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The Impact of Escobar and the Procurement Collusion Strike Force on Procurement-Related False Claims Act Settlements

Samuel Burch Knowles, Dawn Elyse Stern, and Tom Daley

Summary

  • Discusses the application of the Escobar case to damages under the False Claims Act.
  • Discusses the Department of Justice Procurement Collusion Task Force.
  • Analyzes data regarding settlements under the False Claims Act.
The Impact of Escobar and the Procurement Collusion Strike Force on Procurement-Related False Claims Act Settlements
Burhon Onk via Getty Images

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Introduction

The civil False Claims Act (FCA) has long been a significant enforcement tool available to government authorities and relators. As discussed below, the FCA prescribes penalties that may be multiples of the actual damages or, in rare cases, even the underlying contract value. Although the premise of the FCA—punishing those seeking to defraud the government for personal gain—makes sense, many contractors believe that the government has turned the FCA into an enforcement mechanism under which the government seeks disproportionate damages in cases that merely reflect gaps in contractor compliance programs or that otherwise should be addressed as a breach of contract.

In particular, under the FCA “implied certification” theory, the government could receive the bargained-for benefits under the contract for a fair and reasonable price, yet still seek to recover treble damages and penalties based on allegedly knowing regulatory noncompliance. In 2016, the U.S. Supreme Court addressed the viability of the implied certification theory in Universal Health Services, Inc. v. United States ex rel. Escobar. Many observers hailed Escobar as a defining moment in FCA jurisprudence, predicting significant curtailment in enforcement actions, heavier burdens for plaintiffs, and more potential defenses.

More recently, in 2019, the U.S. Department of Justice has focused on another type of misconduct in government acquisition, establishing the Procurement Collusion Strike Force (PCSF) to focus on antitrust issues in the procurement context. The PCSF is an interagency partnership consisting of prosecutors from U.S. Attorney’s Offices and the Department of Justice Antitrust Division, as well as investigators from the Federal Bureau of Investigation and a broad range of federal agencies. As of March 2021, the PCSF reportedly had uncovered conduct that led to approximately 35 related investigations.

To gauge the impact of Escobar and the PCSF through an objective lens, we reviewed publicly available information related to FCA settlements for procurement-related fraud from 2011 to 2014 and 2018 to 2020. Although there are discernable differences from year to year in the number, dollar value, and type of FCA procurement settlements, our analysis demonstrates that the overall landscape has not significantly changed.

For example, with the exception of three unusually large settlements in 2011 and 2014, the total amount of procurement-related settlements generally was between $200 and $300 million each year. Also, settlements related to pricing and billing allegations and multiple award schedule allegations consistently accounted for the greatest number of settlements each year—approximately 70% of the total annually. These numbers indicate that, while contractors should continue to monitor the important developments related to Escobar and the PCSF, they should understand that the greatest risk, by far, remains the traditional risk: the routine pricing and billing of government contracts. Escobar has arguably provided a more detailed roadmap for contractors seeking to mitigate FCA risks, but the enforcement machinations and resulting settlements have largely continued unabated.

I. Background

As relevant to this article, the FCA imposes liability on an individual or entity that “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” or “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” A party liable under the FCA is subject to a “civil penalty of not less than $5,000 and not more than $10,000” per violation, as adjusted for inflation, “plus 3 times the amount of damages which the Government sustains because of the act of that person.”

The FCA, however, “is not an ‘all-purpose antifraud statute or a vehicle for punishing garden-variety breaches of contract or regulatory violations.’” To establish liability, the government must prove that there was “(1) a false statement or fraudulent course of conduct; (2) made with the requisite scienter; (3) that is material; and (4) that results in a claim to the Government or conceals, decreases, or avoids an obligation to pay the Government.” The FCA defines materiality as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”

Prior to the U.S. Supreme Court’s 2016 decision in Escobar, the circuit courts of appeals disagreed as to the scope of the implied certification theory under the FCA, which imposes liability when a party, in requesting payment, makes certain representations that “are misleading because of the omission of violations of statutory, regulatory, or contractual requirements.” As discussed below, the Supreme Court in Escobar recognized the validity of the implied certification theory, provided that the omission is “material.” Many contemporaneous observers posited that the “new” definition of “materiality” set forth in Escobar, and attendant effect on the government’s burden of proof, could impact the frequency and dollar value of procurement-related FCA settlements.

