Need a reminder about the risk of making false claims in connection with public contracting?
I’ll give you three.
First, consider the general contractor who submitted allegedly inflated change orders on various projects financed by the U.S. Department of Justice and Army Corps of Engineers. The government alleged that the change order requests included CGL and workers’ comp insurance rates that had additional “cushions” above and beyond what the GC had actually incurred. Although the contractor denied liability, it agreed last week to settle the government’s fraud allegations by paying the United States $367,500.
Next, consider the general contractor whose subcontractor failed to pay prevailing wages under the Davis Bacon Act on a U.S. Department of the Army contract. The GC’s certified payroll records inaccurately represented that prevailing wages were paid to all subcontractor employees. In October 2012, the U.S. Court of Appeals for the Sixth Circuit upheld a U.S. District Court’s $1.66 million judgment against the GC, but remanded the case for a recalculation of damages that could end up saving the GC at least a little bit of money.
Finally, consider the general contractor who overstated the costs it incurred participating in the U.S. Department of Defense’s Mentor-Protégé Program, designed to provide developmental assistance to disadvantaged small businesses. The government alleged that the contractor submitted more than 20 requests for payment in connection with the program that significantly overstated the amount of developmental assistance actually provided. In December 2012, the contractor agreed to pay a $2 million penalty to avoid prosecution by the government.
Three cases. Millions of dollars. One conclusion: submitting false claims in connection with federal contracting can be extremely expensive.