Failure to Divulge Increased Profit is not a “False Claim”
Post and Parson entered into a joint venture for a fixed price ID/IQ contract under which fixed price task orders would be placed. Prices on the task orders were based on lump sums arrived at by using agreed to labor rates multiplied by number of days to be required to complete the task plus profit. The joint venture was able to reap significantly more profit by lessening the time to complete the task and using lower priced personnel. A qui tam relater alleged the joint venture submitted “false claims and statements” under the False Claims Act where the increased profit was not divulged. The relater put forth the “implied certification” argument that provides a claim is “false” because at the time the defendant was allegedly in non-compliance with a statute, regulation or contract terms. The Court ruled against the relater stating even under the “implied certification” rational, no contract violation occurred. It ruled the contract did not require use of specifically named personnel where under the risk allocations of a fixed price contract the joint venture was merely reaping the benefits inherent in using lower cost personnel on a fixed project (Prime v Post, Buckley, etc. and Parsons Corp., No. 10-cv-1950)
