Circle C Construction: Fort Campbell Wages and the Damages Reversal

The Circle C Construction FCA case produced a $14,748 judgment over false payroll certifications at Fort Campbell, after the appeals court rejected a damages claim that treated completed electrical work as worthless. Circle C’s subcontractor had paid electricians less than the prevailing wages required under the Davis-Bacon Act, and Circle C had sent false wage-compliance statements with its invoices. For someone who handles subcontract payroll or project billing, the connection runs from what the crew received to what the prime certified and what the Army paid.

Circle C was a family-owned general contractor that built 42 warehouses at the Army base spanning Kentucky and Tennessee, on a project costing more than $20 million. A whistleblower brought the case, and the government joined it. The court found Circle C liable under the False Claims Act, but the government’s theory of how much it had lost ran into a practical problem: the Army had the warehouses, including working electrical systems.

Who Certified the Fort Campbell Payroll?

Circle C submitted the weekly statements certifying Davis-Bacon prevailing wages under its Army contract, including statements about its subcontractors’ employees. Its electrical subcontractor, Phase Tech, paid the electricians whose wages made those statements false. That is the link between false certified payroll on defense construction and the government’s construction bill: Circle C sent the statements along with its invoices.

The prime contractor and subcontractor occupied different places in that payment chain. Circle C held the contract with the Army, while Phase Tech supplied electrical work to Circle C. The wage promise reached both companies, even though the prime and the electrical employer were separate businesses.

The subcontract price did not show the wages Circle C was certifying. In testimony described in the court’s account of the subcontract, a Circle C co-owner said Phase Tech gave a set price for each building, obscuring what it paid each electrician. A price for wiring a warehouse did not tell the person signing the wage statement what the workers took home.

What the Court Found About the False Certifications

The court found Circle C liable for inaccurate wage-compliance reports, and described the company as reckless about whether those reports accurately reflected the subcontractor’s pay. The damages opinion gives the wage comparison: the contract required electricians to receive $19 per hour, while Phase Tech paid $16. The damages opinion describes underpayment to two electricians.

Circle C’s owners testified that they believed the certifications were true. The fee opinion recounted that testimony while also explaining the finding that Circle C had been reckless about the accuracy of the reports. For a payroll insider, the revealing gap is between the individual wages and the statement sent upward with the bill. The prime was certifying pay that its subcontract price did not disclose. The Justice Department’s announcement identifies the Department of Labor Office of Inspector General and the Defense Criminal Investigative Service as the agencies that investigated.

Circle C’s Damages Appeal Turned on the Wage Shortfall

Circle C’s damages appeal replaced the value of the affected electrical work with the wage shortfall as the measure of the government’s loss. The district court had treated the government’s entire payment for Phase Tech’s work on the affected Kentucky warehouses as its loss, tripled that amount and credited the subcontractor’s separate settlement.

The Sixth Circuit’s February 4, 2016 decision rejected the $762,894 award that the Justice Department had announced on August 26, 2014. The government had bought buildings and a promise to pay the required wages. It received the buildings, but the electricians were short $9,916, which the appeals court identified as the actual damages. Treating the wiring, circuits and switches as worthless discarded the value the Army was using every day.

We take both parts of that bargain seriously: the buildings and the workers’ pay. Calling functioning electrical work worthless does not put a more accurate number on the wages those workers missed. The court was blunter:

The court tripled the wage shortfall to $29,748 and deducted the $15,000 that Phase Tech had already paid the government to settle the same underpayment. It directed the district court to enter the reduced judgment against Circle C.

The Same Payroll Pattern in Another Construction Case

The government also alleged underpaid or misclassified workers and false certified payroll reports in its case against James River Air Conditioning. Those allegations concerned heating, ventilation and air-conditioning workers on seven federal renovation and construction projects, and the company settled them in 2018. The recurring connection is the trade work, the pay assigned to it and the report submitted to the government.

Circle C adds a further question to that comparison: what loss did the false report cause? Its case required attention to both the wages missing from the payroll and the electrical work the government actually received.

What Proof Do You Need as a Whistleblower?

For a certified-payroll case, we connect the contract’s wage requirement, the actual pay, the weekly statement and the invoice it supported. Circle C shows why each matters: the contract supplied the promised rate, the subcontractor supplied the labor, and the prime’s statement accompanied the request for government money. Your knowledge of how those records were prepared can explain a mismatch that the invoice alone does not reveal.

The Labor Department’s 2008 certified-payroll rule describes records showing worker classifications, hourly rates, fringe benefits, hours worked, deductions and actual wages paid. Those details help connect the work performed to the pay reported. We examine that evidence of defense contractor fraud with you, including who supplied the figures and what the person certifying them understood.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work with construction and payroll insiders to connect their knowledge of the job to the false statement and the government money behind it.

You Know the Pay Behind the Signature

If you prepared the subcontract payroll, handled the project accounts or saw a wage statement that contradicted the crew’s pay, speak to one of our Whistleblower Experts about the pay behind the signature. We help build your strongest certified-payroll whistleblower case around the workers, the certification and the Army’s bill, and bring in defense construction whistleblower lawyers who understand the payroll and damages questions. You have a partner who can follow the payment chain with you from the first conversation through the case.