False Claims Act Update
The Department of Justice reported sharply increased False Claims Act recoveries for government fiscal year 2023. Settlements and judgements dramatically increased from the fiscal year 2022 totals. And DOJ reported a significantly higher number of False Claims Act investigation initiations during fiscal year 2023. As they have been historically, recoveries mostly involved the healthcare industry, but pandemic fraud and government contractors also featured prominently in the recoveries.
Claims Updates
- The Civilian Board of Contract Appeals recently issued a decision highlighting the challenges companies experience when faced with government claims.
- United Facility Services (UFS) contracted with the General Services Administration (GSA) to provide operations and maintenance (O&M) services at a courthouse building. The contract required UFS to perform O&M services as needed during emergency situations, including natural disasters, and to respond to emergency service requests “immediately (with the shortest possible time consistent with the mechanic’s location) during normal working hours and within 30 minutes.”
- When a frozen pipe burst inside a locked room in the courthouse causing flooding, the GSA building manager attempted to contact the UFS employee responsible, but the employee failed to respond and did not return to the building until almost four hours later. GSA brought a government claim against UFS for the cost of the damage, and UFS appealed to the CBCA.
- The CBCA found that UFS had breached the contract by failing to respond to the request for emergency services within 30 minutes as required, rejecting UFS’s argument that the damage to the courthouse was caused by an act of God, precluding liability. The Board reasoned that it was UFS’s responsibility to anticipate weather-related problems that could affect the building and timely respond to such problems. Notably, the Board contemplated that there may be cases where “a weather event is so massive that the contractor cannot reasonably be expected to respond to emergency service calls in a timely manner,” even if the contract required the contractor to anticipate and plan for the emergency, but that no such conditions were present here.
This case affirms the difficulty of raising successful force majeure defenses, especially where the contract expects the contractor to be able to anticipate and address emergencies like weather-related disasters.
Bid Protest Updates
- GAO sustained a protest where the awardee failed to demonstrate compliance with a mandatory small business participation percentage in a solicitation issued by the US Patent and Trademark Office (PTO).
- PTO conducted the procurement under its unique alternative competition method authorized in the Patent and Trademark Office Efficiency Act (PTOEA), an authority which GAO previously held to exempt PTO procurements from substantive federal procurement statutes in title 41 of the US Code and implementing FAR provisions.
- PTO argued that although GAO has jurisdiction to review protests of PTO procurements, GAO’s review of its decisions should be limited to considering whether the award complies with statutes and regulations to which it is not exempt. Specifically, PTO argued that it was exempt from the requirement that it must evaluate proposals based solely on the factors specified in the solicitation (an express requirement in 41 U.S.C. § 3701(a).)
- GAO rejected the argument, tracing the requirement to Comptroller General jurisprudence from nearly 100 years prior and pointing out that adopting PTO’s position that it could ignore the ground rules it established for a competitive procurement would give the agency free license to treat competitors without regard to basic principles of fairness.
This decision reaffirms GAO’s steadfast requirement to evaluate proposals based solely on the evaluation factors announced regardless of PTO’s specific authority exempting application of certain procurement authority.
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