Venable partner Paul Debolt was quoted in an April 20, 2012 Law360 article on a trend of government contractors reporting the smallest cases of overpayment and fraud to federal agencies. In 2008, the Federal Acquisition Regulatory Council issued a rule requiring contractors to report “credible evidence” of fraud-related criminal violations and civil False Claims Act violations, as well as “significant overpayments.” Fearing suspension or debarment, many contractors are reporting all potential issues despite unanswered questions of what overpayments are “significant” and what constitutes “significant evidence” of fraud.
Commenting on the trend, Debolt said, “Because the penalties for not disclosing are so severe, most contractors have erred on the side of caution and may disclose matters that they would have previously viewed as contract administration issues.” The prevalence of disclosures which causes a backlog for federal agencies has led some contractors to question whether there is too much disclosure and if further guidance is needed. “To the extent that some companies make unnecessary disclosures, this slows down the entire process and will potentially delay the [inspector general's] efforts to resolve these matters,” added Debolt. “Obviously to the extent these matters remain open, contractors will have lingering concerns about whether they face potential additional legal action.”