Government And Whistleblowers Target Contractors On Trade Agreements Act Compliance
Originally published in V&E Government Contracts E-communication Update, July 18, 2012
On May 8, 2012, the Department of Justice (DOJ) announced that federal contractor Direct Resource, Inc., had agreed to pay $450,000 to resolve allegations that the company had violated the Trade Agreements Act (TAA), 19 U.S.C. § 2501, et seq. The TAA and its implementing regulations require that products sold to the federal government under certain contracts be wholly manufactured or "substantially transformed" in the United States or in certain "designated countries." Direct Resource settled allegations that it had sold products made in China pursuant to contracts it held with the General Services Administration. China is not a "designated country" under the TAA.
DOJ's agreement with Direct Resource is only the latest in a series of settlements of TAA-related cases brought by whistleblowers under the qui tam provisions of the False Claims Act (FCA), 31 U.S.C. § 3729, et seq. Several of the settlements resulted from qui tam cases brought by competitors or former employees who received a portion of the settlement amount.
In recent years, contractors have paid the following amounts to settle FCA allegations that included allegations that the contractors made false claims or false statements in connection with TAA violations:
Contractor
Date
Settlement Amount
Cablexpress Corp., d/b/a CXtec
April 2012
$2,000,000
Home Depot, Inc. and Home Depot USA, Inc.
October 2011
$2,250,000
Fastenal Company
January 2011
$6,250,000
Furuno U.S.A. Inc.
August 2010
$695,000
Oce North America
September 2009
$1,200,000
J Squared Inc., d/b/a/ University Loft Company
June 2009
$400,000
Mitel, Inc.
February 2009
$1,300,000
Tifco Industries, Inc.
February 2009
$1,600,000
W.W. Grainger Inc
July 2008
$6,000,000
These settlements followed a series of multi-million dollar payments by office supply product vendors Corporate Express, Staples, Office Depot, and OfficeMax to settle FCA/TAA allegations in 2005 and 2006. Like...
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