United States v. United Technologies Corp.
2010 U.S. App. LEXIS 23710
| 6th Cir. | 2010Background
- Pratt & Whitney, a division of United Technologies, submitted a false best-and-final offer with three misstatements to inflate prices for a six-year Air Force engine contract.
- The Air Force proceeded with a split-award contract for Pratt and GE, and engaged in a calls-for-improvement process to update terms without a new RFP.
- The contract allowed annual quantities with minimums, spanning six fiscal years, and the government later discovered prima facie false statements in the final offer.
- In 1997-1999 the government investigated, leading to FCA and common-law theories; ASBCA held Pratt’s final offers did not constitute cost data, but preparatory work could be pricing data.
- The district court found liability under the False Claims Act but held no damages and found a claim-preclusion bar on common-law claims; both sides appealed.
- On appeal, the Sixth Circuit affirms liability, reverses damages, reverses claim preclusion, and remands for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| whether Pratt violated FCA liability | Pratt's false statements were material to payment. | Liability requires particular intent and proper attribution to a specific payment. | Pratt liable under FCA §3729(a)(1)/(a)(2). |
| whether invoices related to a multi-year contract can support FCA liability | Invoices tied to the fraudulent contract can sustain liability. | Invoices post-dating the false final offer may be outside liability window. | Yes; invoices connected to the fraud-prone contract can support liability. |
| damages calculation under FCA | The government suffered damages offset by Pratt’s later price reductions should be measured year-by-year. | Discounts and warranty caps must be accounted for in damages calculations. | Remand for recalculation with year-specific damages and diminished warranty value. |
| claim preclusion against common-law claims | Board lacked jurisdiction over fraud-based common-law claims; preclusion should not bar them. | Board decisions and jurisdiction foreclose relitigation of related claims. | Reversed; common-law claims not precluded; remand for jurisdictional handling. |
| whether the Contract Disputes Act bars fraud claims before the Board | Fraud claims are excluded from the Board; thus they cannot be precluded there. | Board could adjudicate related matters if jurisdiction existed. | The Board lacks jurisdiction over fraud claims; not precluded. |
Key Cases Cited
- United States ex rel. A+ Homecare, Inc. v. Medshares Mgmt. Grp. Inc., 400 F.3d 428 (6th Cir. 2005) (material false statements must influence payment decision)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (Supreme Court, 2008) (intent to use a false record not required after 2009 amendments)
- Martin J. Simko Constr., Inc. v. United States, 852 F.2d 540 (Fed. Cir. 1988) (Congress did not intend fraud claims to be heard under the Contract Disputes Act)
- Rawe v. Liberty Mut. Fire Ins. Co., 462 F.3d 521 (6th Cir. 2006) (claim preclusion limitations depend on tribunal jurisdiction)
- United States ex rel. Roby v. Boeing Co., 302 F.3d 637 (6th Cir. 2002) (damages framework under FCA involving pricing data)