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Davis-Bacon Act Violations Led to False Claims Act Liability

A construction contractor violated the False Claims Act, according to the District Court for the Middle District of Tennessee, because the contractor submitted false payroll certifications, a subcontractor's electricians were not paid prevailing wages as required by the Davis-Bacon Act, and contract payments were contingent on certifications of Davis-Bacon Act compliance. The government and relator were granted summary judgment in an FCA action under 31 USC 3729(a)(1)(B) alleging the contractor knowingly submitted false payroll certifications and violated the prevailing wage requirements of its contract to construct buildings at a military base. The contractor was responsible under the contract to ensure subcontractor employees were paid amounts listed under the Davis-Bacon Act. The contract also incorporated regulations requiring subcontractors to comply with payroll certifications and prevailing wages. However, the contractor did not have a written subcontract with the electrical subcontractor, did not ensure the subcontractor complied with the Davis-Bacon Act, and submitted false payroll certifications for subcontractor employees.

Treble Damages

The court determined the contractor knowingly made false records or statements for purposes of section 3729 when it certified prevailing wages were paid on the project. In addition, the false statements were made to receive payment and were material to the government's payment decision, because contract payments were expressly contingent on the contractor's certifications of Davis-Bacon Act compliance. The amount of the government's actual damages was $553,808, which was calculated by applying the prevailing wage rate to the subcontractor's performance of 98 percent of the project's electrical work. The government would not have paid this amount if it had known of the contractor's false certifications. However, given the contract's clear certification and wage requirements and the contractor's 20 years of experience with government contracts, the court concluded the government was entitled to treble damages under 31 USC 3729(a)(7) in the amount of $1,661,423. (U.S. ex rel. Wall v. Circle Construction, LLC, DC MD Tenn, 54 CCF 79,285)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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