Winning government contracts and grants is vital to the survival of many organizations. It is not surprising then that contractors and grantees sometimes include embellishments and small misstatements in their proposals for government funds. A little puffery never hurt anyone, right? Wrong. Making even a minor factual misstatement or neglecting to provide complete information in a contract or grant proposal may, in some situations, lead the government to allege that it was defrauded and seek to recover three-times the value of the agreement using the civil False Claims Act. Such a significant recovery seems inconsistent with the FCA, which was intended to remedy the government’s actual— not consequential— financial harm. The statute has a separate penalty provision that serves a punitive function and provides remuneration over and above making the government whole. While damages in the amount of the entire value of the contract may exceed the government’s actual financial loss, the government has obtained that sort of windfall recovery in two recent cases. Click here to link to read full article, published in BNA’s Federal Contract Report, Oct. 5, 2010, 94 FCR 345.
