The United States has intervened in yet another False Claims Act suit against GSA Schedule contractors alleging violations of the Trade Agreements Act. On November 24, 2010, the United States filed its Complaint in Intervention in U.S. ex rel. Navarro v. Divine Imaging, Inc. et al.  The complaint alleges that four different office supply companies with Schedule 75 contracts with GSA offered for sale and actually sold products that did not comply with the TAA. Unlike other recent False Claims Act cases against GSA Schedule contractors involving alleged TAA violations, this complaint appears to have evidence that the Government did, indeed, purchase non-compliant products. Earlier cases, such as the Folliard matter, were dismissed due to lack of evidence that the government actually purchased the non-compliant products listed for sale on the contractors’ Schedule contracts.

The Navarro case was initially filed as a qui tam action by Vanessa Navarro against over 50 office supply companies. The Government’s complaint in intervention, filed against only 4 of the original 50 defendants, does not provide any insight into Ms. Navarro’s relationship, if any, with the defendants. Perhaps she is a current or former employee of one of the companies, or works for a competitor and possesses industry-specific information about the origin of the defendants’ products, or perhaps she has no relationship with the defendants and simply conducted some research of publicly available information to develop her claims. The important point to keep in mind as a GSA Schedule contractor is that your price list, which identifies the products and services for sale, is usually publicly available on GSA’s website, so anyone – including a competitor or a member of the general public – can develop information from your price list and other public sources to bring an action alleging non-compliance with the Trade Agreements Act.

It is vitally important for GSA Schedule contractors to ensure, both at the start of contract performance and on a regular basis throughout the life of the contract, that items offered for sale to the government are compliant with the Trade Agreements Act. Conducting regular and on-going due diligence on the country of origin of products offered for sale on a GSA Schedule contract will go a long way toward protecting the contractor from a viable False Claims Act allegation.