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  • Question

    Does FAR 31.205-47(b) apply only to cases under the False Claims Act.


    Answer

    This question should be run past your appropriate legal counsel.

    However, the short answer to your immediate question above is “no”. It has three different applications.

    A reading of FAR 31.205-47(b), might be better examined as shown below, since there are three different types of actions to which this paragraph could be applicable. Note that the word ‘or’ after the second type of action means that any of the three would make FAR 31.205-47(b) applicable. Also note that, #3) below, also states that the action must be brought by: a Federal, State, local, or foreign government for a third party in the name of the United States under the False Claims Act.  

    FAR 31.205-47(b) -   (b) Costs incurred in connection with any proceeding brought by: a Federal, State, local, or foreign government for:

    1. a violation of, or failure to comply with, law or regulation by the contractor (including its agents or employees) ( 41 U.S.C. 4310 and 10 U.S.C. 2324(k));
    2. a contractor or subcontractor employee submitting a whistleblower complaint of reprisal in accordance with 41 U.S.C. 4712 or 10 U.S.C. 2409; or
    3. a third party in the name of the United States under the False Claims Act, 31 U.S.C.3730, are unallowable if the result is-

    So for any of these three types of actions above (if applicable), the cost incurred are unallowable, if the result of which ever applicable action taken, culminates with one of the 5 following results.

      (1) In a criminal proceeding, a conviction;

      (2) In a civil or administrative proceeding, either a finding of contractor liability where the proceeding involves an allegation of fraud or similar misconduct; or imposition of a monetary penalty, or an order issued by the agency head to the contractor or subcontractor to take corrective action under 41 U.S.C. 4712 or 10 U.S.C. 2409, where the proceeding does not involve an allegation of fraud or similar misconduct;

     (3) A final decision by an appropriate official of an executive agency to-

                    (i) Debar or suspend the contractor;

                    (ii) Rescind or void a contract; or

                    (iii) Terminate a contract for default by reason of a violation or failure to comply with a law or regulation.

     (4) Disposition of the matter by consent or compromise if the proceeding could have led to any of the outcomes listed in paragraphs (b)(1) through (3) of this subsection (but see paragraphs (c) and (d) of this subsection); or

     (5) Not covered by paragraphs (b)(1) through (4) of this subsection, but where the underlying alleged contractor misconduct was the same as that which led to a different proceeding whose costs are unallowable by reason of paragraphs (b)(1) through (4) of this subsection.

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