For a federal contractor, the certification is usually where the case is. Civil exposure arises under 31 U.S.C. § 3729 for knowingly presenting a false or fraudulent claim; criminal exposure under 18 U.S.C. § 1001 for false statements in a matter within federal jurisdiction; and where federal program funds are involved, 18 U.S.C. § 666 can reach agents of the organization directly.
Waxman Litigation acts for companies and their boards. Seth B. Waxman spent 13 years as an Assistant United States Attorney in the District of Columbia, roughly eight of them on fraud and public corruption.
The three layers of exposure
Section 1001 sits underneath most contractor cases: a knowing and willful false statement, concealment or false writing in any matter within federal jurisdiction carries up to five years.
| Layer | Statute | Nature |
|---|---|---|
| Civil false claims | 31 U.S.C. § 3729 | Civil liability, often begun by a relator under § 3730(b) |
| False statements / certifications | 18 U.S.C. § 1001 | Criminal |
| Program fraud and bribery | 18 U.S.C. § 666 | Criminal, reaching agents of organizations receiving federal funds |
| Obstruction | 18 U.S.C. §§ 1519, 1512 | Criminal, arising from the response itself |
(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully— (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331 ), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall be not m
18 U.S.C. § 1001
Why § 666 reaches contractors
Section 666 reaches a contractor as an agent of an organization receiving federal funds, covering embezzlement, fraud or intentional misapplication of property valued at $5,000 or more.
(a) Whoever, if the circumstance described in subsection (b) of this section exists— (1) being an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof— (A) embezzles, steals, obtains by fraud, or otherwise without authority knowingly converts to the use of any person other than the rightful owner or intentionally misapplies, property that— (i) is valued at $5,000 or more, and (ii) is owned by, or is under the care, custody, or control of such organization, government, or agency; or (B) corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving any thing of value of $5,000 or more; or (2) corruptly gives, offers,
18 U.S.C. § 666
It turns on the receipt of federal program funds rather than on being a government body — see public corruption.
Responding to a contractor investigation
Suspension and debarment run on their own track and their own timetable, separate from any criminal or civil case, and decisions made early affect all three. See False Claims Act defense and government subpoenas.
Frequently asked questions
What usually triggers these investigations?
Frequently an insider complaint, which may become a sealed qui tam action under 31 U.S.C. § 3730(b).
Is a certification error a false statement?
§ 1001 turns on knowledge and materiality concepts that are fact-specific.
Can individuals be charged as well as the company?
Yes — § 666 reaches agents of an organization, and § 1001 reaches the person who made the statement.
Does responding to the contracting officer resolve it?
Not necessarily, and what is said in that process can matter in the others.
Who decides whether a contractor is debarred?
The suspending and debarring official of the agency, not a court. FAR 9.406-2(a)(1) allows debarment for a conviction of or civil judgment for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public contract or subcontract.
When does a debarment end?
Usually within three years. FAR 9.406-4(a)(1) provides that debarment shall be for a period commensurate with the seriousness of the cause and that, generally, it should not exceed three years — though the period is set case by case rather than by formula.
Where is a False Claims Act case filed, and who sees it first?
Under seal, and the contractor is not told. 31 U.S.C. § 3730(b)(2) requires the complaint to be filed in camera, to remain under seal for at least 60 days, and not to be served on the defendant until the court so orders — so the first sign is often an unexplained document request.
How does the government decide whether to take over a whistleblower case?
Inside the seal period. Under 31 U.S.C. § 3730(b)(4) the Government must, before the 60 days or any extension expires, either proceed with the action or notify the court that it declines — in which case the person who brought it may conduct it themselves.
How much does a False Claims Act judgment actually cost?
Far more than the amount billed. 31 U.S.C. § 3729(a)(1) imposes a civil penalty of not less than $5,000 and not more than $10,000 per claim, as adjusted for inflation under the Federal Civil Penalties Inflation Adjustment Act, plus three times the damages the Government sustains.
Sources and legal authorities
General information about federal law, not legal advice, and not a prediction of any outcome. Federal criminal exposure turns on facts this page cannot assess. If your company has been contacted by investigators or has received a subpoena, take advice before gathering documents or interviewing staff.
Related: White-Collar Defense · False Claims Act Defense · Public Corruption · Government Subpoenas. Call (301) 901-3109 or use the contact page.