Chapter 4

The Contracting Officer as Plaintiff

If taxpayers and disgruntled employees can be bounty hunters, can a contracting officer be one, too?

THE CONTRACTING OFFICER AS BOUNTY HUNTER

For years, bounty hunters have operated under the Federal False Claims Act. This law encourages taxpayers to uncover fraud in government programs by promising them a cut of the fraud recovery received by the government. These lawsuits are called qui tam lawsuits. Qui tam comes from the Latin phrase meaning “who brings the action for the king as well as himself.”¹

Now this is one government program that really works!

Would this amount be higher if government employees were allowed to be “bounty hunters”? No one knows, and the question raises difficult policy issues. For example, since part of a contracting officer’s job is to “safeguard the interests of the United States in its contractual relationships,” contracting officers in a sense are already being paid for uncovering fraud. So one issue is whether or not they should get more than their salary for doing their job.

The courts are still trying to figure out an answer. One thing is clear: the fact that the bounty hunters are government employees is no reason to automatically disqualify them from filing qui tam lawsuits. Would specific government jobs disqualify a government employee from being a bounty hunter?

A CONFLICT OF INTEREST ISSUE?

One case made a distinction between an internal government auditor, whose job was to expose fraud (and thus should not allow him to be a bounty hunter), and another employee, a lawyer, whose job “was not to expose fraud, but to draft contracts and perform other legal services for the Corps,” who could be a qui tam relator.³

A good discussion of the policy issues involved was found in a case dealing with whether a postmaster could be a qui tam relator.⁴ Mary Holmes, the postmaster in a small Colorado town, knew that a bulk mailer in her area was not paying the correct postage. As a postmaster, Holmes was required to report fraud as part of her job. She told her boss; eventually the matter was referred to the U.S. Attorney’s Office. Holmes filed a qui tam lawsuit.

A majority of seven out of the ten judges on the entire court allowed Holmes’s lawsuit to continue. The law said that these kinds of suits may be brought by the Attorney General or a “person.” Because the law entitled a “person” to sue, and clearly the federal employee Holmes was a “person,” she should be able to bring these lawsuits.

The government had argued that a federal employee who discovers fraud in the course of employment and is required to report such fraud is not a “person” who is entitled to bring these lawsuits because the acquisition of such information is within the scope of their job. The court, however, did not agree: “This argument finds no support in the ordinary meaning of the word ‘person.’ In particular, we fail to see how the word could rationally be construed to exclude some, but not all, government employees, and under some, but not all, conditions.”

The court also went on to address issues raised by the government on a “policy” basis, as opposed to a strict interpretation of the law. The government was concerned that, because Holmes had a duty to report fraud, letting her and other federal employees share in any fraud recovery “would be contrary to federal regulations prohibiting the use of public office for private gain, the use of government property or time for personal purposes, the use of nonpublic government information to further private interests, and the holding of any financial interests that may conflict with the impartial performance of government duties.”

Having identified these policy arguments, the court concluded that these were issues for Congress, not the court, to address. “Although the government arguments have some appeal, the fact is that nothing in the law expressly precludes federal employees” from filing these suits. The court pointed out that so far, no court has prevented someone from participating in these lawsuits simply because they were a government employee.

Three of the ten judges disagreed with the majority, believing that Holmes’s lawsuit should not have been allowed to continue. Significantly, the dissenting judges agreed that federal employees should not be prevented from bringing these lawsuits simply because they are employed by the government. The problem, to these judges, was that Holmes had a specific duty to report this fraud. The dissent focused on another section of the law that discusses lawsuits brought “for the person and for the United States government.” Because this phrase distinguishes a person from the United States government, and the United States government is made up of federal employees who are persons, a federal employee must be part of the “United States government” in this phrase, not a “person.” Because a federal employee can be only one and not both, federal employees clearly are part of the “United States government.” These judges therefore “read this statute as authorizing these actions only by those individuals who are distinct from the government. When a federal employee acting pursuant to job responsibilities obtains information about possible fraud, that employee obtains that information as the government. A federal employee who is involved in an ongoing government investigation pursuant to employment duties is the government.”

The dissent to this decision also gave a thoughtful discussion of the difficult conflict of interest issue. It noted that federal employees are prohibited from using public government information to further any private interests. Federal employees are also prohibited from using public office for private gain. “Rather than perform their jobs as required, government employees obligated to disclose suspected fraud may inappropriately hide fraud from their supervisors while preparing” bounty hunting lawsuits.

In a footnote, the majority made an interesting point about the conflict of interest issue: An employee filing a bounty hunting lawsuit based on information obtained in the course of employment “might have to forfeit all or part of the recovery obtained.”

In a later decision, the Tenth Circuit concluded that a senior auditor for Department of the Interior’s Minerals Management Service (MMS) could bring a qui tam False Claims Act suit against a federal oil-and-gas lessee, alleging underreporting of sales revenue and underpayment of royalties on more than fifty offshore oil leases.⁵

Undoubtedly, this is an issue that the U.S. Supreme Court will have to resolve some day. As of this writing, it has not.