As also discussed below, another post-Escobar development in the FCA context that could conceivably impact the frequency and dollar-value of procurement-related FCA settlements is the establishment of the Department of Justice’s PCSF in 2019. Although the PCSF is focused on procurement-related violations of antitrust law such as bid-rigging and price-fixing, the government may assert that such a violation also forms the basis for an FCA action if, for example, the government is fraudulently induced into entering a contract or the contractor submits “false” invoices under a resulting contract.

A. Escobar and Its Aftereffects

In Escobar, the Supreme Court “granted certiorari to resolve the disagreement among the courts of appeals over the validity and scope of the implied false certification theory of liability.” The Supreme Court noted that the U.S. Court of Appeals for the Seventh Circuit “had rejected this theory, reasoning that only express (or affirmative) falsehoods can render a claim ‘false or fraudulent,’” while others “have accepted the [implied certification] theory” but differed in its application.

The Supreme Court determined, as an initial matter, that “the implied false certification theory can, at least in some circumstances, provide a basis for liability.” According to the Supreme Court, the implied certification theory may serve as a basis for liability when at least two conditions are satisfied: “first, the claim does not merely request payment, but also makes specific representations about the goods or services provided; and second, the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.” In reaching its conclusion, the Supreme Court stated that it “need not resolve whether all claims for payment implicitly represent that the billing party is legally entitled to payment” because “[t]he claims in this case do more than merely demand payment.” The Supreme Court explained that the claims at issue in Escobar “fall squarely within the rule that half-truths—representations that state the truth only so far as it goes, while omitting critical qualifying information—can be actionable misrepresentations.”

The Supreme Court then addressed whether, under an implied certification theory, a party should be liable only if the party fails to disclose a contractual, statutory, or regulatory violation that the government expressly designated as a condition of payment. The Supreme Court stated that the FCA “does not impose this limit on liability” but that “not every undisclosed violation of an express condition of payment automatically triggers liability.” Rather, the focus should be on the “materiality requirement.”

The Supreme Court described the materiality requirement as “rigorous” and “demanding.” A misrepresentation is not material if it is “minor or insubstantial,” as the False Claims Act is not designed to punish all types of fraud. The “Government’s decision to expressly identify a provision as a condition of payment is relevant [to the materiality inquiry], but not automatically dispositive.” Proof of materiality may include, “but is not necessarily limited to, evidence that the defendant knows that the Government consistently refuses to pay claims in the mine run of cases based on noncompliance with the particular statutory, regulatory, or contractual requirement.” On the other hand, a misrepresentation may not be material “if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated” or “if the Government regularly pays a particular type of claim in full despite actual knowledge that certain requirements were violated.”

Commentators hailed Escobar as “one of the most important [FCA] decisions in recent history” and a “watershed moment in FCA jurisprudence” because of its discussion of the implied certification theory and materiality. Since the issuance of Escobar, courts have continued to address “open questions regarding falsity and materiality.”

In addition, in 2018, the Department of Justice made changes in response to Escobar, issuing what has come to be known as the “Granston Memo.” In order to help “curb[] meritless” qui tam actions, the Granston Memo provides a nonexhaustive list of factors that the government should consider when seeking dismissal of qui tam actions pursuant to 31 U.S.C. § 3730(c)(2)(A). The Granston Memo identifies the following factors: (1) whether the qui tam complaint is facially lacking in merit, (2) whether the action duplicates a preexisting government investigation, (3) whether the action threatens to interfere with an agency’s policies or administration of its programs, (4) whether dismissal is necessary to protect the Department of Justice’s “litigation prerogatives,” (5) whether dismissal is necessary to safeguard classified information and national security interests, (6) whether the expected costs are likely to exceed any expected gains, and (7) whether there are procedural errors.

