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United States v. Sci. Applications Int'l Corp.

United States Court of Appeals for the District of Columbia Circuit

September 21, 2010, Argued; December 3, 2010, Decided

No. 09-5385

Opinion

 [*1261]   [**227]  Tatel, Circuit Judge: In this case a jury found, among other things, that appellant, a major government contractor, violated the False Claims Act (FCA), 31 U.S.C. § 3729,  [***2] by seeking payments at the same time it knew it was violating contractual provisions governing potential conflicts of interest. On appeal, the contractor principally argues that no liability may attach for its claims for payment because its contract nowhere designated compliance with these conflict of interest requirements as express conditions of payment. As we explain in this opinion, however, ] requests for payment can be "false or fraudulent" under the FCA when submitted by a contractor that has violated contractual requirements material to the government's decision to pay regardless of whether the contract expressly designates those requirements as conditions of payment. We nonetheless vacate the judgment as to FCA liability and remand for a new trial because the district court's "collective knowledge" instruction conflicted with the FCA's scienter standard, the proper application of which is critical to ensuring that FCA liability attaches only for false or fraudulent claims and not for accidental or even negligent breaches of contract.

The Nuclear Regulatory Commission (NRC) is an independent federal agency that regulates the civilian use of nuclear materials. Pursuant to its  [***3] general authority, the NRC oversees the release into interstate commerce of commercially valuable recycled radioactively contaminated materials from nuclear facilities. Companies wishing to release such materials must obtain an NRC license and comply with license restrictions. Beginning in the mid-1980s, however, the NRC sought to establish standards for unrestricted release by setting contamination levels that were below "regulatory concern." Am. Compl. ¶ 11. After the NRC's initial efforts encountered Congressional and public opposition, the agency commenced new studies aimed at developing scientific criteria that could inform a future rulemaking to set uniform national standards on the recycling and release of radioactive materials.

Appellant Science Applications International Corporation (SAIC), a scientific, engineering, and technology applications company, entered into a contract with the NRC in 1992 to provide technical assistance and expert analysis to support the agency's potential rulemaking. SAIC performed multiple tasks under the contract, delivering several reports, including both a literature review and a regulatory options paper that the NRC published in 1999. In the  [***4] options paper, SAIC calculated radiological dose assessment estimates for materials recycled and released from nuclear  [*1262]   [**228]  facilities. In 1999, SAIC and the NRC executed a follow-on contract to allow the company to continue its work in support of the agency's rulemaking.

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626 F.3d 1257 *; 393 U.S. App. D.C. 223 **; 2010 U.S. App. LEXIS 24808 ***

UNITED STATES OF AMERICA, APPELLEE v. SCIENCE APPLICATIONS INTERNATIONAL CORPORATION, APPELLANT

Subsequent History: Summary judgment denied by, Partial summary judgment denied by, Partial summary judgment denied by United States v. Sci. Applications Int'l Corp., 2013 U.S. Dist. LEXIS 102185 (D.D.C., July 22, 2013)

Prior History:  [***1] Appeal from the United States District Court for the District of Columbia. (No. 1:04-cv-01543).

United States v. Sci. Applications Int'l Corp., 653 F. Supp. 2d 87, 2009 U.S. Dist. LEXIS 84021 (D.D.C., 2009)

CORE TERMS

certification, damages, false claim, contractor, district court, conflicting interest, regulations, compliance, knowingly, employees, contractual, contracts, organizational, Nuclear, obligations, scienter, recycling, conflicts, claim for payment, fraudulent claim, false statement, government's decision, false certificate, deliberate, submitting, potential conflict, reckless disregard, express condition, ignorance, calculating

Governments, Federal Government, Claims By & Against, General Overview, Public Contracts Law, Voiding Contracts, Conflicts of Interest, Bids & Formation, Evidence, Burdens of Proof, Allocation, Preponderance of Evidence, Civil Procedure, Appeals, Standards of Review, De Novo Review, Jury Trials, Jury Instructions, Harmless & Invited Errors, Harmless Error Rule, Remedies, Damages, Punitive Damages, Monetary Damages, Inferences & Presumptions, Presumptions