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Grant of Summary Judgment in FCA Action Affirmed

A district court's grant of summary judgment in a qui tam False Claims Act case was affirmed by the Court of Appeals for the Seventh Circuit because the relator failed to establish any genuine issues of material fact to indicate the contractors submitted false claims to the government. The relator alleged FCA violations in connection with the sale of F-16 fighter jets to Greece, which paid for the planes with money borrowed from the United States under the Foreign Military Financing program. According to the relator, the original contractor made a number of false statements to obtain payment from the government, including lying about its use of a government loan to capitalize a Greek business development company, failing to disclose promptly its decision to delete the Economic Price Adjustment clause from the draft contract, and making misrepresentations relating to the contract's spare part purchase and "depot program" provisions. The relator also alleged the successor contractor made a number of misrepresentations in two contract modifications.

Insufficient Evidence

The relator's evidence, however, was not sufficient to enable a reasonable jury to conclude it was more likely than not that the contractors violated the FCA. Regarding the business development company, the relator argued the contractor's certifications of compliance were false because the contractor breached the contract by passing the costs of its investment in the development company on to the government, as lender to Greece. However, the contract required the contractor to fund and support the development company and did not prevent the contractor from capitalizing its investment in the development company with funds obtained from the government's loans to Greece. The deletion of the Economic Price Adjustment clause from the draft contract was immaterial to the government's decision to fund the Greek sale because the parties agreed to not include the clause in the contract. The relator also failed to present evidence showing the contractor knew the estimated amount of spare parts Greece agreed to purchase was false, and the relator's claim regarding the depot program rested on an incorrect interpretation of the contract requirements. Finally, the relator did not establish the successor contractor's agreement to two contract modifications constituted objective "falsehoods." (U.S. ex rel. Yannacopoulos v. General Dynamics, et al., CA-7, 55 CCF 79,630)




(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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