Part 2 False Claims And Whistleblowers

Contractors who sell products, parts, or services produced outside the U.S. should know that the Justice Department is prosecuting violations of the Trade Agreements Act (TAA). Contractors such as, Office Max, Office Depot, Staples, Caddo Design, and Corporate Express have paid settlements of millions of dollars on charges of making false claims about whether their products complied with the TAA. Another contractor's False Claims settlement was for $9,800,000!. Contractors should also know that Whistle Blowers can make millions of dollars for filing Qui Tam lawsuits.

Selling any product, part, or service on your schedule contract that is not produced in a country designated by the U.S. Government under the Trade Agreements Act is a violation of the law subject to the False Claims statute and is punishable by fines of $5,000 to $10,000 per sale, plus three times the amount of the sale. This could mean paying a $10,000 fine for selling a staple remover or memory chip made in Taiwan.

We encourage you to comply with the laws and regulations that apply to your contract. We can help you scrub your product price lists, so that you can be compliant and reduce your ongoing compliance risks. If you have received letters about products, parts, or services produced in non-TAA countries from your Contracting Officers, the GSA Inspector General, or from the U.S. Department of Justice; you may well be targets. We cannot help you with sales already made. You need to talk with attorneys who are experienced in False Claims and TAA issues.

What can you do?

Establish a written policy that you will verify country of origin for all products and services that you provide through your contracts. Do not accept purchase orders for any invalid items; sell these items as open market items on a separate purchase order.
Modify your contract to remove all invalid items immediately.
Republish your GSA Advantage! price lists as soon as your contract modifications are approved by your Contracting Officers.

Please make sure you have read the False Claims text before continuing.

False Claims Text

Please review this text by scrolling. The link to close this window is found at the end of the text.

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The following text was obtained by SenSoft from the Government Printing Office website. Their website does not support external access to specific pages, so we have provided the text here for you. Search for "USC 3729 False Claims": http://www.gpoaccess.gov/uscode/index.html

From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
January 2, 2001 and January 22, 2002]
[CITE: 31USC3729]

TITLE 31--MONEY AND FINANCE

SUBTITLE III--FINANCIAL MANAGEMENT

CHAPTER 37--CLAIMS

SUBCHAPTER III--CLAIMS AGAINST THE UNITED STATES GOVERNMENT

Sec. 3729. False claims

(a) Liability for Certain Acts.--Any person who--
(1) knowingly presents, or causes to be presented, to an officer
or employee of the United States Government or a member of the Armed
Forces of the United States a false or fraudulent claim for payment
or approval;
(2) knowingly makes, uses, or causes to be made or used, a false
record or statement to get a false or fraudulent claim paid or
approved by the Government;
(3) conspires to defraud the Government by getting a false or
fraudulent claim allowed or paid;
(4) has possession, custody, or control of property or money
used, or to be used, by the Government and, intending to defraud the
Government or willfully to conceal the property, delivers, or causes
to be delivered, less property than the amount for which the person
receives a certificate or receipt;
(5) authorized to make or deliver a document certifying receipt
of property used, or to be used, by the Government and, intending to
defraud the Government, makes or delivers the receipt without
completely knowing that the information on the receipt is true;
(6) knowingly buys, or receives as a pledge of an obligation or
debt, public property from an officer or employee of the Government,
or a member of the Armed Forces, who lawfully may not sell or pledge
the property; or
(7) knowingly makes, uses, or causes to be made or used, a false
record or statement to conceal, avoid, or decrease an obligation to
pay or transmit money or property to the Government,

is liable to the United States Government for a civil penalty of not
less than $5,000 and not more than $10,000, plus 3 times the amount of
damages which the Government sustains because of the act of that person,
except that if the court finds that--
(A) the person committing the violation of this subsection
furnished officials of the United States responsible for
investigating false claims violations with all information known to
such person about the violation within 30 days after the date on
which the defendant first obtained the information;
(B) such person fully cooperated with any Government
investigation of such violation; and
(C) at the time such person furnished the United States with the
information about the violation, no criminal prosecution, civil
action, or administrative action had commenced under this title with
respect to such violation, and the person did not have actual
knowledge of the existence of an investigation into such violation;

the court may assess not less than 2 times the amount of damages which
the Government sustains because of the act of the person. A person
violating this subsection shall also be liable to the United States
Government for the costs of a civil action brought to recover any such
penalty or damages.
(b) Knowing and Knowingly Defined.--For purposes of this section,
the terms ``knowing'' and ``knowingly'' mean that a person, with respect
to information--
(1) has actual knowledge of the information;
(2) acts in deliberate ignorance of the truth or falsity of the
information; or
(3) acts in reckless disregard of the truth or falsity of the
information,

and no proof of specific intent to defraud is required.
(c) Claim Defined.--For purposes of this section, ``claim'' includes
any request or demand, whether under a contract or otherwise, for money
or property which is made to a contractor, grantee, or other recipient
if the United States Government provides any portion of the money or
property which is requested or demanded, or if the Government will
reimburse such contractor, grantee, or other recipient for any portion
of the money or property which is requested or demanded.
(d) Exemption From Disclosure.--Any information furnished pursuant
to subparagraphs (A) through (C) of subsection (a) shall be exempt from
disclosure under section 552 of title 5.
(e) Exclusion.--This section does not apply to claims, records, or
statements made under the Internal Revenue Code of 1986.

(Pub. L. 97-258, Sept. 13, 1982, 96 Stat. 978; Pub. L. 99-562, Sec. 2,
Oct. 27, 1986, 100 Stat. 3153; Pub. L. 103-272, Sec. 4(f)(1)(O), July 5,
1994, 108 Stat. 1362.)

