In a case involving the Davis-Bacon Act (40 U.S.C.A. Section 3142) and the False Claims Act (31 U.S.C Section 3729(a)(1)(B)), the United States District Court for the Middle District of Tennessee found a contractor liable to the United States for treble damages under the False Claims Act (FCA) for submitting false payroll certifications to the government for subcontractor employees. United States ex rel. Wall v. Circle Construction, LLC, 700 F.Supp.2d 926 (June 16, 2010).
The Davis-Bacon Act requires government contractors to pay “prevailing wages” set by Secretary of Labor for government construction projects. Circle C had an Army contract for construction of buildings at Fort Campbell in Clarkesville, Tennessee. A subcontractor performed 98 percent of the electrical work, in excess of $500,000, without a written subcontract.
Contractors are required to make sure their subcontractors comply with the Davis-Bacon Act and pay appropriate DBA wages. One of the subcontractor’s employees, Wall, brought this False Claims Act (FCA) case on behalf of the United States against the general contractor Circle C.
The Court found that the contractor failed to ensure that its electrical subcontractor complied with the DBA, and as a result that Circle C’s DBA certifications to the Army were false. DBA requires contractors and subcontractors to submit weekly payroll certifications of wages paid to each employee that week. Regulations implementing DBA make the prime contractor responsible for submission of payrolls by all subcontractors. The prime contractor is responsible to ensure compliance with the Davis-Bacon Act.
Prime contractor Circle C was found liable for FCA treble damages to the United States for making a false statement to the government that was material to the government’s payment decision. Under the current version of the FCA, specific intent to defraud is not required to impose liability. Liability is calculated at three times the difference between what the Government actually paid and what it would have paid had the Government known the true facts.
Contact government contract attorney Karen S. Hindson of Hindson & Melton LLC, a Charleston and Atlanta government contract law firm, for your government contract law questions.