Increased Profit Under a Firm-Fixed Price Contract a False Claim? Not So Says One Federal District Court

Richard J. Conway and Justin A. Chiarodo

Justin A. ChiarodoIn a significant decision regarding the application of the False Claims Act (FCA) to firm-fixed price procurement contracts, the U.S. District Court for the Middle District of Florida recently held that a government contractor working under a fixed-price contract is not liable under the FCA for higher than expected profits and “failing to notify the Government that the work could be performed less expensively and charged a lower price” than the contract price. U.S. ex rel. Prime v. Post, Buckley, Schuh & Jernigan, Inc., 2013 WL 4506357, No. 6:10-cv-1950 (M.D. Fla. Aug. 23, 2013).

The defendant was a joint venture that had entered into a fixed price indefinite delivery/indefinite quantity (ID/IQ) contract with the government to provide architect and engineering services for an Everglades restoration project overseen by the Army Corps of Engineers. As the project was a first-of-its-kind effort, the Corps planned to reduce its cost risk by using a fixed-price contract performed through task orders. The ID/IQ contract provided negotiated fixed-price labor rates and a negotiated profit component, derived primarily from past Corps contract experience. Subsequent fixed-price task orders were lump-sum, determined in accordance with the agreed-upon labor rates multiplied by the number of days required to complete the work, and included the agreed-upon profit component. The joint venture saw its profit margin increase through the use of efficient staffing of task orders with lower-cost resources than those contemplated in the original ID/IQ formulas. Continue reading “Increased Profit Under a Firm-Fixed Price Contract a False Claim? Not So Says One Federal District Court”

Update on the Government Response to the Potential Swine Flu Pandemic

What is the Swine Flu?

Richard J. Conway and Merle M. DeLancey

According to the U.S. Centers for Disease Control (CDC), the Swine Influenza (swine flu) is a respiratory disease caused by type A influenza virus that regularly causes outbreaks of influenza in pigs. The classical swine flu virus (an influenza type A H1N1 virus) was first isolated from a pig in 1930. Swine flu viruses do not normally infect humans. However, sporadic human infections with swine flu have occurred and are occurring now.

What is Known About this Current Outbreak?

According to the CDC, in late March and early April 2009, cases of human infection with swine influenza A (H1N1) viruses were first reported in Southern California and near San Antonio, Texas. Other states and foreign governments have reported cases of swine flu infection in humans, and cases have been reported internationally as well. As of April 30, 2009, there have been 109 cases reported in the United States, with most in New York City, California, and Texas. A toddler who crossed the border from Mexico into south Texas died from a new strain of swine flu on April 29, 2009 in a Houston hospital, the first confirmed death from the virus in the United States. Continue reading “Update on the Government Response to the Potential Swine Flu Pandemic”