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.

The “Relators” (those who file a False Claims Act complaint) were former Blackwater employees who brought a two-count complaint alleging that Blackwater defendants are liable under the False Claims Act, 31 U.S.C. Section 3729, for fraudulent misrepresentations they allegedly made in the course of performing two government contracts.

The first contract was a Homeland Security contract to provide security services in Louisiana after Hurricane Katrina. Relators allege that Blackwater defendants “forged and falsified to inflate hours worked and the number of employees”, and further allege that they “claimed costs for payments to strippers, bar tabs, spa trips, protein shakes, weight-training supplements, haircuts, and gym memberships”, and double-charged for certain costs.

The second contract was a State Department contract to provide security services in Iraq and Afghanistan. Relators allegations include that Blackwater defendants knowingly submitted reports documenting more employees than were actually employed and more expenses than were actually incurred.

False Claims Act claims must be specific, describing the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained as a result.

“The elements of a False Claims Act false statements claim are: (i) false representation or fraudulent course of conduct, (ii) made or carried out with knowledge of the falsehood, (iii) that was material, and (iv) that caused the goverment to pay out money”. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 788 (4th Cir.1999).

Allegations that Blackwater allowed disqualified persons to carry firearms in Louisiana and improperly used deadly force in Iraq and Afghanistan are not appropriately Flase Claims Act matters. These allegations amount to claims that Blackwater breached the terms of their contracts. No “objective falsehood” is demonstrated in the allegations.

In its July 2nd ruling, the Court dismissed the claim against the individual defendant Prince and Prince Group LLC, stating that the claim did not state with particularity a valid fraud claim against these defendants.

For more information about False Claims Act, contact government contracts lawyer Karen S. Hindson.