Government Contractor Fraud Defense Lawyer Theodore P. Watson, Esq.Watson & Associates, LLC professionals often serve as government contractor defense attorneys. when the Department of Justice (DOJ) or the Office of Inspector General ( OIG) comes knocking on your door. The importance of having a strong legal defense early in the investigation stage means having legal counsel that understands the underlying substantive law that causes the prosecution to bring a civil or criminal action.

We represent small businesses and large defense contractors in both civil and criminal cases involving procurement fraud and False Claims Act violations, Trade Agreements Act (TAA Compliance and various FAR and SBA violations.

Government contractor defenses are commonplace during the performance of your contract. When the government makes an adverse decision against you, the next thing that a defense lawyer should do is assess the facts, see if you have any legal defenses to the allegations, then attempt to negotiate the issues before the agency.

Only when the contracting officer fails to amicably resolve the issue should you have to defend the matter in court.

Terminations for Default: A government contractor defense case often arises in the case where the government alleges that you did not comply with the terms and conditions of the contract. The result is a termination for default.

Compared to commercial contracting, there are specific court decisions that address your potential defenses. For example, the agency may have created a situation where it would have become difficult for you to perform. As such, any cure notice given would be meaningless.

When you face a threat of termination for default, you may want to consider contacting a defense lawyer immediately. This can prevent further facts that could develop but not in your favor. You also want to advise him or her about the facts leading up to the adverse action. The government simply cannot create a situation that puts the contractor at risk of non-performance. See information about SVOSB fraud.

Available Government Contractor Defenses to Fraud

Some of the common defenses available to you as a contractor in a criminal case could include:

  • There is a mistake. 
  • Lack of intent
  • Estoppel. 
  • Impossibility of Performance
  • The government’s  action substantially contributed to the situation  

Another common trap faced with government contractor defense is when it is brought up for the first time in the appeals court.  For example, if you assert a set-off of damages sought by a federal agency, you should have brought the issue at the agency level.  This is but one hurdle that a government contract defense lawyer could face. See M. Maropakis Carpentry, Inc. v. United States, _____ F.3d _____, No. 2009-5024, (Fed. Cir. June 17, 2010).

What are Common Mistakes that Government Contractors Make When Responding to Government DOJ or OIG Investigations?

Government contractors must tread carefully when responding to investigations by the Department of Justice (DOJ) or the Office of the Inspector General (OIG). Missteps can exacerbate legal and reputational risks. Here are common mistakes made by government contractors in these situations:

1. Delay in Response: Procrastinating or not promptly acknowledging the receipt of a subpoena or an investigative request can be detrimental. Swift action is crucial.

2. Destroying or Altering Documents: Any attempt to destroy, alter, or tamper with evidence is a grave offense and can lead to severe penalties, including criminal charges.

3. Failing to Preserve Evidence: Contractors must implement a “litigation hold” or document preservation order to ensure all relevant documents, emails, and other data are retained and protected from deletion.

4. Not Seeking Legal Counsel Immediately: Engaging experienced legal counsel should be a priority. They can provide guidance on rights, obligations, and best strategies for responding to the inquiry.

5. Assuming Informal Communications are Unrecorded: Casual conversations or off-the-record discussions with investigators can be used as evidence. Always assume every interaction is on the record.

6. Volunteering Excessive Information: While cooperation is important, avoid providing more information than what’s requested. Extra details can open up new avenues for investigators.

7. Failure to Protect Privileged Information: Not clearly designating communications with your attorney as “privileged” can lead to inadvertent disclosure.

8. Not Preparing Witnesses: Employees or others who might be interviewed should be adequately prepped about the process, their rights, and potential pitfalls during testimonies. This is an area where our experienced government contractor defense lawyers can help.

9. Overlooking the Whistleblower: Whistleblower complaints often trigger investigations. Not addressing their concerns or retaliating against them can have serious repercussions.

10. Not Cooperating: A complete lack of cooperation or perceived obfuscation can lead to greater scrutiny and potential penalties. However, cooperation should be balanced with protecting one’s rights.

11. Underestimating the Seriousness: Dismissing a DOJ or OIG investigation as routine or minor can lead to inadequate preparation and response.

12. Not Conducting an Internal Investigation: When allegations arise, conducting a thorough internal investigation alongside external ones can help in understanding the scope of potential issues and in formulating a response.

