The Implications of False Claims Act Litigation for National Security

This CSIS event looks at understanding of FCA litigation and its implication for national security, particularly defense contracting. FCA cases totaled over $500 billion in FY14, while recoveries accumulated over the last 3 years exceed the recoveries of the previous 25 years combined. In most of these cases companies have settled, and elected not to defend those allegations in court. And there is every reason to believe that this trend will continue, if not accelerate, in the coming years because several circuit courts have expanded the potential for the recovery of large damages by finding liability for "implied" false claims, potentially turning thousands of otherwise properly submitted company invoices into false claims because of an underlying contractual or regulatory compliance issue.

False Claims Act complaints relating to defense procurement are the third largest source of cases after housing and mortgage fraud and health care, and the reason that False Claims Act litigation is an issue for the relationship between the Department of Defense and industry. In some ways the increase in awards is good news because taxpayers are being repaid for losses due to fraudulent activity. However, it is not clear that this is all that is going on. The threat of False Claims Act litigation has grown sharply due to the possibility that triple damages can be imposed, the tremendously increased scope of coverage that can turn almost all contractual or compliance issues into "implied" false claims, and the direct financial incentive that so-called "qui tam" private claimants have to bring false claims cases. At the same time, the federal (and DoD) acquisition system already has a robust series of compliance mechanism intended to ensure that the government receives fair and reasonable pricing and that companies deliver the promised goods and services. In many ways, DoD sets the standard in this regard for the Federal government with the Defense Contract Audit Agency and the Defense Contract Management Agency as the largest and most skilled contract oversight organizations of their kind in government.

Introduction by:

Dr. John Hamre 
President and CEO
CSIS

Featuring:

Alan Chvotkin
Executive Vice President and Counsel, Professional Services Council

And a discussion with:

Peter Hutt
Partner, Akin Gump Strauss Hauer & Feld

and

Kathryn Lindbeck 
Director, Defense Contract Management Agency (DCMA) Contract Integrity Center

Moderated by:

Andrew Hunter
Director, Defense-Industrial Initiatives Group and 
Senior Fellow, International Security Program