From Flawed Methodology to False Claims Act Liability: A Cautionary Tale

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In January of this year,  the Court of Federal Claims issued a harsh reminder of the serious implications of the certification of a claim when dealing with the federal government. In Lodge Construction, Inc. v. United States, not only did the contractor fail to recover on its affirmative claims, but the Court also found merit in the government’s affirmative defenses and counterclaims that raised false claims. The result was forfeiture and fines for the contractor. Indeed, the Court began its opinion with Justice Oliver Wendell Holmes’ famous observation that “men must turn square corners when they deal with the government.” This adage usually bodes ill for contractors.

A Project Literally Mired In Trouble

This project required the contractor to rehabilitate a levy in Florida for the Army Corps of Engineers (“Corps”). Dewatering and soils issues plagued the project from its inception. After a  cofferdam failed, the Corps retroactively disapproved the contractor’s cofferdam design and issued a notice to cure. The contractor certified two claims — the Design and Dewatering claims—requesting nearly $4 million in additional compensation and several months of time extensions. About a month after the submission of the dewatering claim, the Corps terminated the contractor for default. The contractor then sued the government in the Court of Federal Claims on both the dewatering and design claims.

False Claim Allegations…

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