856 F. Supp. 2d 159
D.D.C.2012Background
- United States files FCA action against DRC, Inc. for false pre-qualification documents and false invoices tied to USAID-funded Honduras contract.
- Contract with FHIS included mandatory subcontracting provisions and USAID review rights; Section 28 required FHIS/USAID consent for subcontracting and capped subcontracting at 40%.
- DRC initially represented no plans to subcontract; later negotiations involved FHIS and USAID approvals, with multiple attempts to obtain authorization.
- Invoices submitted December 2000–March 2002 carried a certification that work had been satisfactorily performed and payments aligned with contract terms.
- The government contends DRC illegally subcontracted without prior USAID approval; DRC argues contract allowed subcontracting and that approvals were effectively obtained or not required.
- The court grants partial summary judgment for DRC: claims for invoices from April 2, 2001 to October 16, 2001 are not supported by triable issues of scienter or materiality; other periods remain in dispute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether implied false certification liability attaches to pre-approval subcontracting. | SAIC-based materiality/knowledge supports liability for failing to seek approval. | Contract permits subcontracting subject to approval; certification did not imply noncompliance. | Triable issues exist; partial summary judgment granted for some periods only. |
| Whether USAID pre-approval was material to payment under the contract. | Approval was essential to payment; noncompliance was material. | Materiality depends on contract terms and parties' understanding that payment required compliance. | Materiality found for some periods; not established for April 2001–October 2001 period. |
| Whether the government satisfies presentment and payment-sourcing requirements. | FHIS/USAID payments route through USAID satisfy presentment. | Not essential to prove presentment; focus on certification. | Presentment satisfied; contract financing arrangement directs USAID payments. |
| Whether the contract language is unambiguous and thus supports implied certification liability. | Mandatory Clauses require approval; ambiguity should be resolved in plaintiff’s favor. | Provisions harmonizable; no ambiguity about need for prior approval. | Contract language interpreted to require prior written consent; ambiguity not fatal to plaintiff’s theory. |
Key Cases Cited
- SAIC, Corp. v. United States, 626 F.3d 1257 (D.C. Cir. 2010) (scienter and materiality required for implied certification)
- United States ex rel. Bettis v. Odebrecht Contractors of Cal., Inc., 393 F.3d 1321 (D.C. Cir. 2005) (fraudulent initiation of contract supports liability for ensuing payments)
- United States ex rel. Siewick v. Jamieson Sci. & Eng’g, Inc., 214 F.3d 1372 (D.C. Cir. 2000) (broader definition of a claim and implied certification principle)
- Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004) (presentment principles under FCA)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (U.S. 2008) (scienter standard for false statements)
- Harrison v. Westinghouse Savannah River Co., 352 F.3d 908 (4th Cir. 2003) (contractual obligation materiality may sustain FCA liability despite continued funding)
- Kellogg Brown & Root Servs., Inc., 800 F. Supp. 2d 143 (D.D.C. 2011) (analysis of implied certification and contract interpretation)
- United States ex rel. Hockett v. Columbia/HCA Healthcare Corp., 498 F. Supp. 2d 25 (D.D.C. 2007) (FCA liability hinges on certification of compliance and materiality)