13. Failure to Remediate: Not taking corrective actions or implementing compliance measures in light of identified issues can result in more severe penalties and damage to reputation.

14. Misunderstanding the Scope: Contractors might not fully understand the reach and powers of the DOJ or OIG, leading to inadvertent missteps.

To effectively navigate a DOJ or OIG investigation, government contractors must act promptly, with transparency, and in consultation with expert legal counsel and government contractor defense attorney, while ensuring protection of their rights and interests. Avoiding these common mistakes can go a long way in ensuring a more favorable outcome.

How Can Government Contractors Reduce the Chances of Getting a Criminal Conviction or Indictment for Buy American Act Fraud. How Can a Government Contractor Defense Attorney Help When Compared to Local Criminal Defense Attorneys who are Not Experienced in Federal Procurement Law?

Navigating the complexities of a Buy American Act (BAA) fraud indictment requires a strategic approach that emphasizes evidence and defense at trial. Here’s how government contractors can better defend themselves post-indictment and the unique advantages a specialized government contractor fraud attorney brings when compared to local criminal defense attorneys not experienced in federal procurement law.

While local criminal defense attorneys are invaluable in many contexts, facing a BAA fraud indictment requires the specialized expertise of a government contractor fraud attorney. Their experience with federal procurement law and prior trial experience offers contractors the best chance of a favorable outcome post-indictment.

Common False Claims Act Government Contractor Defenses

 Yet another situation where contractors may have to get into a defensive posture is when the agency alleges a false claim violation. This is yet another area where our government contractor defense lawyers can help.

A person does not violate the False Claims Act by submitting a false claim to the government; to violate the FCA a person must have submitted, or caused the submission of, the false claim (or made a false statement or record) with knowledge of the falsity. In § 3729(b)(1), knowledge of false information is defined as being

(1) actual knowledge,

(2) deliberate ignorance of the truth or falsity of the information,

or (3) reckless disregard of the truth or falsity of the information. See information about FCA penalties.

As you can see, government contract defenses to these types of allegations are very fact-specific. As attorneys, we always suggest that you keep sound documentation as you perform your project because as time accrues, you may not always remember the fine details that help you to develop a viable defense.

Can The Government use Its Sovereign Immunity Defense Against Contractors?

The Tucker Act, initially enacted in 1887, added to the jurisdiction of the Court of Claims by formally waiving the government’s sovereign immunity for claims “founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States.”

The Supreme Court has explicitly confirmed that “by giving the Court of Claims jurisdiction over specified types of claims against the United States,” the Tucker Act “constitutes a waiver of sovereign immunity with respect to those claims.” This is a hurdle that government contract defense lawyers must watch out for.

The Tucker Act does not explicitly identify the substantive law that governs a contracts-based claim. While claims founded upon a particular “money-mandating” statute refer to the statute itself as providing the governing substantive law, when a claim is founded simply upon contract, the source of substantive law is the federal common law of contracts.

Why is Committing the Resources So Important? Why Hire Top Criminal Defense Team to Combat Defense Contractor Fraud Critical in Government Contract Cases?

Committing the appropriate resources and hiring a top criminal defense team for defense contractor fraud is of paramount importance, especially when dealing with government contract cases. The consequences of a conviction can be disastrous for a contractor, both in terms of financial penalties and reputational damage.

In Summary:
In the high-stakes world of government contracting, facing allegations of fraud without a robust defense strategy can be perilous. Committing the necessary resources and securing a top-tier criminal defense team and government contractor defense attorneys are vital steps to ensure that a federal contractor receives a fair defense, protects its interests, and preserves its ability to continue doing business in the future.

Tips for Small Businesses and Government Contract Fraud CasesSmall Business Criminal Defense Cases

Small businesses are often issued subpoenas for documents and testimony. The question is usually, how much do you have to cooperate with federal law enforcement agents? The answer is that you generally have to cooperate fully. However, you do have legal rights. For example, you cannot be compelled to give testimony that is self-incriminating or that can lead to criminal liability.

Defense contractors should protect their rights early in the investigation process. At Watson & Associates, our federal procurement fraud lawyers and government contractor defense attorneys can help with allegations of violating government contract laws. See information on how to respond to government investigations.

If you are a federal government contractor facing a potential, or actual, adverse action from the agency, be aware that you do have legal rights that include defenses. Consider getting help from a government contractor defense attorney. Call 1-866-601-5518.  Speak to Theodore Watson.