Federal Contractors Beware: Firm-Fixed-Price Contract Negotiations & FCA Liability
On May 16, 2022, the US Court of Appeals for the Sixth Circuit held that a plaintiff-relator adequately pled False Claims Act violations based on a defendant’s alleged inflation of labor cost estimates when negotiating a firm-fixed-price contract with NASA—even though NASA’s payments were based on the contract prices, not the estimates.
In United States ex rel. USN4U, LLC v. Wolf Creek Federal Services, Inc., the relator alleged that Wolf Creek Federal Services and several of its employees submitted falsely inflated project estimates to NASA for facilities maintenance projects, resulting in fraudulently induced, exorbitant contract prices.
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