Reining in the 'qui tam' industry.

• Author: Fenster, Herbert L.
• Position: Government Contracting Insights

It is hardly a mystery to government contractors that there is a False Claims Act attached to their contracts and it is no more of a mystery that there is a "qui tam" provision in that act making discontented employees, casual onlookers and even those on the margins of the government itself potential litigants against them.

Qui tarn civil lawsuits allow whistleblowers to recover funds if the government prevails in a False Claims Act case.

Those who assume that the qui tam "relators" are occasional players and simply doing the government's work, may be living under a rock. A vast plaintiffs' bar industry has grown up to promote the private litigation of supposedly government claims.

And anyone who continues to believe that the presence of this industry is a minor matter has not recently visited the extensive advertising in which the industry engages.

Most understand that, supposedly, these qui tam "relators," having been endowed by an absurdly messy statute to litigate on behalf of the government, are simply doing the government's work. Such an assumption lacks every kind of reality.

First of all, 16 years after the question of whether the Constitution even permits these unappointed government agents to carry on executive branch functions was raised in the Supreme Court, that court still has not decided the question. One very thoughtful court has held that, absent statutory permission to attack the performance of a government contract, private parties have no such third party rights whatsoever.

Second, and equally important, the growth of this industry enabling third party attacks on the award and performance of government contracts is insidiously undermining the contract relationships between the government and its contracting communities. As a practical matter, the government elects to gain and retain virtually no control whatsoever over this growing qui tam industry and its litigation behavior. This inattention is very purposeful, political, lazy and incredibly short sighted.

Third, the omnipresence of the qui tam industry exists at a time when the government has a growing need to attract and retain contractors and other partners particularly in research and development, systems, supply chain and very specialized industries such as those supporting command, control, communications, computers, intelligence, surveillance and reconnaissance.

These efforts, vigorously pursued by the Defense Department are going to fail if high-tech companies...