Tuesday, December 11, 2012

Lobbying Costs - Government Joins a Whistleblower Suit

Last month, the Government intervened in a lawsuit against Fluor Hanford Inc. and its parent company, Fluor Corporation (collectively Fluor).  The False Claims Act lawsuit was originally filed by a whistleblower  who was also a former employee of Fluor.  

Between 1999 and 2008, Fluor had a prime contract with the Department of Energy (DOE) to provide a wide variety of security, maintenance and operational services at the DOE’s Hanford Nuclear Site in southeastern Washington State.   As part of its contract, Fluor was responsible for managing and operating a federally-funded facility to train Hanford site workers as well as first responders and law enforcement personnel.  
The whistleblower complaint alleges that, as a condition of receiving its DOE contract, Fluor was required to certify that it would not use federal funds for lobbying activities.   The complaint further alleges that between 2005 and 2008, Fluor ignored these restrictions and used DOE funding to lobby Congress and executive branch officials for more funding for the training facility.   The complaint alleges that Fluor, and two lobbying firms hired by Fluor and paid using DOE funds, Secure Horizons LLC and Congressional Strategies LLC, lobbied members of Congress and executive branch agencies to include additional funds for the training facility in agency appropriations.  The United States intervened in the lawsuit.

 This is a significant development. Usually, these types of costs, if not excluded by contractors as part of their normal scrubbing of costs for unallowables, are flagged during the audit process and questioned. This new lawsuit by the Department of Justice takes the inclusion of unallowable lobbying costs  to an entirely new level, a False-Claims Act (FCA) action. FCA  carries significantly more liabilities than the penalties for unallowable costs provisions in FAR, including treble damages and civil penalties

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