April 24, 2017

Trump Order Raises Significant FCA Compliance Concerns

By the C|C Whistleblower Lawyer Team

On April 18th, President Trump signed an executive order related to Buy American and Hire American laws. In light of the order, new compliance concerns have been raised regarding the False Claims Act’s “Buy American” provisions for government contractors. The executive order calls for agencies to more closely monitor compliance with “Buy American” provisions and limit the use of waivers.

Some argue that the new executive order will burden government contractors particularly in light of the Escobar decision. The two primary expressed concerns are that 1) “Buy American” and “Hire American” are going to be considered material provisions of some government contracts and will fall under the Escobar precedent and 2) the government itself may take a more active role in initiating and conducting investigations that may lessen the reliance on whistleblowers. The vast majority of False Claims Act qui tam suits are brought by whistleblowers but with agencies on notice that rigorous enforcement of “Buy American” provisions is expected, whistleblowers face of the risk of having a lesser role in these types of cases.

The executive order directs agencies to spend the next 150 days reviewing contracts and agreements for compliance with the “Buy American” provisions. During this time experts suggest that government contractors should review or audit current agreement to ensure compliance. Increased government scrutiny in both the short and long term could lead to investigations of government contractors for issues that the government had neither the time nor incentive to look at before.

Overall, this executive order will likely not severely impact the role of whistleblowers in bringing information for False Claims Act suits to light. In the short term, it may have an effect specifically on whistleblowers that have information on “Buy American” violations as the agencies review current agreements. However, in the long-term it will likely have little effect as the government will likely not persist on these issues once the initial 150 day scrutiny ends.

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