Historical and Revision Notes
-------------------------------------------------------------
Revised Section Source (U.S. Code) Source (Statutes at Large)
-------------------------------------------------------------
3729. 31:231. R.S. Sec. 3490.
-------------------------------------------------------------

In the section, before clause (1), the words ``a member of an armed
force of the United States'' are substituted for ``in the military or
naval forces of the United States, or in the militia called into or
actually employed in the service of the United States'' and ``military
or naval service'' for consistency with title 10. The words ``is
liable'' are substituted for ``shall forfeit and pay'' for consistency.
The words ``civil action'' are substituted for ``suit'' for consistency
in the revised title and with other titles of the United States Code.
The words ``and such forfeiture and damages shall be sued for in the
same suit'' are omitted as unnecessary because of rules 8 and 10 of the
Federal Rules of Civil Procedure (28 App. U.S.C.). In clauses (1)-(3),
the words ``false or fraudulent'' are substituted for ``false,
fictitious, or fraudulent'' and ``Fraudulent or fictitious'' to
eliminate unnecessary words and for consistency. In clause (1), the
words ``presents, or causes to be presented'' are substituted for
``shall make or cause to be made, or present or cause to be presented''
for clarity and consistency and to eliminate unnecessary words. The
words ``officer or employee of the Government or a member of an armed
force'' are substituted for ``officer in the civil, military, or naval
service of the United States'' for consistency in the revised title and
with other titles of the Code. The words ``upon or against the
Government of the United States, or any department of the United States,
or any department or officer thereof'' are omitted as surplus. In clause
(2), the word ``knowingly'' is substituted for ``knowing the same to
contain any fraudulent or fictitious statement or entry'' to eliminate
unnecessary words. The words ``record or statement'' are substituted for
``bill, receipt, voucher, roll, account, claim, certificate, affidavit,
or deposition'' for consistency in the revised title and with other
titles of the Code. In clause (3), the words ``conspires to'' are
substituted for ``enters into any agreement, combination, or
conspiracy'' to eliminate unnecessary words. The words ``of the United
States, or any department or officer thereof'' are omitted as surplus.
In clause (4), the words ``charge'', ``or other'', and ``to any other
person having authority to receive the same'' are omitted as surplus. In
clause (5), the words ``document certifying receipt'' are substituted
for ``certificate, voucher, receipt, or other paper certifying the
receipt'' to eliminate unnecessary words. The words ``arms, ammunition,
provisions, clothing, or other'', ``to any other person'', and ``the
truth of'' are omitted as surplus. In clause (6), the words ``arms,
equipments, ammunition, clothes, military stores, or other'' are omitted
as surplus. The words ``member of an armed force'' are substituted for
``soldier, officer, sailor, or other person called into or employed in
the military or naval service'' for consistency with title 10. The words
``such soldier, sailor, officer, or other person'' are omitted as
surplus.

References in Text

The Internal Revenue Code of 1986, referred to in subsec. (e), is
classified generally to Title 26, Internal Revenue Code.

Amendments

1994--Subsec. (e). Pub. L. 103-272 substituted ``1986'' for
``1954''.
1986--Subsec. (a). Pub. L. 99-562, Sec. 2(1), designated existing
provisions as subsec. (a), inserted subsec. heading, and substituted
``Any person who'' for ``A person not a member of an armed force of the
United States is liable to the United States Government for a civil
penalty of $2,000, an amount equal to 2 times the amount of damages the
Government sustains because of the act of that person, and costs of the
civil action, if the person'' in introductory provisions.
Subsec. (a)(1). Pub. L. 99-562, Sec. 2(2), substituted ``United
States Government or a member of the Armed Forces of the United States''
for ``Government or a member of an armed force''.
Subsec. (a)(2). Pub. L. 99-562, Sec. 2(3), inserted ``by the
Government'' after ``approved''.
Subsec. (a)(4). Pub. L. 99-562, Sec. 2(4), substituted ``control of
property'' for ``control of public property'' and ``by the Government''
for ``in an armed force''.
Subsec. (a)(5). Pub. L. 99-562, Sec. 2(5), substituted ``by the
Government'' for ``in an armed force'' and ``true;'' for ``true; or''.
Subsec. (a)(6). Pub. L. 99-562, Sec. 2(6), substituted ``an officer
or employee of the Government, or a member of the Armed Forces,'' for
``a member of an armed force'' and ``property; or'' for ``property.''
Subsec. (a)(7). Pub. L. 99-562, Sec. 2(7), added par. (7).
Subsecs. (b) to (e). Pub. L. 99-562, Sec. 2(7), added subsecs. (b)
to (e).

Increased Penalties for False Claims in Defense Procurement

Pub. L. 99-145, title IX, Sec. 931(b), Nov. 8, 1985, 99 Stat. 699,
provided that: ``Notwithstanding section 3729 of title 31, United States
Code, the amount of the liability under that section in the case of a
person who makes a false claim related to a contract with the Department
of Defense shall be a civil penalty of $2,000, an amount equal to three
times the amount of the damages the Government sustains because of the
act of the person, and costs of the civil action.''
[Section 931(c) of Pub. L. 99-145 provided that section 931(b) is
applicable to claims made or presented on or after Nov. 8, 1985.]

Section Referred to in Other Sections

This section is referred to in sections 3730, 3731, 3732, 3733 of
this title; title 10 section 2324; title 15 sections 637, 657a; title 20
section 1078-9; title 41 section 256; title 42 section 1395i.