As we previously discussed here, the government’s continued payment despite knowledge of contractual or regulatory noncompliance has become a powerful defense argument post-Escobar. The Fourth Circuit recently affirmed summary judgment in favor of government contractors after they obtained declarations from responsible government officials that undercut the relator’s theories of liability. See United States ex rel. Searle v. DRS C3 & Aviation Co., No. 15-2442 (4th Cir. Feb. 23, 2017).

The Army awarded the defendants a contract to create technical manuals to support the maintenance of mine-clearing vehicles. The relator alleged that the defendants had failed to comply with the terms of the contract’s Performance Work Statement (“PWS”). Both parties filed cross motions for summary judgment, and defendants supported their motion with two declarations from government employees who had interfaced with the defendants on the project. The defendants obtained this information by submitting Touhy requests to the Army. Although the relator objected that he had not been informed of the requests, the district court noted that the defendant was not required to do so.

The declarants cut through the relator’s express certification theory of liability by averring that the defendants had not actually been required to submit to the Army certifications of compliance with the PWS. They rebutted the relator’s implied certification theory of liability by clarifying that to the extent defendants’ work deviated from the government’s initial request, “all changes were made at the express direction of the government” and any inaccuracies were “not the fault of” the defendants. The Fourth Circuit agreed with the district court that the declarations preclude a finding of FCA liability.

This case provides defendants with a potentially successful strategy and the related tactics in this post-Escobar world.

A copy of the court’s opinion can be found here.