Wednesday, April 3, 2013

Was it Selling Expense or Lobbying Expense - We Still Don't Know

Back in 2011, a former employee of Fluor Corporation filed a whistleblower suit alleging that the company had used Government funds to lobby Congress. In 2012, the Government intervened in the case, presumably because it found some merit to the allegation. This week, Fluor and the Government settled the lawsuit for $1.1 million. The former employee whistleblower gets $200 thousand of the settlement - not a bad payday.

Fluor had a contract to operate a DOE training facility in Washington State. According to the whistleblower lawsuit, initial attempts by Fluor to "market" the training facility to regional first responders were not very successful. So, in 2005, Fluor hired a couple of consulting firms, using $675 thousand in DOE money, to market its training capabilities including overtures to Congress and federal agencies to include additional money to operate this training facility.

Fluor denied that the expenditures were lobbying costs (lobbying costs are unallowable under FAR 31.205-22). Fluor stated that it was required under the terms of the contract to increase utilization of the facility to promote "economies of scale" and "cost-effective operation and maintenance". Fluor also stated that it was prepared to prove that the use of consultants to cntact other government agencies to market the training facility was fully know to and overseen by high-level DOE officials who were also involved in meetings and communications with the consultants.

So the argument was settled out of court with neither side conceding anything. Fluor stated that it settled to avoid the expense and distraction of litigation. The Federal Government said that the settlement is not a concession that its claims were not well-founded.

So, we still don't know if the activities performed by the consultants were in fact, unallowable lobbying costs or were allowable under the Selling cost principle (FAR 31.205-38).

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