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High Probability of Purchase Enough for False Claims Act Suit

A motion to dismiss a qui tam False Claims Act action was denied in part by the District Court for the District of Columbia because allegations the contractors falsely represented the country of origin of products offered for sale stated FCA claims with the requisite particularity. The relator alleged competitor contractors falsely identified products offered for sale as compliant with the Trade Agreements Act, which limits the countries of origin from which the government may purchase supplies. According to the relator, the contractors falsely listed 140 products as TAA-compliant on NASA's Solutions for Enterprise-Wide Procurement website and 11 products as originating in the United States on the GSA Advantage website. The relator alleged the contractors made and submitted false or fraudulent claims for payment in violation of 31 USC 3729(a)(1) and (2) by knowingly or recklessly making false statements about the products' countries of origin. The contractors moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim on which relief can be granted, and Rule 9(b), for failure to plead fraud with particularity.

Reliable Indicia

With regard to the SEWP listings, the allegations provided a sufficient basis for an FCA claim. The relator represented the sheer number of high-volume, non-specialty computer hardware products "illustrate[d] the high probability that receipts resulting from the procurement of one of these 140 items will be uncovered." These were reliable indicia from which to infer the products were purchased and therefore tied to false claims for payment. In addition, the allegations provided a sufficiently detailed description of the fraudulent scheme. It was not necessary to identify specific transactions within the multi-year period covered by the complaint or plead the contractors' knowledge of the falsity of the claims with particularity. However, the relator failed to state an FCA claim with regard to the GSA website listings because he did not allege the government actually purchased the products through the website or the false listings were material to a government purchase. It therefore could not be inferred false claims for payment were made or submitted. (U.S. ex rel. Folliard v. CDW Technology Services, Inc., et al., DC DofC, 54 CCF 79,310)




(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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