Government Contracting Requires More Than “Truthiness”

Government Procurement Fraud

In homage to Stephen Colbert, we want to discuss the July 2, 2013 false claims act settlement by CyTerra, under which they paid $1.9 million.  As the Department of Justice’s press release stated, “Contractors who negotiate with the government must be scrupulous in their dealings with the government … Government contractors should be on notice that the requirements of the Truth in Negotiations and False Claims Acts will be enforced.”

Government procurement, essentially the means by which the government buys all sorts of goods and services, is a highly regulated process meant to ensure that companies deal honorably with the U.S. government and all of it’s various entities.  The Truth-In-Negotiations Act, or TINA, was passed in 1962, and was renamed in the Federal Acquisition Circular, effective May 29, 2013, to be called the “Truthful Cost or Pricing Data”, which doesn’t have an acronym – TCPD – that works nearly as well as “TINA”.

The government generally makes purchases through 3 distinct processes:  competitive bidding, competitive proposals or sole source procurement.  Depending on the specific government procurement process undertaken, the Truthful Cost or Pricing Data provisions may be relevant.  Put simply, and very much in line with its name, new or old name for that matter, Truthful Cost or Pricing Data requires that the government be dealt with in a manner so that the procurement process with any government contractor includes information that is accurate, current and complete as of the date of agreement on price.

As explained in the DOJ press release, “In 2003, the Department of the Army awarded CyTerra a contract for the production and delivery of AN/PSS-14 hand-held mine detection units … CyTerra knowingly failed to provide the Army with the most recent cost or pricing data on the number of labor hours needed to produce a mine detector.”  The false claims act complaint, which was filed on March 28, 2006, was filed by two whistleblowers, each of whom were senior executives of CyTerra.  Seven years later CyTerra settled the allegations of not dealing fairly with the Department of Army in its purchase of the mine detectors.

The allegations in the whistleblower complaint were pretty stark, with CyTerra being accused of using two different accounting systems, one of which had greatly inflated labor costs which were reported to the government under the procurement contract.  The whistleblowers go on to further allege that fake invoices were issued for vendors in order to support inflated material costs related to the fulfillment of its duties under the government contract.

Our favorite part of the allegations in the whistleblower complaint are that “Minelab, one of the vendors under the contract, offered Cyterra significant discounts for the large quantities which would be called for …”, and “Both Glen Anderson, Cyterra’s contracting officer, and Mike Norton, Cyterra’s Chief Operating Officer, interrupted a senior Minelab executive and told him to say nothing about better price terms until Cyterra had finalized its contract negotiations.”

Stephen Colbert, in his first episode, on October 17, 2005, coined the word “truthiness” for his segment “The Wørd”.  Mr. Colbert’s went on to explain his definition of truthiness as being “a ‘truth’ that a person making an argument or assertion claims to know intuitively ‘from the gut’ or because it ‘feels right’ without regard to evidence, logic, intellectual examination or facts.”  Unfortunately for CyTerra, the truthiness standard espoused on The Colbert Report doesn’t come close to fulfilling the kind of accurate, current and complete information that the U.S. government is owed by its government contractors in its purchase of good and services.

 

Whistleblower Justice Network Can Help You

Whistleblower Justice Network partners with whistleblowers worldwide to expose schemes that violate the Truth-In-Negotiations Act, now revised to the Truthful Cost or Pricing Data provisions. We work with whistleblowers to help them report violations of the False Claims Act, while maintaining their anonymity and ensuring they file their best possible whistleblower action. Utilizing the False Claims Act, we aid whistleblowers in bringing corporations that use deceptive tactics for personal gain to justice.

If you have meaningful information regarding government procurement fraud that you believe is in violation of TINA or the False Claims Act, Whistleblower Justice Network can help. Working alongside world-class legal counsel, we will ensure you are protected to the fullest extent of the law and that you receive credit for the information you bring to the U.S. government. Partnering with whistleblowers is all we do. Visit us at www.whistleblowerjustice.net, or call us at 844-WJN-4ALL, to learn if we can help you.