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GSA Best Price Qui Tam Lawsuits - Failure to Give the Government the Best Price Violates the False Claims Act.
Most federal contracts require the contractor to give the United States the best price the contractor gives to any of its customers. The failure to do so is a form of fraud that violates the False Claims Act and may give rise to a Qui Tam lawsuit. If you have witnessed or are aware of a federal contractor who is violating the best price language of its contract with the government, you should consult with a lawyer to ascertain whether you can become a relator or whistleblower and whether the lawyer can bring a Qui Tam lawsuit to assist the United States Government in recovering the money out of which it was defrauded. As indicated on our Qui Tam page, The False Claims Act provides huge financial incentives to citizen whistleblowers to retain attorneys and come forward, prosecute these lawsuits and fight government fraud. Out of damages imposed on the contractor, the private citizen whistle blower (relator) can receive between 10% and 30% of the lawsuit recovery. Some relators have been paid millions of dollars. These cases are often highly technical and complex. Before filing, they must be properly investigated and assembled, which demands that you obtain competent attorneys experienced in handling Qui Tam fraud cases.
The GSA implemented the Federal Supply Schedule (FSS) program in 1949 to enable government agencies to purchase a wide array of products and services from commercial vendors through schedule contracts. See Contract Management: Opportunities Continue for GSA to Improve Pricing of Multiple Award Schedules Contracts: Statement by David Cooper (July 26, 2005). The multiple awards schedules program is the largest FSS (Federal Supply Schedule) program and provides government agencies “with a simplified method of acquiring varying quantities of a wide range of commercially available goods and services, such as office furniture and supplies, personal computers, scientific equipment, library services, network support, and laboratory testing services.” See Contract Management: Opportunities to Improve Pricing of GSA Multiple Award Schedule Contracts, GAO-05-229 (February 2005), page 4. In 2004, government agencies purchased more than 32 billion dollars of good and services through the MAS program. Id.
A critical component of the program is pricing. The government seeks and demands to be the most favored customer of each vendor who does business with the government.
GSA negotiators seek to obtain discounts from the vendor’s commercial price list which are equal to or greater than the vendor’s most favored customer discounts. The most favored customer is a customer or category of customers that receives the best discounts from the vendor’s commercial price list when purchasing quantities comparable to the government’s under similar terms and condition. Id at page 5 of GAO-05-229.
These policies are reflected in the FAR clauses and certifications applicable to the Schedule 75. Each vendor must certify that the price offered to the government is equivalent or more favorable than the price it gives to other customers. The duty to sell goods and services to the government for the best price is on-going through the life of the contract. If after the contract is awarded a contractor gives a non-government customer a better pricing structure, then the government is entitled to a retroactive price adjustment to restore the government to its position of most favored customer.
Not surprisingly, many vendors are critical of the most favored customer practices of the government. Vendors resist it and call it unfair. One commentator at captureplanning.com states:
The most favored customer (MFC) and price reductions clause (PRC) operate jointly - seldom will you see the MFC clause without the PRC, and the PRC has no meaning without the MFC clause. There simply does not exist a legal basis for these clauses to exist. The FAR standard at 15.4 is fair and reasonable. Their inclusion in an IFB or RFP is clearly not proper. It is currently in the FTS 2001 RFP improperly. GSA has imposed these clauses in the schedule program for decades without legal basis. But no one has taken GSA to court. So, the bluff wins.
The Inspector General of the GSA issued a report on August 24, 2001 entitled “MAS Pricing Practices: Is FSS Observing Regulatory Provisions Regarding Pricing?” The report reviewed a number of contracts and found that Contractors offer numerous excuses to successfully side-step the most favored customer regulations. Id at page 9. In other scenarios, Contractors obtained contract extensions without providing updated pricing data. Id. Looking at a three year period and government purchases of copiers, the Inspector General concluded that the government would have saved $199 million dollars if the most favored customer pricing regulations had been properly applied. Id at page 15. In addition, contrary to vendor protests , most favored customer arrangements are common in commercial contracts between large vendors and suppliers. The Inspector General for GSA looked at several private contracts and found that almost 50% included similar pricing clauses. See page 22 to 23 of the Position Paper of the Inspector General, U.S. General Services Administration, addressing the effects of procurement reform on some aspects of the Multiple Award Schedules. Accordingly, when the government asks for most favored customer status, it is acting like other large customers.
For example, under Schedule 75, all contractors must complete a CSP-1 Form and Discount Pricing Chart listing each article for sale on the schedule, the price to the government, and the price or discount received on this product by the most favored non-government customers. Moreover, the Contractor must answer the following question:
Based upon your written discounting policies (standard commercial sales practices in the event you do not have written discounting policies), are the discounts and any concessions which you offer the Government equal to or better than your best price...offered to any customer [the term “Customer” includes “state and local governments.”] acquiring the same items regardless of quantity or terms and conditions?
Then there are two boxes one next to the word YES and the other next to the word NO. To get a MAS contract, the contractor must check the YES box and provide supporting documentation. Moreover, Contractors must submit information regarding a price decrease “anytime during the contract period in which they occur.” See Clause 552.216-70. Once submitted, the contracting officer has the right to seek a price adjustment. Failure to accurately complete the information on a CSP-1 form is a false statement that makes it impossible for the Contracting Officer to properly assess whether the government has achieved the most favored customer status without performing an audit. See page3 of the Statement of Kathleen Tighe, Counsel to the Inspector General, United States General Services Administration, Hearing on “GSA - Is the Taxpayer Getting the Best Deal?” July 26, 2005. Assuming the Form CSP-1 was accurate and price changes occurred later, failure to report the pricing changes is a false statement. Moreover, each time a government agency purchases an item for which the government has not received the best price and the contractor submits his invoice for payment, the contractor is submitting a false claim for payment. The government is damaged, and this damage is easily measured by the difference between the GSA price and the price paid by the non-federal government customer. In addition, the government is entitled to statutory penalties of between, $5,000.00 and $11,000.00 for each false claim submitted.
If you think you have witnessed a best price violation
of the False Claims Act or any other violation of the False Claims Act, and you
are willing to blow the whistle on such conduct, you owe it to yourself to speak to an experienced
Qui Tam attorney to see if there is a case and to discuss the possibility of bringing a lawsuit
on behalf of the US government to recover damages for the contractor's improper
conduct. The attorney will be able to ascertain if there is a whistleblower claim for which a lawsuit can be pursued and whether the case and lawsuit can be brought to a successful settlement, verdict, award or other recovery, and the experienced lawyer will be able to advise you on any deadlines for bringing
the legal claim for damages. Please contact the law firm of Ashcraft & Gerel, LLP to discuss your case with an experienced
Qui Tam or False Claims Act lawyer in our Qui Tam Department.
The lawyers at Ashcraft and Gerel, LLP have been leaders in pursuing lawsuits on
behalf of the US government to recover damages for conduct that constitutes a
violation of the False Claims Act. Our attorneys have successfully brought about
recoveries in the form of awards or settlements in lawsuits on behalf of whistle
blowers.
We have a toll free number to reach an attorney to answer your questions with regard to your
specific case. That number is 1-800-829-7037. Please ask to speak to Robert Samet, and he will
place you in touch with one of our Qui Tam or False Claims Act lawyers. If you would prefer, please feel free to
e-mail us or complete the help inquiry form on this web
site. Please be sure to include your name, address, telephone number (if you wish to be called), email address and the exact nature of your question, so that our
lawyer can provide you with the specific information you seek about best price
Qui Tam lawsuits.
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