B. Procurement Collusion Strike Force

In 2019, the Department of Justice created the Procurement Collusion Strike Force (PCSF), which focuses “on deterring, detecting, investigating and prosecuting antitrust crimes, such as bid-rigging conspiracies and related fraudulent schemes, which undermine competition in government procurement, grant and program funding.” The PCSF is an interagency partnership consisting of prosecutors from the Department of Justice Antitrust Division, prosecutors from U.S. Attorney’s Offices, investigators from the Federal Bureau of Investigation, the Department of Defense Office of Inspector General, the U.S. Postal Service Office of Inspector General, and other partner federal Offices of Inspector General. According to Daniel Glad, the Director of the Procurement Collusion Strike Force, the PCSF “stands ready, able, and willing to investigate and prosecute procurement fraud at any level.”

As of November 2020, the PCSF had trained over 500 federal, state, and local agencies on recognizing collusion risks in the procurement process. In 2020, the PCSF trained over 8,000 agents, investigators, and auditors on the heightened risks of collusion and fraud attributable to the COVID-19 pandemic. The PCSF also created a new “form of data analysis that uses sophisticated algorithms that continuously learn as they are exposed to new data.”

According to the Department of Justice, as of March 24, 2021, the PCSF had “uncovered conduct” that led to approximately 35 related investigations. To date, the PCSF appears to be focused on core antitrust issues such as bid-rigging and price-fixing. The full impact of the PCSF, however, remains to be seen, as most of its investigations are ongoing.

C. Methodology of FCA Settlement Analysis

As discussed above, we analyzed FCA settlements for calendar years 2011 through 2014, as well as 2018 through 2020. We choose those calendar years in order to determine what effect, if any, the Supreme Court’s 2016 decision in Escobar and the creation of the PCSFhave had on the frequency or amounts of procurement-related FCA settlements. To do this, we compiled and reviewed publicly available FCA settlements that were announced during those years on the Department of Justice’s website, as well as settlements announced on the websites of individual U.S. Attorney’s Offices.

From the public FCA settlements, we identified the “procurement-related” settlements. Generally, a procurement-related FCA settlement is a settlement that resolves an alleged violation of the FCA relating to either (i) a prime contract between the government and a contractor or (ii) a subcontract between a prime contractor and a subcontractor that supports a prime government contract. The definition of a procurement-related FCA settlement used for this article does not include, for example, settlements related to billing for prescription medications that were not actually dispensed or settlements related to false claims made in connection with a research grant.

As outlined below, for purposes of this article, we divided the procurement-related FCA settlements into nine distinct categories. The examples provided in the list below are illustrative and do not contain an exhaustive list of all the types of settlements that could be included in the categories.

  1. Pricing and Billing: These settlements include Truth in Negotiations Act violations, inflated labor hours, misbilling of costs, billing of unallowable costs, and inaccurate rates, prices, or expenses.
  2. Statutory Compliance: This type of settlement includes false claims made in connection with laws such as the Buy American Act, Trade Agreements Act, Berry Amendment, Service Contract Act, Davis-Bacon Act, and Byrd Amendment.
  3. Compliance with Specifications: Settlements in this category relate to product substitution, failure to meet specifications, falsified or improper testing, inaccurate engineering calculations, and counterfeit or defective products and parts.
  4. Multiple Award Schedule: In this category, we included settlements related to alleged failures to comply with the requirements of a multiple award schedule contract, including the Price Reductions clause and the obligation to disclose commercial sales practices. This category also includes other alleged false claims involving a multiple award schedule contract, such as defective pricing and inaccurate billing.
  5. Small Business Regulation: Settlements in this category relate to alleged false claims regarding small business status and eligibility for other socioeconomic programs.
  6. Proposal Misrepresentation: This category addresses false claims made in connection with a proposal, such as misrepresenting a corporate relationship or misrepresenting that key personnel possess active security clearances.
  7. Improper Conduct: These settlements include those involving, among other things, antitrust violations, bribery, improper hiring of a government official, failure to disclose a contingent fee on a foreign military sales contract, and mislabeling country of origin.
  8. Labor Qualifications: This category involves claims that the contractor or subcontractor used employees who lacked the required qualifications, training, or clearances.
  9. Kickbacks: As the title indicates, this category includes FCA settlements related to a contractor providing or receiving kickbacks.

