So You Chose to Be a
Government Contractor
Jack Horan, Partner, Dentons
Bill Walter, Partner, DHG
government contracting
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Speaker Information
@DHG_GovCon
@Dentons
JackHoran,Partner
Dentons
(202)496.7215
[email protected]
BillWalter,Partner
DixonHughesGoodman,LLP
(703)970.0509
[email protected]
government contracting
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An Assessment of Recent Supreme Court and
Other Decisions Impacting Your Business.
@DHG_GovCon
@Dentons
government contracting
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Impact of Legal Decisions
@DHG_GovCon
@Dentons
• AsasupplierofgoodsandservicestotheFederal
Government,theriskscanbeoverwhelming.
• Overthepastfewmonths,theriskshavebeeninthe
spotlightastheUSSupremeCourtandotherFederal
Courtshaveissueddecisionsthatimpacthowyou
choosetorunyourbusiness.
• DepartmentofJusticerecentinterimruletoincrease
penaltiesassociatedwiththeFalseClaimsAct.
government contracting
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Key 2016 Cases Impacting GovCon
@DHG_GovCon
@Dentons
KingdomWareTechnologies- TheRuleofTwo
UniversalHealthcarevs.Escobar- ImpliedCertifications
Gorski- ThePresumedLossRule
En PointeGroup'sDoJ Settlement- PresumedLossRuleandFCA
Campbell-Ewald- Unqualifiedimmunity
StateFarmFire&Casualty- currentlybeforetheSCOTUSinvolving
thedismissalofaquitamwheretherewasintentionalviolationof
theseal
• Casescurrentlyonappeal:
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– FalseClaimsActpublicdisclosurebar- ChicagoTransitAuthority;
Moorev.MajesticBlueFisheries
– Professionaldisagreementsand"objectivefalsehood" - AseraCare
– StatuteofLimitations- KBRv.Murphy
government contracting
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Rule of Two and the VA
@DHG_GovCon
@Dentons
• ApplicationoftheRuleofTwotoSmallDisadvantagedVeteran
OwnedSmallBusinessandVeteranOwnedSmallBusinessSetAsides
• ResolvedconflictbetweentheGAOandVA,andGAOandCourtof
FederalClaims
• VAmustapplyruleoftwotoallcontractingdeterminations
• Noexceptionifithasmetitsgoals
• NoexceptionforFederalSupplyScheduleorders
• VAimplementedimmediately
• Kingdomware Technologies,Inc.v.UnitedStates,No.14-916(June
16,2016)
government contracting
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False Claims Act & Implied Certification
@DHG_GovCon
@Dentons
• ImpliedCertification:unstatedcertificationofcontractual,
regulatory,andstatutorycompliance.
• SplitamongtheCircuitsonliability
• SupremeCourtAnswered:
– Theclaimforpaymentmustmakespecificrepresentations
aboutthegoodsorservicesprovided
– Theundisclosedfailuretocomplymustmakethespecific
representationsmisleadingorahalf-truth.
• Whatisnotmaterial
• UniversalHealthServices,Inc.v.UnitedStatesexrel.Escobar,
No.15-7,2016(June16,2016).
government contracting
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Presumed Loss Rule
• GorskirecruitedaKoreanWarvettoactasthefrontforhis
constructioncompany,LegionConstruction
• Obtained$100Minset-asidecontracts
• Arguedunsuccessfullythathehiredaccountantsandlawyers
tostaywithintheregulations
• Jurydeliberatedfor2hoursbeforeconviction
• Facesupto25yearsinprison– sentencinginSeptember
• U.S.v.Gorski,casenumber1:12-cr-10338,intheU.S.District
CourtfortheDistrictofMassachusetts
government contracting
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SB Size Mis-Representation
• DepartmentofJusticeannouncedsettlement
• AllegationsbyQuiTam:
– FalselycertifiedEn PointeGov.asaSB
– Failedtoreportover80%ofsalesunderGSAIT-70Schedule
• $5.8milliontosettleFCAallegations:
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En PointeGov.Inc.
En PointeTechnologiesInc.
En PointeTechnologiesSalesInc.
