The False Claims Act, Lance Armstrong, and “Reps & Certs”

On Friday, the Department of Justice joined a False Claims Act lawsuit against Lance Armstrong.

Among his many troubles, Lance Armstrong now has a big government contracts problem on his hands–and Lance’s problem can provide an important lesson about “representations and certifications” for the less-famous government contractors among us.

Because this is a government contracts blog, not a sports website or celebrity gossip site, I will spare you the well-known details of Armstrong’s alleged years of doping and his recent confession to (who else) Oprah, and jump right to the lawsuit.

The False Claims Act lawsuit stems from a contract between Lance Armstrong’s cycling team and the U.S. Postal Service.  Under the contract, the USPS was given certain promotional rights, such as the right to prominently place the USPS logo on the cycling team’s uniform.  Importantly, the USPS’s contract with Armstrong’s team required the cycling team to follow the rules of cycling’s governing bodies, which prohibited the use of certain performance enhancing drugs.

Although the contract began with a relatively small $1 million sponsorship in 1996, the annual amount of the sponsorship ballooned to $8 million by 2004.  In total, the USPS paid more than $30 million to Armstrong and his team.

In 2010, Floyd Landis, a former member of Armstrong’s team, filed a “whistleblower” action against Armstrong and others under the False Claims Act.  The lawsuit alleged that Armstrong’s team made false claims to the USPS by accepting the sponsorship payments under the agreement, despite knowing that the team was violating the provisions in the agreement regarding compliance with cycling rules.

Now that the DOJ has intervened in the case, Landis has the muscle of the government behind him in his efforts to prosecute the case against his former teammate.  The outcome, of course, remains to be seen.

For small government contractors, the False Claims Act case against Lance Armstrong offers an important lesson about the importance of making accurate representations and certifications to the government.  Just like Lance Armstrong and his team, government contractors routinely make important representations and certifications to the government: eligibility for small business set-asides, compliance with the limitations on subcontracting rules and compliance with many other FAR provisions.  And like Lance Armstrong (minus the coverage on ESPN and TMZ) government contractors can land in hot water under the False Claims Act for accepting payments from the government while knowingly violating contractual requirements.

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