8706(a)(1) of the Anti-Kickback Act — permitting recovery of twice the amount of each kickback plus $11,000 for each occurrence of a prohibited conduct — corporations are liable “for the knowing violations of those employees whose authority, responsibility, or managerial role within the corporation is such that their knowledge is imputable to the corporation.” In applying this standard to the two Kellogg Brown & Root, Inc. (“KBR”) employees who had accepted meals and entertainment (on 33 occasions) from a supplier, the court found that one employee’s knowledge could be imputed to the corporation because the employee was responsible for supervising the subcontract at issue, for ensuring the supplier met its obligations, including contract performance, and for executing technical evaluations for rebidding the subcontract and therefore “had somewhat significant managerial authority over the sphere of activities in question.” In contrast, the court found the other employee who was neither involved in nor had the authority to take any procurement action regarding the subcontract at issue during the relevant period had only “limited authority” that was not enough to impute his knowledge to KBR.
With respect to whether numerous instances of meals, drinks, and other entertainment constituted “kickbacks” under the Act, the court concluded that “anything of value offered in order to subvert the ‘proper’ process for awarding contracts is a potential kickback,” noting that while merely seeking to develop good will or a good working relationship to gain more business would be insufficient, it was “enough to connect the gratuity with the specific kind of treatment sought in a way that establishes impropriety.” The court found the connection was satisfied with testimony that the supplier provided gratuities, in part, to subvert proper procedures: the supplier employee testified that the KBR employee “was the highest-ranking guy that we dealt with … [and] the most important [person at KBR] with regard to controlling service issues.” When asked why he provided gratuities, the supplier employee answered that it was because the KBR employee “would bring service issues to us. Specifically he knew me based on entertaining; so, if they had issues, he would bring them to me before they escalated out of control.” The court found the testimony provided sufficient specificity to support a finding that the KBR employee received gratuities to overlook and/or forgive performance deficiencies in subversion of proper procedures and in violation of the Anti-Kickback Act.
Crowell & Moring’s “Fastest 5 Minutes” is a biweekly podcast that provides a brief summary of significant government contracts legal and regulatory developments that no government contracts lawyer or executive should be without, with the latest edition hosted by partners David Robbins and Peter Eyre and including updates on the latest executive orders by President Trump, the Homeland Security Acquisition Regulation, and OFCCP’s voluntary self-disclosure of disability form. Click on one of the options listed below to listen.
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On January 26, 2017, the Fourth Circuit heard oral argument in United States ex rel. Omar Badr v. Triple Canopy, one of four False Claims Act decisions that the Supreme Court vacated and remanded for further consideration in light of the Court’s June 2016 holding regarding the implied certification theory in Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016). In Triple Canopy, the relator alleges that a security contractor responsible for ensuring the safety of an air base in a combat zone knowingly employed guards who allegedly falsified marksmanship scores, and presented claims to the government for payment for those unqualified guards. The defendant prevailed on a motion to dismiss at the district court after demonstrating that the government failed to plead that it ever reviewed — and therefore ever relied on — the allegedly false scorecards. United States ex rel. Badr v. Triple Canopy, Inc., 950 F. Supp. 2d 888 (E.D. Va. 2013). The Fourth Circuit reversed, explaining: “Common sense strongly suggests that the Government’s decision to pay a contractor for providing base security in an active combat zone would be influenced by knowledge that the guards could not, for lack of a better term, shoot straight … If Triple Canopy believed that the marksmanship requirement was immaterial to the Government’s decision to pay, it was unlikely to orchestrate a scheme to falsify records on multiple occasions.” 775 F.3d 628, 637–38 (4th Cir. 2015).
Continuing his trend of fulfilling the promises set forth in his Contract with the American Voter, President Trump, on January 30, 2017, issued an Executive Order mandating the elimination of at least two existing regulations for every new regulation issued. In particular, the order explains that “whenever an executive department or agency…publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.” In this way, the Administration intends to offset “any new incremental costs associated with new regulations….” Notably, however, the definition of regulation does not include: (1) “regulations issued with respect to a military, national security, or foreign affairs function of the United States”; (2) “regulations related to agency organization, management, or personnel;” or (3) “any other category of regulations exempted by the Director.”