DominguezEastHoldingsLLC
DinGlobalCorp.
• U.S.exrel.Colangelo etal.v.ModernGov ITInc.etal.,case
number2:14-cv-05865,intheU.S.DistrictCourtforthe
CentralDistrictofCalifornia.
government contracting
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Government Contractor Immunity
@DHG_GovCon
@Dentons
• Scopeofacontractor'sderivativesovereignimmunity
– Anygovernmentcontractor(notlimitedtopublicworks
contracts)
– Testforapplicationofderivativeimmunity
• Risktoimmunityifinviolationof“clearlyestablished”or
“explicit”governmentdirections,instructions,orfederallaw"
• Campbell-EwaldCo.v.Gomez,No.14-857(January20,2016)
government contracting
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Intentional Violation of Seal
@DHG_GovCon
@Dentons
• Standardfordismissalofaquitamsuitwheretherelators
willfullyviolatedthesealrequirementoftheFalseClaimsAct
• Section3730(b)(2)sealrequirement
• RelatorpublicizedthecasetopressureStateFarm
• DistrictCourtandFifthCircuitdidnotdismissthecasefor
violationofthesealrequirement
• SixthCircuithasheldthatdismissalismandatory
• SupremeCourtwillresolvewhetherdismissalismandatory
• StateFarmFire&CasualtyCo.v.UnitedStatesexrel.Rigsby,
No.15-513
government contracting
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FCA Public Disclosure Bar
• ProminentissueofFCAlaw– thestatutes“publicdisclosure
bar”
• Intendedtopreventrelatorsfrombringingsuitsbasedon
informationalreadypubliclydisclosed,unlesstheindividualis
thesourceofthepublicdisclosure
• Interpretationvarybetweencircuits:
– ThirdCircuit– arelatoraddedenoughindependentinformation
tonewsreportstoallowthecasetomoveforward(USexrel.
Moore&Co.PAv.MajesticBlueFisheries
– SeventhCircuit– casedismissedsinceitwasbasedonanaudit
reportthatwasmadepublicpriortothesuit- CauseofActionv.
ChicagoTransitAuthority
government contracting
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Expert Disagreements
• AseraCare,Inc.allegedtohaveallowednon-terminallyill
patientstoreceiveMedicare-fundedhospicestays
• Casetriedintwophases:
– PhaseI– Usedstatisticalsamplingtotryandprovefalsebilling
– PhaseII– Thefalsebillingwasdoneknowingly
• JudgegrantedAseraCare’s summaryjudgementfindingthat
theGov’tcouldn’tprovefraudbasedsimplyonamedical
expert’sdisagreementwithAseraCare’s diagnosisofterminal
illness
• U.S.exrel.Paradies etal.v.AseraCare Inc.etal.,casenumber
2:12-cv-00245,intheU.S.DistrictCourtfortheNorthern
DistrictofAlabama.
government contracting
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Statute of Limitations
• Prime– Subissue
• SubfiledacertifiedclaiminMay2012
• ASBCAinitiallytossedasoutsideof6yearSOL
– 2003terminationofsubcontract
– 2005partialsettlementagreement
• FederalCircuitstatedthatclockstartswhenclaimforcostsis
actuallymadefora“sumcertain”
• KelloggBrown&RootServices,Inc.v.Murphy,casenumber
15-1148,U.S.CourtofAppealsfortheFederalCircuit.
government contracting
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DoJ Interim Final Rule
• Minimumper-claimpenalties:
– $5,500->$10,781
• Maximumper-claimpenalties:
– $11,000->$21,563
• ImplementationoftheBipartisanBudgetActof2015
• EffectiveAugust1,2016– writtencommentsmustbe
postmarkedbeforeAugust29,2016
government contracting
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Issues in Focus Webinar Series
Questions?
@DHG_GovCon
@Dentons
government contracting
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Join Us Next Time
@DHG_GovCon
• August26th – Fundamentals:
“ProcurementSystems- TheDFARSBusiness
SystemsRuleandDFARSCriteria"
• September14th - IssuesinFocus:
“BidProtests:BestPracticesforEffective
ProsecutionandIntervention”
government contracting
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