Government Contracts Contractor Could Seek Costs of Defending Qui Tam Suit
Monday, November 19, 2018

Contractor Could Seek Costs of Defending Qui Tam Suit

By Government Contracts Editorial Staff

The government’s motion to dismiss for failure to state a claim was denied by the Court of Federal Claims because the contractor sufficiently alleged it was entitled to reimbursement of legal fees incurred in successfully defending a qui tam False Claims Act suit. The contractor was engaged to develop technical manuals for a mine clearing vehicle. After the district court dismissed the qui tam suit alleging the contractor improperly certified compliance with the technical data package (59 CCF ¶80,764, aff’d 61 CCF ¶81,064), the contractor requested that the government reimburse a portion of its legal fees pursuant to FAR 31.205-47. The contracting officer denied the request, concluding the work arose from a “firm fixed price order which contain[ed] no provisions [for the government to assume the risk of legal costs],” and the costs were not allowable because they were not allocable to, or within the terms of, the contract.

Christian Doctrine. The task order contract, issued on a fixed-price/level-of-effort basis, implicated the cost principles of FAR Subpart 31.2, contracts with commercial organizations. Although the contract contained no express or implied term allowing cost reimbursement, the cost principals appeared to apply by operation of law under the Christian doctrine. Under this doctrine, “a mandatory contract clause that expresses a significant or deeply ingrained strand of procurement policy is considered to be included in the contract by operation of law.” Because the contract was manifestly established on the basis of FAR 15.404-1 and FAR 31.103 cost principles, the provisions of FAR 31.205-47 appeared to apply.

Allowability Sufficiently Pleaded. Under FAR 31.205-47, legal costs arising from a qui tam suit may be allowable to the extent that the defense is successful and: (1) the costs are reasonable; (2) the costs are not otherwise recovered from another; and (3) the percentage of costs allowed is appropriate and does not exceed 80 percent. Here, the contractor asserted its litigation costs were necessary and proper for its successful defense of the qui tam suit, the costs were “incurred specifically for the contract,” and the contractor’s performance of the contract per the government’s direction created the issue litigated in the qui tam suit. The contractor successfully defended the suit, sought 80 percent of its legal costs, and stated its expenses were reasonable and that it bore the costs. It pleaded sufficient facts to satisfy FAR 31.205-47, and the remainder of FAR Subpart 31.2 did not otherwise prohibit reimbursement of the costs. (Tolliver Group, Inc. v. U.S., FedCl, 62 CCF ¶81,507).

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