When a settlement did not fit into one of the above-identified categories, we labeled it as Miscellaneous for purposes of our analysis. Additionally, when a settlement related to more than one category, we assigned it to the category that appeared to be the primary allegation in the case.

After sorting the procurement-related FCA settlements into the appropriate categories, we determined the frequency and monetary amounts for each of the calendar years addressed in this article. As discussed below, we identified noteworthy trends among the years analyzed.

II. Analysis of Settlement Data

The trends observed during the 2011–2014 time period and the 2018–2020 time period are summarized below. Additionally, the lack of an identifiable impact related to the Supreme Court’s 2016 decision in Escobar and the PCSFon procurement-related FCA settlements, as reflected in a comparison of procurement-related FCA settlements occurring during 2011–2014 and 2018–2020, is discussed in Section III.C below.

A. Trends from the 2011–2015 Time Period

1. Summary of 2011–2015 Settlements

This chart summarizes the procurement-related FCA settlements occurring during calendar years 2011–2015.

2. Differences Across 2011–2015 Settlements

The most noticeable difference among the years summarized in this chart is the government’s significantly higher recoveries in 2011 and 2014. A review of underlying data demonstrates that the difference is directly attributable to two large settlements in 2011 and one in 2014. Specifically, in October 2011, a software company paid $199,500,000 to settle allegations that it failed to comply with the price reductions clause of its General Services Administration (GSA) Schedule contract and failed to provide GSA with current, accurate, and complete information about its commercial sales practices. At the time, the Department of Justice touted the settlement as “the largest False Claims Act settlement that the GSA has ever obtained.” Earlier that year, in April 2011, a telecommunications company paid $93.5 million in connection with a GSA contract. Specifically, GSA alleged that the telecommunications company overcharged the government when it invoiced GSA for various federal, state, and local taxes and surcharges in violation of the terms of its contract. Combined, these two settlements account for $293 million, or more than half of the total settlements paid in 2011 (and more than all of the settlements in 2013). Notably, removing these two settlements from the analysis puts the overall 2011 payments at $245 million, which is in line with payments in the other years.

Similarly, in December 2014, a subsistence contractor pled guilty to criminal charges of major fraud against the United States in connection with a contract to supply food and water to troops in Afghanistan. In addition to pleading guilty to the criminal charges, the subsistence contractor paid $146 million to settle three civil matters alleging that it overcharged the Department of Defense for costs related to the transport of fuel, food, water, and cargo in Afghanistan. This settlement accounts for over a third of the overall payments in 2014 and, once again, removing this settlement from the calculation puts the 2014 total payments at approximately $279 million, which is consistent with payments in the other years.

In addition to the differences in the overall totals, the above chart demonstrates that there were above-average settlement totals in a few categories across each of the years. Once again, it appears that these differences are driven by a few large settlements in the relevant categories rather than by a shift in the types of cases pursued by the government. First, the settlements involving the software company and the subsistence contractor account for the higher-than-average settlement amounts under the 2011 Multiple Award Schedule category and the 2014 Pricing and Billing category, respectively.

