United States: Federal Grant & Contract News For Nonprofits - October 2014

Last Updated: November 7 2014
Article by Dismas Locaria, Jeffrey S. Tenenbaum and Melanie Jones Totman

October 2014 saw several court decisions with notable implications for federal nonprofit grant recipients. After a federal judge dismissed his False Claims Act suit against George Washington University, the plaintiff (a former grant director terminated by the university) has appealed his case. In Florida, a federal district court limited the ability of an agency – in this case, the Federal Emergency Management Agency (FEMA) – to de-obligate funds previously committed to grant recipients under the Stafford Act.

Former George Washington University Grant Director Appeals Dismissal of False Claims Act Lawsuit

On October 8, 2014, a former grant director for George Washington University (GW) appealed the dismissal of his False Claims Act (FCA) lawsuit against the university, in which he claimed that he was terminated because he complained about fraudulent practices relating to a $5 million U.S. State Department anti-terrorism contract.

The lawsuit alleges that GW attempted to pull a bait-and-switch on the federal government by removing (with the intention of replacing) the plaintiff as principal investigator on a subcontract without notifying the government or the prime contractor of the key personnel change. The plaintiff further alleges that he was illegally fired three weeks after complaining to GW's management that a university employee was attempting to replace him on the subcontract.

The U.S. District Court for the District of Columbia dismissed the lawsuit, holding that neither the prime contractor nor the university actually submitted any claims for payment that falsely stated the plaintiff was working on the subcontract. Further, the court explained that the former grant director's "theory that a series of hypothetical events might have resulted in the submission of false claims does not provide a reasonable basis for his allegations under the FCA." For more information regarding the lawsuit, click here.

This case provides several useful insights for nonprofit grant recipients. First and foremost, employers must address employee concerns to avoid FCA claims under the qui tam provision of the FCA. Nonprofits should have a whistleblower policy in place that sets forth how the organization will proceed with investigating claims of grant mismanagement. This policy should be circulated among employees so that the process is transparent. Whistleblowers often report matters directly to the government or file qui tam suits because they did not feel their concerns were heard and/or reviewed by their employers. Second, the case affirms again that a violation of the FCA must be based on claims that are, in fact, false. Accurate and truthful submissions to the government can defeat an FCA claim. Nonprofit grantees should ensure that employees submitting backup documentation to the government (1) are aware of the required terms of the grant or contract and (2) submit accurate information demonstrating the allowability of their costs and their compliance with the agreement. Finally, nonprofit grant recipients should heed the warning that substitution of principal investigators or key personnel should be done in full compliance with the applicable grant or contract to avoid fraud charges.

Federal District Court in Florida Limits the Ability of FEMA to De-Obligate Funds Previously Awarded under the Stafford Act

On September 18, 2014, the United States District Court, Southern District of Florida, issued its decision in South Florida Water Management District v. Federal Emergency Management Agency, 2014 U.S. Dist. LEXIS 133153 (S.D. Fla. Sept. 17, 2014). In this case, the South Florida Water Management District challenged FEMA's decision to de-obligate funds awarded to the district after several hurricanes devastated the area in 2004 and 2005.

Under the Stafford Act, the district received public assistance grants from FEMA to repair 52 hurricane-damaged canals. In 2010, FEMA reviewed each of the 52 funded projects and determined they were ineligible for funding according to existing statutes as well as FEMA's internal regulations and policies. Specifically, FEMA concluded it lacked authority under the Stafford Act to fund such repairs if another federal agency "has specific authority to restore facilities destroyed by an event which is declared a major disaster." FEMA determined that because the district could have received assistance from either the U.S. Army Corps of Engineers' Levee Rehabilitation Program or the National Resources Conservation Service's Emergency Watershed Protection Program, it was improper for FEMA to provide grant money. As a result, FEMA informed the district in 2012 that it was de-obligating the funds from the 52 repair projects, which totaled $23.5 million.

The district protested FEMA's actions before the court, arguing that FEMA was statutorily prohibited from de-obligating the funds. In sum, the district argued that 42 U.S.C. § 5205(c), enacted as part of the Disaster Mitigation Act of 2000, provides:

A State or local government shall not be liable for reimbursement or any other penalty for any payment made under this [Act] if –

  1. the payment was authorized by an approved agreement specifying the costs;
  2. the costs were reasonable; and
  3. the purpose of the grant was accomplished.

In its opinion, the court found all three requirements present, rejecting FEMA's argument that the Stafford Act did not apply because the initial payments were contrary to FEMA's regulations. The court ruled that if the three conditions of 42 U.S.C. § 5205(c) are met, FEMA cannot de-obligate funds previously granted to recipients, and "any error FEMA made in originally applying its regulations and policies is irreversible."

Notably, this case creates helpful precedent that an agency's initial decision may be binding on the agency in the event it changes its position. Accordingly, nonprofit grant recipients should obtain agency guidance in writing and maintain a file with all correspondence and communications.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions