Monday, February 16, 2015

The Lincoln Law

Today is President's Day so today's posting keeps with that theme.

During the Civil War, the Union army relied heavily on private contractors for its uniforms, shoes, horses, gunpowder, food, and other necessities. It didn't take too long before contractors began cutting corners on what they delivered. There were stories about decrepit horses and mules, faulty rifles and rancid rations. Soldiers complained about uniforms that dissolved in the rain. There were some contractors who mixed sawdust in with the gunpowder they delivered to the Army.

The Government was essentially broke and didn't have resources to hire inspectors much less investigators and prosecutors to bring cases against the miscreants. So Congress came up with a plan that would reward employees for turning in their own companies - the Government agreed to give them half of any fine it collected based on their accusations. This became known as the "Lincoln Law" because, of course, Lincoln was the President at that time.

After the Civil War, the law went through a number of changes that effectively gutted its provisions. However in the mid-1980s, with news of that DoD was paying $640 for toilet seats, $7,600 for coffee makers, and $436 for hammers, Congress re instituted the "Qui Tam" provisions of the False Claims Act. Now, people who are not affiliated with the Government (whistleblowers) can file actions against federal contractors claiming fraud against the Government. Instead of the 50 percent share that was in place during the Civil War, relators (or whistleblowers) receive between 15 and 25 percent of any award or settlement amount.

The Lincoln Law, by some accounts, has been very successful in ferreting out fraud, waste, and abuse in Government contracts and programs . Since it's revitalization in 1986 through 2013, the Department of Justice Reports that the Government has recovered $27.2 billion from cases arising from whistleblowers under the Qui Tam provisions. The whistleblowers themselves got $4.1 billion of that amount.

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