Bottom Line Up Front: Contractors who provide labor, materials, or products to federal agencies that do not meet the specifications / qualifications called for by the contract are likely violating the False Claims Act. 

DRS Technical Services, Inc. (DRS), a Virginia-based defense contractor agreed to pay the government $13.7 million to settle False Claims Act allegations that it overcharged the Department of Defense (DoD) for work performed by unqualified staff.  The DoD alleged that DRS employed workers on several DoD contracts that did not meet the specified labor qualifications, which resulted in DRS overbilling the government for less-qualified workers.  The period of overbilling was alleged to have run from 2003 to 2012, some of which involved labor supporting DoD forces in Iraq and Afghanistan.      

The Department of Justice explained that “Contractors that fail to provide qualified labor as promised are not entitled to bill the government as though they had.”

Lessons Learned: Contractors that are unaware of the requirements of the False Claims Act or ignore the Act in performing federal contracts do so at their peril.  The government is pursuing False Claims Act cases against federal contractors more than ever.  The Act is the government’s primary enforcement tool to pursue federal contractors for alleged fraud and results in ever-increasing revenue for the government each year. 

All federal contractors must understand that the Act applies on every federal project they perform.  It only takes one erroneous or inaccurate invoice (claim for payment) submitted to the government to violate the Act.  The best defense for contractors is to have a robust and comprehensive compliance program in order to prevent even the appearance that a False Claims Act violation has occurred. 

Doug Hibshman is a partner in Fox Rothschild LLP’s Federal Government Contracts and Procurement, Construction, and Infrastructure Practice Groups in Washington, DC, and routinely represents federal contractors on False Claims Act prevention, compliance, mitigation, and defense matters.