United States ex rel. Garzione v. Pae Government Services, Inc.
164 F. Supp. 3d 806
E.D. Va.2016Background
- Garzione was PAE’s Program Subcontracts Manager; DOS awarded PAE a Prime Contract to provide life‑support services in Iraq, including bottled water.
- DLA stopped supplying bottled water at end of 2014; DOS issued a Task Order requiring PAE to provide additional bottled water under the Prime Contract.
- PAE issued a limited solicitation for 4,000 bottles for testing; Taylors (already PAE’s food subcontractor) submitted a higher price than other bidders but was selected and issued a Notice to Proceed for September–November 2014 and later extended.
- Garzione reviewed bids, questioned Taylors’ selection and price, solicited additional bidders for the post‑November contract, and arranged alternative testing; after complaining he was excluded from duties and terminated in February 2015.
- Garzione sued under the False Claims Act: Counts I–II (presenting/causing false claims via implied certifications that subcontract costs were reasonable) and Count III (retaliation for protected whistleblowing).
- The court granted PAE’s motion to dismiss, concluding Garzione failed to plead falsity, scienter, Rule 9(b) particularity, and that his conduct was not objectively protected activity under the FCA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PAE presented a false claim by submitting invoices that included higher bottled‑water costs (implied certification) | Garzione: PAE impliedly certified compliance with FAR and that prices were reasonable; selecting higher‑priced Taylors rendered claims false | PAE: selection discretion under FAR; no specific false statement alleged; payment conditioned on Contracting Officer’s allowability determination | The complaint failed to plausibly allege a false claim under an implied‑certification theory; no specific contract term was shown to be violated |
| Whether extending Taylors’ performance required a new competitive procurement | Garzione: extension without rebidding was a procurement violation making costs unreasonable | PAE: modification likely within scope (same product, unit price, increased quantity); FAR permits contractor judgment on competition | Plaintiff did not plead facts showing a material departure requiring new competition; extension plausibly within original scope |
| Whether PAE acted with requisite scienter for FCA liability | Garzione: PAE knowingly sought payment for unreasonable costs | PAE: no knowledge or reckless disregard; regulations are discretionary and reasonableness is subjective | Allegations do not support knowing falsity or reckless disregard; scienter not plausibly pled |
| Whether Garzione engaged in protected activity under 31 U.S.C. § 3730(h) | Garzione: questioning subcontract selection and soliciting bids was activity to prevent FCA violations | PAE: his complaints were internal price‑concerns, not allegations of fraud; no objectively reasonable possibility of FCA litigation | Court: his conduct was only subjective disagreement about procurement; not an objectively reasonable basis to believe fraudulent claims were being submitted, so not protected activity |
Key Cases Cited
- United States v. Triple Canopy, 775 F.3d 628 (4th Cir. 2015) (implied‑certification framework and scienter discussion under the FCA)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008) (scienter requirement for FCA claims)
- Ceradyne, Inc. v. United States, 103 Fed. Cl. 1 (Fed. Cl. 2012) (when a contract modification materially departs from original scope)
- AT&T Communications v. Wiltel, 1 F.3d 1201 (Fed. Cir. 1993) (factors for whether solicitation advised offerors of contemplated changes)
- Mann v. Heckler & Koch Defense, Inc., 630 F.3d 338 (4th Cir. 2010) (distinct‑possibility standard for protected activity under the FCA)
- Eberhardt v. Integrated Design & Construction, 167 F.3d 861 (4th Cir. 1999) (protected activity need not be a qui tam suit but must involve false or fraudulent claims)
- Glynn v. EDO Corp., 710 F.3d 209 (4th Cir. 2013) (protected activity must concern false or fraudulent claims)
- United States ex rel. Owens v. First Kuwaiti Gen. Trading & Contracting Co., 612 F.3d 724 (4th Cir. 2010) (reckless disregard standard for FCA scienter)