After more than 10 years of litigation and a four-week bench trial, a District Court in D.C. recently found a contractor liable under the False Claims Act (FCA) in connection with the U.S. General Services Administration’s Multiple Award Schedules program (GSA Schedules). While the court only awarded a fraction of the damages sought by the government, the case nevertheless serves as a cautionary tale for contractors about the unique risks and liabilities of doing business under the GSA Schedules.
Background
The recently decided case, United States er rel. Morsell v. NortonLifeLock, Inc., was originally filed under the qui tam provisions of the FCA by a former employee who alleged that the Schedule holder had violated the FCA by, among other things, (i) submitting false Commercial Sales Practices (CSP) pricing disclosures in connection with the award and modification of the Schedule contract; and (ii) failing to disclose deeper discounts granted to the agreed-upon “basis of award” customer, as required under the Price Reductions Clause (PRC). In a decision spanning over 180 pages, the court ruled for the government on liability with regard to both issues.
Liability
With regard to the CSP disclosures—which were prepared in part by an outside consultant who had no specific expertise in GSA Schedules—the court found that the contractor’s submission was false because it failed to disclose the existence of certain commercial rebate programs. The court also found that the CSPs...
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