Attention Producers and Contractors - Announcement from the SFAA: (released 2/07)
In an opinion in the Court of Federal Claims, Morse Diesel International, Inc. v. United States, 2007 WL 259918 (Fed. Cl. January 26, 2007 & 74 Fed. Cl. 601, 2007 US Claims Lexis 10, 2007), the court elaborated on its prior opinion reported at 66 Fed. Cl. 788 (2005). You may remember that we reported to you then that in the earlier decision the court found that brokers' rebates of part of their commissions on Miller Act bonds violated the federal Anti-Kickback Act. In the recent decision, the court held that submission of requisitions without credit for the rebates violated the False Claims Act.

The court also found in the new decision that the government required proof that the bond premiums had been paid before it would reimburse the contractor. The contractor obtained from the brokers involved copies of invoices stamped "paid", even though the bond premiums in fact had not been paid, and were not paid until several weeks after the government paid the requisitions. The court held that the submission of these invoices marked "paid" was a separate violation of the False Claims Act. The court only considered civil violations, but it noted that the contractor pled guilty to criminal False Claims Act violations in connection with the false "paid" invoices. The court held that under the Forfeiture of Fraudulent Claims Act the contractor forfeited its claims on the jobs involved. These claims totaled over $53 million.