Similarly, the $122 million settlement total related to kickbacks in 2011 was driven by two large settlements that year out of the Eastern District of Arkansas. Specifically, a professional services company agreed to pay $63.675 million to resolve allegations that it received kickbacks in connection with its recommendation of certain hardware and software to the government, as well as inflated prices and rigged bids in connection with certain technology contracts. That same year, a computer technology company entered into a $46 million settlement to resolve claims that its recently purchased subsidiary paid kickbacks to system integrator companies in exchange for recommendations that government agencies purchase the subsidiary’s software products. Moreover, the two largest settlements in 2015, a $75.5 million payment by a cloud computing company and its distributor, account for the entire Multiple Award Schedule category for that year, and a $30 million settlement by an information security company (and its parent company) for allegedly failing to comply with contractual quality requirements explains the higher-than-average value in the Compliance with Specifications category for 2015.

Thus, while there were differences in the values of certain settlement categories and in the total settlements paid during 2011–2015, the differences were driven by large settlements rather than a trend in particular areas.

3. Similarities Across 2011–2015 Settlements

Although there are outliers in some of the categories across the 2011–2015 time frame, there also are notable instances in which the government’s recoveries remained consistent. The number of procurement-related settlements remained relatively consistent across the years—2011, 35 settlements; 2012, 29 settlements; 2013, 33 settlements; 2014, 38 settlements; and 2015, 27 settlements—and there does not appear to be a single, identifiable reason for the slight increase in 2014 or the lower number in 2015. Further, as discussed above, other than the three large settlements that drove the higher government recoveries in 2011 and 2014, the total amount of procurement-related settlements was consistently between $200 million and $300 million each year. In addition, the average amount per settlement is relatively constant; indeed, when removing the three large settlements in 2011 and 2014 discussed above, the average for each of those years is $7.4 million and $7.5 million, respectively, making the range in the average settlement amount even smaller (from $5.8 million to $11.2 million).

There also are important trends when looking across the years within each category. Most notably, the Multiple Award Schedule and Pricing and Billing categories consistently contained the highest procurement-related settlement payments in each year. In fact, across all years, these two categories account for 70% of the total settlements paid. The third-highest category was Compliance with Specifications. In general, the other categories represented small percentages of the overall recovery each year, and any spikes in a given year were attributable to a specific settlement. For example, the Statutory Compliance category was consistently less than $10 million, with the exception of 2014, when there was $19.5 million in settlements in that category. Of that total, $8.3 million was paid by a medical equipment company to resolve claims that it sold products that did not comply with “country of origin” requirements. Similarly, while there were generally no recoveries related to Unequal Access to Information in most years, the $24 million recovered in 2011 relates to one procurement in which government officials allegedly shared nonpublic information in order to ensure that the contractor and its teaming partners were awarded a contract.

The one exception is that the 2014 spike in settlements related to Small Business Regulation is attributed to six unrelated cases on this issue involving settlements ranging from $400,000 to $4.5 million. Thus, unlike in the other areas, this outlier is not driven by one case.

B. Trends from the 2018–2020 Time Period

1. Summary of 2018–2020 Settlements

This chart summarizes the procurement-related FCA settlements during calendar years 2018, 2019, and 2020.

2. Differences Across 2018, 2019, and 2020 Settlements

The government’s higher recovery amounts in 2018 are due, in large part, to the differences in Improper Conduct settlements occurring in 2018 versus 2019 and 2020. The government recovered significantly more in 2018 for Improper Conduct cases ($133,339,000) than in 2019 ($52,313,250) and 2020 ($88,057,577). Much of this difference, as well as much of the difference in the average settlement values in these years, is attributable to three related settlements that occurred in 2018. Specifically, three South Korean companies agreed to pay a total of $120,669,000 to settle FCA violations related to the companies’ “decade-long bid-rigging conspiracy” for fuel contracts at bases in South Korea. For their roles in the alleged bid-rigging conspiracy, the three companies agreed to pay $42,621,000, $71,866,000, and $6,182,000, respectively. Note that these antitrust-related settlements preceded—and presumably motivated—the establishment of the Procurement Collusion Strike Force in 2019.

