United States v. Dyncorp International, LLC
253 F. Supp. 3d 89
| D.D.C. | 2017Background
- DynCorp held a Department of State CIVPOL contract to provide lodging, security, transportation, and related services in Iraq and subcontracted lodging and local labor to Corporate Bank.
- The government alleges DynCorp knew Corporate Bank’s hotel, labor, and G&A rates were unreasonably inflated, yet billed those rates to the State Department and failed to disclose their unreasonableness.
- DynCorp billed some items under cost-reimbursable line items (hotels, labor after July 2007, and G&A) and billed labor before July 2007 under an undefinitized firm-fixed-price line item; DynCorp submitted multiple price proposals and extensions.
- Government alleges false claims (presentment), false statements, unjust enrichment, payment by mistake, and breach of contract based on DynCorp’s alleged misrepresentations and omissions; it identified specific invoices and internal DynCorp communications expressing concern about inflated rates.
- DynCorp moved to dismiss all counts for failure to plead falsity, materiality, scienter, particularity, statute-of-limitations, and for lack of jurisdiction over contract claims.
- The court denied dismissal of the FCA counts and breach claim, but dismissed unjust-enrichment and payment-by-mistake claims to the extent they depend on cost-reimbursable charges.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether cost-reimbursable claims (hotels, labor post-July 2007, G&A) are false under an implied-certification theory | DynCorp billed unreasonable costs while withholding their unreasonableness, violating FAR and thus implicitly certifying compliance | Reasonableness is subjective; government payments and later audits show reasonableness is not material; allegations fail to show falsity or scienter | Sustained: complaint plausibly alleges falsity (including Escobar materiality) and knowledge/reckless disregard for cost-reimbursable charges under implied certification |
| Whether fixed-price labor charges (pre-July 2007) are false | False statements in price proposals (e.g., "historical data," "consistent with prior periods") fraudulently induced government to accept inflated fixed prices | FAR reasonableness does not apply to fixed-price items; alleged justifications were not false or did not induce payment | Sustained: FCA presentment claim adequately pleaded under fraudulent inducement theory for specified statements and induced pricing |
| Whether FCA false-statement claim (Count II) meets intent/materiality standards (pre- and post-FERA) | Government alleges statements were made with intent/materiality sufficient under either pre-FERA purpose standard or post-FERA materiality | DynCorp argues Allison Engine intent requirement (pre-FERA) defeats Count II for older claims | Sustained: court finds complaint meets pre-FERA intent (and post-FERA materiality) at pleading stage; need not resolve retroactivity definitively |
| Whether quasi-contract claims (unjust enrichment, payment by mistake) and breach of contract survive | Government may plead quasi-contract claims alternatively where contract terms were fraudulently induced; breach arises from same facts and fraud exception to CDA applies | DynCorp: express contract bars quasi-contract claims; CDA deprives court of contract jurisdiction | Partial: quasi-contract claims allowed only as to fraudulently induced fixed-price labor charges (dismissed as to cost-reimbursable charges); breach claim survives under fraud exception to CDA |
Key Cases Cited
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (Supreme Court 2016) (articulates implied-certification theory and demanding materiality standard)
- Science Applications Int’l Corp. v. United States, 626 F.3d 1257 (D.C. Cir.) (pre-Escobar D.C. Circuit discussion of implied certification and limits on collective-knowledge scienter)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (Supreme Court) (pre-FERA interpretation requiring purpose to get false claim paid for § 3729(a)(2))
- United States ex rel. Bettis v. Odebrecht Contractors of Cal., Inc., 393 F.3d 1321 (D.C. Cir.) (fraudulent-inducement theory: fraud in procurement renders subsequent claims false)
- Shemesh v. CA, Inc., 89 F. Supp. 3d 36 (D.D.C.) (fraudulent inducement and alternative pleading of quasi-contractual claims in FCA context)
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court) (pleading standard: plausible claim required)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (Supreme Court) (pleading standard and plausibility)
- Kowal v. MCI Commc’ns Corp., 16 F.3d 1271 (D.C. Cir.) (Rule 9(b) particularity requirements for fraud pleadings)
- United States ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251 (D.C. Cir.) (fraud spanning years: need not plead every instance when scheme alleged)