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August 9, 2012

Landmark FCA Ruling: Federal appeals court says contract underbidding covered under the False Claims Act

According to a recent ruling by the U.S. Court of Appeals for the Ninth Circuit, underbidding to obtain a government contract can be the basis for liability.

Former Lockheed Martin Corporation project engineer Nyle Hooper filed a lawsuit in 2005 against Lockheed under the qui tam provision of the False Claim Act, alleging that the company knowingly submitted a low bid to the U.S. Air Force in order to obtain a contract that it knew would cost substantially more to actually complete.

"We always felt a false statement about an under-bidded bid is a basis for liability, and this is the first time we've seen a circuit court make such a finding," said Mark Labaton in an article published by The National Law Journal. Labaton is a California-based whistleblower attorney with Motley Rice who represents Hooper.

"We think it could be very, very significant, because our understanding is that underbidding to get contracts occurs quite often, particularly in the defense contracting industry. The implications of this decision beyond our case could be very significant," he added.

Read more about this whistleblower lawsuit. 

The case is Nyle Hooper v. Lockheed Martin Corporation. Labaton represents Hooper along with Joseph A. Black of Cullen Law Firm located in Washington, D.C.

Read about qui tam cases and whistleblower protection.