Another area where settlements varied during 2018–2020 is the Pricing and Billing category. In each of those years, there were approximately eight Pricing and Billing settlements. The government recovered $53,406,613 in 2018 and $76,382,865 in 2020 from such settlements, but only recovered $13,574,056 from such settlements in 2019.

This difference was caused by a few large settlements. For example, in 2018, a defense contractor agreed to pay $27.45 million to resolve claims that it allegedly violated the FCA by “overstating the number of hours its employees worked on two battlefield communications contracts.” Also in 2018, a shipping services company agreed to pay $20 million to resolve FCA claims that it “knowingly overbill[ed] the U.S. Navy under contracts for ship husbanding services.” In 2020, a team of government contractors collectively paid $57.75 million to resolve claims that the companies “fraudulently overcharged the U.S. Department of Energy (DOE) in connection with its operation of the Hanford Waste Treatment Plant (WTP) project” by submitting inflated labor hours and by billing for work that was not actually performed.

The Pricing and Billing settlements in 2019 were generally smaller than in 2018 and 2020; for instance, in 2019, an aerospace company paid $2.6 million “after self-disclosing its overbilling of the government and its prime contractors.” The total value of the aerospace company’s settlement is similar to the other Pricing and Billing settlements that occurred in 2019.

Thus, while there were differences in the total values of certain settlement categories during 2018, 2019, and 2020, the differences were primarily driven by large settlements. The varying size of the settlements was a significant factor as to why the government recovered more than $300 million in 2018 but only approximately $230 million in 2019 and 2020, respectively.

3. Similarities Across 2018, 2019, and 2020 Settlements

There were a number of similarities between the government’s recoveries in 2018, 2019, and 2020. As noted above, the total number of procurement-related settlements in 2018 (37 settlements), 2019 (37 settlements), and 2020 (38 settlements) was remarkably consistent. The total value of procurement-related FCA settlements in 2019 ($230,380,558) and 2020 ($239,231,896) was also very similar. The value of such settlements was higher in 2018 ($313,455,320), but, as discussed above, that is primarily due to a few large settlements occurring during 2018.

In 2018 and 2019, the government recovered a substantial amount from settlements related to Compliance with Specifications, recovering $94,180,003 in 2018 and $74,939,820 in 2019. The government had at least one Compliance with Specifications settlement in excess of $30 million in both 2018 and 2019. In 2018, the government executed a settlement with a Japanese company and its American subsidiary under which the companies agreed to pay $66 million to resolve claims that the companies violated the FCA by selling “defective Zylon fiber used in bullet proof vests.” In 2019, a contractor agreed to pay $34.6 million to resolve claims that it allegedly “caus[ed] a government contractor to invoice [the Missile Defense Agency] and NASA for aluminum extrusions that did not comply with contract specifications.”

The value of Compliance with Specifications settlements dipped in 2020 to $18,596,924. The main difference between the value of these settlements in 2018 and 2019 versus 2020 was that there was not a Compliance with Specifications settlement in excess of $30 million in 2020. Indeed, in 2020, the value of Compliance with Specifications settlements typically was a few million dollars or less. One Compliance with Specifications settlement that was an outlier in 2020 concerned a mining equipment company that paid $10,896,924 to resolve allegations that the company had “produced and sold substandard steel components for installation on U.S. Navy submarines.”

There also was some consistency among the Small Business Regulation settlements in 2018 ($19,120,263.90 in settlements) and 2019 ($31,424,714.20). The amount the government recovered per settlement for alleged violations of small business regulations during 2018 and 2019 was roughly $3,750,000 per settlement. There were several higher-value Small Business Regulation settlements during 2018 and 2019, including a settlement between the government and the majority owner and former chief executive officer of a military equipment supplier who agreed to pay $20 million to settle claims that the former chief executive officer “caused [the company] to falsely represent that it qualified as a small business concern when it failed to do so.”

