United States v. Science Applications International Corp.
393 U.S. App. D.C. 223
| D.C. Cir. | 2010Background
- SAIC entered into a 1992 NRC contract to provide technical assistance for potential NRC rulemaking regarding recycling of radioactive materials.
- The contract restricted conflicts of interest and required disclosures and mitigation, with NRC approval for potential conflicts and termination rights if disclosures were incomplete.
- A 1999 follow-on contract continued the work; both contracts mirrored organizational-conflict provisions referencing NRC regulations.
- SAIC submitted preprinted payment vouchers that contained no express certifications or payment-condition language tied to conflict-of-interest compliance.
- During 1999, NRC halted SAIC's work after SAIC disclosed undisclosed relationships with British Nuclear and Bechtel Jacobs, prompting a no-cost settlement and contract termination; the United States then sued SAIC for FCA violations and breach of contract.
- A jury found SAIC liable for FCA violations (aiding false claims and false records) and breach of contract, with damages and penalties calculated under pre-FERA FCA provisions; the district court upheld the findings and damages, and SAIC appealed on multiple grounds including the theory of implied certification, scienter, jury instructions, and damages methodology.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of implied certification under FCA | SAIC argues implied certification requires express payment conditioning. | Govt argues implicit certifications can render claims false if material to payment. | Implied certification does not require express payment conditioning; materiality governs liability. |
| Materiality standard for implied certification | Materiality not proven; certifications were not tied to payment. | Materiality shown by the government's reliance on COI provisions to decide payment. | Materiality must be shown; record supports materiality of COI provisions to payment decision. |
| Use of collective knowledge to prove scienter | Collective knowledge imputes knowledge from all employees to SAIC. | Collective knowledge conflicts with FCA’s scienter requirements and individual knowledge standard. | Collective knowledge is inappropriate; scienter must be proven through actual knowledge, deliberate ignorance, or reckless disregard by individuals. |
| Damages measure under FCA after vacatur | Damages should reflect value of services tainted by conflicts, not simply payments made. | Damages should reflect payments made, possibly limited to value difference. | Remand for proper damages calculation; district court must apply benefit-of-the-bargain or value-difference approach consistent with FCA. |
Key Cases Cited
- Siewick v. Jamieson Sci. & Eng'g, Inc., 214 F.3d 1372 (D.C. Cir. 2000) (implied certifications can arise from silence when certification is prerequisite to government action)
- TDC Mgmt. Corp. (TDC II), 288 F.3d 421 (D.C. Cir. 2002) (implied certification theory and materiality in FCA context)
- TDC Mgmt. Corp. (TDC I), 24 F.3d 292 (D.C. Cir. 1994) (definition of knowingly and relief for concealed information in FCA context)
- Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001) (implied false certification in Medicare context; materiality concerns noted)
- United States ex rel. Harrison v. Westinghouse Savannah River Co., 352 F.3d 908 (4th Cir. 2003) (collective knowledge concerns in FCA context criticized; emphasis on individual knowledge)