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The False Claims Act imposes civil liability on any person or entity deemed to have submitted a false or fraudulent claim for payment to the United States government. More specifically, the False Claims Act also prohibits: 

  • conspiring to have a false or fraudulent claim paid by the government;
  • withholding property of the government with the intent to defraud the government or to willfully conceal it from the government;
  • making or delivering a receipt for the government's property which is false or fraudulent;
  • buying property belonging to the government from someone who is not authorized to sell the property; or
  • making a false statement to avoid or deceive an obligation to pay money or property to the government. 

When working on a government project, consider the tips below to help avoid allegations of the False Claims Act:

  • Due diligence of bid. Exercise due diligence in reviewing a bid. Carefully check disadvantaged business participation and all subcontractor listings, certifications and representations regarding payment of prevailing wages. This step is especially important since these items can be independently verified. If false, each of these representations could constitute a violation of the False Claims Act. In short, performing thorough due diligence may help avoid a false claim allegation later. 
  • Establish a compliance program. Establishing a compliance program is a critical tool in avoiding allegations of a False Claims Act violation. A compliance program will help: 
    • employees understand what the False Claims Act is;
    • establish standard operating procedures in terms of reviewing bids, submitting change orders and how to respond if an employee suspects false information has been submitted to the government; and 
    • in the event that a false claim is brought against the company, a compliance program helps establish that there was a company culture of compliance and that, if anything, a few rogue actors must have committed the fraud. Common features of a compliance program include: 
      • a lead compliance officer on the executive team; 
      • regular notifications and training for employees regarding how to report a possible false claims act allegation; 
      • immediate and thorough follow up of any reports; 
      • anti-retaliation policies for the whistleblower;
      • internal audits of all units; 
      • a company guidebook; and
      • requirements that business partners, agents, vendors, distributors, contractors and potential acquisition targets abide by the same compliance standards as the company. 
  • Review all change orders. A change order is a request for payment from the government; as such, it is important to review all change orders prior to submission. High-level executives are often removed from the regular change order process. While efficient, this protocol removes senior management from the submission of change orders and other requests for money to the government. To ensure compliance with the False Claims Act, it may make sense to either have a senior team member review change orders (or change orders over a certain amount) or to actively empower project managers with the knowledge and power to analyze all change orders for False Claims Act compliance. 
  • Establish a process to analyze claims before submission. To help avoid False Claims Act liability, it is important to establish a meaningful and thorough process to analyze any claims before they are submitted to the government. Analyzing all aspects of a claim prior to submission forces the contractor to find support for each portion of its claim and ensures that the contractor has independently considered and found backup for each portion of the claim it is submitted. This process usually includes a full accounting of the claim and is more important when a prime contractor is submitting a pass-through claim on behalf of a subcontractor. Prime contractors have a duty to scrutinize the claim, ask questions, make sure a subcontractor’s claim is accurate and supportable and, especially, certify that the claim is being made in good faith. 
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