As with the Compliance with Specifications settlements, the value of the Small Business Regulation settlements again dipped in 2020. The government only recovered $10,753,309 from Small Business Regulation settlements in 2020, even though there were a higher number of such settlements in 2020 than in either 2018 or 2019. In fact, in 2020, there were multiple Small Business Regulation settlements with values of less than $750,000. Examples of those settlements include a settlement in which a joint venture paid $310,000 to resolve claims that it took “advantage of the Disadvantaged Business Enterprise (DBE) program” and a settlement in which an engineering company and two of its employees paid $672,352 to settle allegations that the company improperly obtained funds from the Small Business Innovation Research and Small Business Technology Transfer programs.

One other area where there was some consistency among the settlements in 2018–2020 was the Proposal Misrepresentation category. The government recovered a relatively modest amount in proposal misrepresentation settlements in 2018 ($10,760,000), 2019 ($3,000,000), and 2020 ($4,950,000). These settlements typically involved a contractor paying to resolve claims that the contractor misrepresented the materials it would use under a contract. There also were settlements in which a contractor paid to resolve allegations that it misrepresented, in its proposal, that it did not have an organizational conflict of interest.

C. Impact of Escobar and the Procurement Collusion Strike Force on Procurement-Related FCA Settlements

It is often the case that contemporaneous predictions of paradigm shifts and far-reaching, or “watershed,” implications tied to a single event turn out to be overstated. With approximately five years of perspective since Escobar, it is perhaps early to draw a definitive conclusion as to the long-term significance of the case, but the settlement data that we reviewed suggest that the impact of Escobar does not lie in reduced or materially different FCA enforcement patterns. Escobar has justly received much attention from the contractor community based on its careful consideration of the “implied certification” theory and its delineation of factors relevant to a materiality determination. Still, as measured by FCA settlements, life under the FCA for federal contractors and government enforcement authorities is proceeding, in many respects, without substantial change.

Notably, predictions from the plaintiff’s bar that Escobar would diminish the government’s FCA enforcement actions have not come to fruition. As the post-Escobar settlement information illustrates, the FCA continues to be a powerful enforcement tool, and initiatives such as the PCSF and the recent creation of the Civil Cyber-Fraud Initiative confirm the government’s continuing commitment to such enforcement. The data indicate that the Department of Justice continues to scrutinize and hold contractors accountable based on a broad range of alleged improprieties to the tune of hundreds of millions of dollars annually. Thus, the legislative push to amend the FCA through the False Claims Amendments Act of 2021, is not supported by the post-Escobar settlement data; rather, the legislation appears to be a solution in search of a problem.

The settlement data also do not reflect any impact, as yet, of the PCSF. This is not surprising, of course, as the PCSF was formed in 2019 and was undoubtedly slowed in 2020 and beyond by the COVID-19 pandemic. It is not hard to imagine, however, that the PCSF will result in an increased number of antitrust-related settlements in the Improper Conduct category in the future, similar to those that occurred in 2018. What is unclear is whether such an increase also will increase the government’s total recoveries in future years or, instead, simply reflect a realignment of enforcement priorities without a net increase in total recoveries.

The data suggest that annual fluctuations in settlement amounts, numbers of settlements, average settlement amounts, and types of FCA allegations settled are attributable to the distinct complexities of individual FCA cases and to prosecutorial discretion. As noted above, large settlements can skew averages and disproportionately affect metrics for specific years and categories, and it is these large settlements that are responsible for most of the material fluctuations in FCA settlement statistics over time. Although tempting to speculate or draw inferences as to the impact of Escobar and the PCSF, the available information does not show a clear connection. Rather, the settlement data suggest a consistent number of FCA settlements each year, across a relatively consistent set of compliance issues, with substantial recoveries by the government.

III. Conclusion

In sum, Escobar was a significant decision for FCA jurisprudence, and creation of the PCSF was a noteworthy enforcement focus that likely will increase antitrust-related FCA settlements in the future. However, based on the data we reviewed from 2011 to 2014 and 2018 to 2020, neither has yet had a significant impact on the amount or frequency of procurement-related FCA settlements.

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