United States: 2018 NDAA Analysis: The Limits Of The 2018 NDAA's Report On Procurement Fraud

Megan Mocho Jeschke is a Partner in Holland & Knight's Tysons office

This is the fifth blog post in a series of blogs analyzing the current draft of the 2018 National Defense Authorization Act (NDAA) as agreed-to by House and Senate negotiators on November 8, 2017. Stay tuned for additional blog posts covering additional topics in the near future from Holland & Knight's Government Contracts Team.

A provision in the NDAA for Fiscal Year 2018 (2018 NDAA; H.R. 2810) would require the Department of Defense (DoD) to prepare a report on defense contracting fraud. Specifically, Section 889 of the 2018 NDAA requires the DoD to report the number of fraud-related criminal convictions of contractors over the past five fiscal years and prepare a listing of those contractors that were debarred or suspended based on their criminal conviction. The report will also require a listing of contractors having civil judgments or settlements related to fraud over the past five years. DoD will be required to provide an assessment of the dollar value of contracts awarded to these companies. The report will also include a recommendation on how to "penalize contractors repeatedly involved in fraud in connection with contracts or other transactions entered into with the Federal Government." DoD has 180 days to prepare the report upon passage of 2018 NDAA.

This is not the first time Congress has requested such a report. A similar provision was contained in the Department of Defense Appropriations Act, 2010 requiring reporting for fiscal years 2000-2010. That report came out in October 2011.

The 2011 report identified approximately 64 contractors with criminal convictions and over 300 contractors who had fraud-related criminal or civil settlements. The report showed that the overwhelming majority of companies with criminal convictions also received not-insignificant periods of debarment. (The 2011 report is available here and tables here).

Many viewed the 2011 report as evidence of systematic fraud by defense contracting community members, while others panned the report as evidencing isolated incidents of wrongdoing. The former cited with ire the value of contracts received by contractors even after their respective conviction, settlement, or judgment.

This proxy can be misleading though. As a threshold matter, judgments are not equivalent to settlements without admission of liability. A more telling proxy would be a breakout of the number of settlements involving an admission of liability. Second, the report did not establish a threshold amount for civil settlements or judgments. A fair number of the civil settlements and judgments listed in the 2011 report are less than $1 million. Nor is there an indication of the value of the settlement relative to the claimed damages or the size of the company. A not-insignificant number of the companies listed in the 2011 report are multi-billion dollar contractors with a single minor settlement within the ten-year report period. Where the settlement value is relatively low and there is no admission of liability, it more likely evidences companies who settled unmeritorious cases to avoid the time and expense of litigation. This is particularly true of settlements involving qui tam relator claims under the False Claims Act and even more so in those cases where DOJ declined intervention. Finally, as the 2011 report points out, payment of money due to the government is typically indicative of a responsible contractor, restoring its eligibility for continued participation in government contracting.

In addition to these limitations, the report lacks related analytical data points that could be useful. For example, there is no requirement to identify the number of cases stemming from or involving mandatory disclosures. Now just shy of a decade old, the mandatory disclosure rule requires self-disclosure by contractors whenever there is credible evidence of a violation of Federal criminal law involving fraud or violations of the False Claims Act. Many commenters on the rule say it has been a vehicle for reporting minimal overpayments rather than meaningful disclosure of serious fraud. The report could also require a segregation of cases brought by DoD investigative services versus whistleblowers.

Nor does the report call for a reevaluation of the companies identified in the 2011 report or a year over year trend analysis. The Department of Justice (DOJ) tracks this latter information to some extent as part of its annual Fraud Statistics (which indicates a decline in the number of qui tam and non qui tam DoD fraud cases over the past ten years):

Link Source: Department of Justice, Civil Division, Fraud Statistics – Department of Defense

Back in 2011, DoD relied extensively on DOJ for the underlying data regarding fraud cases. However, as DoD admitted, DOJ's data was not an ideal for the report - companies were misidentified or not necessarily identified as contractors, judgments and settlements were not apportioned where there was joint and several liability, and cases involving procurement fraud may not have been categorized as such. The 2011 report recognized that DOJ's data likely underreported the number and value of procurement fraud cases. If DOJ's collection and categorization methods have improved or if DoD started tracking cases in parallel, we might see a different trend line from that currently reported out of DOJ.

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